Analyst presentation H1 2016/17 - Lucas Bols

Analyst presentation H1 2016/17Half year ended 30 September 201617 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.

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1. Highlights H1 2016/172. Business review3. Financials H1 2016/174. Outlook

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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 brandsNorth 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

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Lead the development of the cocktail market

Use marketing techniques and strategic innovation to optimise the product

offering 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

of regional brands

Leverage operational excellence

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

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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

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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 & AmericanoGalliano L’Aperitivo market presence

Already launched:

Scandinavia Netherlands Germany UK Italy Israel Singapore Canada

To follow: New Zealand USA Mexico

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of regional brands









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• Increased awareness of Bols Genever in top of 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 VAT I O N 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

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• > 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 VAT I O N S B A R C O N V E N T B E R L I N 2 0 1 6

Trade fairs

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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 VAT I O N 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 O N 2 0 1 6 / 1 7

Ongoing initiative: Bols around the world

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of regional brands






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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

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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.

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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 of 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

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Passoã : Adding the Passoã brand to the portfolio

Galliano Vaccari Sambuca

BOLS Genever BOLS Vodka Damrak Gin

BOLS Liqueurs Italian liqueursWhite 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

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)

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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



Accelerate global brand growth


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P&L H1 2016/17Highlights

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

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Reported (* €m) H1 2016/17 H1 2015/16Reported growth

Organicgrowth

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 0.0EBIT 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 brandsRevenue 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

-0.539.4

H1 2015/16 Δ Foreign exchange effect

-0.1

+0.1%

H1 2016/17

39.4

Revenue (* €m)Reported

H1 2016/17Reported growth %

Organicgrowth %

Global brands 27.7 1.8% 2.2%

Regional brands 11.7 -3.8% -3.9%Total 39.4 0.1% 0.3%

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Revenue development by regionsRevenue 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 NorthAmerica

+0.1%

H1 2016/17

39.4

Δ ForeignExchange

Impact

-0.1

Δ EmergingMarkets

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

43.9%

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

21.8%

Revenue*


H1 2016/17Reported


Organicgrowth %

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%

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Revenue development by regionsRevenue development at constant currencies (in €m)

*) based on H1 2016/17 revenue

H1 2015/16

Δ EmergingMarkets

Δ ForeignExchange

Impact

-0.1

Δ NorthAmerica

0.8

+0.1%

0.539.4

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*

21.1%

13.2%


H1 2016/17Reported


Organicgrowth %

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%

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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 EmergingMarkets

Δ NorthAmerica

0.3

Δ ForeignExchange Impact

H1 2015/16

24.0

-1.00.2

0.00.4

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Total ‐50 bps

Western Europe ‐190 bpsAsia ‐ Pacific + 80 bpsNorth America ‐180 bpsEmerging Markets +200 bps

28.8%

EBIT development by brandsEBIT 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 brandsΔ Global brands

11.6

H1 2016/17H1 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-off 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)

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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


Organicgrowth

Revenue 27.7 27.2 1.8% 2.2%Cost of sales -10.0 -9.4


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 0.0EBIT 11.8 12.0 -1.1% -1.0%EBIT margin % 42.7% 44.0%

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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


Organicgrowth

Revenue 11.7 12.2 -3.8% -3.9%Cost of sales -5.6 -6.0


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 0.0EBIT 5.9 5.3 11.8% 11.5%EBIT margin % 50.6% 43.5%

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Reported (* €m) H1 2016/17 H1 2015/16

Revenue 39.4 39.4Cost of sales -15.6 -15.4

GROSS PROFIT 23.8 24.0Gross margin % 60.3% 60.8%

D&A expenses -13.4 -12.4

OPERATING PROFIT 10.3 11.6Operating profit margin % 26.2% 29.4%

Share of profit of JVs, net of tax 1.0 0.0EBIT 11.3 11.6EBIT margin % 28.8% 29.5%

Finance costs -1.3 -1.4PROFIT BEFORE TAX 10.1 10.3

Income tax expense -2.3 -2.6PROFIT 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

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Reported (* €m) H1 2016/17 H1 2015/16

Revenue 39.4 39.4Cost of sales -15.6 -15.4

GROSS PROFIT 23.8 24.0Gross margin % 60.3% 60.8%

D&A expenses -13.4 -12.4

OPERATING PROFIT 10.3 11.6Operating profit margin % 26.2% 29.4%

Share of profit of JVs, net of tax 1.0 0.0EBIT 11.3 11.6EBIT margin % 28.8% 29.5%

Finance costs -1.3 -1.4PROFIT BEFORE TAX 10.1 10.3

Income tax expense -2.3 -2.6PROFIT 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

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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

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H1 2016/17 FY 2015/16ASSETS (in €m)

Intangible assets 216.2 214.9Investments in joint ventures 7.3 5.8Other 2.3 2.2NON‐CURRENT ASSETS 225.8 222.9

Cash and cash equivalents 2.2 3.3Net working capital 16.4 13.3TOTAL 244.4 239.6

Funded byLIABILITIES & EQUITY (in €m)Loans and borrowings 47.4 49.7Deferred tax liabilities 24.2 22.2Other 1.4 1.2NON‐CURRENT LIABILITIES 73.1 73.1

Loans and borrowings 4.0 4.0Derivative financial instruments 1.1 0.7CURRENT LIABILITIES 5.1 4.7

EQUITY 166.2 161.8TOTAL 244.4 239.6

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

Deferred tax assets -5.4 -7.4Deferred tax liabilities 29.6 29.6Total 24.2 22.2

H1 2016/17 FY 2015/16Finance ratio's (in €m)

Debt 51.9 54.3Cash -2.2 -3.3Net debt 49.7 51.0Leverage ratio 2.9 2.8

Continued strong cash flows from operations funded investments and dividends

HighlightsLower 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

InvestmentsH1 2016/17 Operating free cash

flow

7.8

Δ Net cash from operating 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

• other investments: € 1.3 million for the acquisition of the brands Floryn and Legner

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

Cash flow development (in €m)

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Important aspects of Lucas Bols’ currency effects

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• Revenue denominated in foreign currency is 54.3% in H1 2016/17

• The net currency impact on H1 results is limited

JPY exchange rateUSD exchange rate

AUD exchange rate

1. Highlights H1 2016/172. Mission & strategy3. Financials H1 2016/174. Outlook

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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 our results for three to four months. This positive impact in the second half of the financial year is expected to be more orless offset by the associated one-off transaction costs.

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Q & A

Documents

Analyst presentation H1 2016/17 - Lucas Bols