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Purcari Wineries Plc2019 Preliminary unaudited results presentation

February 28, 2020

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Disclaimer

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whatsoever.

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deems necessary.

The information herein, which does not purport to be comprehensive, has not been independently verified by or on behalf of the Group, nor does the Company or its directors, officers, employees, affiliates, advisers

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a prediction of actual results, or a promise or representation as to the past or future, nor as an indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or

prospects have been prepared or the information or statements herein are accurate or complete. Past performance of the Group cannot be relied on as a guide to future performance. No statement in this

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This presentation contains references to certain non-IFRS financial measures and operating measures. These supplemental measures should not be viewed in isolation or as alternatives to measures of the

Company’s financial condition, results of operations or cash flows as presented in accordance with IFRS in its consolidated f inancial statements. The non-IFRS financial and operating measures used by the

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▪ Over 10 years of

management experience

▪ Ex Virgin Mobile, ACN in

senior Business

Development, Sales and

Marketing roles

▪ Amsterdam University of

Applied Sciences, ESSEC

Business School

▪ Speaks EN, RO, RU, NL,

FR

Eugen ComendantCOO

Today’s presenters

▪ 20 years of experience in

banking, audit, corporate

finance

▪ 10+ years experience in

wine making companies

▪ Ex-PWC, Acorex Wineries

▪ International Management

Institute

▪ Speaks EN, RO, RU

Victor ArapanCFO

▪ Over 10 years experience

in FMCG

▪ Partner at Horizon Capital,

$850m+ AUM

▪ Ex- Monitor Group, Philips

▪ MBA Harvard Business

School

▪ Speaks EN, RO, RU, FR,

NL

Vasile TofanChairman

▪ Founded the Group in

2002

▪ Over 35 years of

experience in wine

industry

▪ Built and exited one of the

largest wine companies in

RU

▪ Technical University,

Oenology

▪ Speaks FR, RO, RU

Victor BostanCEO, Founder

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1 Our Group

2 2019 Operational Results

3 2020 Outlook

4 Q&A

Our newest

launch, Malbec de

Purcari, tapping

the global Malbec

phenomenon, a

fruit-bomb and big

hit with consumers.

Agenda

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Purcari Wineries at a glance

Source: Company Information, FAOSTAT, OIV, Decanter, the Ministry of Finance of Romania, Nielsen

Founded in 1827 by French colonists, Purcari group is now...

4 brands, covering a broad spectrum of segments

Leading wine player in Romania and the CEE...

Located in a region with one of the richest wine heritages

Top 10 European countries by area under vines, kha

… with a strong & expanding regional footprint

Geographical breakdown of sales in value terms, 2019, %

awarded CEE winery of the year in 2015-2019 at Decanter

London, “wine Olympics”

premium wine brand in Romania, Moldova

fastest growing large winery in Romania

largest exporter of wine from Moldova

1,392+ hectares of prime vineyards, top production assets

Reputable shareholders alongside founder, Victor Bostan:

Fiera Capital, Aberdeen, Conseq, East Capital, SEB,

Franklin Templeton, Horizon Capital, etc

#1

#1

#1

#1

top

top

42% 23% 11% 6%5%

10%3%

CN UA Other

CZ+SK

RO PLMD

191

147

969

793705

338

192106 103 92 69 66

ES FR IT RO+MD PT GR DE RU HU BG

#1 CEE #4 Europe

1

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Our Group: competitive advantage in an attractive market

Wine growth ’16-

’20F in Romania

9.0% vs. 1.9% for

beer

#1 fastest growing

large winery in

Romania

Shrinking vine

plantations, create

shortage, push

prices up

Secular shift from

beer, spirits to

wine, especially in

CEE

Plenty to catch

up: wine

consumption in

Poland = ¼

Germany, per cap.

Romania +

Moldova

undisputable #1

vineyards size in

CEE, 5x vs #2

#1 EBITDA

margin among

global publicly

traded wine peers

#1 premium wine

brand in Romania

#1 most awarded

CEE winery at

Decanter, “wine

Olympics”

#1 on Instagram,

Vivino engaging

millennials in

Romania

Attractive

market

Competitive

advantage

1

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Our business model: Affordable Luxury

Modern,

cost-competitive

winemaking

Affordable

Luxury

Differentiated

marketing

Purcari is positioned at the

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 example of

affordable luxury, building on a

heritage dating back to 1827

and ranking among the most

awarded wineries in Europe

▪ Differentiated marketing: the

company is not afraid to be

quirky about the way it

approaches marketing,

prioritizing digital channels

and focusing on engaging

content as opposed to

traditional advertising

1

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Our mission

Our vision

Our values

To become the undisputable wine

champion in CEE, acting as a

consolidator of a fragmented industry

To bring joy in people’s lives, by

offering them high quality, inspiring,

ethical wines and excellent value for

money.

HungryWe win in the marketplace because we want it more

EthicalAlways do the right thing and the money will follow

ThriftyThe only way we can offer better value for money

DifferentWe proud ourselves on taking a fresh look on things

BetterWe keep improving – both our wines and our people

Our mission, vision and values1

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Vision: be the consolidator of a fragmented market

Volume share top-3 players by country, %

Unlike beer or spirits, wine market remains very fragmented; players who have

the scale and sophistication needed – are in a great position to consolidate it

#1

#2

#3

Source: Euromoniitor 2016, market share for top-3 players in the still wine category; *excludes Murfatlar, in insolvency

18

68

Beer WineSpirits

82

39*

79

Beer Spirits Wine

41

10

63

Beer Spirits Wine

7477

Beer Spirits Wine

67

36

1

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Topping competition at engagement, quality

Note: Purcari - #purcari, Cramele Recas - #recas, Jidvei - #jidvei, Cotnari - #cotnari, Budureasca - #budureasca, Samburesti - #samburesti, Segarcea - #segarcea

Sources: Instagram, Vivino as of February 2020

Aspirational brand which consumers like sharing about

Number of #brand uses on Instagram, thousand, by key Romanian brands

Highest number of ratings and highest scores on Vivino

X axis – number of Vivino ratings; Y axis – average Vivino score

3.0

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

4.0

4.1

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000

1

10,6

0,4

4,6

1,9

5,7

1,30,8

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Excellent feedback from digital natives, dominate premium segment

Note: as per Vivino breakdowns as of January 2020

#1 #1

#1 presence in the RON <30 and RON 30-60 segment;

Hold 10 out of TOP-25 positions in the crucial RON 30-60 segment

1

• We remain obsessed about the

quality of our wines, which pays

off in excellent consumer feedback

• In our core premium segment, 30-

60 RON per bottle shelf price, we

dominate the category with 10 best

rated wines in Vivino’s top-25

• Our push in upper-mainstream

segment shows good results, with 4

of our wines in top-25 <30 RON

• We remain convinced, it is the

product that will make the

difference in mid and long term

with consumers, so we are focusing

on making exciting wines, that

capture people’s imagination

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Leading medal-winning winery1 in CEE at Decanter,

the Wine ”Olympics”

# of Decanter medals in 2015 - 19

▪ Unlike beer or spirits, wine production is more prone to

quality fluctuations. The Group has demonstrated the

ability to keep raising the bar quality wisely, as illustrated

by the mounting number of medals won at top global

competitions

▪ Most awarded winery to the east of Rhine, ahead of reputable

(and much pricier!) German, Hungarian or Austrian wineries

Increasing number of medals won from year to year

# of medals

Quality highly commended, remain the most awarded winery in CEE1

Notes: (1) PWG: Purcari Wineries Group = Purcari, Crama Ceptura and Bostavan brands;

7

2013

15

2014 2015

14

2016 2017 2018 2019

2325

44

56

Decanter

IWSC

Challenge International du Vin, Bordeaux

Concours Mondial de Bruxelles

Mundus Vini52

45 45

37

32 32

2523 22 21

1916 16

7 6

#1

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1919

20

22

9

10

8 8

16

13

7

655 5 5

4

3 3

16

11

6

3 3

0

2

4

6

8

10

12

14

16

18

20

22

24

2014 2015 2016 2017 2018 2019

Value share of TOTAL retail market, Romania, %

1616

1615

16

1111

12

1213

11

12 12

1211

56

6

8 9

10

34

5

7

9

9

2014 2015 2016 2017 2018 2019

4

16

14

2

6

8

10

12

18

13

11

10

Overall, Purcari has tripled MS in 5 years….

Cotnari

Vincon

Jidvei

Cramele Recas

Purcari (Group)

Value share of Premium (RON 30+/liter) retail market, Romania, %

…while becoming a clear #1 in Premium1

78

1212

13

2

Crama Ceptura

Purcari (Group)

Samburesti

Murfatlar*

Segarcea

25%+ Market

Share in

Premium for

Group

Clear #1 in premium in Romania, keep gaining share, ample headroom1

Notes: (1) FY 2019

Sources: Nielsen report; Purcari Group = Purcari, Crama Ceptura and Bostavan brands;

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Negru de Purcari

2013, 4.4 score on

Vivino, top 1% wine

globally

1 Our Group

2 2019 Operational Results

3 2020 Outlook

4 Q&A

Agenda

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Net Income normalized2EBITDA1Revenues

1

60

71

107

142

168

199

2014 2015 2016 2017 2018

9

18

37

44

55

68

20162014 2015 20182017

0

23

29

44

2014 2015 20182016

neg

2017

RON m RON m RON m

Note: (1) EBITDA normalized for non-recurring, IPO-related expenses incurred in 2017 and 2018

(2) Net income normalized for Net gain on equity instruments, namely investment in Glass Container Company at FVTPL in 2018 (-RON 4.17m) and 2019 (+RON 0.24 m).

Net Income in 2018 RON 41.7m and 2019 RON 44.3 m, up 6% YoY

+29%+23%

+19%2+18%

Strong track record of growth

2019 2019 2019

33%EBITDA margin 22%NI normalized margin 22%34%

37

424.2m RON in extraordinary

gains from revaluation of

stake held in Glass

Container Company in 2018

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2

Strong revenue

growth

• Robust revenue growth sustained, sales increasing +18% YoY in 2019, to RON 199.1m.

• Romania contributing most to the growth, increasing 26% YoY, accompanied by high double-digit growth

in Moldova and Poland. Very fast growth in Asia +52% and Ukraine +28%.

• Purcari and Bardar leading the growth both in value and volumes terms.

Strong guidance for

2020

• Organic revenue growth +16-20%.

• EBITDA margin 30-32%.

• Net Income margin 20-22%.

Sustaining high

margins

• EBITDA margin at 34% and Net Income margin1 at 22%, on strong revenues growth, good cost control.

• Increase in trade marketing drove marketing and sales expenses to 10% of sales.

• G&A expenses reduced to 11% of sales on certain salary cost reallocations to Cost of Sales, lower

professional fees compared to 2018 when IPO related expenses were incurred.

Decent harvest in a

challenging year for

growers globally

• 2019 world wine production down 10% YoY, EU’s down 15%, enabling positive pricing environment.

• Own harvest at Purcari Group down 9% YoY, lower purchases from third parties, along with significant

stocks build-up in 2018 season.

• Positioned well stock-wise to support ambitious sales plan in 2020.

Key operational highlights for 2019

Excellent customer

feedback

• 8 out of top 10 wines in Romania according to Vivino (30-60 RON) are Purcari’s.

• Our flagship Negru de Purcari 2015 ranked #1 in the world in the $10 - $40 price segment by Vivino.

• Excellent performance at wine tasting competitions, with 56 medals won (vs. 44 in 2018).

Note: (1) Net income normalized for Net gain on equity instruments, namely investment in Glass Container Company at FVTPL in 2018 and 2019.

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2

Market Share of sales, FY19 Growth, FY19 YoY Comments

RO

MD

PL

ASI

CZ

SK

UA

RoW

42%

23%

11%

6%

5%

3%

10%

+26%

+19%

+18%

+52%

-22%

+28%

+8%

• RO: Strong Purcari performance, up 37% YoY. Bardar up fourfold,

albeit from lower base. Crama Ceptura growing at high single-digit

rate, launched 360 Ad campaign to boost sales, expected effect in

2020.

• MD: Bardar shows ongoing strong growth. Good ramp up with

Coca Cola Hellenic, our distributor; better client services and AR

discipline. Significant fragmented channel penetration in Q4,

HORECA has recovered growth pace.

• PL: Maintained success in Bostavan development initiatives,

expanding within key accounts, price increases pushed through.

Continue to work on brand revamp. Entering market with Purcari

and Bardar brands, +50% and +112% accordingly, albeit from

a smaller bases.

• ASIA: Strong year, driven by an increase in volumes and

improved product mix. Continue work on implementation of the

commercial strategy for China.

• CZ&SK: Sales impacted by restructuring process of one of key

distributors; buffer stock effects on a large order from key partner;

much more aggressive price promo from local and EU competitors.

Refocusing the strategy from sweet wine perceived as cheap to

more premium dry segments.

• OTHER: Strong performance in Belarus +22%, fueled by Bardar

price increase and shift from bulk to bottles. Mid single-digit growth

in Baltics partly impacted by high excise tax. Modest growth in

RoW as we are yet to establish long term partnerships.

Markets: Romania remains key growth driver, followed by Moldova

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2

• PURCARI: ongoing strong traction in Romania, ample headroom

remains through geographic expansion and traditional trade

segment. Double digit growth in Moldova, larger benefits still to be

expected in mid-to-long-term from distributor shift. Promising

performance in Asia +71%, Poland +50%, Ukraine +39%.

• BOSTAVAN: strong traction in Poland +18% as expanding on to

new large retail chains. Successfully optimizing pricing policy,

average price per liter up 2% YoY. Double digit growth in Asia and

Ukraine, albeit from smaller base. Certain challenges in CZ&SK

due to key distributor restructuring, aggressive price competition

which overall eroded 8% YoY growth. Refocusing the strategy

from sweet wine perceived as cheap to more premium dry

segments.

• CRAMA CEPTURA: growing at low double-digit rate, launched

360 Ad campaign to boost sales with an expected effect in 2020.

Catch up potential in traditional trade and geographically in

Romania.

• BARDAR: Successful commercial strategy in Moldova resulting in

a very strong year. The relation with new distributor, CCH1,

steadily speeds up, significant benefits in channel penetration in

Q4, HORECA has recovered growth. Strong performance in

Belarus +22%, fueled by Bardar price increase and shift from bulk

to bottles

42%

15%

28%

15%

+33%

+11%

+4%

+27%

Premium brands Purcari and Bardar lead the growth

Note: (1) Coca Cola Hellenic

Brand Share of sales, FY19 Growth, FY19 YoY Comments

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▪ Revenue up 18.4%, within guidance range, on strong

performance of Purcari, Bardar brands.

▪ COGS lower in Q4 YoY as effect of reversing the provision

for Fair Value of vineyards of 2018 and updating with 2019

Fair Values, as per IFRS.

▪ Gross margin slightly up with revenues growing faster than

cost of goods sold, on improved mix and select price raises.

▪ Increase in marketing and selling activity to 10% of sales in

correlation with seasonal high selling quarter. Upside

effects on sales expected in Q1 too.

▪ Other operating expenses reflect adjustment to the FV of

harvested grapes at the year end according to Market price.

▪ G&A expenses reduced to 11% as share of revenue due to

certain salary cost reallocations to Cost of Sales, lower

professional fees compared to 2018 when IPO related

expenses incurred.

▪ Adjusted EBITDA margin at 34% level achieving top of the

guidance. Normalized EBITDA growth of 23% shown,

excludes the IPO related expenses in 2018, with non-

adjusted EBITDA up 25% YoY.

▪ Normalized Net profit stood at RON 44.5 million, up 19%,

with margin within the guidance range 22-24%.

Normalization stands for Net gain on equity instruments,

namely investment in Glass Container Company at FVTPL

(a 4.2m RON gain was recorded in 4Q19). Un-normalized,

IFRS Net Profit up 6% YoY ‘19/’18.

2

Comments

Margins and sales continuous growth

RON m 2018 2019 ∆ ’19/’18

Revenue 168.1 199.1 18.4%

Cost of Sales (85.5) (96.7) 13.2%

Gross Profit 82.6 102.4 23.9%

Gross Profit margin 49.2% 51.4% +2.3 pp

SG&A (36.0) (43.3) 20%

Marketing and selling (13.9) (19.1) 38%

General and Administrative (23.0) (22.5) -2%

Other income/expenses 0.9 (1.6) -269%

EBITDA 54.4 68.2 25%

Adj. EBITDA 55.3 68.2 23%

Adj. EBITDA margin 33% 34% +1 pp

Net Profit normalized 37.6 44.5 19%

Net Profit margin

normalized 22% 22% +0 pp

Net Profit 41.7 44.3 6%

Net Profit margin 25% 22% (3 pp)

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2 IFRS 16 effect reconciliation – relatively minor impact

Nature of operation Impacted area

Amount before

applying IFRS 16

Impact of

IFRS 16

Amount after

applying IFRS 16 Change, %

Recognition of right-of-use assets Property, plant and equipment 266.36 8.50 274.86 3%

Recognition of lease liability Current borrowings and finance lease 48.91 0.74 49.65 2%

Non-current borrowings and finance lease 54.71 6.43 61.14 12%

Depreciation of right-of-use assets Charge for the year 7.10 0.80 7.90 11%

Accrued interest on lease liability Finance cost 5.31 0.50 5.80 9%

Derecognition of buildings rent G&A expenses 23.20 -0.68 22.52 -3%

Foreign exchange (gain)/loss 0.86 -0.09 0.77 -11%

Derecognition of land rent Inventory 127.22 -0.40 126.82 0%

Cost of Sales 96.76 -0.04 96.73 0%

Net Profit 44.79 -0.49 44.30 -1%

EBITDA 67.45 0.72 68.17 1%

RON, m

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Freedom Blend,

indigenous grapes

from Moldova,

Georgia, Ukraine;

91 points by Wine

Enthusiast

1 Our Group

2 2019 Operational Results

3 2020 Outlook

4 Q&A

Agenda

Page 22

Guidance 2020 – continue robust growth, sustain margins

Target 2020 guidance Comments

• Financing cost does rise on higher rates in Romania;

financing in Moldova remains very competitively priced.Net Income

margin20-22%

Organic

revenue

growth

+16-20%

• Romania to remain growth driver, continue focusing on

Poland, Czech, Slovakia, Ukraine; continue seeding newer

markets – Asia, Scandinavia, Germany.

• Launch a number of new products from our Bostavan winery,

on premiumization drive.

EBITDA

margin30-32%

• Expect moderate increase in COGS given smaller harvest,

but to be compensated by favorable pricing environment and

ongoing premiumization of portfolio.

3

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3 Upgraded production to sustain growth for the years to come

Purcari

Crama Ceptura

Bostavan

Bardar

• Built a new bottling section with

storing and warehouse facilities, to be

fully equipment in 2020

• Increased storing capacities,

~300,000 dal

• Mythos vinificators, which also lowers

CO2 footprint, as reusing it during

fermentation

• Modernized the sewage processing

facility

• Planted 30 ha of new vineyards

(60ha planned for 2020)

• Acquisition of production facility at

Moscovei with 100ha of wineyard;

acquisition of Chetrosu vineyard

150ha

• Increased storing at Moscovei to

250,000 dal

• Mythos vinificators, lowering the CO2

footprint

• Re-equipped grape processing and

fermentation equipment, increasing

storing to 500,000 dal, as well as

grapes processing capacity

• Switched to new highly efficient

filters, lowering the usage of

consumables

• Distillated more than 70,000 dal to

sustain strong growth in demand

• Increased storing capacities for

distillates by 50%

• Extended aging warehouse by 15%

for additional barrels

• Modernized the entire electricity

system

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1 Our Group

2 2019 Operational Results

3 2020 Outlook

4 Q&A

Cuvée de Purcari,

the extension to

sparkling

launched in 2017.

Made according to

the traditional,

Champenoise

method, with in-

bottle fermentation

Agenda

Page 25

Thank you.