Interim Results

1

• Interim Results
• December 2001

2

• Brian Stewart
• Chairman

3
Excellent Progress From Restructured Business

• Pre Tax Profit 243m
• Operating Profits ahead on a comparable basis
• UK Beer 5.2
• International Beer 7.8
• Retained Managed Pubs 7.3
• Dividend increased by 4

4

• Ian McHoul
• Group Finance Director

5
Interim Results

• F01
• Kronenbourg included from July 2000
• Center Parcs included for full six months
• Pontins sites sold in September 2000
• Centralcer excluded - acquired December 2000
• F02
• Managed house disposal programme
• 661 outlets sold, mostly in July 2001
• 169 outlets transferred to tenancies in June 2001
• Tenanted pubs sold to RBS - announced October
  2001

6
Interim Results F02

• M

Turnover 2178 - Operating
Profit 297 -4 EBITDA 375 -8 Profit Before
Tax 243 1 EPS 23.0p -10 Dividend 9.88p 4 Comp
aratives restated for the impact of FRS 19 -
Deferred Taxation
7
Earnings Per Share
M F02 H1 F01 H1 Diff

• Profit before tax 243 241 2 1
• Tax (68) (75) 7
• Profit after tax 175 166 9 5
• Minority interests (26) (3) (23)
• Profit attributable 149 163 (14) -9
• Earnings per share (p) 23.0 25.6 (2.6) -10
• Potential full year minority (35) (18) (17)
• (Average diluted number of shares - F02
  648m/F01 636m)

8
Underlying Growth in Operating Profit
F02 F01 H1 F01 H1 Ongoing H1 Increase Underlyi
ng Reported

• Scottish Courage 108 5.2 103 103
• International Beer 68 7.8 63 41
• Managed Houses 106 7.3 99 99
• 282 6.6 265 243
• Divestments
• Managed Houses 6 25
• Tenancies 9 8
• Leisure - 35
• 297 311

9
Scottish Courage
M

• Turnover 991 -1.0
• Operating Profit 108 5.2
• Margin
  10.9 0.6
• After Kronenbourg royalty payments of 4m

10
Scottish CourageReorganisation

• Restructuring of on trade salesforce
• Rationalisation of on trade support functions
• National telesales operation announced
• Commencement of depot rationalisation
• Implementation of new systems (SAP R3)

11
Scottish CourageReorganisation

• F02
• Exceptional Costs (M) F01 H1 Cum.
• Accelerated depreciation 20 - 20
• Redundancy reorganisation 67 15 82
• 87 15 102
• Savings (M) F01 F02 F03 F04
• 2 10 30 50

12
International BeerFinancial Performance
M

• Turnover 612
• Operating Profit 68
• Margin 11.1
• Underlying Operating Profit up 7.8
• After royalty payments of 12m

13
International BeerIntegration Synergy Benefits

• Good progress on marketing initiatives
• Beamish launched in France (October 01)
• Fosters to be launched in France (January 02)
• Fosters to be launched in Belgium and Portugal
  (Spring 02)
• Production investment for Fosters in Strasbourg
  and Lisbon
• International harmonisation of Kronenbourg brand
• Cost savings on track
• Purchasing
• Manufacturing
• Technical support

14
Managed RetailEstate Profile
1 May Acqns/ 28 Oct 2001 Disposals Transfer
s 2001

• Retained Estate 1450 10 - 1460
• Disposal Estate 881 (661) (169) 51
• 2331 (651) (169) 1511

15
Retained Managed
M

• Turnover 484 7.5
• Operating Profit 106 7.3
• Margin 21.9 -

16
Pub EnterprisesInnovative Strategy

• Management of third party owned tenancies
• Securing fee income and beer supply
• Sale of 456 outlets to RBS announced October
  2001
  
• Proceeds 260m
• Post December - c. 1100 pubs under contract
  management
• Total cash released 490m

17
Exceptional Costs
M

• Scottish Courage reorganisation (15)
• Property disposal losses
• Managed houses (8)
• Tenancies (12)
• Other 3
• (17)
• Goodwill previously written off (14)
• (31)

18
Financial Expenses
M F02 H1 F01 H1

• Group debt (at period end) 1576 2008
• Group 51 67
• Joint Ventures 3 3
• 54 70
• (1) Group debt excludes borrowings in joint
  venture companies
• (2) Debt excludes 260m of proceeds to be
  received from RBOS
• at the end of December 2001

19
Impact of FRS 19 - Deferred Tax

• M F02 H1 F01 H1
• Profit before tax 242.8 241.1
• Tax pre FRS 19 (59.5) 24.5 (60.8) 25.2
• FRS19 adjustments
• - Base (8.5) (9.2)
• - One-off - (5.0)
• (68.0) 28.0 (75.0) 31.1

20
Cash Flow
M F02 H1 F01 H1

• Operating Activities 320 384
• Reorganisation (29) (17)
• Capital Expenditure (160) (193)
• Assets Disposals 241 53
• Other (5) 12
• Operating Cash Flow 367 239
• Interest, Tax Dividends (207) (213)
• Acquisitions Disposals (9) (150)
• 151 (124)

21
Capital Expenditure
F02 H1 F01 H1

• Scottish Courage (41) (58)
• International Beer (20) (6)
• Retail (99) (101)
• Leisure - (28)
• (160) (193)

22

• Guy Dickson
• Group Managing Director

23
(No Transcript)
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Uncertain Times

• Becks UK distribution
• The sale of Carling Brewers

25
Scottish CourageKey Profit Drivers

• Market share
• Investment in premium brands to deliver volume
  and value growth
• Investment in customer service
• Continuing pursuit of cost reduction and
  efficiency gains

26
Long TermMarket Share Gain
27
Long TermMarket Share Gain
28
Scottish CourageUK Beer Volumes

• UK Market 0.3
• Scottish Courage
• On trade -2.5
• Off trade 1.4

29
Scottish CourageNet Selling Prices

• On Trade 1.6
• Off Trade -1.8

30
Increased Investment in Premium Brands
31
Innovation
32
Major Brands Sales Performance
33
Scottish CourageTop 5 Brands - Mix
34
International Beer
35
International Beer -Key Profit Drivers

• Brand development - value strategy
• Integration and synergy benefits
• Cost reduction initiatives

36
Brasseries KronenbourgValue Strategy

• Build the market share and proportion of sales in
  premium brands
• Build the price premium of all key brands
• Enhance the quality of all key brands
• Extract operational efficiency from focus on
  fewer brands

37
Brasseries KronenbourgVolumes

• French Market -1.1
• Brasseries Kronenbourg volume -2.4

38
Brasseries KronenbourgVolumes

• French Market -1.1
• Brasseries Kronenbourg volume -2.4
• Brasseries Kronenbourg decline all in non core
  brands
• Drive brands 5.2
• Mainstream brands 0.4
• Other brands -15.9
• Note 1 F01 volumes adjusted for loading impact
  of November 2000 price increase
• Note 2 Drive brands are K1664, Grimbergen,
  Brugs and Imports

39
Brasseries KronenbourgPortfolio Profile
F00 H1 F01 H1 F02 H1

• Drive Brands 17.5 19.5 21.1
• Mainstream Brands 54.5 54.1 56.1
• Other Brands 28.0 26.4 22.8
• 100.0 100.0 100.0

40
Brasseries KronenbourgPricing
Price V. Price Index F01 H1 F01 H1 F02 H1

• Drive Brands - 152 150
• Mainstream Brands 1.5 100 100
• Other Brands -3.3 92 88
• 1.2

41
Brasseries KronenbourgPerformance of Key Brands

• Volume 4
• Volume 16
• Volume 1
• Note F01 volumes adjusted for loading impact of
• November 2000 price increase

42
Successful Innovations
43

• Focus on premium brands
• Total volumes -1.3
• Grimbergen 6.8
• Beer sales value 2.8
• Beer sales value per hl 4.1

44

• Focus on premium brands
• Total volumes -0.5
• Sagres volumes 1.4
• Beer sales value 3.0
• Beer sales value per hl 3.5

45
Export - NBA in USA
46
(No Transcript)
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Managed Retail Key Profit Drivers

• Improvement in sales trends
• Long term returns from drive brands
• Focused capital investment

48
Retained Managed -Sales Growth
F01 H1 F01 H2 F02 H1

• Bar 4.6 5.2 5.6
• Food 5.1 6.2 5.8
• Rooms 38.7 47.5 33.3
• Others (1.9) 2.9 5.4
• Total 6.2 7.5 7.5

49
Retained Managed - Like for Like Sales
50
Retained Managed - Returns from Drive Brands

• Outlets Current
• at Year
• 28 Oct 01 ROI
• Barras 114 21
• Chef Brewer 98 20
• TJ Bernard 54 24
• Bar 38 13 16
• Lodges 120 12
• 399 17

51
Retained ManagedReturns From Recent Major
Projects
No. of Annualised Outlets R0I

• Lodges 11 13
• Other 77 16
• Defined as outlets trading for more than three
  months
• but less than twelve

52
Developments
53
Total Estate F01 H1 F02 H1

• Units 107 120
• Rooms 5750 7239
• Occupancy 70 72
• Rev par 30.63 32.95
• Like for like v F01 H1
• Occupancy 76 (5)
• Rev par 34.47 (10)