Interim ResultsPresentation
21 May 2007
Gerald CorbettChairman
John GibneyFinance Director
Financial Headlines
H107£’m
H106£’m
% Change
Branded Revenue 353.6 323.5 9.3
EBITEBIT Margin
24.26.8%
18.65.7%
30.11.1% pts
Profit after Tax 10.9 6.5 67.7
Basic earnings per share 5.0p 3.0p 66.7
Free cash flow
Interim Dividend per share
(12.2)
3.3p
(42.3)
3.0p
71.2
10.0
Note: all numbers are before exceptional costs.
H107£’m
H106£’m
% Change
Branded Volume (million litres)Average Realised Price (ARP) per litreBranded RevenueBrand Contribution
696.250.8p353.6148.0
645.450.1p323.5133.2
7.91.49.3
11.1
Non brand A&PFixed Supply ChainSelling CostsOverhead and other costs
(4.4)(34.2)(46.5)(38.7)
(3.5)(36.1)(44.2)(30.8)
(25.7)5.3
(5.2)(25.6)
EBITEBIT Margin
24.26.8%
18.65.7%
30.11.1%pts
Note: all numbers are before exceptional costs.
Summary H1 07 – EBIT
Stills
H107£’m
H106£’m
% Change
Volume (million litres) 229.9 213.8 7.5
ARP per litre 72.6p 71.9p 1.0
Revenue 166.8 153.7 8.5
Brand Contribution 76.9 69.9 10.0
Brand Contribution Margin 46.1% 45.5% 0.6%pts
Direct product costs decreased by 1.2%
Carbonates
H107£’m
H106£’m
% Change
Volume (million litres) 449.1 415.6 8.1
ARP per litre 39.0p 38.5p 1.3
Revenue 175.2 159.8 9.6
Brand Contribution 68.0 60.6 12.2
Brand Contribution Margin 38.8% 37.9% 0.9%pts
Direct product costs increased by 2.6%
International
H107£’m
H106£’m
% Change
Volume (million litres) 17.2 15.9 8.2
ARP per litre 67.1p 62.3p 7.7
Revenue 11.6 9.9 17.2
Brand Contribution 3.1 2.8 10.7
Brand Contribution Margin 26.7% 28.3% (1.6)%pts
Direct product costs increased by 4.5%
H107£’m
H106£’m
% Change
Non Brand A&P (4.4) (3.5) (25.7)
Total A&P spendA&P as % Net Revenue
(24.3)6.9%
(23.3)7.2%
(4.3)
Fixed Supply Chain (34.2) (36.1) 5.3
Selling Costs (46.5) (44.2) (5.2)
Overheads & Other (38.7) (30.8) (25.6)
Total (123.8) (114.6) (8.0)
Overheads and other costs
H107£’m
H106£’m
% Change
EBITInterest
24.2(9.0)
18.6(9.2)
30.12.2
Profit before taxTaxTax rate
15.2(4.3)
28.2%
9.4(2.9)
30.9%
61.7(48.3)
Profit after tax 10.9 6.5 67.7
Note: all numbers are before exceptional costs.
EBIT to Earnings
H107£’m
Cash items Restructuring costs 1.8
Share items Transitional Share Awards 1.7
Non cash items Wind up of IHG share optionsReturnable Bottle write off
0.21.1
Total exceptional items 4.8
Total exceptional items after tax 4.0
Exceptional Items
71.914.5
(50.2)(362.5)
(14.1)(309.8)
Free Cash Flow post exceptionalsNet Debt
80.6(140.8)(27.3)Net Cash Flow pre exceptionals
72.184.7
(42.3)(98.5)
(12.2) (15.1)
Free Cash flowDividends
-47.866.7
(67.5)
(16.5)(27.4)(30.0)(11.7)
(16.5)(14.3)(10.0)(19.6)
Working CapitalCapital ExpenditurePension contributionOther
11.143.448.2EBITDA
30.1(3.2)
18.624.8
24.224.0
Operating Profit pre exceptionalsDepreciation
% ChangeHY06£’m
HY07£’m
Improving Cash Position and Reducing Working Capital
Note: EBITDA is operating profit before exceptional items, depreciation, amortisation and any gain or loss on disposal of fixed assets
Dividends
• Interim Dividend of 3.3 pence per share payable on 29 June 2007
• Total value of Interim Dividend of £7.1m
• Progressive dividend policy whilst maintaining an appropriate level of dividend cover
Previous guidance given at Preliminary Results in November
• Hot summer benefit in FY06 of £2.5m at an EBIT level
• PVO £2m further saving in 2007
• Brand contribution reflected in FY06 numbers expected to be sustainable
• On track to deliver £18m of planned BTP overhead cost savings by 2008:• 2007 incremental savings of £4m identified• 2008 incremental savings of £3m identified• No bonus paid in 06 – 07 bonus provision of £5m
• EBIT margin growth of 10-15 bps
• Exceptional items:• c.£2-4m of Transitional Share Awards costs each year through 07 and 08• c.£1.5m restructuring costs in 07
• Taxation:• FY tax rate at 29% in line with 06 • Cash tax rate c.29%
• Capex £40-45m
New guidance
• Further reduction in Capex guidance to £35-40m
• c.40% of the first 5% of any profit above budget will fund the employee
bonus payments
• FY07 tax rate guidance lowered to 28.2%
• Proposed outsourcing of secondary retail distribution network/ vending and
chiller remanufacturing operations:
• £5-6m additional annualised savings by FY09
• £2-3m reduction in capex by FY08
• One off exceptional cost in FY08 of £2-3m
• Net cash consideration of £9.0m for sale of Tamworth depot
CCSD guidance
• 3-yr historic CCSD revenue of CAGR of 2.5%
• Annual capex of c €8m – focusing on production and commercial assets
• A&P spend - traditionally around 7% as a proportion of soft drinks revenue (total CCSD)
• Britvic total Interest to increase by around £10.7m in FY08
• Effective tax rate last year – 11.2%, rising to 13.5% from 2010
• Similar seasonality – two-thirds of profit made in Britvic’s H2
• Anticipate pre tax synergies (focused mainly on supply chain) of around €14m - €11m are cost efficiencies (FY08 c€4.5m, ramping up to FY09 full €11m)
• One-off integration costs to achieve these synergies in the region of €20-25m:• c.€10m ‘catch up’ maintenance capex (majority in FY08) • c.€10-15m (approx 1/3 FY08; 2/3 FY09)
• Working capital benefits to come through by FY09 of €6-7m
Summary
• Strong volume and ARP performance• Consistent across all areas of the business
• Continued focus on costs• Overhead and PVO savings delivering as planned
• A&P spend maintained
• Improving margin
• Strong and improving cashflow• Underlying investment in the business
• Interim dividend of 3.3p up 10%
• FY Guidance unchanged or improved
Paul MoodyChief Executive
Agenda
• Market
• Strategy
• Driving profitable revenue growth
• Innovation
• Driving efficiency
• Expansion into Europe
• Current trading
40,000
50,000
60,000
70,000
80,000
90,000
100,000
WE 0
8.10
.06
WE 2
2.10
.06
WE 0
5.11
.06
WE 1
9.11
.06
WE 0
3.12
.06
WE 1
7.12
.06
WE 3
1.12
.06
WE 1
4.01
.07
WE 2
2.01
.07
WE 11
.02.
07
WE 2
5.02
.07
WE 11
.03.
07
WE 2
5.03
.07
WE 0
8.04
.07
Vo
lum
e T
ho
usa
nd
Lit
res
2004/052005/062006/07
Stills Market Volume
Stills market showing continued growth although at lower levels to last year – still expect majority of total market growth going forward to come from this category
Source: Nielsen Scantrack May 2007: Take Home
Easter peak
Carbonates Market Volume
40,000
50,000
60,000
70,000
80,000
90,000
100,000
110,000
WE 0
8.10
.06
WE 2
2.10
.06
WE 0
5.11
.06
WE 1
9.11
.06
WE 0
3.12
.06
WE 1
7.12
.06
WE 3
1.12
.06
WE 1
4.01
.07
WE 2
2.01
.07
WE 11
.02.
07
WE 2
5.02
.07
WE 11
.03.
07
WE 2
5.03
.07
WE 0
8.04
.07
Vo
lum
e T
ho
usa
nd
Lit
res
2004/052005/062006/07
Carbonates while showing signs of recovery is not back to levels of 2004/05
Source: Nielsen Scantrack May 2007: Take Home
Easter peak
Soft Drinks Market Volume
Source: Nielsen Scantrack May 2007: Take Home
80,000
100,000
120,000
140,000
160,000
180,000
200,000
220,000
WE 0
8.10
.06
WE 2
9.10
.06
WE 1
9.11
.06
WE 1
0.12
.06
WE 3
1.12
.06
WE 2
1.01
.07
WE 11
.02.
07
WE 0
4.03
.07
WE 2
5.03
.07
WE 1
5.04
.07
WE 0
6.05
.07
WE 2
7.05
.07
WE 1
7.06
.07
WE 0
8.07
.07
WE 2
9.07
.07
WE 1
9.08
.07
WE 0
9.09
.07
WE 3
0.09
.07
Vo
lum
e T
ho
usa
nd
Lit
res
2004/052005/062006/07
Total market continues to perform well as we enter the typically more volatile H2 driven by weather and key events
Relative Size of Categories and Growth
0 500,000 1,000,000 1,500,000
Smoothies
Adult
Dairy
Mixers
Juice Drinks
Squash
Pure Juice
Water
Functional
Non Fruit Carbs
Lemonade
Fruit Carbs
Cola
Diet/ Low Cal
Regular/ Full Sugar
Sti
lls
Ca
rbs
+1.9%
-3.6%
+3.1%
+1.8%
+18.2%
+8.1%
+0.5%
-0.8%
-9.3%
+1.8%
+0.9%
+0.6%
-7.3%
+2.4%
+1.1%
+6.9%-3.1%+12.5%
+3.5%
+10.0%-14.2%
+1.7%+0.8% +2.4%
+2.7%
+3.8%
+78.5%
Volume (‘000s litres)
Source: Take home MAT to 14.04.2007 Nielsen Scantrack
Strategy focused on delivering shareholder value
Driving Profitable Revenue : Pepsi
• Further volume market share gains over the period • 23.5% share of the Cola market over the period, an increase of 1.8%pts on
the same period last year
• Supported by strong promotional levels for Pepsi Regular and Diet Pepsi
• Pepsi Max continues to gain share over the same period driven by
increases in loyalty levels and volume per buyer • Redesign across all formats
• Pepsi Max back on TV
• A focus around taste which is driving trial
• Growing presence in the increasingly important discounters sector
Source: Take home MAT to 14.04.2007 Nielsen Scantrack
Driving Profitable Revenue : Robinsons
• Further investment to reinforce Robinsons’ number one position• New production facilities unlocked the ability to drive large pack performance• Large pack value share 3.5pts ahead of last year in last 12 weeks, driving
overall brand value share by 1.2pts*• Re-launch of family squash range in July, with no artificial colours or flavours
and significant packaging re-design
• £12.5m total marketing support across Robinsons range over Summer• New ‘Raise them on Robinsons’ campaign• £1m sampling investment behind re-launched family squash range• Wimbledon on-pack promotion across squash range, marking 71st year on
the umpire’s chair
• Fruit Shoot – No artificial colours and flavours• Value share risen to 33% in last 12 weeks, 4.4% ahead of last year*• £2.8m marketing investment in print, radio and outdoor to drive
comprehension of no artificial colours and flavours message in 2007
*Source: Nielsen Scantrack, Total Coverage,12 weeks to March 07
Driving Profitable Revenue : J20
• J20 continues to grow
• 7% growth against prior year*• continuing to strengthen its category leadership
• Strong Christmas 2006 grocery performance
• driving success for Britvic and our customers
• PET pack launched in June 2006• broadening the brand’s footprint outside on premise heartland and into home
channels• Increased points of sale and performing well
• Orange & Pomegranate• 6th flavour in the range after a successful limited edition period
• Successful ‘If H20 were J20’ television campaign
*Source: Nielsen Scantrack & Brewers data to March 07
Driving Profitable Revenue : Water
• Fruit Shoot H20*
• 49% value share of kid’s water in the last 12 weeks • Repeat rates at 41% well ahead of new product benchmarks • 85% incremental to Fruit Shoot brand• £2.5m media investment in outdoor and TV
• Pennine Spring – a focus on licensed and food service sectors• Third largest and fastest growing brand in managed retail
• Drench – a focus on take home • Packaging re-design and repositioning to differentiate & widen appeal• New packs available from June 2007• Driving on availability in convenience & impulse• New ad campaign to coincide with launch ‘your brain is 75% water…keep it
topped up, stay drenched!’
*Source: Nielsen to March 2007
Driving Profitable Revenue: International
• Fruit Shoot in the Netherlands continues to perform strongly
• Volumes up 100%• Revenue growth of 120%
• New bespoke TV campaign called GO EXPLORE starts in May
• Robinsons High Juice in Denmark and Sweden• Great early success
• Distribution through all key retailers - expect to achieve 70% distribution in both markets by mid-summer.
• Through-the-line campaigns in both markets featuring national TV advertising, outdoor campaigns and heavy-weight in-store promotional activity
• Robinsons High Juice to be launched into Finland in May• To further build the scale of our business in the Nordic region
• Listings have been secured in all major grocery chains
• Expect 70% distribution by the summer
• A full campaign, including TV advertising, is accompanying the launch
Driving Profitable Revenue: Innovation
Aseptic line installed
Planned innovation on track and on time
Driving profitable revenue: Robinsons Smooth Juice and Fruit Shoot 100% Juice
• Robinsons Smooth Juice
• Expect over 90% distribution in all major multiples by end of May
• Fruit Shoot 100% Juice
• Expect over 90% distribution in all major multiples by July
• Both products capturing the imagination of customers with major plans in place for launch activity
• point-of-sale material
• branded off-shelf display
• Magazine features
• Store incentives
• Links with home delivery
Driving efficiency
• Business Transformation Programme on track:
• £4m of anticipated savings in FY07
• £3m of anticipated savings in FY08
• Proposed outsourcing of secondary retail distribution network/ vending and chiller remanufacturing operations:
• £5-6m additional annualised savings by FY09
• £2-3m reduction in capex by FY08
• Sale of Tamworth depot – net cash consideration of £9.0m
• Continuing to drive our PVO programme
• £2m of anticipated savings in FY07
Expansion into Europe – agreement to acquire the soft drinks & related businesses of C&C plc (“CCSD”)
• A great opportunity to accelerate earnings growth
• Provides us with a leading position in both the Republic of Ireland and Northern Ireland.
• Exciting potential for:
• anticipated supply chain synergies of €14m
• brand & product expansion
• innovation.
• An experienced and highly capable CCSD senior management team
• Opportunities to further develop both CCSD’s own brands and the Pepsi and 7Up brands in these markets.
Summary
Well positioned in this growth market
• The market
• Signs of a return to normality after exceptional down turn H106
• H2 traditionally more volatile with tougher comparatives
• This year we have grown market share in stills and carbonates
• Strong innovation pipeline performing to expectation
• Continued focus on efficiency
• Increasing operating margins
• Optimising working capital
• Further cost savings
• European expansion
• C&C soft drinks opportunity
• Business has started well in H2