Press release date:

10/09/2015 - 5:45pm

Reims, Thursday September 10th, 2015, - 5:45 pm

The LANSON-BCC Group is releasing its audited earnings for the first half of 2015, with -1.32 million euros in net income. This result must be put into perspective because the first half-year period accounts for around one third of sales but half of costs. The positive effects of the improvement in the price-product mix and the continued reduction in financial expenses have not offset the negative impact of the contraction in volumes.

Highlights

In terms of volumes, for the Champagne industry as a whole, the first halves of 2015 (-1%) and 2014 (+1.4%) show negative contrasts. The French market, with 52% of the volumes shipped, is flat, while other countries both within and outside of the European Union are down (-2.1%). (Source: CIVC)

In a highly competitive environment, the LANSON-BCC Group's volumes contracted during the first half of 2015 in France, as well as other countries, both within and outside of the European Union. The priority has been to safeguard the price positioning of the Group's Houses, rather than maintaining volumes. Despite the current sluggish market trends, the LANSON-BCC Group is resolutely moving forward with its productive and commercial investment program.

IFRS (€'000,000)

H1 2015

H1 2014

restated*

H1 2014

reported

Revenues

85.83

94.33

94.33

EBIT

2.08

7.21

8.22

Financial income / expense

-3.36

-3.81

-3.81

Net income

-1.32

1.85

2.51

* As required by IFRS (IFRIC 21), the consolidated financial statements for the first half of 2014 have been restated in order to take into account the elimination of the prorata approach for recognizing taxes.

Consolidated revenuesfor the first half of 2015 came to 85.83 million euros, compared with 94.33 million euros (-9%). Excluding the brokerage subsidiary, whose activity is traditionally subject to fluctuations, consolidated revenues represent 84.29 million euros for the first half of 2015, compared with 92.55 million euros (-8.9%).

Exports generated 43.2% of revenues, compared with 44.4% at June 30th, 2014. This change reflects the lower level of sales on several European markets, particularly the UK, where Champagne Lanson has historically had strong market shares, as well as outside of Europe. On export markets and in France, sales have been deferred faced with sometimes high levels of stock in certain distribution channels. Encouraging performances have been achieved on quality destinations such as Italy and Japan.

EBIT came to 2.08 million euros, compared with 7.21 million euros at June 30th, 2014. The operating margin ratio represents 2.4%, compared with 7.6% for the first half of 2014. This change primarily factors in the contraction in volumes and the increase in the cost price of bottles sold. However, the price mix effect has continued to show positive trends for France and export markets.

Financial income and expenses have continued to improve: -3.36 million euros, versus -3.81 million euros at June 30th, 2014 (+13%). The average rate for consolidated debt came to 1.43%, versus 1.60% at December 31st, 2014. This positive change reflects the fact that the most expensive credit facilities have matured, including the end of repayments for the debt to acquire Maison Burtin and Champagne Lanson, set up in March 2006.

Net income totaled -1.32 million euros, compared with 1.85 million euros at June 30th, 2014.

Consolidated balance sheet

Shareholders' equity represented 240.13 million euros at June 30th, 2015, compared with 222.69 million euros at June 30th, 2014.

Consolidated net debtcame to 491.83 million euros at June 30th, 2015, compared with 484.17 million euros at June 30th, 2014. This change takes into account the contraction in sales during the first half of 2015, as well as ongoing investments in the Group's Houses, particularly Champagne De Venoge in Epernay and Champagne Lanson in Reims. 83% of this debt is allocated for ageing a quality stock of wines for over three years, an integral part of the process for creating Champagne wines. Gearing has improved further to 2.05, versus 2.17 at June 30th, 2014.

Outlook

As the first half of the year accounts for 50% of fixed costs, but generates barely one third of sales, these results cannot be extrapolated over the full year for 2015. Since visibility for the end of the year is still limited, the Group is not releasing any forecasts for the full year.

Additional information

The consolidated half-year accounts have been subject to a "limited" review by the statutory auditors (Grant Thornton and KPMG), in accordance with the regulations in force. The half-year financial report was approved by the Board of Directors on September 10th, 2015 and is available on the Group website: www.lanson-bcc.com.

2015 third-quarter revenueswill be released on Thursday November 5th, 2015 (after close of trading).

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