Presentation materials for the Annual Meeting of Shareholders

EX-99.1 2 dex991.htm PRESENTATION MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS Presentation materials for the Annual Meeting of Shareholders

ANNUAL SHAREHOLDERS

MEETING

2006

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.

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

Polish Economy

•

GDP –

2006 4.8%

•

Unemployment –

17.8%

•

Inflation –

0.7%

•

Interest Rates –

•

Currency –

EUR 3.87

USD 3.07

2005 Drinks Industry

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

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)

Transformational Year for

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

Rational for

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

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

CEDC Brands –

Bols

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

Bols

Vodka Actions

Focus on improvement

of brand visibility in

the traditional trade

and modern trade

Bols

Vodka Actions

Focus on improvement of brand visibility

in the traditional trade and modern trade

Modern trade

shelving system

for

super &

hypermarkets

CEDC Brands –

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

CEDC Brands –

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

CEDC Brands –

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

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

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

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

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

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

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

Zubrówka

–

New Export

Package

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

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

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

Minority Interest

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

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

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

Family of Fine Beverages