Analyst presentation annual results 2014/15 Year ended 31 March 2015 - - PowerPoint PPT Presentation

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Analyst presentation annual results 2014/15 Year ended 31 March 2015 - - PowerPoint PPT Presentation

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Analyst presentation annual results 2014/15 Year ended 31 March 2015 24 June 2015 Disclaimer DISCLAIMER THIS PRESENTATION may contain forward looking statements. These statements are based on current expectations, estimates and projections of

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24 June 2015

Analyst presentation annual results 2014/15

Year ended 31 March 2015

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Disclaimer

DISCLAIMER THIS PRESENTATION may contain forward looking statements. These statements are based on current expectations, estimates and projections of Lucas Bols¹s management and information currently available to the company. Lucas Bols cautions that such statements contain elements of risk and uncertainties that are difficult to predict and that could cause actual performance and position to differ materially from these statements. Lucas Bols disclaims any obligation to update or revise any statements made in this presentation to reflect subsequent events or circumstances, except as required by law. Certain figures in this presentation, including financial data, have been rounded. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an exact arithmetic aggregation of the figures which precede them.

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Management

Huub van Doorne Joost de Vries

  • CEO
  • Led the 2006 buy-out
  • 25 years spirits industry experience
  • CFO
  • Joined in the 2006 buy-out
  • 9 years spirits industry experience
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1. Lucas Bols at a glance 2. Highlights 2014/15 3. Financials 2014/15 4. Foreign exchange rate 5. Outlook

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Amsterdam 1575

Lucas Bols at a glance

Over 110 countries, 54% revenue outside Western Europe 24 brands, Bols Liqueur range 39 flavours Highlights

12.9% North America 18.5% Asia-Pacific 22.7% Western Europe 45.9% Emerging Markets

€78m revenue €22m operating profit

% of total FY 2014/15 revenue

Note 1: Excluding IPO costs Note 2: Free cash flow is defined as Operating Profit net of investing activities, taxes paid (normalised) and change in Operating Working Capital (Inventories + Trade receivables – Trade payables); Note 3:Cash conversion defined as operational FCF / EBITDA; operational FCF defined as EBIT x (1 - statutory tax rate) + D&A - ∆ Operating Working Capital (Inventories + Trade receivables – Trade payables) – Capex

Operating profit €m Revenue €m 22.1 1) 77.7 28%

margin

  • Free cash flow2) €22.3m
  • Cash conversion 3) 74.7%
  • Leverage ratio 2.6
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Global footprint in over 110 countries with 54% of revenue outside Western Europe with growth in Asia-Pacific and Emerging Markets

Revenue in €m

Emerging Markets Asia-Pacific North America Western Europe

12.9% 18.5% Emerging Markets North America Western Europe Asia-Pacific 45.9% 22.7%

Group revenue and operating profit Group revenue structure1) (FY 2014/15)

Note 1: as % of total Group revenue Note 2: excluding IPO costs

Group revenue per geographical segment

Operating profit in €m 2)

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Lucas Bols’ mission & strategic framework

Mission Lucas Bols We aim to create great cocktail experiences around the world. Strategic framework Lucas Bols

  • To strengthen and grow our global brands in the international cocktail market
  • To maintain the competitiveness of our regional brands in regional and local markets

Build the brand equity Lead the development of the cocktail market Accelerate global brand growth Leverage operational excellence 3 2 4 1

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1. Lucas Bols at a glance 2. Highlights 2014/15 3. Financials 2014/15 4. Foreign exchange rate 5. Outlook

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Solid performance in FY 2014/15 1)

Revenue FCF Net Profit Net Debt Gross Margin % Operating Profit Revenue of € 77.7 million in line with last year (at constant currencies) Free cash flow of € 22.3 million, in line with last year Net profit for the year is € 3.8 million, versus € 0.2 million in FY 2013/14 Net debt significantly reduced to € 61.2 million, with leverage ratio at 2.6 Operating profit of € 22.1 million up 7.7% organically over last year Gross margin organic increase with 60 bps to 61%

Note 1: Excluding IPO costs

YTD 2015/16 2015/16 YTD: Revenue in line with last year with a slightly higher gross margin

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Highlights regions in FY 2014/15

Western Europe North America Asia-Pacific

  • Slow recovery in the economy - consumers looking for a quality on-trade experience leading to higher demand for

cocktails and spirits such as vodka and gin.

  • Global brands achieved double-digit growth in the Netherlands, in regional brands, market share in the Netherlands

further strengthened in a still declining market.

  • Strong performances in Scandinavia and Italy, challenging retail market conditions in the UK and Belgium.
  • The transition of the distribution of Bols Liqueurs to Lucas Bols USA was completed.
  • Deliberate price-structure adjustment negatively impacted revenue.
  • Second half however showed a significant improvement versus first half.
  • The weakening of the Japanese Yen impacted results.
  • Organically, China and Japan achieved strong growth.
  • Weak market performance and one-off stock reductions in South East Asia.

Emerging Markets

  • A vibrant cocktail culture is developing in the Emerging Markets which Lucas Bols can capitalise on.
  • Weak Russian Rouble and political instability impacted results.
  • Latin America and Africa achieved strong growth.
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1. Lucas Bols at a glance 2. Highlights 2014/15 3. Financials 2014/15 4. Foreign exchange rate 5. Outlook

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Corporate P&L 2014/15

Note 1: Excluding IPO costs

Reported Organic REPORTED (* € million) ¹ FY 2014/15 FY 2013/14 growth growth Revenue 77,7 78,7

  • 1,3%
  • 0,5%

Cost of Sales (30,8) (31,1) GROSS PROFIT 46,9 47,6

  • 1,4%

0,5%

60,4% 60,4%

D&A Expenses (24,8) (26,1)

31,9% 33,1%

OPERATING PROFIT 22,1 21,5 2,7% 7,7%

28,4% 27,3%

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13 60.4%

Revenue development global and regional brands

Revenue development (in €m)

(0.2) FY 2014/15

Foreign exchange effect

(0.6)

Δ Regional brands

(0.2) FY 2013/14 77.7

Δ Global brands

78.7 64.8% 50.3% 60.4%

Gross margin

Group revenue structure (FY 2014/15)

Regional brands Global brands 69.3% 30.7%

Group revenue structure (FY 2013/14)

Regional brands Global brands 30.8% 69.2%

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Revenue development per geographical segment

0.3 (0.6) 0.6 FY 2014/15 77.7

Foreign exchange effect

(0.6)

Δ Emerging markets Δ North America Δ Asia- Pacific Δ Western Europe

(0.8) FY 2013/14 78.7

Revenue development (in €m)

45.9% 22.7% 18.5% 12.9% 46.2% 232% 18.1% 12.5%

Revenue structure (FY 2014/15)

Emerging Markets Emerging Markets North America North America Western Europe Western Europe Asia-Pacific Asia-Pacific

Revenue structure (FY 2013/14)

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Gross profit development per geographical segment

0.3 (0.5) 0.3 FY 2014/15 46.9

Foreign exchange effect

(0.9)

Δ Emerging markets Δ North America Δ Asia- Pacific Δ Western Europe

0.1 FY 2013/14 47.6 54.4% 72.5% 65.6% 56.6%

Gross profit development (in €m)

60.4% 60.4%

Gross margin

Gross margin development at constant currencies

Western Europe +140 bps Asia Pacific +50 bps North America

  • 120 bps

Emerging Markets

  • 120 bps
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16 28.4%

Operating profit development global and regional brands

Operating profit development (in €m)

1.8 (0.3) FY 2014/15

Foreign exchange effect

(1.1)

Δ Regional brands

0.2 FY 2013/14 22.1

Δ Global brands

21.5 42.4% 41.9% 27.3%

Operating margin

Operating profit structure (FY 2014/15)

Regional brands Global brands

Operating profit structure (FY 2013/14)

Regional brands Global brands 30.4% 68.6% Δ

Overhead

69.6 31.4%

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Ongoing margin improvement at constant rates1)

Note 1: Excluding IPO costs

Optimised investment in Advertising & Promotion Lowered investment in Russia due to political situation Decreased logistic costs, following new multiple year contract Gross margin improvement in Western Europe

Drivers for strengthened operating margin

% of organic revenue

Delta FY 2013/14 - FY 2014/15

Gross Margin +60 bps +50 bps +70 bps Operating Margin +230 bps +340 bps +130 bps Global Brands Regional Brands Company

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Share of profit of JV’s

€ 0.2 million release of employee benefits liability in Maxxium NL in FY 2013/14 Challenging market circumstances in India in FY 2014/15

Highlights

REPORTED (* € million) ¹ FY 2014/15 FY 2013/14 Revenue 77,7 78,7 Cost of Sales (30,8) (31,1) GROSS PROFIT 46,9 47,6

60,4% 60,4%

D&A Expenses (24,8) (26,1)

31,9% 33,1%

OPERATING PROFIT 22,1 21,5

28,4% 27,3%

Share of profit of JV, net of tax 0,1 0,5 EBIT 22,2 22,0

28,5% 28,0%

Finance costs (15,7) (19,4) PROFIT BEFORE TAX 6,5 2,6 Income tax expense (2,7) (2,4) PROFIT FOR THE PERIOD 3,8 0,2

Note 1: Excluding IPO costs

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Post IPO significantly lower finance costs

Note 1: Excluding IPO costs

REPORTED (* € million) ¹ FY 2014/15 FY 2013/14 Revenue 77,7 78,7 Cost of Sales (30,8) (31,1) GROSS PROFIT 46,9 47,6

60,4% 60,4%

D&A Expenses (24,8) (26,1)

31,9% 33,1%

OPERATING PROFIT 22,1 21,5

28,4% 27,3%

Share of profit of JV, net of tax 0,1 0,5 EBIT 22,2 22,0

28,5% 28,0%

Finance costs (15,7) (19,4) PROFIT BEFORE TAX 6,5 2,6 Income tax expense (2,7) (2,4) PROFIT FOR THE PERIOD 3,8 0,2

Finance costs ¹

Pre IPO Post IPO Normalised

(* € million) Apr-Jan Feb-Mar FY 2014/15 FY 2013/14 Senior debt & Mezzanine 7,8 0,5 8,3 11,5

  • Cum. preference shares

6,6 0,0 6,6 7,0 Amortisation fees 0,8 0,0 0,8 0,9 Total 15,2 0,5 15,7 19,4 Annualised 18,2 3,0 Debt 184,5 61,2 61,2 184,2

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Income Tax Expense

Note 1: Excluding IPO costs

REPORTED (* € million) ¹ FY 2014/15 FY 2013/14 Revenue 77,7 78,7 Cost of Sales (30,8) (31,1) GROSS PROFIT 46,9 47,6

60,4% 60,4%

D&A Expenses (24,8) (26,1)

31,9% 33,1%

OPERATING PROFIT 22,1 21,5

28,4% 27,3%

Share of profit of JV, net of tax 0,1 0,5 EBIT 22,2 22,0

28,5% 28,0%

Finance costs (15,7) (19,4) PROFIT BEFORE TAX 6,5 2,6 Income tax expense (2,7) (2,4) PROFIT FOR THE PERIOD 3,8 0,2 Tax ( * € million) ¹

FY 2014/15 Profit before tax 6,5

  • Cum. Pref. Dividend

6,6 Result/ Dividend subsidiaries 0,1 13,2 Tax Expense (2,7) Tax rate 20,8%

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IPO and refinancing had notable impact on FY 2014/15

Hedge adjustment € 0.8 million IPO costs charged against equity € 4.5 million (net of taxes) Amortisation of fees € 1.1 million

Highlights

ESA and other € 2.2 million Statutory IPO Normalised REPORTED (* € million) FY 2014/15

  • ne-offs

FY 2014/15 FY 2013/14 Revenue 77,7

  • 77,7

78,7 Cost of Sales (30,8)

  • (30,8)

(31,1) GROSS PROFIT 46,9

  • 46,9

47,6

60,4% 60,4% 60,4%

D&A Expenses (27,0) 2,2 (24,8) (26,1)

34,8% 31,9% 33,1%

OPERATING PROFIT 19,9 2,2 22,1 21,5

25,6% 28,4% 27,3%

Share of profit of JV, net of tax 0,1

  • 0,1

0,5 EBIT 20,0 2,2 22,2 22,0

25,7% 28,5% 28,0%

Finance costs (17,5) 1,9 (15,7) (19,4) PROFIT BEFORE TAX 2,4 4,1 6,5 2,6 Income tax expense (2,2) (0,5) (2,7) (2,4) PROFIT FOR THE PERIOD 0,2 3,5 3,8 0,2 Earnings per share (in €) 0,02 0,42 0,03

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Balance sheet

Assets (* € million) FY 2014/15 FY 2013/14 Intangible assets 214,9 214,9 Investments in joint-ventures 5,1 5,9 Other 2,0 2,3 Non-current assets 222,1 223,1 Cash and cash equivalents 0,6 3,1 Net working capital 14,5 13,1 Total 237,2 239,3 Funded by: Liabilities & equity (* € million) FY 2014/15 FY 2013/14 Loans and borrowings 52,7 111,1 Other non-current fin. Liabilities

  • 64,8

Deferred tax liabilities 20,0 19,6 Other 1,7 1,2 Non-current liabilities 74,4 196,7 Loans and borrowings 8,4 9,6 Derivative financial instruments 1,2 1,2 Current Liabilities 9,6 10,8 Equity 153,2 31,8 Total 237,2 239,3

Deferred Tax (* € million) FY 2014/15 FY 2013/14 Deferred tax assets (9,3) (7,4) Deferred tax liabilities 29,4 27,0 Total 20,0 19,6

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Normalised versus actual cash conversion1 FY 2014/15 (in €m)

(5.5) 0.0 (0.2) 0.5 5.4 22.3 Fiscal depreciation brand value Normalised FCF 16.9 (∆ Oper. NWC) (Capex) D&A (Adj. taxes) ³ Operating profit 22.1 Actual FCF

Free Cash Flow 16.9 EBITDA 22.6 Normalised cash conversion 74.7% Actual Free Cash Flow 22.3 Actual cash conversion 98.6%

2

Note 1: Cash conversion defined as operational FCF / EBITDA; operational FCF defined as EBIT x (1 - statutory tax rate) + D&A - ∆ Operating Working Capital (Inventories + Trade receivables – Trade payables) – Capex Note 2: Operating profit is used (EBIT excluding share of profit of joint ventures, net of tax) for comparison reasons Note 3: Taxes at Dutch statutory tax rate of 25%

Strong cash conversion driven by low capex, limited working capital requirements and tax holiday

Free Cash Flow (* € million) FY 2014/15 FY 2013/14 Delta Operating profit 22,1 21,5 0,6

  • Income tax paid

(0,1)

  • (0,1)

Depreciation & amortisation 0,5 0,6 (0,1) Capital expenditure (0,2) (0,5) 0,3 Δ Working capital 0,0 1,0 (0,9) Free cash flow 22,3 22,5 (0,2) Δ Working capital (* € million) FY 2014/15 FY 2013/14 Delta Inventories 7,6 7,6 0,0 Accounts receivable trade 12,9 12,1 (0,8) Accounts payable trade (8,0) (7,2) 0,8 Total 12,5 12,5 0,0

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1. Lucas Bols at a glance 2. Highlights 2014/15 3. Financials 2014/15 4. Foreign exchange rate 5. Outlook

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Important aspects of Lucas Bols’ currency effects

USD natural hedge

Revenue denominated in foreign currencies is 53.9 % in FY 2014/15

Impact on net profit at 1 % movement ¹

Note 1: A +1% movement of the JPY, USD and AUD against the Euro at 31 March would have affected equity and profit or loss by the amounts shown below. The analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

Long term JPY hedge expiring 31st march 2015 USD exchange rate

81 54 FY 2014/15 31 March

JPY USD

* € 000

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1. Lucas Bols at a glance 2. Highlights 2014/15 3. Financials 2014/15 4. Foreign exchange rate 5. Outlook

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Outlook

We foresee continued stabilisation of the regional brands and growth of the global brands. We will continue to focus on the expansion of our brands in the US with our organisation Lucas Bols USA. While some markets will remain challenging, we are overall positive about the future developments of our brands. In particular in Asia and the Emerging Markets we see the urbanisation trend resulting in a growing on-premise market. The improvement in the global economies is contributing to a more positive on-premise environment and a growing cocktail culture. First dividend following IPO is anticipated after publication of the half year results 2015/16, on 18 November 2015.

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Q&A

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Appendix

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BOLS Liqueurs Italian liqueurs

Galliano Vaccari Sambuca

Premium and Super-Premium positioning

Premium BOLS Liqueurs BOLS Vodka Super- Premium Damrak Gin BOLS Genever Vaccari Galliano

White spirits

BOLS Genever BOLS Vodka Damrak Gin

Core offering of premium and super-premium global brands...

69.3% Global brands

Group revenue structure (FY 2014/15) Within the portfolio, global brands are fuelling future growth Strategy to position Bols Liqueurs range as the number one brand for the international cocktail market

39 flavours to create great tasting cocktails with Bols Liqueurs

Bols Liqueurs actively marketed towards the bartending community Continuously optimising the liqueurs range to create new trends in the cocktail market Positioning of White spirits as essential base spirits for cocktails, thereby complementing the liqueurs range Marketing and positioning Italian liqueurs as an addition to the Bols cocktail platform

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…complemented with strong regional brands

Regional brands Within the portfolio, the regional brands serve as stable cash generators Strong positions in domestic markets (i.e. in the Netherlands) Selective introduction of new concepts / broadening of the portfolio Established regional brands support the growth of the global brands

Value brands Liqueurs

30.7% Regional brands

Group revenue structure (FY 2014/15)

Dutch Jenever portfolio

Strong and stable cash generation resulting from limited A&P spending and working capital requirements Maintain competitiveness in respective markets by focusing on market share growth

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Fully focused on innovation and strategic marketing to build the Lucas Bols brand equity

Note 1: Source IWSR

House of Bols Bols around the World Bols.com recipe database Bols Bartending Academy Innovate existing products

Bols Natural Yoghurt Bols Foam

Introduce new cocktail concepts

Pumpkin Spice Green Tea

Expand liqueur range offering

Marketing efforts and A&P spending focus on growing the global brands and maintaining the established position of the regional brands New product development aims to boost the position of the global brands Strategic marketing

Appealing marketing campaign

New product development

50,000 visitors p.a. 3,000 participants from 76 countries Over 500 cocktail recipes 3,000 bartenders & professionals trained p.a. Award winning bottle1 #1 Global Genever Brand1 IWSR Gold Award for Yoghurt

Business to business marketing targets both the bartender community and the distributors

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Lucas Bols business model

General note: Each trade mark, trade name or service mark of any other company belongs to its holder

Product development

Craft distillery Production (blending and bottling) Master distiller

Production (blending and bottling)

Lucas Bols in-house Partnerships

Distribution set-up to ensure route to market Production set-up to increase efficiencies and ensure quality

Lucas Bols USA Distribution joint venture

BOLS Kyndal

Flexible and asset-light business model allowing management to focus on core activities

Distribution Sales and marketing Distillation of the heart of the products

Direct distributors

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Source: Drinks International; Economist Intelligence Unit; Euromonitor; IWSR 2013; IWSR 2014; Canadean; World Bank

Supporting macroeconomic fundamentals Developing on- trade consumption Premiumisation Innovation Developing cocktail scene 1 2 3 5

  • During 2013, on-trade consumption

accounted for approximately 29% of total spirits volume worldwide and is growing 2

  • Global cocktail scene is growing,

driving spirits consumption

  • Bartenders help to develop the

mixology trend at the consumer level

  • Growing number of on-trade outlets

benefits Lucas Bols, mainly in urban Asia 5

  • Customers are constantly looking for

new drink experiences

  • Differentiation by introduction of new

flavours

  • Close relationship with the bartender

community is key for innovation 4

  • Growing population over age of 21
  • Increasing urbanisation
  • Per capita expenditure on spirits is

increasing in all geographies 1 4

  • Premiumisation in all geographies but

Emerging Markets

  • Emerging Markets consumers are

believed to be switching from domestic to more international brands

  • Craft beverage trend

3

Industry trends support the global spirits market