analyst presentation annual results fy 1516 lucas... · western europe 24 brands 45 liqueur...

Analyst presentation annual results 2015/16Year ended 31 March 2016

9 June 2016

2

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 glance2. Highlights 2015/163. Operational review4. Financials 2015/165. Outlook

4

Amsterdam 1575

Lucas Bols at a glance

Over 110 countries, 53% revenue outside

Western Europe

24 brands45 liqueurflavours

Highlights

12.5%North America

20.7%

Asia-Pacific

19.5%

Western Europe

47.3%

Emerging Markets

€72.6m revenue€17.6m EBIT

% 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)

€mRevenue

€m

17.6

72.6

24%

margin

• Free operating cash flow 2)

€16.7m

• 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

7

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

9

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

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 regionsNew distribution contracts in new regions

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MEXICO

COLOMBIA

VENEZUELA

CUBA

UNITED STATES OF AMERICA

BRAZIL

BOLIVIA

PERU

ARGENTINA

CHILE PARAGUAY

URUGUAY

ECUADOR

CANADA

ALASKA(USA)

GREENLAND

RUSSIANORWAYSWEDEN

FINLAND

GERMANYUK

FRANCE

SPAINPORTUGALITALY

POLAND

GREECE TURKEY

ICELAND

MOROCCO

ALGERIA LYBIAEGYPT

BULGARIAROMANIA

MAURITANIAMALI NIGER CHAD NORTH

SUDAN

ETHIOPIA

OMAN

SAUDIARABIA

ISRAEL

NIGERIA

CAMEROON

DEMOCRAT. REP. OF THE CONGO

ANGOLA

NAMIBIA

SOUTHAFRICA

ZIMBABWE

ZAMBIA

MOZAMBIQUE

MADAGASCAR

TANZANIA

KENYAGABON

KAZAKHSTANMONGOLIA

CHINA

TURKMENISTAN

IRAN

UZBEKISTAN

INDIA

PAKISTAN

JAPAN

NEPAL

TAJIKISTAN

KYRGYSTAN

THAILAND

MALAYSIA

INDONESIA

AUSTRALIA

PHILIPPINES

NEWZEALAND

VIETNAM

SOUTHKOREA

LAOS

PANAMA SURINAMECOSTA RICA

GEORGIA

U.A.E.

SINGAPORE

BURMA

IRAQ

TOGO

GHANA

BENINCAMBODIA

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.

11

Innovations vital to strengthening brand equity

12

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

13

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).

14

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.

15

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.

16

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

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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

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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 2015/16Foreign exchange effect

Δ Regional brandsFY 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 2015/16Foreign 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%


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 brandsEBIT 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)


effect

Δ Regional brands

FY 2014/15Δ

Global brands

39.1% 42.5%25.7%

EBIT margin

ΔUnallocated

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 one-off in-market stock reductions.

White spirits showed double-digit revenue growth in the year under review.


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


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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


Increase in share of profit of 0.7 million, as a result Maxxium NL and India.


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 (in €m) FY 2015/16 FY 2014/15Senior debt (& Mezzanine) 2.6 9.0Cum. preference shares 0.0 6.6Costs related to IPO 0.0 1.9Total 2.6 17.5

30

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


EBIT 17.6 20.0 24.2% 25.7%



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%

31

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 our dividend policy of a pay-out of at least 50% of net profit


EBIT 17.6 20.0 24.2% 25.7%



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 29.4Total 22.2 20.0

Finance ratio's(in €m) FY 2015/16 FY 2014/15

Debt 54.3 61.8Cash (6.5) (2.5)Bank overdrafts 3.1 1.9Net Debt 51.0 61.2Leverage 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 rateJPY exchange rate AUD exchange rate

AUDUSDJPY

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.

35

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.

analyst presentation annual results fy 1516 lucas... · western europe 24 brands 45 liqueur...

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