2016 Results: 2016 net margin of 4.3% despite the Sterling's depreciation

2016 net margin of 4.3% despite the Sterling's depreciation

Financial structure further strengthened

Reims, Thursday March 30th, 2017 - 5:45 pm

Following a dynamic end to 2015 and first half of 2016, the sterling's sharp depreciation and a relatively sluggish French market affected LANSON-BCC's performances over the second half of 2016. Despite this disappointing environment, net income came to 11.15 million euros, enabling the Group to further strengthen its financial structure. In 2017, LANSON-BCC is moving forward with its investments, in line with its long-term value development strategy.

Consolidated earnings

2016 consolidated revenues came to 259.15 million euros (-2.8%). Excluding the brokerage subsidiary, whose activity is traditionally subject to fluctuations, consolidated revenues represent 252.23 million euros (-3.4%).

The Group's EBIT represents 23 million euros, compared with 27.08 million euros (-15%). On the one hand, the sterling's sharp depreciation (-11.4%) affected performances in the UK, the Group's primary export market. On the other hand, intense competition undermined sales in France. The increase in sales prices at constant exchange rates was not sufficient to fully offset the increase in the cost price of bottles sold during the year. EBIT for the year also factors in the ongoing programs for major investments in several Houses to further strengthen their capacity for development.

Financial expenses primarily concern financing for the aging of Champagne stocks, coming in at -6.60 million euros, compared with -6.96 million euros, thanks to the continued reduction in the average rate for financial debt, down from 1.37% in 2015 to 1.18%.

Pre-tax earningscame to 16.40 million euros, with -5.25 million euros in income tax. The Group's effective corporate income tax rate was 32%.

Net incomerepresents 11.15 million euros, compared with 12.25 million euros, giving a net margin rate of 4.3%.

Consolidated balance sheet

Shareholders' equityrepresents 264.55 million euros,up from 253.56 million euros at end-2015 (+4.3%).

Consolidated net financial debt totaled 500.70 million euros (73% fixed rate), versus 498.88 million euros at end-2015. Out of this debt, 434.35 million euros, compared with 417.73 million euros at end-2015, are allocated for financing the ageing of Champagne stocks, with a book value of 476.06 million euros, versus 470.67 million euros at end-2015.

Other financial debt represents 66.35 million euros, down from 81.15 million euros at end-2015
(-18.2%).

The Group's financial structure has continued to improve: gearing (1.89) is at a normal position for the Champagne industry, in line with its high levels of stocks for aging, down from a high of 5.68 at end-2006 following the acquisition of Maison Burtin and Champagne Lanson. Excluding stocks, this ratio comes out at 0.25, compared with 0.32 in 2015.

LANSON-BCC's Board of Directors will be submitting a proposal for approval at the General Meeting on May 19th, 2017 for the dividend to be kept at 0.35 euros per share and paid out on May 26th, 2017. By allocating nearly 90% of its consolidated net income since 2006 to further strengthening its financial foundations, the shareholders have set out their commitment to ensure the Group's sustainability by giving it the means required for its long-term development.

Outlook

The impacts of the sterling's sharp depreciation and the contraction in volumes in France on profitability for the year were not offset by the good performance recorded for the first half of 2016, the positive changes in the product mix and the further reduction in financial expenses. Confident about its future, LANSON-BCC is reasserting its long-term value development strategy. Its Houses are continuing with their major investments. The sometimes unreasonable practices adopted by competitors on certain markets highlight the benefits of a commonsense policy to not ignore any segments or regions, while successfully avoiding any involvement in excessively aggressive promotional operations.

The Group's development is underpinned by the effective fit between its Houses, combined with the increasingly widely recognized quality of their wines, their efficient production facilities and their effective management.

As usual, considering the importance of the last quarter of the calendar year, the LANSON-BCC Group will not be releasing any quantified targets for 2017.

Additional information

The consolidated financial statements for 2016 were approved by the Board of Directors on March 30th, 2017. The procedures to audit the consolidated accounts have been completed. The certification report will be issued once the necessary procedures have been finalized for filing the 2016 registration document.