HY 2018 Results Presentation | August 28, 2018 1
Today’s speakers Bert Meulman, CEO Gert van Laar, CFO • CFO since 2009 • CEO since 2004 • Former CFO of Paul Global, acquired • Joined B&S in 1992, held several by B&S Group in 2000 leadership positions • Chartered Accountant and 8 years at • Shareholding partner since 1995 PWC and other senior finance positons 2
Agenda ▪ HY 2018 highlights ▪ Business segments & market conditions ▪ Key financials ▪ Acquisition of FragranceNet.com ▪ Outlook ▪ Q&A 3
HY 2018 highlights 4
HY 2018 highlights ▪ 9.8% to € 766 M (14.2% on a constant currency basis) Overall turnover growth Organic turnover growth ▪ 7.5% (11.9% on a constant currency basis) ▪ EBITDA amounted to € 45.9 M; on a constant currency basis EBITDA increased from EBITDA € 47.4 M (HY17) to € 52.5 M (HY18) Business segment ▪ All business segments contributed to turnover growth individually ▪ HTG +11.4% | B&S +5.3% | Retail +8.0% contribution ▪ B&S expands in its HTG Health & Beauty segment through the acquisition of US leading online M&A discount fragrance retailer FragranceNet.com 5
Overall turnover growth analysis Overall turnover growth Commentary ▪ Each of our business segments contributed to the turnover growth in HY 2018 (HTG +11.4%, B&S +5.3% and Retail +8.0%) ▪ The inclusion of the acquisition of Alcodis contributed € 16 M ▪ The adverse development of the EUR/USD exchange rate had an effect of € 31 M on turnover 6
EBITDA development on a constant currency basis EBITDA development Commentary ▪ Largely driven by the 52.5 +10.7% adverse development of the 47.4 6.6 EUR/USD exchange rate in (3.3%) 45.9 HY 2018 compared to HY 2017 ▪ EBITDA on a constant currency basis grew to € 52.5 M (HY18) up from € 47.4 M (HY17) HY 17 HY 18 Reported Constant currency effect 7
Seasonal patterns Commentary Turnover development 798 ▪ Peak in sales in Q3 and Q4, 797 747 with a tendency for sales to 699 767 even move into Q4 593 ▪ Airport retail and Maritime business peak in summer H1 16 H2 16 H1 17 H2 17 H1 18 ▪ HTG segment generates EBITDA development vast majority of turnover and profitability in second half of 52.5 57.4 52.6 the year 47.4 36.3 45.9 H1 16 H2 16 H1 17 H2 17 H1 18 8
Business segments & market conditions 9
Business segment contribution – key figures 8.1% A global distributor of liquors and Expert in distribution to remote Specialty retail in duty free health & beauty items with a and high demanding customers as environments including airports differentiated sourcing proposition well as underserved markets 28.1% 63.8% enabling specialty channels Percentage of Group turnover Turnover +11.4% (€ 500.8 M) Turnover +5.3% (€ 220.3 M) Turnover +8% (€ 63.7 M) HTG B&S Retail Gross profit margin 12.0% Gross profit margin 14.8% Gross profit margin 25.1% 8.9% 24.7% 66.4% Maritime Percentage of Group EBITDA HTG B&S Retail Remote Retail B2C Retail B2B Retail B2B Note All figures at reported rates 10
Business segment contribution - developments ▪ In general this segment performed very ▪ The demand in this segment showed an ▪ Overall we noted an increase in the well with an accelerated growth in sales increase in sales in the remote business number of passengers which coupled to value and discount retailers both on with the opening of new shops resulted in and the distribution to underserved and offline the increase in turnover markets ▪ Warehouse completion setting the ▪ Increased concession fees at contract segment up for further operational renewals, costs for new tenders for new efficiency business, start-up costs of the opening of new shops and the discontinuation of small non profitable contracts had an effect on profitability Maritime Retail B2C Remote Retail B2B Retail B2B 11
Key financials 12
Key figures HY 2018 € million (unless otherwise HY 2018 HY 2017 Change Change Change at Commentary indicated) (absolute) (percentage) constant FX (percentage) ▪ Turnover grew 9.8% (14.2% on Profit or loss account a constant currency basis) Turnover 766.9 698.5 68.4 9.8% 14.2% Gross profit 108.5 98.7 9.8 9.9% 14.0% ▪ Gross profit grew 9.9%, margin Gross profit margin 14.1% 14.1% - remained at 14.1% Other gains and losses (3.2) 4.8 8.0 ▪ Other gains and losses and EBITDA 45.9 47.4 (1.5) (3.3%) 10.7% EBITDA largely driven by the EBITDA margin 6.0% 6.8% adverse development of the Result before taxation 38.4 40.9 (2.5) Profit for the year from EUR/USD exchange rate 31.4 35.9 (4.5) continuing operations ▪ Net debt fully in line with seasonal pattern of our ROCE 35.3% 33.5% 1.8% business reflecting the build of Financial position debt associated with inventory Solvency Ratio 37.3% 41.5% (4.2%) (being a clear indicator of Net Debt 277.0 202.6 74.4 business in the subsequent Net Debt/EBITDA 2.68 2.03 0.65 quarter) 13
Working capital development Commentary HY 2018 HY 2017 (€ x 1,000) ▪ Inventory increased mainly as a result of higher inventory levels Inventory 379,041 324,828 for anticipated seasonality in sales in Q3 and Q4, but also stems from the first time inclusion of Alcodis (€ 5.4 M) ▪ The increase in trade receivables reflects the strong second Trade receivables 160,512 137,644 quarter turnover ▪ Increase in trade payables is fully in line with the increase in Trade payables 68,488 53,467 turnover and inventory 550,000 450,000 471,065 409,005 Working capital 350,000 250,000 HY 15 FY 15 HY 16 FY 16 HY 17 FY 17 HY 18 14
Net debt development HY 2018 15
Financial position Net debt / EBITDA Commentary ▪ Net debt increased by € 74.4 M (HY17 to HY18) 2.7 reflecting primarily the seasonal pattern of our working capital 2.3 2.0 ▪ Inventory increased towards the end of the first 1.9 1.8 half year advancing anticipated seasonality in sales in Q3 and Q4 but also in line with the growth in HY18 ▪ The increase in trade receivables resulted from a strong second quarter 2015 2016 2017 HY 2017 HY 2018 16
Acquisition of FragranceNet.com 17
Our criteria for M&A ▪ We focus on companies with a turnover between broadly € 50 M to € 200 M, strengthening our Size position in channels and markets The companies we acquire should have strong management which is committed to the ▪ Management integration and growth strategy post acquisition, a growth they could not easily realise without a partner such as B&S IT ▪ Company systems should be integrated in our backbone Interest ▪ Management of the company must maintain a minority interest 18
Our present position in Health & Beauty Strong position in Supplier of both A- Supplying a long tail value and discount brand products and A-brand health and retail private label products beauty products assortment to E- commerce platforms Total share of turnover some 37% Main focus on B2B retail Geographically most customers in Europe and Asia 19
The position of FragranceNet.com Leading US online retailer with long tail of A-brand health & beauty products sold at discount prices Total turnover of US$ 216 M for Main focus on B2C retail and on smaller retailers the year ended March 31, 2018 Geographically present mainly in the US 20
B&S Group Health & Beauty combined with FragranceNet.com Experience ▪ Consolidation of buying power and market knowledge ▪ FragranceNet.com business model for both B2C and sales to smaller retailers to be Business model exported to other regions, as well as exporting B&S B2B business model to US ▪ Perfect match geographically: Europe, Asia and the USA with ample opportunities Geography for B&S to widen its distribution basis 21
Potential synergies from acquiring FragranceNet.com ▪ Organisational scale advantages and supplier base expansion Sourcing & distribution ▪ Proprietary technology of FragranceNet combined with B&S platform ▪ Generate substantial footprint in US Market expansion ▪ Export business model to other geographies Value chain ▪ Utilise knowledge and experience for value chain integration 22
About FragranceNet.com 23
FragranceNet.com - factsheet ▪ Online platform of health & beauty products to consumers and to smaller retailers at discount prices ▪ Supplier base with wide assortment offering ▪ Long standing track record (since 1997) Company activity ▪ Based in New York ▪ Over 250 employees ▪ Approximately 20,000 SKUs ▪ Turnover for the year ended March 31, 2018 US$ 216 M Overall turnover growth ▪ 8% CAGR since 2013 Gross margin ▪ Healthy gross margin of around 25% for the last 5 years 24
Attractive market with ample growth opportunities ▪ Online fragrance channel Fragrance primarily used for repeat purchases of known brands market ▪ Discount fragrance channel seeking the best possible price • The general fragrance • Shifting channel • Online channel is fastest growing as department market in the U.S. is dynamics in fragrance large and has grown at from brick and mortar to store share falls a steady pace over the online last five years 25
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