Analyst presentation annual results 2015/16 Year ended 31 March 2016 - - PowerPoint PPT Presentation

Analyst presentation annual results 2015/16

Year ended 31 March 2016

9 June 2016

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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.

1. Lucas Bols at a glance 2. Highlights 2015/16 3. Operational review 4. Financials 2015/16 5. Outlook

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Am sterdam 1 5 7 5

Lucas Bols at a glance

Over 1 1 0 countries, 5 3 % revenue outside W estern Europe 2 4 brands 4 5 liqueur flavours Highlights

12.5% North America 20.7% Asia-Pacific 19.5% Western Europe 47.3% Emerging Markets

€ 7 2 .6 m revenue € 1 7 .6 m EBI T

% of total FY 2015/ 16 revenue

Note 1: EBIT defined as ‘operating profit’ including ‘share of profit of joint ventures, net of tax’. Note 2: FOCF defined as EBIT - taxes + D&A - Capex - other items - ∆ Working Capital

EBIT 1) €m Revenue €m 17.6 72.6 24%

margin

• Free operating cash flow 2)

€ 1 6 .7 m

• Leverage ratio 2 .8

Strong offering of global brands and regional brands

Global brands

White Spirits Italian Liqueurs Bols Liqueurs Range

Regional brands

Liqueurs Value brands Dutch Jenever portfolio

69.3% 30.7%

Revenue structure

Regional brands Global brands FY 2015/16 5

1. Lucas Bols at a glance 2. Highlights 2015/16 3. Operational review 4. Financials 2015/16 5. Outlook

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Substantially higher net profit for FY 2015/16

Revenue FOCF Net Profit Net Debt Gross Margin % EBIT Revenue of € 72.6 million, a decrease of 5.9% at constant currency, influenced by one-off in-market stock reductions Operating free cash flow of € 16.7 million, in line with last year at constant currency Net profit increased to € 11.7 million (FY 2014/15: € 0.2 million) as a result of significantly lower interest expenses post-IPO Net debt reduced by € 10.2 million to € 51.0 million at 31 March 2016 EBIT of € 17.6 million, a 6.2% decrease at constant currency Gross margin at 58.8%, organic decrease of 70 bps EPS Dividend Earnings per share amounted to € 0.94 for 2015/16 (2014/15: € 0.02) Proposed final dividend of € 0.23 per share, bringing the total dividend for 2015/16 to € 0.54 per share

1. Lucas Bols at a glance 2. Highlights 2015/16 3. Operational review 4. Financials 2015/16 5. Outlook

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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

• perational

excellence

Global footprint - Steps taken in FY 2015/16

Existing distribution contracts in existing regions (before 31 March 2015). Renewed and new distribution contracts in existing regions New distribution contracts in new regions 10

MEXICO COLOMBIA VENEZUELA

CUBA

UNITED STATES OF AMERICA

BRAZIL

BOLIVIA PERU ARGENTINA CHILE PARAGUAY

URUGUAY ECUADOR

CANADA

ALASKA (USA)

GREENLAND

RUSSIA

NORWAY SWEDEN FINLAND

GERMANY UK FRANCE SPAIN PORTUGAL ITALY POLAND GREECE TURKEY ICELAND MOROCCO ALGERIA LYBIA EGYPT BULGARIA ROMANIA MAURITANIA MALI NIGER CHAD NORTH SUDAN ETHIOPIA OMAN SAUDI ARABIA ISRAEL NIGERIA CAMEROON

• DEMOCRAT. REP.

OF THE CONGO ANGOLA NAMIBIA SOUTH AFRICA ZIMBABWE ZAMBIA MOZAMBIQUE MADAGASCAR TANZANIA KENYA GABON KAZAKHSTAN MONGOLIA

CHINA

TURKMENISTAN IRAN UZBEKISTAN

INDIA

PAKISTAN

JAPAN

NEPAL TAJIKISTAN KYRGYSTAN THAILAND MALAYSIA INDONESIA

AUSTRALIA

PHILIPPINES

NEW ZEALAND

VIETNAM SOUTH KOREA LAOS PANAMA SURINAME COSTA RICA GEORGIA U.A.E. SINGAPORE BURMA IRAQ TOGO GHANA BENIN CAMBODIA

Route to market optimised

Western Europe

• The contract for the European Travel retail market was renewed.

Asia Pacific

• In South East Asia new distribution agreement will optimize our route to market:
• Edrington Singapore (for Singapore, Malaysia, Indonesia and Philippines)
• Alchemy Asia Trading (for Vietnam, Cambodia, Laos and Thailand)
• The Philippines and Cambodia are new markets for the company.
• Renewed distribution contract Australia and New Zealand.

Emerging markets

• We entered new markets Turkey and Caucasus (8 countries) by signing new distribution contracts.
• In Mexico we signed a new contract with Monarq for the Bols Brands, Galliano and Damrak Gin.
• We renewed our contract with Monarq for the Caribbean.
• In Southern Africa we changed our route to market; including our distributor and local production partners.
• We renewed the royalty contract in Argentina.
• Renewed contracts in West Africa and Central Africa.

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Innovations vital to strengthening brand equity

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In 2016 : Bols Pink Grapefruit Bols Pear Bols Ginger In 2015: Bols Date Bols Pineapple Chipotle Bols Blackberry In 2016: Galliano l’Aperitivo Pisang Ambon Spicy Banana

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Brand initiatives Bols liqueurs in FY 2015/16

Global Brands

• Launched 2 new flavors in the USA to boost the classics category: Bols Maraschino, Bols Parfait Amour.
• Awarded for Parfait Amour and Peppermint in the USA.
• USA’s newest hot cocktail – Skinny Colada.
• Drink promotions introduced in the Netherlands (Flavour Selection), Austria (Bolsini) and the UK (Mixxit).

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Brand initiatives Galliano in FY 2015/16

Global Brands

• Launch of Galliano L’Aperitivo in Scandinavia, Canada, France and Israel.
• Development of a new strategy & visual identity for Galliano.

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Brand initiatives White Spirits in FY 2015/16

Global Brands

• A solid brand identity & campaign platform for Damrak Gin.
• Damrak Gin is introduced on board by KLM business class.
• Product introductions in China of Bols Genever and Bols Vodka.
• Built the brand equity of Bols Genever around the World.

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Brand initiatives Regional Brands in FY 2015/16

Regional Brands

• Wynand Fockink redesign nominated for best packaging design 2016 in NL.
• The creation of Henkes Gin & Tonic cans to ride the Gin wave in NL
• Activation platform Pisang Ambon Let’s Go Bananas in Scandinavia.
• Bols Corenwyn instore tastings & shelf communication tools.

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Bols Business class in FY 2015/16

• Bols Business Class is an open platform that inspires and educates bar owners/managers, as well as the

global bartending community.

• Through talks by the industries best, covering topics like industry insights, future trends of the industry to social

media, bars technology and cocktail menu design.

Bols business class

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Refurbishing House of Bols in FY 2015/16

• In February and March 2016 we updated the House of Bols to a new interactive experience.
• A new interactive tool has been created, which offers all visitors a personal audio guide.

House of Bols

1. Lucas Bols at a glance 2. Highlights 2015/16 3. Operational review 4. Financials 2015/16 5. Outlook

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Corporate P&L 2015/16

Reported Organic REPORTED (in €m) FY 2015/16 FY 2014/15 growth growth Revenue 72.6 77.7

• 6.5%
• 5.9%

GROSS PROFIT 42.7 46.9

• 9.0%
• 7.0%

58.8% 60.4%

D&A Expenses (26.0) (27.0)

35.8% 34.8%

OPERATING PROFIT 16.7 19.9

• 16.0%
• 10.2%

23.0% 25.6%

Share of profit of JV, net of tax 0.9 0.1 EBIT 17.6 20.0

• 11.9%
• 6.2%

24.2% 25.7%

Finance costs (2.6) (17.5) PROFIT BEFORE TAX 15.0 2.4 Income tax expense (3.3) (2.2) PROFIT FOR THE PERIOD 11.7 0.2 Earnings per share (in €) 0.94 0.02

21 58.8%

Revenue development by brands

Revenue development at constant currency (in €m)

77.7 (3.2) (1.4) (0.4) 72.6

One-off (1.7) One-off (0.3)

FY 2015/16

Foreign exchange effect Δ Regional brands

FY 2014/15

Δ Global brands 63.3% 48.4% 60.4%

Gross margin

• 6.0%
• 5.7%

Highlights

In global brands, one-off in- market stock reductions in Australia & New Zealand, South East Asia and the US. One-off negative impact in regional brands from the steps taken to improve our route to market in South Africa. Excluding these one-off effects and at constant currency revenue was down 3.5%, largely explained by lower shipments to Asia, weak Travel Retail and the declining Dutch domestic spirits market.

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Revenue structure (FY 2015/16)

Revenue development by regions

77.7 (1.5) (2.4) (0.6) (0.1) (0.4) 72.6

• 4.2%
• 13.6%
• 4.3%
• 0.9%

FY 2015/16

Foreign exchange effect Δ Emerging markets Δ North America Δ Asia- Pacific Δ Western Europe

FY 2014/15

Revenue development at constant currency(in €m)

47,3% 19,5% 20,7% 12,5%

Emerging Markets North America Western Europe Asia-Pacific

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Highlights regions in FY 2015/16

Western Europe Asia-Pacific

• Revenue in Western Europe down mainly due to the declining market in The

Netherlands for domestic spirits

• European Travel retail was under pressure
• Revenue in Belgium was impacted by an increase in excise duties
• Global brands increased in The Netherlands, mainly Bols Vodka and Damrak Gin
• Other markets operated in line with last year, with Southern Europe back to growth
• Revenue decreased due to currencies and one-off stock reductions
• Japan and China saw lower shipments
• Since Q4, positive underlying results in Australia and New Zealand
• First positive effects of the changes in the distribution network in South East Asia

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Highlights regions in FY 2015/16

North America Emerging Markets

• Reported revenue up 4.6%, as a result of the strengthened US dollar
• At constant currency revenue decreased by 4.3% mainly the in-market one-off stock

reductions

• Positive underlying performance as depletions show a reversal from a mid-single-digit

decline at the beginning of the year to a slight increase towards the end of the year

• Market share of the Bols Liqueurs range increased
• Revenue was negatively impacted by one-off South Africa. Excluding this one-off a

slight increase at constant currency

• Increase mainly from Eastern Europe, as revenue in Russia increased following

continued investments

• Revenue in the African/Middle East region was stable, while revenue in Latin America

decreased

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Gross profit development by regions

46.9 (1.2) (1.6) (0.6) 0.1 (0.9) 42.7

• 6.4%
• 12.6%
• 6.9%

+ 1.7%

FY 2015/16

Foreign exchange effect Δ Emerging markets Δ North America Δ Asia- Pacific Δ Western Europe

FY 2014/15

53.5% 71.4% 64.4% 55.5%

Gross profit development at constant currency (in €m)

60.4% 58.8%

Gross margin

Gross margin development at constant currency

Total

• 70bps

Western Europe

• 120 bps

Asia Pacific +90 bps North America

• 150 bps

Emerging Markets +180 bps

26 24.2%

EBIT development by brands

EBIT development at constant currency (in €m)

20.0 2.2 (2.7) (0.3) (0.5) (1.1) 17.6

• 11.7%
• 2.9%
• 4.3%

One-off (1.1) One-off (0.3)

FY 2015/16

Foreign exchange effect Δ Regional brands

FY 2014/15

Δ Global brands 39.1% 42.5% 25.7%

EBIT margin

Δ

Unallocated

Highlights

EBIT, at constant currency and excluding one-off stock reductions and IPO impact, was 9.4% lower than the year before. Decrease as a result of:

• Drop in gross profit
• Increase in D&A expenses

following increased investments behind the global brands, particularly in the US, in H2. Stable EBIT of regional brands, excluding one-off costs. Unallocated increased mainly as a result of costs associated with the stock exchange listing and investments.

IPO costs

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Global brands

Highlights

Global brands’ reported margin development

The decline in revenue was mainly caused by

• ne-off in-market stock reductions.

White spirits showed double-digit revenue growth in the year under review. Reported Organic REPORTED (in €m) FY 2015/16 FY 2014/15 growth growth Revenue 50.4 53.9

• 6.5%
• 6.0%

Cost of Sales (18.5) (19.0) GROSS PROFIT 31.9 34.9

• 8.6%
• 6.4%

63.3% 64.8%

D&A Expenses (12.4) (12.1) 2.4% 4.0%

24.6% 22.4%

Share of profit of JV, net of tax 0.2 0.1 EBIT 19.7 22.9

• 14.2%
• 11.7%

39.1% 42.6%

64.6%

• excl. one‐off

40.9%

• excl. one‐off

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Regional brands

Regional brands’ reported margin development

Highlights

A stable EBIT, excluding one-offs and at constant currency. An increased EBIT margin of 80 bps on regional brands in FY 2015/16.

49.3%

• excl. one‐off

43.6%

• excl. one‐off

Increase in share of profit of 0.7 million, as a result Maxxium NL and India. Reported Organic REPORTED (in €m) FY 2015/16 FY 2014/15 growth growth Revenue 22.3 23.8

• 6.5%
• 5.7%

Cost of Sales (11.5) (11.8) GROSS PROFIT 10.8 12.0

• 10.1%
• 8.7%

48.4% 50.3%

D&A Expenses (2.0) (2.0)

• 0.6%

0.0%

9.0% 8.5%

Share of profit of JV, net of tax 0.7 (0.0) EBIT 9.5 9.9

• 4.5%
• 2.9%

42.5% 41.7%

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Post IPO significantly lower finance costs

REPORTED (in €m) FY 2015/16 FY 2014/15 EBIT 17.6 20.0

24.2% 25.7%

Finance costs (2.6) (17.5) PROFIT BEFORE TAX 15.0 2.4 Income tax expense (3.3) (2.2) PROFIT FOR THE PERIOD 11.7 0.2 Finance costs (in €m) FY 2015/16 FY 2014/15 Senior debt (& Mezzanine) 2.6 9.0

• Cum. preference shares

0.0 6.6 Costs related to IPO 0.0 1.9 Total 2.6 17.5

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Decrease in effective tax rate

Highlights

Effective tax rate of 21.8% Normalised tax rate of 24.0% calculated excluding two one-off effects related to: taxes in the US taxes paid on the ESA programme

REPORTED (in €m) FY 2015/16 FY 2014/15 EBIT 17.6 20.0

24.2% 25.7%

Finance costs (2.6) (17.5) PROFIT BEFORE TAX 15.0 2.4 Income tax expense (3.3) (2.2) PROFIT FOR THE PERIOD 11.7 0.2 Tax (in €m) FY 2015/16 FY 2014/15 Profit before tax 15.0 2.4

• Cum. Pref. Dividend
• 6.6

Result/ Dividend subsidiaries 0.9 0.1 15.9 9.1 Tax Expense (3.3) (2.2) Tax rate 21.8% 90.9%

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Substantially higher net profit

Highlights

Earnings per share of € 0.94 Proposed final cash dividend of € 0.23 Number of shares outstanding are 12,477,298 Total cash dividend amounts to € 0.54 Pay-out ratio of 57.5% of net profit, in line with

• ur dividend policy of a pay-out of at least 50% of

net profit

REPORTED (in €m) FY 2015/16 FY 2014/15 EBIT 17.6 20.0

24.2% 25.7%

Finance costs (2.6) (17.5) PROFIT BEFORE TAX 15.0 2.4 Income tax expense (3.3) (2.2) PROFIT FOR THE PERIOD 11.7 0.2 Earnings per share (in €) 0.94 0.02

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Balance sheet

Deferred Tax (in €m) FY 2015/16 FY 2014/15 Deferred tax assets (7.4) (9.3) Deferred tax liabilities 29.5 29.4 Total 22.2 20.0

Finance ratio's (in €m) FY 2015/16 FY 2014/15 Debt 54.3 61.8 Cash (6.5) (2.5) Bank overdrafts 3.1 1.9 Net Debt 51.0 61.2 Leverage ratio 2.8 2.6 Assets (in €m) FY 2015/16 FY 2014/15 Intangible assets 214.9 214.9 Investments in joint-ventures 5.8 5.1 Other 2.2 2.0 Non-current assets 222.9 222.1 Net Cash and cash equivalents 3.3 0.6 Net working capital 13.3 14.5 Total 239.6 237.2 Funded by: Liabilities & equity (in €m) FY 2015/16 FY 2014/15 Loans and borrowings 49.7 52.7 Deferred tax liabilities 22.2 20.0 Other 1.2 1.7 Non-current liabilities 73.1 74.4 Loans and borrowings 4.0 8.4 Derivative financial instruments 0.7 1.2 Current Liabilities 4.7 9.6 Equity 161.8 153.2 Total 239.6 237.2

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Important aspects of Lucas Bols’ currency effects

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.

USD exchange rate JPY exchange rate AUD exchange rate AUD USD JPY Impact on net profit at 1 % movement ¹

* € 000

Revenue denominated in foreign currency is 52.8% in FY 2015/16, with only a natural hedge for the USD.

1. Lucas Bols at a glance 2. Highlights 2015/16 3. Operational review 4. Financials 2015/16 5. Outlook

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Outlook

We expect a recovery in performance in the Asian Pacific region, while the Western European market will remain challenging. For the coming year we foresee no further impact from the stock reductions that took place in the financial year 2015/16. Looking ahead we maintain our positive view on the development of the global cocktail market. We believe in the strong fundamentals of the cocktail market and therefore continue to foresee medium-term growth for the global brands. We are confident about the growth prospects for the US market and Emerging Markets. Lucas Bols will gradually step up investments in the expansion of its global commercial organisation (including Lucas Bols USA) and A&P in core markets to support the growth of the global brands.

Q&A