B&S S A : Inside Information / Ad Hoc Information Full Year 2023 results B &S Group S.A.

Full Year 2023 results

B&S Group S.A.

B&S delivers on projected EBITDA of € 111 million

Mensdorf, Luxembourg - April 16, 2024 (07:00 CET)

B&S Group S.A. ("B&S" or the "Company"), a company in the consumer goods industry, today publishes its full year 2023 results ("FY 2023").

Highlights

During 2023, the governance procedures were strengthened, guided by a new Supervisory Board and Executive Board;

Overall turnover increased by 3.3% to € 2,219.8 million (4.3% on a constant currency basis);

Gross profit grew with 13.1% to € 343.6 million;

Reported EBITDA came in at € 110.9 million (2022: € 90.9 million), with EBITDA margin

of 5.0% (2022: 4.2%);

Net debt decreased from € 334.9 million to € 306.5 million;

Net debt / EBITDA leverage improved to 2.8 (2022: 3.7), well within our bank covenants;

Dividend proposal: € 0.16 per share (2022: € 0.12 per share);

Strong performance Personal Care due to clear private label strategy;

Beauty continued to benefit from B2C strategy especially in the US, in spite of difficult market circumstances;

In 2023 inflation impacted operational expenses which increased by € 20 million, of which € 2.9 million was realised in the second half year;

Our newly onboarded external auditor KPMG issued an unqualified audit opinion;

Financing arrangements have been secured to the end of 2026.

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Message from the Executive Board

We are pleased with the performance of the B&S Group S.A. (the "Company") over 2023: reporting a EBITDA just below € 111 million and yet with room for further improvement in different parts of the business. Additionally, there have been positive developments of other financial indicators such as leverage, Return on Invested Working Capital and dividend payout, all in the range of 20% - 30%.

It must be noted that especially the segment Personal Care outperformed in 2023, whereas Beauty, Food and Health showed steady results. Liquors and Travel Retail struggled with the market circumstances and inflation in 2023.

We would like to thank our management and staff across the globe who have been resilient throughout the year and contributed so much to the success of the Company in 2023. At the same time the Company has progressed in the field of governance, working capital management and risk management.

We have been working on the onboarding procedures of new stakeholders, communicating our way of working at B&S, our related party policies and on policies as regards incentivising our senior management. Furthermore, we have sharpened our Code of Business Ethics. We believe all these steps contribute to a healthy and responsible business environment within the group.

As per the end of 2023 as well as early 2024 we have executed on the planned buy out of minority shareholders. We have increased our direct majority shareholdings in FragranceNet (from 75% to 87.5%) in November 2023 and in Topbrands in the beginning of 2024 (from 70.83% to 95%).

All in all, we had a financially stable year on a consolidated level, with a turnover increase of 3.3% to € 2.2 billion and EBITDA increasing by € 20 million to € 110.9 million. Together with balance sheet management, this resulted in a leverage ratio of 2.8 per year end.

A New Strategy

As Supervisory Board and Executive Board we defined, together with the segment leadership, a new strategy centred around our six segments. Our segments are united in branded consumer goods and operate in different markets. They create synergies through optimisation of distribution costs and solving marketing and supply chain challenges. At the same time, to understand the potential of the Company, one has to obtain a good understanding of each segment since they are all different in growth potential, M&A potential and risk profile.

Our segments operate close to their markets, have unique global networks, and hold all together over 20 independent brands in their respective markets.

The strategy is centred around building autonomous and accountable segments. To support this strategy all segments will focus on operational excellence and as such further improve on cost control, working capital management, business control, and sustainability.

Focus on digitisation remains important in all internal and external processes. All segments will be working on our corporate culture, will continue to focus on governance, sustainability and people engagement through data driven HR policies while maintaining our entrepreneurial spirit.

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Next to operational excellence at Company level we will remain focused on strategic options around M&A opportunities to strengthen any of the six segments and improving the logistical backbone of the Company.

Outlook

For 2024, we project topline growth across our segments in line with our Financial objectives 2024-2026 albeit at the lower end of the range, resulting in a consolidated growth of approximately 5%. We expect to continue growth in our Personal Care, Beauty and Travel Retail segments. Our segment Food is expected to grow on the back of market developments. Travel Retail will grow in 2024 partly as a result of the full year effects of new stores and the further recovery of travellers. Global liquor markets are expected to bottom out in the second half of 2024. We project staff cost and other operating expenses to normalise, yet inflation is expected to remain a factor. With stable gross profit margins we project EBITDA margin in the range of

5 to 6%.

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Key figures FY 2023

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Financial performance

Turnover

2023 turnover increased 3.3% compared to 2022 levels. Organically, turnover increased 3.0% and was mainly driven by Beauty, Personal Care, and Travel Retail. Acquired turnover contributed 0.3%, stemming from the acquisition of Europe Beauty Group per May 2022 in the Beauty segment.

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B&S Liquors

Turnover decrease for the year (-9.7%) was mainly driven by challenging market circumstances in the (international) liquor market. Higher interest rates and increased product availability in the market, due to oversupply of goods by brand owners and competitors which led to high volatility of prices, largely explains the challenging market circumstances.

B&S Beauty

The increase in turnover is mainly driven by our B2C companies, which benefited from its quality inventory positions and overall better market circumstances. The reported turnover was negatively impacted by FX-results. On a constant currency basis turnover grew by 7.5% compared to last year.

B&S Personal Care

2023 has been an exceptional successful year for Personal Care, marking its best historical performance, with strong growth in both revenue and profit. This surge is primarily the result of product scarcity in the market and widespread inflation, factors that have collectively contributed to our turnover increase compared to prior year. Additionally, a strategic shift in our product portfolio in favour of our Brand & Private Label assortment has positively contributed to the increase in turnover.

B&S Food

In 2023, our Food segment prioritised stability and service excellence amidst challenging market conditions, focusing on three core areas: (i) Duty-free channels, (ii) Maritime and Cruise Businesses, and (iii) Export/ Distribution into underserved markets. The turnover decreased within the Export/ Distribution services due to substantial price increases not being absorbed by the end-customers. Macro economical and geo-political influences strengthened the headwind. On the other hand, turnover of the Food Service distribution remained robust, bolstered by our brand partnerships and digital innovations through our B2B platform, www.kingofreach.com.

B&S Health

Turnover increased by 4.0% compared to 2022 mainly stemming from a higher demand for travel related vaccines and medicines business. Turnover of worldwide medical supply was lower due to one-off deals in 2022, partly related to the Covid pandemic.

B&S Retail

Turnover increased by 21.1% mainly as a result of the opening of new shops both in late 2022 (3 shops) and during 2023 (12 shops), as well as increased passenger numbers.

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Turnover split per segment

Gross profit

Gross profit amounted to € 343.6 million (2022: € 303.9 million). As a percentage of turnover, margins increased from 14.1% to 15.5%. This was mainly the result of turnover compilation and focus on sales margins. Lastly, as a reminder, it should be noted that the 2022 gross profit was impacted by one-off provisions in the Food segment amounting to € 15.8 million.

Operating expenses

Operating expenses increased from € 213.1 million to € 232.8 million. The increase of € 19.7 million mainly stems from increased personnel cost (+14.2 million), office / warehouse costs, travel cost and other operating expenses.

EBITDA

EBITDA increased by 22.0% to € 110.9 million (FY 2022: € 90.8 million) mainly as a result of the gross margin increase, partly off-set by an increase in operating expenses. EBITDA margin increased to 5.0% (FY 2022: 4.2%). Adjusted for one-offs, EBITDA margin stood at 5.1% in 2023 (2022: 5.0%).

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Group result for the year

Depreciation of tangible fixed assets, depreciation of right-of-use assets and amortisation of intangible fixed assets amounted to € 36.7 million (2022: € 32.7 million). Additionally, a reversal of impairment loss related to the Food segment of € 6.1 million has been accounted for in 2023.

Financial expenses increased to € 17.3 million (2022: € 10.4 million) mainly as a result of increased

borrowing rates. All in all, this resulted in profit before tax of € 63.5 million (2022: € 47.7 million).

The effective tax rate stood at 24.4% compared to 24.3% FY 2022. As a result, net profit from continuing operations amounted to € 48.0 million (2022: € 36.1 million).

Net profit attributable to non-controlling interests amounted to € 14.3 million (2022: € 10.0 million). The increase is mainly the result of increased net results of Topbrands Europe B.V. and the increased contribution of FNet acquisition Company LLC. Net profit attributable to the owners of the Company amounted to € 33.8 million (2022: € 26.1 million).

Cash flow & financial position

Net cash from operations amounted to € 79.5 million (2022: € 98.8 million).

Net working capital increased to € 464.0 million at year-end 2023, compared to € 455.7 million at year-end 2022, due to decreased payable positions and increased trade receivables, offset by decreased inventory positions.

Investing activities mainly related to the payment of the purchase of shares of FNet acquisition Company LLC and FNC International B.V., the received cash for the sale of shares in Top Care Distribution S.L.U. and the investments in furniture and other equipment for new shops and renovations of buildings.

Financing activities mainly related to dividend payments to both the shareholders of the Company and the minority shareholders, off-set by changes in credit facilities and new loans received from banks.

Net debt decreased from € 334.9 million as per year-end 2022 to € 306.5 million as per year-end 2023. The Leverage Ratio stood at 2.8 (FY 2022: 3.7). The Interest Coverage Ratio (ICR) came in at 4.7 (FY 2022: 5.8). As such, both ratios are within our bank covenants.

Dividend proposal

At the Annual General Meeting to be held on May 24, 2024, B&S will propose the payment of € 0.16 per share, in cash (subject to withholding tax if applicable). This translates into a pay-out ratio of 40% of the annual profits attributable to the owners of the Company.

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Conference call

Our CEO Peter van Mierlo and our CFO Mark Faasse will host an analyst call at 10:30 CET this morning to discuss the FY 2023 Results publication.

The call will be recorded and archived for playback purposes and will be available on our website shortly after the call.

Financial calendar

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