joint venture operated by Lucas Bols 14 October 2016 Disclaimer - - PowerPoint PPT Presentation

14 October 2016

Lucas Bols and Rémy Cointreau create Passoã joint venture operated by Lucas Bols

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Disclaimer

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

• f Lucas Bols´s 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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Lucas Bols N.V. has reached agreement with the Rémy Cointreau Group (“Rémy Cointreau”) regarding the formation of a joint venture which will operate and further develop the global activities of the iconic Passoã brand

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Key transaction parameters

JV contribution Closing Next steps Financial impact

• Rémy Cointreau will contribute the full Passoã activities, including distribution, manufacturing, trademarks and inventory

and Lucas Bols will contribute working capital and its know-how and expertise in the liqueur and cocktail business

• The joint venture will be France based and is expected to generate revenues of around €18 million on a full year basis,

with EBIT margins in line with Lucas Bols’ global brands

• The transaction is expected to close before the end of 2016
• In due time, the joint venture could lead to the acquisition by Lucas Bols of all shares in the joint venture, for which funding

has been secured

• Lucas Bols will assume full operational and financial control over the brand
• Lucas Bols will consolidate the full financials of the joint venture into its accounts, the results will be fully attributable to the

shareholders of Lucas Bols, net of interest on debt assumed Transaction structure

• Lucas Bols shall fund the joint venture’s working capital requirements which amount to, at the establishment of the joint

venture, €5 million. The working capital commitment is funded via existing bank facilities

• The joint venture is expected to realize an increase of around 20% in the earnings per share for Lucas Bols on a full year

basis (based on the 2015/16 result)

Background Passoã

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Passoã 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 of cocktails Attractive financial performance with a strong EBIT margin and a strong cash conversion Renowned high quality brand with upside potential further enhancing the strength of Lucas Bols´ global brands portfolio Flexible, scalable and asset light business model with potential for innovation and expansion to new markets

Product impression

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Background Passoã

• Passoã is the first and original Passion Fruit liqueur, at 17% alcohol volume, in a signature black bottle
• In 1986, the Master Distiller of Cointreau brought a surprising fruit from a trip to Brazil: the maracuja (passion fruit)
• The fruit's distinctive flavours enthralled him. He took inspiration from it and created Passoã, a singular liqueur made with passion

fruit juice from Brazil

History

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Background Passoã

• Recognizable bottle with distinctive eye-catching colours
• The Brazilian inspired product design enables the bottle to stand out on the retailer’s shelves
• Passoã may be consumed on its own or combined with other drinks for cocktails and long drinks. The brand thereby adds to

Lucas Bols’ mission to create great cocktail experiences around the world

Positioning

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Passoã presence

Puerto Rico *

Background Passoã

• Passoã has experienced recent successes in the on-trade environment in various markets, including the UK
• Largest Passoã market is Western-Europe with main markets France, the Netherlands, Belgium and the United Kingdom
• Most important markets outside Western-Europe are Japan, Puerto Rico and the United States

On- and off- trade brand with global presence

Strategic rationale

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The joint venture facilitates Lucas Bols’ asset light business model 4

Strategic rationale Lucas Bols

Source: Lucas Bols, Kempen & Co analyses

Passoã fits within strategic ambition to broaden portfolio of premium and super-premium global brands 1 Passoã will increase distribution power and positioning in several core markets, and strengthen the in-house distribution platforms in the US 2 Passoã’s added value to Lucas Bols Lucas Bols can further build the Passoã brand based on the recent successes of Passoã in the on-trade environment and benefitting from the global presence of the Bols Liqueurs range and Galliano 3

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54 55 50 FY2015/16 68 FY2014/15 FY2013/14

Addition to global brands portfolio

Source: company input and reports, Kempen & Co analyses

Global brands

Italian Liqueurs White Spirits Bols Liqueurs Range Passoã Traditional Jenever Regional Liqueurs Value brands

Regional brands 25% 20% 56%

Regional brands Passoã Global brands

Pro-forma combined revenue structure (FY 2015/16)

22 24 24 FY2015/16 FY2014/15 FY2013/14 €91m 76% Revenue (€m) Revenue (€m)

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~18

13 Strong increase in revenue for the high margin global brands segment Improved market position in several large Western- European markets like France, Belgium, the UK and the Netherlands Increased exposure to Western-Europe although better balanced between countries resulting in decreased exposure to the Dutch market Increased distribution power in several core markets due to additional Passoã volume

Revenue development by brand and region

31% 69%

Regional brands Global brands

Lucas Bols stand-alone (FY 2015/16 revenue)

24% 76%

Pro-forma combined (FY 2015/16 revenue)

12% 21% 19% 47%

Emerging Markets North America Asia-Pacific Western Europe

11% 16% 17% 56% €73m €91m €73m €91m

2 Observations

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Building the Passoã brand

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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 of 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

15 Passoã can benefit from Lucas Bols’ expertise, knowledge, and innovation track record in the liqueurs market while the joint venture structure secures the existing knowhow and experience built by the Rémy Cointreau organization 2

Lucas Bols business model

Product development Distillation of the heart of the products Production (blending and bottling) Sales and marketing Distribution 1 2 3 5 4

Lucas Bols will further develop the Passoã brand through close collaboration with the bartender network 1 Production will remain at Rémy Cointreau’s production facilities in Angers 3 The joint venture will require a limited increase in overhead mainly related to additional marketing & sales staff 4 Passoã’s existing distribution network has significant overlap with Lucas Bols’ current network Direct transfer of US distribution activities to Lucas Bols USA 5

Lucas Bols in-house Partnerships

Joint venture facilitates Lucas Bols’ asset light business model

Combination in-house and partnerships

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Deal structure

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• Lucas Bols will assume full operational control and will perform day to day management of the joint venture and

run the Passoã brand in the ordinary course of business Operational control Taxes

• Taxable income from Passoã, generated in the French entity, will be subject to 35% French corporate income

tax (assumed that accrual of interest will not be tax-deductible)

Deal characteristics

• Lucas Bols will consolidate the full financials of the joint venture into its accounts and the results will be fully

attributable to the shareholders of Lucas Bols, net of interest on debt assumed Consolidation Next steps

• In due time, the joint venture could lead to the acquisition by Lucas Bols of all shares in the joint venture

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Source: press release Lucas Bols, Annual report Lucas Bols

• Addition of Passoã revenue

“the joint-venture is expected to generate revenues of around €18 million on a full year basis” “the joint venture is expected to add around 20% earnings per share for Lucas Bols on a full year basis”

• All net profit fully attributable to Lucas Bols

shareholders

Deal characteristics – Indicative Profit & Loss impact

“with margins in line with Lucas Bols’ global brand EBIT margins”

• ~40% EBIT margin for the Lucas Bols’ global

brands after absorption of all Lucas Bols costs

“the joint venture, which will be based in France”

• French corporate tax rate 35%

Indicative profit & loss impact based on 2015/16 figures

Indicative

“net of interest on debt assumed”

• Accrued interest (non-cash) from deferred payment

at holding level at ~3% (not tax-deductible)

• Interest from working capital investment

€72.6m €11.7m €17.6m €(3.3)m €(2.6)m ~€18m ~€2m ~€7m ~€(2)m ~€(2)m ~€91m ~€14m ~€25m ~€(5)m

Pro- forma

~€(5)m Revenue Net profit EBIT Tax Interest

2015/16

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* Final balance sheet impact subject to PPA process finalization Source: press release Lucas Bols, Annual report Lucas Bols DISCLAIMER THIS PRESENTATION may contain forward looking statements. These statements are based on current expectations, estimates and projections of Lucas Bols´s 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.

“Lucas Bols shall fund the joint venture’s working capital requirements which are, at the establishment of the joint venture, equal to an amount of €5 million”

Deal characteristics – Indicative Balance sheet impact

Indicative Balance Sheet impact based on 2015/16 figures

Indicative

Working capital investment at closing “In due time, the joint venture could lead to the acquisition by Lucas Bols of all shares in the joint venture” Acquisition in due time Working capital Interest bearing debt

Assets* Liabilities*

Intangible fixed asset + Goodwill Deferred payment at NPV + Deferred tax liability General Full consolidation of financials of the joint venture into its accounts of Lucas Bols