Analyst presentation H1 2016/17 Half year ended 30 September 2016 - - PowerPoint PPT Presentation

Analyst presentation H1 2016/17

Half year ended 30 September 2016 17 November 2016

Disclaimer

DISCLAIMER THIS PRESENTATION may contain forward looking statements. These statements are based on current expectations, estimates and projections of Lucas Bols’ 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.

2

1. Highlights H1 2016/17 2. Business review 3. Financials H1 2016/17 4. Outlook

3

Highlights H1 2016/17

Revenue D&A Net Profit and EPS Dividend Cooymans EBIT Revenue of € 39.4 million, in line with last year, driven by 2.2% organic growth in the global brands North America and Emerging markets reported strong revenue growth, Asia-Pacific showed recovery, while Western Europe remains challenging Increased investments in commercial organisation and A&P largely funded by higher EBIT of the regional brands, including one-off gain on Cooymans acquisition Net profit of € 7.8 million, up 1.7% at constant currency; earnings per share of € 0.62 The interim dividend in cash set at € 0.31 per share EBIT of € 11.3 million, down 2.4% at constant currency Dutch genever brands Floryn and Legner were acquired as part of the takeover of the Cooymans distillery by the Avandis joint venture Passoa Agreement with Rémy Cointreau on Passoã joint venture announced on October 14th

4

1. Highlights H1 2016/17 2. Business review 3. Financials H1 2016/17 4. Outlook

5

Lead the development of the cocktail market

Use marketing techniques and strategic innovation to optimise the product

• ffering and positioning

Accelerate growth global brands

Tailor growth strategies for the brands to the markets within our four geographic segments

Lucas Bols: Four strategic pillars

Build the brand equity

Increase market position of the global brands and maintain the competitiveness

• f regional brands

Leverage operational excellence

Maintain and optimise current business model with a mix of in-house and outsourced activities

6

Key initiatives global brands in H1 2016/17

Bols Liqueurs

• New flavor introductions of Bols Liqueurs in Japan, Switzerland, Portugal and USA

White spirits

• Bols Genever launched in Scandinavia, South-Korea and Italy
• Bols Genever masterclasses in Belgium, Israel, South-Korea, China and the USA
• Damrak Gin expansion in Canada and introduction in Italy
• Introduction of Bols Vodka in China, Thailand and Vietnam

Route to market

• First shipments of global brands to new markets like Philippines, Ethiopia and Kenia

Galliano

• Expansion of Galliano brand portfolio in China, Italy, Poland, Scandinavia and the

Netherlands

• Development of new global brand booklet for Galliano focusing on the classic

L’Authentico, L’Aperitivo and Amaretto & Ristretto

7

Launch of Galliano L’Aperitivo

• Galliano L’Aperitivo is a well balanced bitter, or in

Italian ‘Amaro’.

• The recipe includes many extracts and infusions of

Mediterranean citruses such as chinotto, bergamots & grapefruits.

• The L’Aperitivo recipe includes a subtle addition of

the heart of Galliano L’Autentico.  The taste: fresh Mediterranean citrus notes combined with subtle herbal notes  Key serve: Galliano Tonic & Americano

Galliano L’Aperitivo market presence

Already launched:  Scandinavia  Netherlands  Germany  UK  Italy  Israel  Singapore  Canada To follow:  New Zealand  USA  Mexico 8

Build the brand equity

Increase market position of the global brands and maintain the competitiveness

• f regional brands

Accelerate growth global brands

Tailor growth strategies for the brands to the markets within our four geographic segments

Lucas Bols: Four strategic pillars

Leverage operational excellence

Maintain and optimise current business model with a mix of in-house and outsourced activities

Lead the development of the cocktail market

Use marketing techniques and strategic innovation to optimise the product

• ffering and positioning

9

• Increased awareness of Bols Genever in top
• f global cocktail bars.
• 500 visitors, only on invitation  all important

bar owners & bartenders from around the world.

• Bols Genever present as only Genever brand

with bar, logo’s, advertising & goodie bags.

• Acceptance & renewed awareness of the

Bols Genever brand within key target group.

• Expansion of Bols Genever distribution in top

cocktail outlets.

A C T I VATION S  W O R L D 5 0 B E S T B A R AWA R D S 2 0 1 6

World 50 best bar awards London

10

• > 10.000 visitors from the global bar

scene.

• Bols Genever present with ‘hidden

speak easy bar’ within Bols stand.

• Serving ‘Kopstootjes’ with Bols

Genever Barrel Aged and applications for Bols Around the World competition.

A C T I VATION S  B A R C O N V E N T B E R L I N 2 0 1 6

Trade fairs

11

H

• BATW is a bartender competition for

bartenders that aims to grow bartenders careers, as well as their passion for bartending.

• BATW increases bartender’s knowledge

by providing education and inspiration, showcasing their talent and growing their international network.

• Start 31st of Oct 2016; Finals 8,9,10

May 2017

• > 2.000 participants from all over the

world

A C T I VATION S  B O L S A R O U N D T H E W O R L D – G E N E V E R E D I T I ON 2 0 1 6 / 1 7

Ongoing initiative: Bols around the world

12

Accelerate growth global brands

Tailor growth strategies for the brands to the markets within our four geographic segments

Lucas Bols: Four strategic pillars

Build the brand equity

Increase market position of the global brands and maintain the competitiveness

• f regional brands

Leverage operational excellence

Maintain and optimise current business model with a mix of in-house and outsourced activities

Lead the development of the cocktail market

Use marketing techniques and strategic innovation to optimise the product

• ffering and positioning

13

Investments in Cooymans and Passoã are a perfect fit in Lucas Bols’ strategy

The acquisition of Cooymans by Avandis and the acquisition of the Floryn and Legner brands by Lucas Bols further strengthen the domestic spirits market share Passoã joint venture fits within the strategic ambition to broaden portfolio of premium and super-premium global brands and facilitates Lucas Bols’ asset light business model

14

Cooymans transaction; Lucas Bols acquires genever brands Floryn and Legner

Lucas Bols has acquired the genever brands Floryn and Legner and the small brand Leyden Gin, thereby further strengthening its leading position in the genever market. As of September 2016, sales of Floryn and Legner to our distributor Maxxium in the Netherlands are included in Lucas Bols’ results. Avandis, the blending and bottling joint venture, has, on 26 July 2016, acquired the activities of Distillery Cooymans and the wine activities of Delcave/NCK in Oosterhout, both were part of the Dirkzwager Groep. With this acquisition Avandis strengthens its market position, serving the clients even better with this new combination of know-how and production facilities.

15

Passoã: Brand overview

Passoã is the original Passion Fruit liqueur with a bright pink colour in a signature black bottle Passoã has a strong position in the Western-European off- trade segment and is an important ingredient for a wide range

• f cocktails

Attractive financial performance with a strong EBIT margin and a strong cash conversion Passoã is a high quality, well-known consumer brand, with a global footprint Product impression

16

Passoã : Adding the Passoã brand to the portfolio

Galliano Vaccari Sambuca BOLS Genever BOLS Vodka Damrak Gin

BOLS Liqueurs Italian liqueurs White spirits Passoã

Lucas Bols can further build the Passoã brand based on the recent successes of Passoã in the on-trade environment in various markets like the UK As Passoã is currently sold in over 40 countries, there are opportunities for distribution expansion into new markets, building on the global presence

• f the Bols Liqueurs range and Galliano

Passoã can benefit from the positioning of Bols Liqueurs as the number one brand for the international cocktail market and from Lucas Bols active marketing towards the bartending community The Passoã activities will add significant value to Lucas Bols shareholders with an expected increase of earnings per share by around 20% on a full year basis (based on 2015/16 earnings per share) 17 Passoã will increase Lucas Bols' distribution power and positioning in several core markets, and strengthen the in-house distribution platform in the US

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

18

1. Highlights H1 2016/17 2. Business review 3. Financials H1 2016/17 4. Outlook

19

P&L H1 2016/17

Highlights

Revenue performance in line with last year Gross profit performance is influenced by changes in the regional mix D&A expenses increase reflects the continuous investments in the commercial organization and in A&P spend Share in income of JVs includes one-off gain of € 0.7 million, related to the badwill recognized upon acquisition of distillery Cooymans by Avandis

20

Reported (* €m) H1 2016/17 H1 2015/16 Reported growth Organic growth Revenue 39.4 39.4 0.1% 0.3% Cost of sales

• 15.6
• 15.4

1.4% 1.6% GROSS PROFIT 23.8 24.0

• 0.7%
• 0.6%

Gross margin % 60.3% 60.8%

D&A expenses

• 13.4
• 12.4

8.7% 8.9% OPERATING PROFIT 10.3 11.6

• 10.8%
• 10.7%

Operating profit margin % 26.2% 29.4%

Share of profit of JVs, net of tax 1.0 0.0 EBIT 11.3 11.6

• 2.5%
• 2.4%

EBIT margin % 28.8% 29.5%

Finance costs

• 1.3
• 1.4
• 7.0%
• 7.0%

PROFIT BEFORE TAX 10.1 10.3

• 1.9%
• 1.9%

Income tax expense

• 2.3
• 2.6
• 12.2%
• 12.2%

PROFIT FOR THE PERIOD 7.8 7.7 1.6% 1.7%

60.3%

Revenue development by brands

Revenue development at constant currencies (in €m)

63.8% 52.1% 60.8%

Gross margin

Group revenue structure (H1 2016/17)

Global brands 29.7% 70.3% Regional brands Δ Global brands 0.6 Δ Regional brands

• 0.5

39.4 H1 2015/16 Δ Foreign exchange effect

• 0.1

+0.1% H1 2016/17 39.4

Revenue (* €m) Reported H1 2016/17 Reported growth % Organic growth % Global brands 27.7 1.8% 2.2% Regional brands 11.7

• 3.8%
• 3.9%

Total 39.4 0.1% 0.3%

21

Revenue development by regions

Revenue development at constant currencies (in €m)

*) based on H1 2016/17 revenue

• 1.3

H1 2015/16 Δ Asia - Pacific Δ Western Europe 39.4 0.8 0.1 Δ North America +0.1% H1 2016/17 39.4 Δ Foreign Exchange Impact

• 0.1

Δ Emerging Markets 0.5

• Lower revenue global brands, attributable to Belgium

(following significant excise increase) and the German/Scandinavian border, where we let go of a number of retail contracts.

• Double digit growth of the global brands in the Dutch

market, on the back of strong market share gains with Damrak Gin and Bols Vodka

• Dutch market share of domestic spirits increased,

acquisition of Floryn and Legner will further strengthen that position

• Good performance in Spain, Ireland and Austria

4 3 .9 %

Western Europe

Revenue*

• Clear recovery of shipments to Australia and New Zealand
• Shipments to South East Asia also increased, continuation

first positive results from changes in distribution network

• In Japan shipments were lower vs last year when we had

high shipments in anticipation of the price increase Asia-Pacific

2 1 .8 % Revenue*

Revenue (* €m) Reported H1 2016/17 Reported H1 2015/16 Reported growth % Organic growth % Western Europe 17.3 18.7

• 7.7%
• 6.9%

Asia - Pacific 8.6 8.1 5.7% 1.5% North America 8.3 7.6 10.0% 10.7% Emerging Markets 5.2 5.0 5.4% 9.2% Total 39.4 39.4 0.1% 0.3%

22

Revenue development by regions

Revenue development at constant currencies (in €m)

*) based on H1 2016/17 revenue H1 2015/16 Δ Emerging Markets Δ Foreign Exchange Impact

• 0.1

Δ North America 0.8 +0.1% 0.5 39.4 Δ Western Europe 39.4 H1 2016/17 0.1

• 1.3

Δ Asia - Pacific

• Growth in all brands in the US drove strong shipments
• Bols Liqueurs continues to grow in depletions following

more listings in national accounts and further expansion in listings in control states; other global brands performed well

• The US continues to show a healthy mid-single digit growth

in depletions

• Canada had a solid, stable half year

North America

Revenue*

• Russian and Polish markets achieved continued strong

growth, reflecting our continued investments.

• Lower revenue in Central America following intentional

decrease in shipments to some customers

• In Africa revenue rose significantly; progress was made in

Southern Africa after change in distributor Emerging Markets

Revenue* 2 1 .1 %

1 3 .2 % Revenue (* €m) Reported H1 2016/17 Reported H1 2015/16 Reported growth % Organic growth % Western Europe 17.3 18.7

• 7.7%
• 6.9%

Asia - Pacific 8.6 8.1 5.7% 1.5% North America 8.3 7.6 10.0% 10.7% Emerging Markets 5.2 5.0 5.4% 9.2% Total 39.4 39.4 0.1% 0.3%

23

Gross profit development by regions

53.0% 73.8% 68.0% 56.9%

Gross profit development at constant currencies (in €m)

60.8% 60.3%

Gross margin

Gross margin development at constant currencies

• 0.7%

H1 2016/17 23.8 Δ Western Europe Δ Asia - Pacific Δ Emerging Markets Δ North America 0.3 Δ Foreign Exchange Impact H1 2015/16 24.0

• 1.0

0.2 0.0 0.4

24

Total ‐50 bps Western Europe ‐190 bps Asia ‐ Pacific + 80 bps North America ‐180 bps Emerging Markets +200 bps

28.8%

EBIT development by brands

EBIT development at constant currencies (in €m)

42.7% 50.6% 29.5%

EBIT margin

30.6% 69.4% 0.0

• 0.1

11.3 0.6

• 0.8

Δ Regional brands Δ Global brands 11.6 H1 2016/17 H1 2015/16 Δ Foreign exchange effect

• 2.5%

Unallocated

Highlights

EBIT at constant currency is 2.4% lower than last year’s Net result includes the one-

• ff badwill impact of

+ € 0.7 million Increase in D&A expenses following increased investments in the commercial organization and A&P spend Stable EBIT of regional brands, excluding one-off positive impact

One-off (+0.2) One-off (+0.5)

25

Global brands

Highlights

White spirits segment (Bols Vodka, Bols Genever and Damrak Gin) continued its double digit revenue growth The Italian liqueurs showed a strong revenue development, on the back of recovery of shipments to Australia Bols Liqueurs was slightly down, mainly on lower shipments to South America Slightly lower gross margin mainly as a result of changes in the regional mix in the first half of the year

Reported (* €m) H1 2016/17 H1 2015/16 Reported growth Organic growth Revenue 27.7 27.2 1.8% 2.2% Cost of sales

• 10.0
• 9.4

GROSS PROFIT 17.7 17.8

• 0.5%
• 0.2%

Gross margin % 63.8% 65.3%

D&A expenses

• 6.2
• 5.8

6.1% 6.7%

% of revenues

• 22.2%
• 21.3%

OPERATING PROFIT 11.5 12.0

• 3.6%
• 3.5%

Operating margin % 41.6% 44.0%

Share of profit of JVs, net of tax

0.3 0.0 EBIT 11.8 12.0

• 1.1%
• 1.0%

EBIT margin % 42.7% 44.0%

26

Regional brands

Highlights

Excluding the one-off gain and at constant currencies, the regional brands reported a stable EBIT compared to last year Increased our markets share of domestic spirits in the Netherlands, market position to be further strengthened with the acquisition of Legner and Floryn In Africa revenue rose significantly compared to a year earlier Higher gross margin mainly as a result of changes in the regional mix, with higher sales in Africa

Reported (* €m) H1 2016/17 H1 2015/16 Reported growth Organic growth Revenue 11.7 12.2

• 3.8%
• 3.9%

Cost of sales

• 5.6
• 6.0

GROSS PROFIT 6.1 6.2

• 1.5%
• 1.8%

Gross margin % 52.1% 50.9%

D&A expenses

• 0.9
• 0.9
• 5.7%
• 6.5%

% of revenues

• 7.5%
• 7.6%

OPERATING PROFIT 5.2 5.3

• 0.7%
• 1.0%

Operating margin % 44.6% 43.2%

Share of profit of JVs, net of tax

0.7 0.0 EBIT 5.9 5.3 11.8% 11.5%

EBIT margin % 50.6% 43.5%

27

Reported (* €m) H1 2016/17 H1 2015/16 Revenue 39.4 39.4 Cost of sales

• 15.6
• 15.4

GROSS PROFIT 23.8 24.0

Gross margin % 60.3% 60.8%

D&A expenses

• 13.4
• 12.4

OPERATING PROFIT 10.3 11.6

Operating profit margin % 26.2% 29.4%

Share of profit of JVs, net of tax 1.0 0.0 EBIT 11.3 11.6

EBIT margin % 28.8% 29.5%

Finance costs

• 1.3
• 1.4

PROFIT BEFORE TAX 10.1 10.3 Income tax expense

• 2.3
• 2.6

PROFIT FOR THE PERIOD 7.8 7.7

Effective tax rate

Highlights

Effective tax rate of 22.9% (vs. last year's 25.6%) Effective tax rate is lower than nominal tax rate, as a result of the effect of share of profit of joint ventures, which is included net of tax

28

Reported (* €m) H1 2016/17 H1 2015/16 Revenue 39.4 39.4 Cost of sales

• 15.6
• 15.4

GROSS PROFIT 23.8 24.0

Gross margin % 60.3% 60.8%

D&A expenses

• 13.4
• 12.4

OPERATING PROFIT 10.3 11.6

Operating profit margin % 26.2% 29.4%

Share of profit of JVs, net of tax 1.0 0.0 EBIT 11.3 11.6

EBIT margin % 28.8% 29.5%

Finance costs

• 1.3
• 1.4

PROFIT BEFORE TAX 10.1 10.3 Income tax expense

• 2.3
• 2.6

PROFIT FOR THE PERIOD 7.8 7.7

Net profit

Highlights

Earnings per share of € 0.62 Interim cash dividend of € 0.31 per share Number of shares outstanding are 12,477,298

29

Balance sheet

Net working capital in line with H1 2015/16

Highlights

Investments in joint ventures increased mainly due to € 0.7million badwill on Cooymans transaction and € 0.5 million contribution to

• Avandis. Also included is a capital contribution of € 0.4 million to

BolsKyndal India Traditional higher working capital in first half year

30

H1 2016/17 FY 2015/16 ASSETS (in €m) Intangible assets 216.2 214.9 Investments in joint ventures 7.3 5.8 Other 2.3 2.2 NON‐CURRENT ASSETS 225.8 222.9 Cash and cash equivalents 2.2 3.3 Net working capital 16.4 13.3 TOTAL 244.4 239.6 Funded by LIABILITIES & EQUITY (in €m) Loans and borrowings 47.4 49.7 Deferred tax liabilities 24.2 22.2 Other 1.4 1.2 NON‐CURRENT LIABILITIES 73.1 73.1 Loans and borrowings 4.0 4.0 Derivative financial instruments 1.1 0.7 CURRENT LIABILITIES 5.1 4.7 EQUITY 166.2 161.8 TOTAL 244.4 239.6

H1 2016/17 FY 2015/16 Deferred Tax (in €m) Deferred tax assets

• 5.4
• 7.4

Deferred tax liabilities 29.6 29.6 Total 24.2 22.2 H1 2016/17 FY 2015/16 Finance ratio's (in €m) Debt 51.9 54.3 Cash

• 2.2
• 3.3

Net debt 49.7 51.0 Leverage ratio 2.9 2.8

Continued strong cash flows from operations funded investments and dividends

Highlights

Lower operating free cash flow despite EBIT in line with last year as the one-off gain related to Cooymans transaction is for now a non-cash item

Interest paid

• 1.1

Dividends

• 2.9
• 1.3

8.8

• 2.4

Investments H1 2016/17 Operating free cash flow 7.8 Δ Net cash from

• perating

activities

• 1.0

H1 2015/16 Operating free cash flow Net debt reduction

Investments represent:

• additions to joint ventures: € 0.5 million to Avandis

(related to the acquisition of Cooymans distilleries) and € 0.4 million contribution to BolsKyndal India

• ther investments: € 1.3 million for the acquisition
• f the brands Floryn and Legner

Dividends paid to shareholders of € 2.9 million (last year: 0)

Cash flow development (in €m) 31

Important aspects of Lucas Bols’ currency effects

32

• Revenue denominated in foreign currency is 54.3% in H1 2016/17
• The net currency impact on H1 results is limited

JPY exchange rate USD exchange rate AUD exchange rate

1. Highlights H1 2016/17 2. Mission & strategy 3. Financials H1 2016/17 4. Outlook

33

Outlook

• We have seen recovery in the Asia - Pacific region and expect this trend to continue
• We foresee continued challenging market circumstances in a number of Western European markets
• We remain confident about the growth prospects for the US market and Emerging Markets

The contribution of the acquired Dutch genever brands will have a positive impact on the results for the full year 2016/17, including the one-off gain on the Cooymans acquisition We will continue to gradually step up investments in the expansion of our global commercial organization and Advertising & Promotion in core markets to support the growth of the global brands We maintain our positive mid-term view of growth of the global brands and continued stabilisation of the regional brands The Passoã joint venture is expected to be established before the end of the calendar year and will therefore contribute to

• ur results for three to four months. This positive impact in the second half of the financial year is expected to be more or

less offset by the associated one-off transaction costs.

34

Q & A