Half year results Lucas Bols.pdf

Half year results 2015/16 (April 2015 – September 2015) 18 November 2015

Lucas Bols reports a substantial increase in net result at slightly lower revenue Highlights first half year 2015/16 

Revenue of € 39.4 million, a decrease of 2.9% at constant currency, mainly following one-off in market stock reductions in Asia Pacific



North America reports healthy 3.4% growth at constant currency, as a result of our strategy for growth



Gross margin of 60.8%, at the same level as last year at constant currency



Operating profit of € 11.6 million, -5.3% at constant currency



Increase in net profit from € 2.0 million to € 7.7 million



Interim dividend in cash set at € 0.31 per share

Huub van Doorne, CEO Lucas Bols: “In the past six months we have seen a slight decrease in revenue, mainly in the Asia Pacific region where one-off in market stock reductions in the second quarter impacted revenue. In North America we see our market strategy for growth pay-off, with a healthy organic revenue increase of 3.4%. Our overall operating profit level was impacted by lower revenue and currency effects but given our reduced net debt and the consequent reduction in finance costs, we reported a substantially higher net result of € 7.7 million. We are pleased to announce an interim dividend of € 0.31 per share. With the recent addition of two innovative new flavours to our Bols Liqueur range and the launch of various new marketing initiatives to engage with our markets we continue to strengthen the Bols brand.” Key Figures (in € million unless otherwise stated, for the half-year ended)

30 September 2015

30 September 2014

Revenue

39.4

40.8

-3.4%

-2.9%

Gross profit

24.0

25.2

-4.9%

-2.9%

60.8%

61.8%

-100bps

0bps

11.6

12.9

-10.3%

-5.3%

Net result

7.7

2.0

Free operating cash flow2

8.8

8.3

+5.5%

+13.3%

Earnings per share (in €)

0.61

Dividend per share (in €)

0.31

Gross margin Operating profit (EBIT)

1 2

at constant currency Free operating cash flow is defined as net cash from operating activities minus CAPEX

N/A

% change reported

% change 1 organic

Financial review Revenue Lucas Bols’ revenue for the first six months of the financial year 2015/16 (H1 2015/16) amounted to € 39.4 million, a reported decrease of 3.4% compared to € 40.8 million in the same period last financial year. The effect of currencies on revenue was limited and amounted to € 0.2 million negative, caused by the effect of the lower Japanese Yen, Russian Ruble and Australian Dollar, largely mitigated by a stronger US Dollar. The decrease of 2.9%, at constant currency, was mainly attributable to the reduction of in-market stocks in Australia and South East Asia in the second quarter of the year. We achieved good performance in Emerging Markets and North America, the latter showing an organic revenue growth of 3.4% compared to the same period last year, confirming our market strategy for growth. Gross profit Gross profit for H1 2015/16 amounted to € 24.0 million, a 4.9% decrease compared to last year, due to stock reductions as mentioned above (€ 0.7 million) and currency effects (€ 0.5 million). The reported gross margin of 60.8% decreased by 100bps, fully attributable to the currency effect. At constant currencies gross margin was at last year’s level. Operating profit Operating profit (EBIT) for H1 2015/16 decreased by 10.3% to € 11.6 million (H1 2014/15: € 12.9 million). At constant currencies operating profit decreased 5.3%, which was fully attributable to the lower revenue. D&A expenses were broadly stable at last year’s level. On balance currency effects had a negative impact of € 0.6 million.

Developments by global brands and regional brands Global Brands Our portfolio of global brands consists of Bols Liqueurs, Bols Genever, Bols Vodka, Damrak Gin and our Italian liqueurs Galliano and Vaccari Sambuca. (in € million unless otherwise stated, for the half year ended) Revenue Gross profit % of revenue Operating profit % of revenue

30 September 30 September 2015 2014 27.2 28.3

% change reported -3.8%

% change organic* -3.3%

-4.4%

-2.1%

-40 bps

+90 bps

17.8

18.6

65.3%

65.7%

12.0

12.5

-4.5%

-1.6%

44.0%

44.3%

-30bps

+80bps

* at constant currency

Revenue of the global brands for H1 2015/16 amounted to € 27.2 million a decrease of € 1.1 million compared to € 28.3 million for H1 2014/15. Currencies had a limited negative effect of € 0.1 million on revenue, gross profit and operating profit however, were both effected by € 0.4 million. The positive effect of the strong US Dollar on operating profit was largely offset as the costs of blending and bottling Bols Liqueurs for the US market and the costs of the Lucas Bols USA organisation are also denominated in dollars. The decrease in revenue is caused by one-off in-market stock reductions in the second quarter in Australia and South East Asia (impact of € 0.9 million in the first half). In Australia the supply chain structure in the market was adjusted by our local distributor, leading to a reduction of warehouses, affecting shipments of especially Galliano. In South East Asia stocks were reduced in anticipation of a change in distribution partner, effective January 1, 2016. Challenging market circumstances, following increased import duties, in Indonesia contributed further to the lower shipments to this region. The remainder of the Asia Pacific region performed in line with last year, while the gross margin for the total region was up 150 bps as a result of price increases.

2

North America reported organic revenue growth of 3.4% compared to the same period last year. This strong performance was driven by the US market which performed in accordance with our expectations. This reflects the success of our market strategy for growth. The reported revenue growth in North America was 15.4%. Western Europe operated in line with the same period last year as strong performance in the on-trade market in Scandinavia and Southern Europe compensated for the more difficult circumstances in the retail market in Belgium, Germany and the UK. In the Netherlands sales of global brands by Maxxium showed a positive trend as a result of the recently introduced brands Bols Vodka and Damrak Gin. In line with our longer term strategy for Bols Vodka of steady growth where market opportunities arise, the blending and bottling of this brand was transferred to our production joint-venture Avandis in The Netherlands. Emerging Markets showed a slight increase compared to last year. Revenue in Eastern Europe (including Russia) was in line with last year. In Russia we saw the market recovery continue, which was first noted in the last quarter of FY 2014/15, following the steep downward trend experienced earlier in 2014. Revenue in Africa was slightly down, balanced by higher sales in Central and South America. Gross profit of the global brands decreased by 4.4%, partly as a result of the adverse currency developments. At constant currency, gross profit declined by 2.1% and operating profit by 1.6%, fully attributable to the in-market stock reduction mentioned above (with an effect on both gross and operating profit of € 0.7 million). Mainly as a result of price increases in Asia Pacific, both the gross and operating margins were up, 90bps and 80bps respectively at constant currency. Regional Brands Our regional brand portfolio contains the portfolio of Dutch Genevers and Vieux, which enjoy market leadership in the Dutch market, the Pisang Ambon and Coebergh brands as well as a broader range of products that are sold on one continent or in a specific country such as Henkes Star Schnapps in West-Africa or Regnier Crème de Cassis in Japan. (in € million unless otherwise stated, for the half year ended) Revenue Gross profit % of revenue Operating profit % of revenue

30 September 2015 12.2


6.2

6.6

50.9%

53.0%

5.3

5.7

43.2%

45.9%



-6.5%

-5.2%

-210 bps

-180 bps

-8.2%

-6.9%

-270bps

-230bps

* at constant currency

Revenue of the regional brands for H1 2015/16 amounted to € 12.2 million a decrease of € 0.3 million compared to € 12.5 million for H1 2014/15. The slight decrease in revenue was mainly the result of weakened market circumstances for domestic spirits in The Netherlands, where market share however continued to increase. Other markets, especially France and Scandinavia, reported a higher revenue. Currencies, especially the Japanese Yen, had a negative effect of € 0.1 million on revenue, as well as on gross profit and operating profit. The gross margin decreased with 180 bps on an organic basis mainly as a result of a (temporarily) relatively lower share of higher margin products. This also impacted the operating margin. Finance costs Finance costs decreased by € 7.7 million to € 1.3 million (H1 2014/15: € 9.0 million) as a result of the reduction of debt at the IPO earlier this year.

3

Taxes The effective tax rate is approximately 25% for H1 2015/16, in line with the nominal tax rate. The effective tax rate in H1 2014/15 was approximately 50% mainly as a result of non-tax deductible dividends on cumulative preference shares. These preference shares were redeemed at the time of the IPO. Profit for the period As a result of the reduced finance costs, the net result for the year increased to € 7.7 million in H1 2015/16 from € 2.0 million in H1 2014/15. The net result per share for H1 2015/16 amounted to € 0.61. Cash Flow Free operating cash flow for H1 2015/16 amounted to € 8.8 million (H1 2014/15: € 8.3 million). Financial position (in € million unless otherwise stated) Total equity Net debt Net debt/ EBITDA

30 September 2015 161.6

31 March 2015 153.2

53.5

61.2

2.4

2.6

Equity Equity increased as a direct result of the € 7.7 million net profit as well as an increased valuation of our derivatives portfolio. Net debt Net debt reduced to € 53.5 million at 30 September 2015 (31 March 2015: € 61.2 million). Following the IPO on 4 February 2015 we have achieved a sound financing structure of our business and will for the short term focus on further reduction of our debt. The net debt to EBITDA ratio stands at 2.4 as at 30 September 2015 (2.6 as at 31 March 2015). Dividend In accordance with earlier announcements an interim dividend in cash will be distributed. In line with the dividend policy of a pay-out of at least 50% of the net profit, the interim dividend is set at € 0,31 in cash per share, a pay-out ratio of 50%. The dividend will be payable on 30 November. Outlook Looking ahead, we foresee long-term growth of the global brands and continued stabilisation of the regional brands. Overall the ongoing improvement in the global economies is contributing to a more positive on-trade environment, and a growing cocktail culture, both driving the further development of our global brands. We will continue to focus on accelerated growth of our brands in the US with our organisation Lucas Bols USA. The second half should experience less impact from currency fluctuations on operating profit due to hedges in place. Furthermore we expect a lesser effect of one-off stock reductions in Asia Pacific. Although a number of markets will remain challenging, overall we maintain a positive view about the future developments of our brands.

4

For further information www.lucasbols.com Huub van Doorne (CEO) / Joost de Vries (CFO) +31 20 570 85 48 About Lucas Bols Lucas Bols is the world’s oldest distilled spirits brand and one of the oldest Dutch companies still in business. Building on its 440 year old heritage dating back to 1575, the Company has mastered the art of distilling, mixing and blending liqueurs, genever, gin and vodka. Lucas Bols owns a portfolio of more than 20 premium and super premium brands of different spirits used in cocktail bars worldwide. Its products are sold in more than 110 countries around the world. Since 4 February 2015, Lucas Bols is listed at Euronext Amsterdam (BOLS). Lucas Bols has the number one position in liqueur ranges worldwide (outside the USA) and is the world’s largest player in the genever segment. Many of Lucas Bols’s other products have market or category-leading positions. Furthermore, Lucas Bols is a leading player in the bartending community. Through the House of Bols Cocktail & Genever Experience and Europe’s largest bartending school, the Bols Bartending Academy, the Company provides inspiration and education to both bartenders and consumers.

Financial calendar 9 June 2016

Publication of 2015/16 full year results

30 June 2016

Publication annual report

1 September 2016

Annual General Meeting

17 November 2016

Publication of 2016/17 half-year results

Interim dividend 23 November 2015

Ex-dividend date

24 November 2015

Record date

30 November 2015

Payment of interim dividend

Annexes 1. Segment information 2. Brand information 3. Interim condensed consolidated report H1 2015/16

5

Segment information Western Europe (in € million unless otherwise stated, for the half year ended) Revenue % of group revenue

Gross profit % of group gross profit

Gross margin (Gross profit in % of revenue)


30 September % change 2014 reported -1.9% 19.1

47.4%

46.8%

10.3

10.7

43.1%

42.6%

55.3%

56.4%


-3.8%

-4.6%

-110 bps

-130 bps

Asia-Pacific (in € million unless otherwise stated, for the half year ended) Revenue % of group revenue





20.7%

24.0%

5.8

7.1

24.4%

28.0%

71.8%

72.1%


-17.3%

-9.3%

-30 bps

+150 bps

North America (in € million unless otherwise stated, for the half year ended) Revenue % of group revenue




30 September % change 2014 reported +15.4% 6.5

19.2%

16.0%

4.4

3.8

18.5%

15.2%

58.6%

58.7%

% change organic* +3.4%

+15.4%

+2.7%

-10bps

-40bps


% change organic* +2.5%

Emerging Markets (in € million unless otherwise stated, for the 30 September 2015 half year ended) Revenue 5.0 % of group revenue



12.7%

13.2%

3.4

3.6

14.0%

14.1%

67.2%

66.1%

-5.5%

+8.8%

+110bps

+410bps

*At constant currency

6

Brand information Global Brands Our portfolio of global brands consists of Bols Liqueurs, Bols Genever, Bols Vodka, Damrak Gin and our Italian liqueurs Galliano and Vaccari Sambuca. (in € million unless otherwise stated, for the half year ended) Revenue Gross profit % of revenue D&A expenses % of revenue Operating profit % of revenue




-4.4%

-2.1%

-40 bps

+90 bps

-4.2%

-3.0%

-10 bps

+10 bps

17.8

18.6

65.3%

65.7%

5.8

6.1

21.3%

21.4%

12.0

12.5

-4.5%

-1.6%

44.0%

44.3%

-30bps

+80bps

Regional Brands Our regional brand portfolio contains the portfolio of Dutch Genevers and Vieux, which enjoy market leadership in the Dutch market, the Pisang Ambon and Coebergh brands as well as a broader range of products that are sold on one continent or in a specific country such as Henkes Star Schnapps in West-Africa or Regnier Crème de Cassis in Japan. (in € million unless otherwise stated, for the half year ended) Revenue Gross profit % of revenue D&A expenses % of revenue Operating profit % of revenue Total (in € million unless otherwise stated, for the half year ended) Revenue Gross profit % of revenue D&A expenses (allocated) % of revenue D&A expenses (unallocated) % of revenue Operating profit % of revenue



6.2

6.6

50.9%

53.0%

0.9

0.9

7.6%

7.1%

5.3

5.7

43.2%

45.9%




-6.5%

-5.2%

-210 bps

-180 bps

+5.1%

+5.7%

+50 bps

+50 bps

-8.2%

-6.9%

-270bps

-230bps



-4.9%

-2.9%

-100 bps

+0 bps

-3.0%

-1.9%

+10 bps

+20 bps

+5.5%

+1.6%

+120 bps

+60 bps

24.0

25.2

60.8%

61.8%

6.7

6.9

17.1%

17.0%

5.6

5.3

14.3%

13.1%

11.6

12.9

-10.3%

-5.3%

29.4%

31.7%

-230bps

-80bps

*At constant currency

7

Interim condensed consolidated financial information for the six months ended 30 September 2015

8

Interim condensed consolidated statement of profit or loss for the six months ended 30 September 2015 and 2014

Amounts in EUR '000 for the six months ended

Revenue Cost of sales Gross profit Distribution and administrative expenses Operating profit Share of profit of joint ventures, net of tax Finance income Finance costs Net finance costs Profit before tax Income tax expenses Profit/(loss) Result attributable to the owners of the Company Weighted average number of shares Earnings per share Basic earnings per share (euro) Diluted earnings per share (euro)

Note

4

6

7

9

8

30 September 2015 30 September 2014

39,388 (15,423) 23,965 (12,368) 11,597 37

40,781 (15,572) 25,209 (12,283) 12,926 39

5 (1,357) (1,352) 10,282 (2,630) 7,652 7,652

0 (9,041) (9,041) 3,924 (1,965) 1,959 1,959

12,477,298

8,400,000

0.61 0.61

0.23 0.22

The notes are an integral part of this interim condensed consolidated financial information

9

Interim condensed consolidated statement of other comprehensive income for the six months ended 30 September 2015 and 2014


Note


Result for the period Foreign operations - foreign currency translation differences Net change in hedge reserves Related tax Items that are or may be reclassified to profit or loss

7,652 (57) 1,103 (276) 770

1,959 32 (1,629) 407 (1,190)

Other comprehensive income for the period, net of tax Total comprehensive income Total comprehensive income attributable to the owners of the Company

770 8,422

(1,190) 769

8,422

769


10

Interim condensed consolidated statement of changes in equity for the six months ended 30 September 2015 and 2014

Amounts in EUR '000

Note

Balance as at 1 April 2015 Transfer result prior period

Share capital 1,248

Share premium 130,070

Translation reserve 32

Hedging reserve (1,536)

Retained earnings 23,148

Result for Total equity the period 220 153,182

-

-

-

-

220

(220)

-

Profit (loss) for the period

-

-

-

-

-

7,652

Other comprehensive income

-

-

(57)

827

-

-

Total comprehensive income

-

-

(57)

827

220

7,432

8,422

(25)

(709)

23,368

7,652

161,604

Translation reserve (171)

Hedging reserve (78)


Balance as at 30 September 2015

Amounts in EUR '000 Balance as at 1 April 2014 Transfer result prior period

Note

1,248

130,070

Share capital 8,400

Share premium -

Retained earnings 23,410

7,652 770

Result for Total equity the period 223 31,784

-

-

-

-

223

(223)

-

Profit (loss) for the period

-

-

-

-

-

1,959

1,959

Other comprehensive income

-

-

32

(1,222)

-

-

(1,190)

-

-

32

(1,222)

223

1,736

769

(139)

(1,300)

23,633

1,959

32,553


Total comprehensive income Balance as at 30 September 2014

8,400

0


11

Interim condensed consolidated statement of financial position as at 30 September 2015 and 2014 Amounts in EUR '000

Note

30 September 2015

31 March 2015

Assets Property plant and equipment Intangible assets Investments in joint ventures Other investments, including derivatives Non-current assets Inventories Trade and other receivables Derivative financial instruments Cash and cash equivalents Current assets Total assets

10

1,329

1,398

214,943

214,943

5,093

5,116

599

600

221,964

222,057

6,871

7,564

17,477

18,328

133

-

3,776

630

28,257

26,522

250,221

248,579


12

Interim condensed consolidated statement of financial position (continued) Amounts in EUR '000

Note

30 September 2015

31 March 2015

Equity Share capital Share premium Hedging Reserve

1,248

1,248

130,070

130,070

(709)

Translation Reserve

(1,536)

(25)

Retained earnings Result for the period Total equity

32

23,368

23,148

7,652

220

161,604

153,182

52,677

52,705

610

940

Liabilities Other loans and borrowings

11

Other non-current financial liabilities Employee benefits

738

738

Deferred tax liabilities

22,602

20,044

Total non-current liabilities

76,627

74,427

4,000

8,400

7,418

11,343

572

1,227

11,990

20,970

88,617 250,221

95,397

Loans and borrowings Trade and other payables Derivative financial instruments Total current liabilities Total liabilities Total equity and liabilities

11

248,579


13

Interim condensed consolidated statement of cash flows for the six months ended 30 September 2015 and 2014


Note


Cash flows from operating activities Result for the period

7,652

1,959

242

259

1,352

9,041

Adjustments for: • Depreciation • Net finance costs

7

• Release net-realized hedging reserve

-

• Share of profit joint ventures

(726)

(37)

• Income tax expense

2,630

• Other non-cash items

(181)

(39) 1,965 -

11,658

12,459

• Inventories

693

1,044

• Trade and other receivables

865

(1,314)

Change in:

• Trade and other payables Net changes in working capital Dividends from joint ventures

12

(4,212)

(3,917)

(2,654)

(4,187)

-

200

Interest received

5

-

Income tax paid

(69)

-

Income tax received

-

-

8,940

8,472

Net cash from operating activities

14

Interim condensed consolidated statement of cash flows (continued) Amounts in EUR '000 for the six months ended

Note


Cash flows from investing activities Acquisition of/additions to joint ventures

(73)

-

Acquisition of property, plant and equipment

(174)

(162)

Net cash from (used in) investing activities

(247)

(162)

(4,500)

(4,806)

(961)

(3,689)

(5,461)

(8,495)

Cash flows from financing activities Repayment of borrowings Interest paid Net cash from (used in) financing activities Net increase (decrease) in cash and cash equivalents

3,232

(185)

Cash and cash equivalents at 1 April

630

3,120

Effect of exchange rate fluctuations

(86)

-

Cash and cash equivalents at 30 September

3,776

2,935


15

Notes to the interim condensed consolidated financial statements for the six months ended 30 September 2015 and 2014 1. Reporting entity Lucas Bols N.V. (the `Company') is a company domiciled in the Netherlands. The address of the Company's registered office is Paulus Potterstraat 14, Amsterdam. The interim condensed consolidated financial statements of the Company as at and for the six months ended 30 September 2015 comprise the Company and its subsidiaries (together referred to as the `Group') and the Group's interest in jointly controlled entities. Lucas Bols N.V. is primarily involved in managing the product development, bottling, distribution, sales and marketing of the brands Bols, Galliano, Vaccari, Pisang Ambon, Bokma, Hartevelt, Coebergh and a large group of Dutch jenevers and liqueurs. As per 4 February 2015 the shares of Lucas Bols N.V. are listed on the Amsterdam Stock Exchange.

2. Basis of preparation (a) Statement of compliance The interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as endorsed by the EU. They do not include all the information required for a complete set of IFRS financial statements. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since the last annual consolidated financial statements as at and for the year ended 31 March 2015. The interim condensed consolidated financial statements were authorised for issue by all members of the Management Board and Supervisory Board on 17 November 2015. (b) Basis of measurement The interim condensed consolidated financial statements have been prepared on each reporting date on the historical cost basis except for the following material items in the statement of financial position:

 derivative financial instruments are measured at fair value;  interests in the joint venture are accounted for using the equity method;  non-derivative financial instruments at fair value through profit or loss are measured at fair value; and  the net defined benefit liability is recognised as the present value of the defined benefit obligation, less the fair value of plan assets. Measurement of fair values A number of the Group's accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the valuation techniques as outlined below. When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible.

16

Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows

 Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.  Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).  Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability might be categorized in different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. Further information about the assumptions made in measuring fair values is included in note 12 – financial instruments. (c) Functional and presentation currency The interim condensed consolidated financial statements are presented in Euro, which is the Company's functional currency. All financial information presented in Euro has been rounded to the nearest thousand, except when otherwise indicated. (d) Use of estimates and judgements In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively. The significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 March 2015.

3. Significant accounting policies The accounting policies applied in the interim condensed consolidated financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 March 2015. A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2015, and have consequently not been applied in preparing these interim condensed consolidated financial statements. Those which may be relevant to the Group are set out below. The Group does not plan to early adopt these standards. IFRS 9 Financial Instruments IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit loss model for calculating impairment on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance on recognition and derecognition of financial instruments from IAS 39.

17

IFRS 9 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Company is in the process of assessing the potential impact on its consolidated financial statements resulting from the impact of the application of IFRS 9, but currently expects that the impact will not be significant.

IFRS 15 Revenue from Contracts with Customers IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2017, with early adoption permitted. The IASB recently has proposed to defer the effective date by one year to 1 January 2018. The Company is in the process of assessing the potential impact on its consolidated financial statements resulting from the impact of the application of IFRS 15, but currently expects that the impact will not be significant.

4. Operating segments The Group sells products which can be divided in two reportable segments. This segmentation is also the structure for the management of the brands within the Group, as they require different marketing and sales strategies. Separate financial information is available internally, which is used by the main operational decision-makers for resource allocation. Brand information The Group identifies global and regional brands: (I) Global brands The Global brands represent the Group’s brands which are in general sold on more than one continent, on which the Group makes a relatively high margin and which have an on-premise characteristic. The Group’s main Global brands are the Bols Liqueur range, the Italian Liqueurs (Galliano and Vaccari) and its white spirits portfolio (Bols Vodka, Bols Genever and Damrak Gin). (II) Regional brands The Regional Brands represent the Group’s brands, which are in general sold on one continent and have predominantly an off-premise character. The main Regional Brands are the Companies `jenever/vieux portfolio', Pisang Ambon, Coebergh, the Strike brands, Regnier and La Fleurette. The Group's management reviews internal management reports of each segment. Information regarding the results of each reportable segment is set out on the next page.

18

Brand Information (continued)

Global brands Amounts in EUR '000 for the six months ended

Regional brands

Unallocated

Total

30 September 2015 30 September 2014 30 September 2015 30 September 2014 30 September 2015 30 September 2014 30 September 2015 30 September 2014

Revenue

27,196

28,264

12,192

12,517

-

-

39,388

40,781

Cost of goods sold

(9,432)

(9,684)

(5,991)

(5,888)

-

-

(15,423)

(15,572)

Gross profit

17,764

18,580

6,201

6,629

-

-

23,965

25,209

A&P and distribution expenses

(5,801)

(6,053)

-

-

(6,730)

(6,937)

Personnel and other expenses Total result from operating activities Share of profits of joint ventures and associates

Intangible assets

*)

Inventories Other assets

**)

Total segment assets Total segment liabilities **)

*

-

(929) -

-

(5,638)

(5,346)

(5,638)

(5,346)

12,527

5,272

5,745

(5,638)

(5,346)

11,597

12,926

13

37

26

-

-

37

39

11,963

12,540

5,309

5,771

(5,638)

(5,346)

11,634

12,965

124,031

124,031

90,912

90,912

-

-

214,943

214,943

5,853

5,741

1,018

820

-

-

6,871

6,561

11,963 -

129,884 -

-

(884)

129,772

91,930

-

-

91,732 -

28,407

28,461

28,407

28,461

28,407

28,461

250,221

249,965

(88,617)

(217,412)

(88,617)

(217,412)

The economic title to all intangible assets is held by the Dutch companies within the Group.

** The deferred tax assets amounts have been reclassified as netted with deferred tax liability amounts.

19

Geographical information From a geographical perspective, management has identified the following regions on which they manage their business:

Revenue by region of destination Amounts in EUR '000 for the six months ended

Western Europe Asia Pacific

*)

**)

North America ***) Emerging markets Consolidated totals

Gross profit

30 September 2015 30 September 2014 30 September 2015 30 September 2014

18,702

19,060

10,335

10,748

8,137

9,805

5,845

7,069

7,551

6,541

4,428

3,838

4,998

5,375

3,357

3,554

39,388

40,781

23,965

25,209

*) of which revenue attributed to The Netherlands: 8.640 (H1 2015/16) and 8.971 (H1 2014/15) **) of which revenue attributed to Japan: 4.551 (H1 2015/16) and 5.214 (H1 2014/15) ***) of which revenue attributed to USA: 6.066 (H1 2015/16) and 5.153 (H1 2014/15)

5. Seasonality of operations The Group's business is to a certain extent affected by seasonality. In full year 2014/15 the Group made 52% of its revenue in the first half year (April - September 2014) as distributors built up their stocks in anticipation of the year-end period. In the first half year of 2015/16 we have experienced some changes in normal supply patterns related to in-market stock reductions in Asia-Pacific, which could impact this year’s revenue seasonality. On the expense side the seasonality is reflected in higher advertising and promotional costs in the second half of the year, which traditionally results in a lower share of operating profit in the second half year. In 2014/15 the second half year was impacted by the IPO-costs.

6.

Distribution and administrative expenses



Advertising and promotional expenses

5,067

5,488

Distribution expenses

1,663

1,449

Personnel expenses

4,039

3,729

Other administrative expenses

1,357

1,358

Depreciation and amortisation

242

259

12,368

12,283

20

7. Finance costs Finance costs decreased as a result of lower interest rates, as well as of the post IPO financing structure.



Interest on loans and borrowings

1,285

3,728

Interest paid in kind for mezzanine facility

-

955

Interest on cumulative preference shares

-

3,888

Amortization refinancing fees

72

470

1,357

9,041

8. Earnings per share Total weighted average number of shares has changed due to the reversed share split and 8,277,298 shares issued at the IPO in February 2015.

9. Tax expense Tax expense comprises deferred tax. The Group's consolidated effective tax rate in respect of continuing operations for the six months ended 30 September 2015 was 25.6% (six months ended 30 September 2014: 50.1%). The percentage of the effective tax rate for the six months ended 30 September 2014 versus the official tax rate in the Netherlands of 25% was caused predominantly by the interest on cumulative preference shares, which is not tax-deductible (see table). Reconciliation of effective tax rate For the six months ended

30 September 2015

%

EUR 1,000 10,282

25.0 0.7 0.0 (0.1) 0.0 25.6

2,570 69 (9) 2,630

Profit before tax Tax using the Company's domestic tax rate Effect of tax rates in foreign jurisdictions Non-deductible cum. pref. interest Effect of share of profits of equity-accounted investees Other

30 September 2014

%

25.0 1.5 24.8 (1.0) (0.1) 50.1

EUR 1,000 3,924 981 57 972 (40) (5) 1,965

Deferred tax liabilities The deferred tax liabilities (EUR 22,602 thousand) as at 30 September 2015 is a netted amount. It is the net balance of deferred tax assets of EUR 8,121 thousand and deferred tax liabilities of EUR 30,723 thousand. The deferred tax liabilities (EUR 20.044 thousand) as at 31 March 2015 is a netted amount. It is the net balance of deferred tax assets of EUR 9.316 thousand and deferred tax liabilities of EUR 29.360 thousand.

21

10. Intangible assets Each year the Company carries out a formal impairment test at the end of its financial year. For the six month period ended 30 September 2015 no impairment test has been performed as the operations during the six month period ended 30 September 2015 are in line with assumptions as used in last year's impairment test which is performed at 31 March 2015. Management has therefore not identified any indicators at 30 September 2015, nor at 30 September 2014 for carrying out an additional impairment test.

11. Loans and borrowings The Group has drawn EUR 22,0 million term loans and EUR 35,3 million revolving credit facilities under the existing bank facilities. No major changes have occurred in the position as reflected in the financial statements as at and for the year ended 31 March 2015.

12. Net working capital The increase in working capital for the six-month period ended 30 September 2015 and 2014 is caused by seasonality.

22

13. Financial instruments The following tables show the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. They do not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.

30 September 2015 ' Amounts in EUR `000

Fair value – Loans and hedging receivables instruments

Other financial liabilities

Total

Level 1

Level 2

Level 3

Total

Financial assets measured at fair value Interest rate swaps used for hedging

-

-

-

-

-

-

-

-

Forward exchange contracts used for hedging

133

-

-

133

-

133

-

133

133

-

-

133

-

133

-

133

-

17,477

-

17,477

-

17,477

3,776

-

3,776

-

3,776

-

21,253

-

21,253

-

21,253

Financial assets not measured at fair value Trade and other receivables

-

17,477

Cash and cash equivalents

-

3,776

-

21,253

Financial liabilities measured at fair value Interest rate swaps used for hedging

-1,059

-

-

-1,059

-

-1,059

-

-1,059


-19

-

-

-19

-

-19

-

-19

-1,078

-

-

-1,078

-

-1,078

-

-1,078

Financial liabilities not measured at fair value Secured bank loans (long and short term) Subordinated loan – Mezzanine bank loan

-

-

56,677

-

56,677

-

56,677

-

-

-

-

-

-

-

Cum. pref. shares

-

-

-

-

-

-

-

-

Trade and other payables

-

-

7,418

7,418

-

7,418

-

7,418

-

-

64,094

64,094

-

64,094

-

64,094

56,677 -

23

30 September 2014 ' Amounts in EUR `000

Fair value – Loans and hedging receivables instruments

Other financial liabilities

Total

Level 1

Level 2

Level 3

Total

Financial assets measured at fair value Interest rate swaps used for hedging

-

-

-

-

-

-

-

-


15

-

-

15

-

15

-

15

15

-

-

15

-

15

-

15

17,620

-

17,620

-

17,620

-

17,620

Financial assets not measured at fair value Trade and other receivables

-

Cash and cash equivalents

-

2,935

-

2,935

-

2,935

-

2,935

-

20,555

-

20,555

-

20,555

-

20,555

Financial liabilities measured at fair value Interest rate swaps used for hedging

-2,303

-

-

-2,303

-

-2,303

-

-2,303


-152

-

-

-152

-

-152

-

-152

-2,455

-

-

-2,455

-

-2,455

-

-2,455

Financial liabilities not measured at fair value Secured bank loans (long and short term) Subordinated loan – Mezzanine bank loan

-

-

-81,251

-81,251

-

-81,251

-

-81,251

-

-

-36,098

-36,098

-

-36,098

-

-36,098

Cum. pref. shares

-

-

-68,538

-68,538

-

-68,538

-

-68,538

Trade and other payables

-

-

-7,095

-7,095

-

-7,095

-

-7,095

-

-

-192,982

-192,982

-

-192,982

-

-192,982

24

Measurement of fair values Valuation techniques and significant unobservable inputs The following tables show the valuation techniques used in measuring Level 2 fair values at 30 September 2015 and 30 September 2014, as well as the significant unobservable inputs used. Financial instruments measured at fair value: Type

Valuation technique

Significant unobservable inputs

Inter-relationship between significant unobservable inputs and fair value measurement

Forward exchange contracts and interest rate swaps

Market comparison technique: The fair values are based on broker quotes. Similar contracts are traded in an active market and the quotes reflect the actual transactions in similar instruments

Not applicable

Not applicable

Financial instruments not measured at fair value: Type

Valuation technique

Significant unobservable inputs

Financial assets

Discounted cash flows

Not applicable

Financials liabilities

Discounted cash flows

Not applicable

Financial assets include trade and other receivables and cash and cash equivalents. Other financial liabilities include bank loans, other short term financial liabilities, trade and other payables. The book value of the secured bank loans are considered to be the best approximation of the fair value. For all other financial instruments, the fair value is considered to be consistent with the book value.

14. Employee Share Purchase Plan (ESPP) Since the IPO (4 February 2015) the Group operates an Employee Share Purchase Plan (ESPP) in which employees of the Group are offered the opportunity to buy depositary receipts for shares (investment shares) twice a year at a 13.5% discount, following the publication of the Company’s annual and semi-annual accounts. Each participant may determine at his or her own discretion the amount of money to be invested in investment shares with a yearly maximum of 33.33% of the gross base salary of the participant. Shares issued under the ESPP are bought on the regulated market of Euronext Amsterdam and will be held by a trust foundation. The investment shares are subject to a retention period of three years during which the participant in the ESPP cannot dispose of the investment shares.

25

15.

Commitments and operating leases

Leases as lessee The Group leases offices under operating lease. The Group determined that the office leases are an operating lease. The rent paid to the owner is adjusted to market rent at regular intervals, and the Group does not have an interest in the residual value of the office building. As a result, it was determined that substantially all of the risks and rewards of the office buildings are with the owner. Future minimum lease payments At 30 September 2015 the future minimum payable lease payments under non-cancellable leases were as follows:

Amounts in EUR '000


Less than 1 year Between 1 and 5 years More than 5 years

625

545

2,087

2,113

197

709

2,909

3,367

For the lessor a guarantee has been issued for an amount of EUR 138 thousand.

16. Related parties The related party transactions in the first six-month period ended 30 September 2015 do in substance not deviate from the transactions as reflected in note 29 of the financial statements for the year ended 31 March 2015.

17. Subsequent event No subsequent events were identified.

18. Auditor’s review The interim condensed consolidated financial statements for the period ended 30 September 2015 have not been reviewed by the external auditor.

19. Responsibility statement The Management Board of Lucas Bols N.V. hereby declares that, to the best of its knowledge, the interim condensed consolidated financial statements as at and for the six months ended 30 September 2015 as prepared in accordance with IAS 34 Interim Financial Reporting gives a true and fair view of the assets, liabilities, financial position and the profit or loss of Lucas Bols N.V. and its jointly consolidated companies included in the consolidation as a whole, and that the semi-annual report gives a fair view of the information required in accordance with section 5:25d subsections 8 and 9 of the Dutch Financial Supervision Act (Wet op het financieel toezicht). 26