![]() 1 ANNUAL SHAREHOLDERS MEETING 2006 |
![]() 2 Forward Looking Statements Forward Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Investors are cautioned that forward-looking statements are not guarantees of future performance and that undue reliance should not be placed on such statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements or to make any other forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by the securities laws. Investors are referred to the full discussion of risks and uncertainties associated with forward-looking statements included in the Company's Form 10-K for the fiscal year ended December 31, 2005, and other periodic reports filed with the Securities and Exchange Commission. |
![]() 3 VISION VISION • VISION Continued leadership in the beverage manufacturing and distribution industry, by providing our customers with products of high value while maintaining integrity and commitment to deliver shareholder value |
![]() 4 Polish Economy Polish Economy • GDP – 2006 4.8% • Unemployment – 17.8% • Inflation – 0.7% • Interest Rates – 4% • Currency – EUR 3.87 USD 3.07 |
![]() 5 2005 Drinks Industry 2005 Drinks Industry Overview Overview - Total alcohol market growth in low single digits primarily led by imports (beer, wine and spirits) and domestic beer - Spirit excise increase of 3% in February 2005 led to softness in the domestic spirit market (no perceived impact on imports) - CEDC has changed the spirit market landscape by purchasing the two most profitable distilleries in Poland - Continued consolidation in the wholesale trade - Smaller spirit wholesalers continue to struggle to maintain margin |
![]() 6 2005 Highlights 2005 Highlights - Completed acquisitions of three regional distributors - Continued roll out of IT infrastructure and upgrading of fleet - Concluded tender for banking services (significant savings achieved) - Expanded internal audit department (successful Sarbanes- Oxley opinion) - Continued branch consolidation (over 15 branches consolidated) |
![]() 7 Transformational Year for Transformational Year for CEDC CEDC - Transformed CEDC from leading distributor to leading producer and distributor - Completed acquisitions of the two most profitable distilleries in Poland - Obtained control of 32% of the vodka market in Poland with 4 of the top 10 brands - The acquisition of Bols together with our existing import portfolio created the largest import portfolio in Poland -The acquisition of Polmos Bialystok and Bols enabled CEDC to tap into growing international vodka market |
![]() 8 Rational for Rational for Transformation Transformation OFFENSIVE - Benefits for sales force through brand ownership - Margin expansion - Retail/wholesale leverage - Export potential from brand ownership - Complimentary portfolio of vodka brands - Larger import portfolio in growing segment - Production synergies DEFENSIVE - Control our own destiny through brand ownership - Control of the margin table from producer to retailer - Market entry for new players extremely difficult |
![]() 9 Business Strategy Business Strategy Accelerate direct sales of our own brands 700 strong sales force to focus on selling Bols’ and Bialystok’s brands Leverage access to 40,000 outlets to grow sales of our brands Utilize dedicated on-trade sales force to execute brand building in on trade outlets Dedicated National Key Account and Off Trade sales force to expand distribution and product listings |
![]() 10 CEDC Brands – CEDC Brands – Bols Bols Vodka Vodka #1 Premium Vodka in Poland One of the most recognized vodka brands in Poland Sales of more than 1.5 million cases Most profitable brand in Poland Re-launch of new Bols flavors with new package design |
![]() 11 Bols Bols Vodka Actions Vodka Actions Focus on improvement of brand visibility in the traditional trade and modern trade |
![]() 12 Bols Bols Vodka Actions Vodka Actions Focus on improvement of brand visibility in the traditional trade and modern trade Modern trade shelving system for super & hypermarkets |
![]() 13 CEDC Brands – CEDC Brands – Zubrówka Zubrówka Considered to be a vodka in a category of its own in Poland with a unique flavor and heritage Leading brand for export potential Very loyal base of consumers Strongly connected with tradition and Polish culture Considered one of the top icons of Poland Approaching 1 million cases |
![]() 14 CEDC Brands – CEDC Brands – Soplica Soplica One of the oldest vodka brands in Poland Associated with Polish nobility and heritage Currently under priority to be exported New package design and price positioning executed in August 2005 – 30% growth since re-launch New line extensions of flavors launched this year On target to reach 1 million cases in 2007 |
![]() 15 CEDC Brands – CEDC Brands – Absolwent Absolwent #1 Vodka in Poland for last 7 years One of the top 10 selling vodka brands in the world High quality at a reasonable price Brand has continued to outperform the category Positioned in the mainstream Close to 4 million cases sold |
![]() 16 Business Strategy Business Strategy Reduce costs of goods sold Leverage purchasing power to reduce cost of raw materials Largest spirit purchaser in Poland Purchase over 100 million each of bottles, caps and labels per year Build rectified spirit plant by early 2007 at our two production sites -> payback within 3 years |
![]() 17 Business Strategy Business Strategy Reduce key operating overhead expenses Reduction of headcount by 10% by 2008 Reduction of bad debt expense Combine purchasing power to reduce key SG&A costs Continue to consolidate satellite branches Consolidate back office of CEDC in 2008 |
![]() 18 Business Strategy Business Strategy Develop new brand opportunities Introduction of new brands for own and third-party brands Current excess production capacity gives opportunity for growth of new brands for next three years Restricted advertising laws in Poland emphasizes new brands to be developed through distribution Post rectification (lowering of spirit costs) more aggressive move into private label and economy sector |
![]() 19 Business Strategy Business Strategy Continued Acquisitions of Producers and Distributors Grow current 32% production share to 40% by acquiring niche brands Utilize excess capacity with acquired niche brands Targeting mid-single digit multiple on a forward 12 month basis for brands acquisition Acquire distributors with at least $100 million in annualized sales for 2006 and 2007 |
![]() 20 Business Strategy Business Strategy Expand higher margin import portfolio Combination of CEDC’s and Bols’ exclusive imports strengthens position as a “one stop shop” Rapid on premise expansion in Poland drives growth opportunities for imports Our direct distribution and strong sales force makes us more attractive for additional agency brands Strong GDP and purchasing power growth in Poland will fuel consumer demand for imports |
![]() 21 Business Strategy Business Strategy Expand export sales Vodka represents the fastest growing category worldwide Grow Zubrowka exports to reach 750,000 cases within 5 years (current base 170,000 cases) Expand export sales for Soplica to 200,000 cases within 5 years New distributor agreements to be signed in 2006 representing greater value for CEDC Expand geographical reach of Zubrowka from current small base |
![]() 22 Zubrówka Zubrówka – – New Export New Export Package Package |
![]() 23 Business Strategy Business Strategy Target opportunities outside of Poland Regional acquisition opportunities (Central and Eastern Europe) Target companies with similar business model as CEDC Leverage our know how and business relations to utilize in other markets License production of Bols in Russia |
![]() 24 Financial Activities Highlights Financial Activities Highlights Completed acquisition financing 325 million EUR bond offering $117 million private equity placement Completed two significant producer acquisitions Bols included in consolidated results as of August 2005 66% of Polmos Bialystok included in consolidated results as of October 2005 |
![]() 25 Income Statement Summary Income Statement Summary Dec-04 Dec-05 $ Change % Change Net sales 580,744 749,415 168,671 29% Gross Margin 74,331 122,047 47,716 64% as a percentage of sales 12.8% 16.3% Total selling, general and administrative expense 45,946 70,405 24,459 53% as a percentage of sales 7.9% 9.4% Operating profit 28,385 51,642 23,257 82% as a percentage of sales 4.9% 6.9% Total non operating income (expenses) -1,941 -23,768 -21,827 1125% Income before taxes 26,444 27,874 1,430 5% Minority Interest 0 2,260 Income tax expense 4,614 5,346 732 16% Net income 21,830 20,268 -1,562 -7% Income per FD share 1.31 1.05 (0.25) -19% Net Income Comparable Basis 21,830 31,322 9,492 43% Comparable Income per FD share 1.31 1.63 0.32 25% 12 months Sales up 29% Improved gross margins 82% growth in operating profit Increase in non operating expenses from bond interest and acquisition related expenses On a comparable basis 25% increase in FD EPS |
![]() 26 Other Financial Highlights Other Financial Highlights Dec-04 Dec-05 $ Change % Change EBITDA, adjusted for minority interest 31,992 55,909 23,917 75% Cash flow from operations 8,861 34,081 25,220 285% Cash 10,491 60,745 50,254 479% Total Shareholders Equity 120,316 374,942 254,626 212% Total Assets 291,704 1,084,472 792,768 272% 12 months |
![]() 27 Conclusion Conclusion CEDC became the 4th largest vodka producer in the world Further consolidation of brands and distribution will continue – branded products continue to take share Growing consumer purchasing power will fuel growth of domestic brands and imports Leverage our infrastructure for improving shareholder value Export to play a key profit driver over the next 5 years Continued consolidation in Central & Eastern Europe with CEDC taking an active role |
![]() 28 Family of Fine Beverages |