Analyst presentation annual results 2014/15

Transcription

1 Analyst presentation annual results 2014/15 Year ended 31 March June 2015

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. 2

3 Management Huub van Doorne Joost de Vries CEO Led the 2006 buy-out 25 years spirits industry experience CFO Joined in the 2006 buy-out 9 years spirits industry experience 3

4 1. Lucas Bols at a glance 2. Highlights 2014/15 3. Financials 2014/15 4. Foreign exchange rate 5. Outlook

5 Lucas Bols at a glance Amsterdam 1575 Over 110 countries, 54% revenue outside Western Europe 77.7 margin Highlights North America Emerging Markets 18.5% 12.9% 45.9% Western Europe Revenue m ) 28% Operating profit m Free cash flow 2) 22.3m Cash conversion 3) 74.7% Leverage ratio brands, Bols Liqueur range 39 flavours Asia-Pacific 22.7% % of total FY 2014/15 revenue 78m revenue 22m operating profit Note 1: Excluding IPO costs Note 2: Free cash flow is defined as Operating Profit net of investing activities, taxes paid (normalised) and change in Operating Working Capital (Inventories + Trade receivables Trade payables); Note 3:Cash conversion defined as operational FCF / EBITDA; operational FCF defined as EBIT x (1 - statutory tax rate) + D&A - Operating Working Capital (Inventories + Trade receivables Trade payables) Capex 5

6 Global footprint in over 110 countries with 54% of revenue outside Western Europe with growth in Asia-Pacific and Emerging Markets Revenue in m Operating profit in m 2) Group revenue and operating profit Group revenue per geographical segment North America Western Europe Group revenue structure 1) (FY 2014/15) Emerging Markets North America 18.5% 12.9% 45.9% Western Europe Asia-Pacific 22.7% Emerging Markets Asia-Pacific Note 1: as % of total Group revenue Note 2: excluding IPO costs 6

7 Lucas Bols mission & strategic framework Mission Lucas Bols We aim to create great cocktail experiences around the world. Strategic framework Lucas Bols Build the brand equity Lead the development of the cocktail market Accelerate global brand growth Leverage operational excellence 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 7

8 1. Lucas Bols at a glance 2. Highlights 2014/15 3. Financials 2014/15 4. Foreign exchange rate 5. Outlook

9 Solid performance in FY 2014/15 1) Revenue Revenue of 77.7 million in line with last year (at constant currencies) Gross Margin % Gross margin organic increase with 60 bps to 61% Operating Profit Operating profit of 22.1 million up 7.7% organically over last year FCF Free cash flow of 22.3 million, in line with last year Net Profit Net profit for the year is 3.8 million, versus 0.2 million in FY 2013/14 Net Debt Net debt significantly reduced to 61.2 million, with leverage ratio at 2.6 YTD 2015/ /16 YTD: Revenue in line with last year with a slightly higher gross margin Note 1: Excluding IPO costs 9

10 Highlights regions in FY 2014/15 Western Europe Slow recovery in the economy - consumers looking for a quality on-trade experience leading to higher demand for cocktails and spirits such as vodka and gin. Global brands achieved double-digit growth in the Netherlands, in regional brands, market share in the Netherlands further strengthened in a still declining market. Strong performances in Scandinavia and Italy, challenging retail market conditions in the UK and Belgium. The weakening of the Japanese Yen impacted results. Asia-Pacific Organically, China and Japan achieved strong growth. Weak market performance and one-off stock reductions in South East Asia. North America The transition of the distribution of Bols Liqueurs to Lucas Bols USA was completed. Deliberate price-structure adjustment negatively impacted revenue. Second half however showed a significant improvement versus first half. Emerging Markets A vibrant cocktail culture is developing in the Emerging Markets which Lucas Bols can capitalise on. Weak Russian Rouble and political instability impacted results. Latin America and Africa achieved strong growth. 10

11 1. Lucas Bols at a glance 2. Highlights 2014/15 3. Financials 2014/15 4. Foreign exchange rate 5. Outlook

12 Corporate P&L 2014/15 Reported Organic REPORTED (* million) ¹ FY 2014/15 FY 2013/14 growth growth Revenue 77,7 78,7-1,3% -0,5% Cost of Sales (30,8) (31,1) GROSS PROFIT 46,9 47,6-1,4% 0,5% 60,4% 60,4% D&A Expenses (24,8) (26,1) 31,9% 33,1% OPERATING PROFIT 22,1 21,5 2,7% 7,7% 28,4% 27,3% Note 1: Excluding IPO costs 12

13 Revenue development global and regional brands Revenue development (in m) Gross margin 78.7 Group revenue structure (FY 2014/15) (0.2) (0.2) Regional brands (0.6) % 30.7% Global brands Group revenue structure (FY 2013/14) Regional brands 30.8% FY 2013/ % Δ Global brands Δ Regional brands 64.8% 50.3% Foreign exchange effect FY 2014/ % Global brands 69.2% 13

14 Revenue development per geographical segment Revenue development (in m) Revenue structure (FY 2014/15) 78.7 Emerging Markets 12.9% (0.8) 0.3 (0.6) 0.6 (0.6) 77.7 North America 18.5% 45.9% Western Europe Asia-Pacific 22.7% Revenue structure (FY 2013/14) Emerging Markets 12.5% FY 2013/14 Δ Western Europe Δ Asia- Pacific Δ North America Δ Emerging markets Foreign exchange effect FY 2014/15 North America 18.1% 46.2% Western Europe Asia-Pacific 232% 14

15 Gross profit development per geographical segment Gross profit development (in m) Gross margin Gross margin development at constant currencies (0.5) 0.3 Western Europe +140 bps (0.9) Asia Pacific +50 bps 46.9 North America -120 bps Emerging Markets -120 bps FY 2013/14 Δ Western Europe Δ Asia- Pacific Δ North America Δ Emerging markets Foreign exchange effect FY 2014/ % 54.4% 72.5% 56.6% 65.6% 60.4% 15

16 Operating profit development global and regional brands Operating profit development (in m) Operating margin 0.2 (0.3) Operating profit structure (FY 2014/15) 1.8 (1.1) % Regional brands 21.5 Global brands 69.6 Operating profit structure (FY 2013/14) Regional brands FY 2013/ % Δ Global brands Δ Regional brands 42.4% 41.9% Δ Overhead Foreign exchange effect FY 2014/ % Global brands 68.6% 31.4% 16

17 Ongoing margin improvement at constant rates 1) % of organic revenue Delta FY 2013/14 - FY 2014/15 Company Global Brands Regional Brands Gross Margin +60 bps +50 bps +70 bps Operating Margin +230 bps +340 bps +130 bps Drivers for strengthened operating margin Gross margin improvement in Western Europe Optimised investment in Advertising & Promotion Lowered investment in Russia due to political situation Decreased logistic costs, following new multiple year contract Note 1: Excluding IPO costs 17

18 Share of profit of JV s REPORTED (* million) ¹ FY 2014/15 FY 2013/14 Revenue 77,7 78,7 Cost of Sales (30,8) (31,1) GROSS PROFIT 46,9 47,6 60,4% 60,4% D&A Expenses (24,8) (26,1) 31,9% 33,1% OPERATING PROFIT 22,1 21,5 28,4% 27,3% Share of profit of JV, net of tax 0,1 0,5 EBIT 22,2 22,0 28,5% 28,0% Highlights 0.2 million release of employee benefits liability in Maxxium NL in FY 2013/14 Challenging market circumstances in India in FY 2014/15 Finance costs (15,7) (19,4) PROFIT BEFORE TAX 6,5 2,6 Income tax expense (2,7) (2,4) PROFIT FOR THE PERIOD 3,8 0,2 Note 1: Excluding IPO costs 18

19 Post IPO significantly lower finance costs REPORTED (* million) ¹ FY 2014/15 FY 2013/14 Revenue 77,7 78,7 Cost of Sales (30,8) (31,1) GROSS PROFIT 46,9 47,6 60,4% 60,4% D&A Expenses (24,8) (26,1) 31,9% 33,1% OPERATING PROFIT 22,1 21,5 28,4% 27,3% Share of profit of JV, net of tax 0,1 0,5 EBIT 22,2 22,0 28,5% 28,0% Finance costs (15,7) (19,4) PROFIT BEFORE TAX 6,5 2,6 Finance costs ¹ Pre IPO Post IPO Normalised (* million) Apr-Jan Feb-Mar FY 2014/15 FY 2013/14 Senior debt & Mezzanine 7,8 0,5 8,3 11,5 Cum. preference shares 6,6 0,0 6,6 7,0 Amortisation fees 0,8 0,0 0,8 0,9 Total 15,2 0,5 15,7 19,4 Annualised 18,2 3,0 Debt 184,5 61,2 61,2 184,2 Income tax expense (2,7) (2,4) PROFIT FOR THE PERIOD 3,8 0,2 Note 1: Excluding IPO costs 19

20 Income Tax Expense REPORTED (* million) ¹ FY 2014/15 FY 2013/14 Revenue 77,7 78,7 Cost of Sales (30,8) (31,1) GROSS PROFIT 46,9 47,6 60,4% 60,4% D&A Expenses (24,8) (26,1) 31,9% 33,1% OPERATING PROFIT 22,1 21,5 28,4% 27,3% Share of profit of JV, net of tax 0,1 0,5 EBIT 22,2 22,0 28,5% 28,0% Finance costs (15,7) (19,4) PROFIT BEFORE TAX 6,5 2,6 Tax ( * million) ¹ FY 2014/15 Profit before tax 6,5 Cum. Pref. Dividend 6,6 Result/ Dividend subsidiaries 0,1 13,2 Tax Expense (2,7) Tax rate 20,8% Income tax expense (2,7) (2,4) PROFIT FOR THE PERIOD 3,8 0,2 Note 1: Excluding IPO costs 20

21 IPO and refinancing had notable impact on FY 2014/15 Statutory IPO Normalised REPORTED (* million) FY 2014/15 one-offs FY 2014/15 FY 2013/14 Revenue 77,7-77,7 78,7 Cost of Sales (30,8) - (30,8) (31,1) GROSS PROFIT 46,9-46,9 47,6 60,4% 60,4% 60,4% D&A Expenses (27,0) 2,2 (24,8) (26,1) 34,8% 31,9% 33,1% OPERATING PROFIT 19,9 2,2 22,1 21,5 25,6% 28,4% 27,3% Share of profit of JV, net of tax 0,1-0,1 0,5 EBIT 20,0 2,2 22,2 22,0 25,7% 28,5% 28,0% Highlights IPO costs charged against equity 4.5 million (net of taxes) Hedge adjustment 0.8 million Amortisation of fees 1.1 million ESA and other 2.2 million Finance costs (17,5) 1,9 (15,7) (19,4) PROFIT BEFORE TAX 2,4 4,1 6,5 2,6 Income tax expense (2,2) (0,5) (2,7) (2,4) PROFIT FOR THE PERIOD 0,2 3,5 3,8 0,2 Earnings per share (in ) 0,02 0,42 0,03 21

22 Balance sheet Assets (* million) FY 2014/15 FY 2013/14 Intangible assets 214,9 214,9 Investments in joint-ventures 5,1 5,9 Other 2,0 2,3 Non-current assets 222,1 223,1 Cash and cash equivalents 0,6 3,1 Net working capital 14,5 13,1 Total 237,2 239,3 Funded by: Liabilities & equity (* million) FY 2014/15 FY 2013/14 Loans and borrowings 52,7 111,1 Other non-current fin. Liabilities - 64,8 Deferred tax liabilities 20,0 19,6 Other 1,7 1,2 Non-current liabilities 74,4 196,7 Deferred Tax (* million) FY 2014/15 FY 2013/14 Deferred tax assets (9,3) (7,4) Deferred tax liabilities 29,4 27,0 Total 20,0 19,6 Loans and borrowings 8,4 9,6 Derivative financial instruments 1,2 1,2 Current Liabilities 9,6 10,8 Equity 153,2 31,8 Total 237,2 239,3 22

23 Strong cash conversion driven by low capex, limited working capital requirements and tax holiday Normalised versus actual cash conversion 1 FY 2014/15 (in m) (5.5) 0.0 (0.2) Free Cash Flow (* million) FY 2014/15 FY 2013/14 Delta Operating profit 22,1 21,5 0,6 - Income tax paid (0,1) - (0,1) Depreciation & amortisation 0,5 0,6 (0,1) Capital expenditure (0,2) (0,5) 0,3 Δ Working capital 0,0 1,0 (0,9) Operating 2 profit (Adj. taxes) ³ ( Oper. NWC) (Capex) D&A Normalised Fiscal FCF depreciation brand value Free Cash Flow 16.9 EBITDA 22.6 Normalised cash conversion 74.7% Actual Free Cash Flow 22.3 Actual cash conversion 98.6% Actual FCF Free cash flow 22,3 22,5 (0,2) Δ Working capital (* million) FY 2014/15 FY 2013/14 Delta Inventories 7,6 7,6 0,0 Accounts receivable trade 12,9 12,1 (0,8) Accounts payable trade (8,0) (7,2) 0,8 Total 12,5 12,5 0,0 Note 1: Cash conversion defined as operational FCF / EBITDA; operational FCF defined as EBIT x (1 - statutory tax rate) + D&A - Operating Working Capital (Inventories + Trade receivables Trade payables) Capex Note 2: Operating profit is used (EBIT excluding share of profit of joint ventures, net of tax) for comparison reasons Note 3: Taxes at Dutch statutory tax rate of 25% 23

24 1. Lucas Bols at a glance 2. Highlights 2014/15 3. Financials 2014/15 4. Foreign exchange rate 5. Outlook

25 Important aspects of Lucas Bols currency effects Revenue denominated in foreign currencies is 53.9 % in FY 2014/15 Long term JPY hedge expiring 31st march 2015 USD natural hedge Impact on net profit at 1 % movement ¹ 81 * USD exchange rate JPY USD FY 2014/15 31 March 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. 25

26 1. Lucas Bols at a glance 2. Highlights 2014/15 3. Financials 2014/15 4. Foreign exchange rate 5. Outlook

27 Outlook We foresee continued stabilisation of the regional brands and growth of the global brands. The improvement in the global economies is contributing to a more positive on-premise environment and a growing cocktail culture. In particular in Asia and the Emerging Markets we see the urbanisation trend resulting in a growing on-premise market. We will continue to focus on the expansion of our brands in the US with our organisation Lucas Bols USA. While some markets will remain challenging, we are overall positive about the future developments of our brands. First dividend following IPO is anticipated after publication of the half year results 2015/16, on 18 November

28 Q&A

29 Appendix

30 Premium Super- Premium Core offering of premium and super-premium global brands... BOLS Liqueurs White spirits Italian liqueurs BOLS Genever BOLS Vodka Damrak Gin Galliano Vaccari Sambuca Group revenue structure (FY 2014/15) 39 flavours to create great tasting cocktails with Bols Liqueurs Within the portfolio, global brands are fuelling future growth Premium and Super-Premium positioning 69.3% Global brands Strategy to position Bols Liqueurs range as the number one brand for the international cocktail market Bols Liqueurs actively marketed towards the bartending community Continuously optimising the liqueurs range to create new trends in the cocktail market BOLS Genever Galliano Damrak Gin Vaccari Positioning of White spirits as essential base spirits for cocktails, thereby complementing the liqueurs range BOLS Liqueurs BOLS Vodka Marketing and positioning Italian liqueurs as an addition to the Bols cocktail platform 30

31 complemented with strong regional brands Regional brands Liqueurs Dutch Jenever portfolio Value brands Group revenue structure (FY 2014/15) 30.7% Regional brands Within the portfolio, the regional brands serve as stable cash generators Strong positions in domestic markets (i.e. in the Netherlands) Maintain competitiveness in respective markets by focusing on market share growth Strong and stable cash generation resulting from limited A&P spending and working capital requirements Selective introduction of new concepts / broadening of the portfolio Established regional brands support the growth of the global brands 31

32 Fully focused on innovation and strategic marketing to build the Lucas Bols brand equity Strategic marketing New product development House of Bols Bols Bartending Academy Bols around the World Expand liqueur range offering Award winning bottle 1 50,000 visitors p.a. 3,000 bartenders & professionals trained p.a. 3,000 participants from 76 countries Pumpkin Spice Green Tea Introduce new cocktail concepts Bols.com recipe database Appealing marketing campaign IWSR Gold Award for Yoghurt Bols Foam Bols Natural Yoghurt Innovate existing products Over 500 cocktail recipes #1 Global Genever Brand 1 Marketing efforts and A&P spending focus on growing the global brands and maintaining the established position of the regional brands New product development aims to boost the position of the global brands Business to business marketing targets both the bartender community and the distributors Note 1: Source IWSR 32

33 Flexible and asset-light business model allowing management to focus on core activities Lucas Bols business model Production set-up to increase efficiencies and ensure quality Distribution set-up to ensure route to market Product development Distillation of the heart of the products Production (blending and bottling) Sales and marketing Distribution Lucas Bols in-house Partnerships Master distiller Craft distillery Production (blending and bottling) Lucas Bols USA Distribution joint venture Direct distributors BOLS Kyndal General note: Each trade mark, trade name or service mark of any other company belongs to its holder 33

34 Industry trends support the global spirits market 5 Global cocktail scene is growing, driving spirits consumption 1 1 Growing population over age of 21 Bartenders help to develop the mixology trend at the consumer level Increasing urbanisation Growing number of on-trade outlets benefits Lucas Bols, mainly in urban Asia 5 Developing cocktail scene Supporting macroeconomic fundamentals 2 Per capita expenditure on spirits is increasing in all geographies 4 Customers are constantly looking for new drink experiences Differentiation by introduction of new flavours Close relationship with the bartender community is key for innovation Innovation 4 Premiumisation Developing ontrade consumption 3 2 During 2013, on-trade consumption accounted for approximately 29% of total spirits volume worldwide and is growing 3 Premiumisation in all geographies but Emerging Markets Emerging Markets consumers are believed to be switching from domestic to more international brands Craft beverage trend Source: Drinks International; Economist Intelligence Unit; Euromonitor; IWSR 2013; IWSR 2014; Canadean; World Bank 34