B&S S A : Investor presentation FY 2019

FY 2019 Investor Presentation | February 2020

Our sustainable growth model

Key elements defining our model

1Trusted and reliable partner with a clear value proposition

2Leading positions in attractive channels and specialised markets

3Entrepreneurial segments powered by our centralised Group platform

4Track record of strong and consistent profitable growth

5Focused on organic growth complemented with strategic M&A

3

Value proposition

	Differentiated
	sourcing	Supply chain
		excellence
Linking suppliers			Delivering FMCG to the
and customers that are			right place,
difficult to connect			at the right time
	Fully bonded	Regulatory
	supply chain
	expertise

Highly efficient

logistical platform

4

Three business segments with diversified activities

Distribution of bonded liquors	Specialty distribution of	Specialty retail at high traffic
and health & beauty products	FMCG products to maritime	airports and remote locations
to specialty retailers and	and remote markets
online end-customers
TURNOVER 2019	TURNOVER 2019	TURNOVER 2019
€ 1,408.2 m	€ 497.8 m	€ 140.0 m
69%	24%	7%
of Group turnover	of Group turnover	of Group turnover

Health & Beauty

Liquors

	46%	42%	12%	69%	31%
65%	35%	of Segment turnover		of Segment turnover
of Segment turnover	of Segment turnover

5

Serving four fragmented key markets worldwide

Retail B2B	Remote	Maritime	Retail B2C
Empowering	Partner in remote	Serving complex	Experienced
wholesalers and	distribution	end-markets	in specialty retail
retailers

Value for money	Caterers at remote	Ship suppliers and	End-customers
retailers, secondary	industrial sites,	cruise lines	in (travel) retail outlets
channels and	peacekeeping missions,		and on e-commerce
e-commerce platforms,	government and		platforms
underserved and	defence operations
duty-free markets

6

All powered by a centralised backbone

IT	Distribution		Legal &		HR			Finance &		Safety &
Compliance				Control		Security

7

Selected niches exposed to attractive long term trends

Our markets & channels

Channel trends

E-commerce

Value retail

Travel

Market trends

Globalisation

Digitisation

Selected distribution

Market disruption

Increasing compliance standards

8

Resulting in organic turnover growth complemented with selective M&A

(in million €)

acquisitive

organic

Discontinuation of non-premium-brand perfumes

Topbrands

103

65

Capi

Rdam /

Weeze

Lagaay

FragranceNet.com

Alcodis148

114

UCVF

38

9

58

1,152

1,338 1,274 1,404

1,831

1,632

573

816845

677

964

2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019
			Dutch GAAP						IFRS

9

Selective M&A to expand our role in the value chain

markets

geographies

products

Travel	Value
retail	Retail
B2C	B2B

EU

Middle

East

expansion

Personal

care

E-

commerce

B2C

USA

Pharma ceuticals

2012

2015

2017

2018

2019

10

Disciplined execution of our M&A strategy

2018

2019	2020 & beyond

FragrancetNet.com

Expanding our footprint to the US, our role in the value chain and further growth in Health & Beauty

Lagaay Group

Adding to our single source supply offering to maritime and remote operations

Airport shops Weeze & Rotterdam

Adding to our position in regional airport retail within the EU

• Further build our position in the value chain
• Targeted companies that match our business model and entrepreneurial culture
• With potential for further organic growth

11

FY 2019 Results

Performance highlights FY 2019

Unfavourable developments Asian markets

• Trade war and Hong Kong protests had an effect on demand for luxury products in Asia in 2019
• Effect of these market circumstances became evident for the Group from Q3 onwards
• Advancing beyond the level we anticipated in the latter part of Q4
• Gross profit for the year in both our Liquor category in Asia and our fast-moving consumer goods activities in the B&S Segment were impacted

Growth in Health & Beauty		Strong
category		cash flow

▪ Identified business opportunities in	▪ As a result of focus on maintaining
B2B distribution to value retail and	volumes in Asia and continuous
e-commerce	focus on working capital
▪ Reorganisation and expansion
robotised infrastructure and
automated processes for organic
growth & roll out B2C model to EU
▪ Steps taken in roll out B2B model
to US
▪ Resulting in 28.2% growth (11.3%
organic) in this category

13

FY 2019 - Highlights

Overall turnover growth	▪ Overall: 13.3% to € 1,978.8 M
▪	Organic: 4.9%
	EBITDA	▪ EBITDA of € 114.6 M
	▪	Pre IFRS 16 EBITDA came in at € 104.6 M (2018: € 109.0 M)
Business segment	▪	All business segments contributed to turnover growth individually
contribution	▪	HTG +17.7% | B&S +11.7% | Retail +2.5%
		▪ Net cash from operations of € 114.7 M (2018: € 3.5 M)
Cash flow	▪	Inventory in days: 80 (2018: 92)
		▪ Debtors in days: 37 (2018: 43)
		▪ FragranceNet contributed to HTG segment (9 months)
M&A	▪	Lagaay contributed to B&S segment (5 months)

▪ Airport shops Rotterdam & Weeze contributed to Retail segment (7 months)

14

Business segment performance FY 2019

• Good performance in Health & Beauty from value retail and e-commerce markets in EU and USA
• Performance in Liquor Asia affected by ongoing margin pressure; partly offset by performance of Liquor Europe that was in line with expectations

• Performance improvements after Q2 did not advance due to developments in Asian markets; anticipated growth did not materialise
• Staff costs in this segment reflect the anticipated further volume growth, resulting in material EBITDA decline

• Performance Airport Electronics as expected
• Contribution of Rotterdam & Weeze airport

15

Key figures FY 2019

€ million (unless stated otherwise)	FY 2019		FY 2019 Pre	FY 2018		(%)
	reported		IFRS 16	reported		reported
Profit or loss account
Turnover	1,978.8		1,978.8	1,746.5		13.3%
Gross profit (margin)	271.9	13.7%	271.9	242.3	13.9%	12.2%
EBITDA (margin)	114.6	5.8%	104.6	109.0	6.2%	5.1%
Depreciation & amortisation	26.6		16.9	10.7		148.6%
Profit before tax	77.5		78.2	90.8		(14.7%)
Net profit	60.3		60.8	71.4		(15.5%)
EPS (in euro)	0.56			0.72		(22.2%)

• Turnover grew 13.3%
• Gross profit grew 12.2%, margin slightly decreased to 13.7%
• Acquisitions contributed positively to gross profit margin, offset by developments in Asian markets
• Increase in personnel costs primarily related to the full year consolidation of FragranceNet.com and the increase in staff costs in the B&S Segment

16

HTG Key figures - category breakdown

Liquors

€ million	FY 2019		FY 2018
Turnover	497.3		483.5
Gross profit	30.1	6.1%	42.1	8.7%
EBITDA	12.6		24.7
EBITDA Margin	2.5%		5.1%

Health &

Beauty

€ million	FY 2019		FY 2018
Turnover	914.2		713.1
Gross profit	143.3	15.7%	104.7	14.7%
EBITDA	76.5		56.4
EBITDA Margin	8.4%		7.9%

Change

2.9%

-28.5%

-48.9%

-2.6%

Change

28.2%

36.9%

35.6%

0.5%

Liquors

• Impact of the USA - China trade war and turmoil in Hong Kong on our Liquor category became evident in Q3 and amplified in Q4.
• Our Liquor category in Europe realised growth in line with expectations.

Health & Beauty

• Increased focus and demand from the value retail in Europe and Health & Beauty markets in Europe, Asia and USA.

17

B&S key figures - FY 2019

FY

€ million	FY 2019		FY 2018		Change
Turnover	497.8		445.6		11.7%
Gross profit	60.5	12.2%	59.3	13.3%	1.9%
EBITDA	19.3		21.4		-9.8%
EBITDA margin	3.9%		4.8%		-0.9%
EBITDA pre IFRS	13.9		21.4		-35.0%
16
EBITDA margin pre	2.8%		4.8%		-2.0%
IFRS 16

• 11.7% turnover growth for FY
  2019
• Focus on serving volume contracts resulted turnover growth for the B&S Segment;
• Gross profit margin amounted to 12.1% (FY 2018: 13.3%)
• EBITDA margin decreased to 3.9%. Mainly as the result of declining gross margin and increased staff cost.

18

Retail key figures - FY 2019

FY

€ million	FY 2019	FY 2018		Change
Turnover	140.0	136.6		2.5%
Gross profit	35.9 25.6%	34.7	25.4%	3.7%
EBITDA	9.5	10.6		-10.1%
EBITDA margin	6.8%	7.8%		-1.0%

• Turnover increase of 2.5% to €
  140 M with an increased gross profit to € 35.9 M following acquired Airport shops and new shop openings
• EBITDA and EBITDA margin were impacted by staff costs and operating expenses related to the new shop openings.

19

Overall turnover growth analysis FY 2019

• The HTG and B&S segment are the main contributor to organic turnover growth;
• The inclusion of the acquisitions of FragranceNet.com, Lagaay Medical Group and airport retail Rotterdam and Weeze contributed € 148.4 M
• The development of the EUR/USD exchange rate had an effect of € 27.1 M on turnover

20

Financial position

€ million (unless stated otherwise)	FY 2019	FY 2018
Financial position
Solvency ratio*	34.6%	34.3%
Net debt *	296.0	312.7
Net debt / EBITDA *	2.8	2.9
Inventory in days	80	92
Working capital in days	95	113

• Net debt stood at € 296.0 M (FY 2018: € 312.7). Net debt post IFRS 16 stood at € 367.4
  M.
• Net debt / EBITDA stood at 2.8 (FY 2018: 2.9). Post IFRS 16, net debt / EBITDA stood at 3.2

Notes

* Excluding IFRS 16 lease liability.

21

Net debt development FY 2019

22

Working capital development

• million (unless stated otherwise)

Inventory

(days)

Trade receivables

(days)

Trade payables

Working capital

(days)

20192018

375.6377.9

(80)(92)

201.3205.7

(37)(43)

104.690.8

472.2	492.8
(95)	(113)

• Working capital reduction program initiated in the second part of 2019 resulted in decline of working capital and improvements of working capital in days to 95 from 113
• Net cash from operations increased from € 3.5 M in
  2018 to € 114.7 M in 2019

23

Outlook

Outlook for 2020

Growth in Health & Beauty

• Positive on overall growth opportunities specifically in EU and
  USA
• Performance levels in this category expected to increase
• Growth foreseen from geographical expansion in B2B and B2C

Developments in Asian markets

• Optimistic that the circumstances in Asian markets will not last throughout 2020
• Corona virus will have impact on demand for luxury brands in Asia in H1 2020; impact on our performance to be determined

Focus for coming quarters

• Invest in key growth markets that benefit from digitisation, retail re- design and supply chain simplification
• Solidify financial position by operational effectiveness and cost reductions through our investments in digitisation and automation
• Growing our business profitably by executing our 2020-2022 strategic initiatives

25

Strategic focus

2020 - 2022

We see ample opportunities and challenges in our markets

Geopolitical tension	Trade war &
and turmoil	recession threat

Digital	Retail value chain
disruption	redesign

27

We have a defensive profile towards macro economic developments

Robust and global	Bonded supplier	Diversified supplier
product categories	status	and customer basis
with mainly A-	limiting the impact	with limited
branded products that	of geopolitical	dependency on a
outperform in	developments	single market
economic hardship

28

Our value proposistion is adaptive to market trends and developments

Digital

disruption

Disinterme-

diation

Consumer shift to

online channel

Differentiated
sourcing	Supply chain
	excellence

Rise of value

channels

Fully bonded	Regulatory
supply chain
expertise

Highly efficient

logistical platform

Price

transparancy

29

Key focus areas that support our 2020 - 2022 growth strategy

1	2
Centralisation		Digital
of operations		Transformation

	Focus on	4
		Organic
	growth markets		expansion
3

30

Long term value creation - strategic initiatives 2020 - 2022

1

2

3

4

Digital tranformation

Focus on growth

• With close commercial involvement further centralise IT and Logistics towards creating a more lean and focused organisation
• Cluster overlapping segmental business activities to simplify the supply chain and optimise inventory management
• Intensify segmental collaboration by optimising internal processes
• Use data driven insights to optimise internal processes and identify commercial opportunities
  Digitise the supply chain with commercial tools that support centralised operations Continued innovation by embedding digital capabilities in our organisation
• Focus on niche markets driven by mega trends (digitisation, globalisation, market disruption)
• Invest in unique positions with compelling advantage
• Complemented by selective M&A to strenghten niche positions
• Capture opportunities for geographical expansion in all business segments
• Explore new PMCs in adjacent channels or product / category per segment
• Drive organic growth through data driven customer services

31