Slide 1: Purcari Wineries Plc Preliminary annual results 2017
Purcari Wineries Plc Preliminary annual results 2017 March 5, 2018 Page 1
Slide 2: Disclaimer
Disclaimer THIS PRESENTATION IS MADE AVAILABLE ON THIS WEBSITE BY PURCARI WINERIES PUBLIC COMPANY LIMITED (the Company) AND IS FOR INFORMATION PURPOSES ONLY. This presentation and its contents do not, and are not intended to, constitute or form part of, and should not be construed as, constituting o
Slide 3: Agenda
AGENDA Rose de Purcari, 1 Message to Investors and 2017 Operational Highlights 90 points by Wine Enthusiast, #1 premium Rosé in Romania 2 Our Group 3 Detailed Operational Performance 2017 4 Preliminary Consolidated IFRS Financial Results 5 2018 outlook 5 6 Q&A Page 3
Slide 4: Message to Shareholders
1 MESSAGE TO SHAREHOLDERS Dear Shareholders, 2017 has been an outstanding year. Listing the company on the Bucharest stock exchange marked a new chapter for Purcari, with higher visibility, higher scrutiny and a deliberate step outside our comfort zone. I am confident this will make us stronger as a
Slide 5: Successful IPO boosting visibility with consumers, partners
1 SUCCESSFUL IPO BOOSTING VISIBILITY WITH CONSUMERS, PARTNERS Unprecedented press coverage, boosting brand Increase in interest from general audience Selected titles Number of Google searches for “purcari” “Moldovan winemaker pivots away from Russia, lists shares” “Purcari Wineries lists on Buchares
Slide 6: Key operational highlights of 2017
1 KEY OPERATIONAL HIGHLIGHTS OF 2017 • Sales up 38% yoy, to RON 147m Very strong • Romania remains largest growth driver, growth accelerating to 69% yoy revenue growth • Maintained premiumization trend, with premium Purcari brand showing fastest growth, +65% yoy • Gross margin down 6.1 pp yoy, to 43
Slide 7: Agenda
AGENDA Negru de Purcari 2013, 4.4 score on 1 Message to Investors and 2017 Operational Highlights Vivino, top 1% wine globally 2 Our Group 3 Detailed Operational Performance 2017 4 Preliminary Consolidated IFRS Financial Results 5 2018 outlook 5 6 Q&A Page 7
Slide 8: Purcari Wineries at a glance (1/2)
2 PURCARI WINERIES AT A GLANCE (1/2) Leading wine player in Romania and the CEE... … with a strong & expanding regional footprint Geographical breakdown of sales in value terms, 2017, % Founded in 1827 by French colonists, Purcari Group is now... RO MD PL CH CZ+SK UA Other awarded CEE winery of the
Slide 9: Purcari Wineries at a glance (2/2): Evolution of Purcari Group
2 PURCARI WINERIES AT A GLANCE (2/2) Macro context Acquisitions Sales’10-17, RON Development 2017 147m 2018 Listing on Bucharest Evolution of Purcari Group Strong economic growth across Stock Exchange (BSE:WINE) CEE, especially Romania 107m Start of push into brandy, 2016 sparkling 71m Ukrai
Slide 10: Our mission, vision and values
2 OUR MISSION, VISION AND VALUES Our mission Our values To bring joy in people’s lives, by Hungry offering them high quality, inspiring, We win in the marketplace because we want it more ethical wines and excellent value for Ethical money. Always do the right thing and the money will follow Thrifty
Slide 11: Our business model
2 OUR BUSINESS MODEL Modern, cost-competitive Purcari is positioned at the winemaking intersections of three themes: Modern winemaking: the company is brand, as opposed to appellation centric and runs a cost-efficient business Affordable luxury: as an aspirational brand, Purcari wines are an exa
Slide 12: Our strategy: growth engines to achieve CEE leadership
2 OUR STRATEGY: GROWTH ENGINES TO ACHIEVE CEE LEADERSHIP Clear drivers to achieve its goal of building a wine champion and consolidate the CEE market… I Build out sales force; direct to retail II Extend brands to new categories % of direct to retail CAGR of brandy2, RON sales1 mn • Build out own sal
Slide 13: Agenda
AGENDA Freedom Blend, indigenous grapes 1 Message to Investors and 2017 Operational Highlights from Moldova, Georgia, Ukraine; 91 points by Wine Enthusiast 2 Our Group 3 Detailed Operational Performance 2017 4 Preliminary Consolidated IFRS Financial Results 5 2018 outlook 5 6 Q&A Page 13
Slide 14: Strong 2017, our 3rd year of 30%+ top line growth
3 STRONG 2017, OUR 3RD YEAR OF 30%+ TOP LINE GROWTH Revenues EBITDA1 Net Income RON m RON m RON m 147 47 32 +38% +26% +37% +35% +72% 37 23 107 71 60 18 9 neg 0 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 Note: (1) For 2017, un-normalized EBITDA is RON 45.6 m, while Adjusted EBITDA is
Slide 15: Markets: Romania largest and highest growth market
3 MARKETS: ROMANIA LARGEST AND HIGHEST GROWTH MARKET Market Share of sales, 2017, % Growth, 2017 yoy, % Comments RO 37% +69% • RO: Entered Lidl and Profi chains; Growth supported by massive media campaign in Q4 for Crama Ceptura; entered sparkling segment with Purcari and Dor lines MD 24% +57% • MD:
Slide 16: Brands: premium Purcari main growth driver
3 BRANDS: PREMIUM PURCARI MAIN GROWTH DRIVER Brand Share of sales, 2017, % Growth, 2017 yoy, % Comments • PURCARI: Romania remains largest market, up 86%, strengthening position as clear #1 premium brand; 39% +65% strong dynamic in Poland, Ukraine – up 78% and 61% respectively, albeit from lower bas
Slide 17: Margins: solid despite adverse FX effects
3 MARGINS: SOLID DESPITE ADVERSE FX EFFECTS Comments ∆ RON m 2014 2015 2016 2017 • Gross margin decreased 6.1 pp, on faster rising ’17/’16 cost of sales, on MDL appreciation vs. RON by Revenue 60 71 107 147 38% 7.7% during entire 2017 Cost of Sales (39) (42) (53) (83) 55% ‒ MDL appreciation in 4Q17
Slide 18: G&A expenses: kept under control
3 G&A EXPENSES: KEPT UNDER CONTROL Year ended Comments 31-Dec-17 31-Dec-16 ∆ ’17/’16 • (1) Effect of MDL appreciation Employee benefits (1) 6,871,582 5,523,029 24% affecting MDL denominated salaries Depreciation 790,060 716,968 10% • (2) Includes circa RON 740 thousand Amortization 38,946 34,357 13%
Slide 19: Ongoing deleveraging, with net debt / EBITDA ~1x
3 ONGOING DELEVERAGING, WITH NET DEBT / EBITDA ~1X Net Debt/EBITDA 6.3x 3.3x 1.2x 1.1x 2014 2015 2016 2017 Page 19
Slide 20: Continued creating engaging, differentiating brand building campaigns
3 Continued creating engaging, differentiating brand building campaigns Grape, Oak and Patience (Jan) Digital Label (April) Bostavan Sparkling (May) TV campaign Bardar brandy April’s Fool prank Dor, value line launch Winelicious (Year round) Purcari Wine Run (August) Crama Ceptura – Astrum (Oct) Sho
Slide 21: Ongoing investments into digitization, technology, process efficiency
3 Ongoing investments into digitization, technology, process efficiency Push on digitization Ongoing investment in top wine technology • Management focused in digitizing processes, increasing reliance on • Continued investing in quality, with Bitzer data in running operations and minimizing human er
Slide 22: Agenda
AGENDA Crama Ceptura – Astrum, the latest 1 Message to Investors and 2017 Operational Highlights introduction in the Ceptura line-up, targeting the 15-20 RON/bottle segment, 2 Our Group which accounts for circa 20% of market sales, which the Group started 3 Detailed Operational Performance 2017 purs
Slide 23: Profit and Loss Statement
4 Profit and Loss Statement 31-Dec-17 31-Dec-16 RON RON Gross revenue 163,666,700 119,856,656 Discounts (16,655,775) (13,096,414) Revenue 147,010,925 106,760,242 Cost of Sales (82,616,002) (53,471,103) Gross profit 64,394,922 53,289,139 Other operating income 1,317,093 1,223,583 Marketing and sellin
Slide 24: Balance Sheet
4 Balance Sheet 31-Dec-17 31-Dec-16 Assets RON RON Property, plant and equipment 66,947,091 64,931,515 Intangible assets and goodwill 1,050,873 1,058,552 Loans receivables 953,034 2,840,953 Investments in associates 7,457,736 - Other non-current assets 24,446 9,441 Non-current Assets 76,433,180 68,8
Slide 25: Agenda
AGENDA Cuvée de Purcari, 1 Message to Investors and 2017 Operational Highlights the extension to sparkling launched in 2017. 2 Made according to Our Group the traditional, Champenoise method, with in- 3 Detailed Operational Performance 2017 bottle fermentation 4 Preliminary Consolidated IFRS Financi
Slide 26: Favorable wine-macro outlook for 2018
5 FAVORABLE WINE-MACRO OUTLOOK FOR 2018 Wine prices at a historical high, on poor global 2017 harvest Purcari Wineries 2018 outlook VINEX Global Price Index (VGPI)1 135 • 2017 has marked a historical low in global wine “As a direct consequence of the tighter volumes, production for the last several
Slide 27: Agenda
AGENDA 1 Message to Investors and 2017 Operational Highlights 2 Our Group 3 Detailed Operational Performance 2017 4 Preliminary Consolidated IFRS Financial Results 5 2018 Outlook 5 6 Q&A Purcari Ice Wine, Decanter Platinum, 95 points, Best CEE sweet Page 27
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