How To Value Cedc

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1 Investor Call Presentation CEDC First quarter 2014 Investor Relations contact:

2 Forward Looking Statements This presentation contains forward-looking statements based on our expectations and assumptions as of May 15, All forward-looking statements are expressly qualified in their entirety by the following cautionary statements. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual results, performance or events to differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements are not guarantees of future performance and undue reliance should not be placed on them. Additional risk factors that may affect future results are contained in our Form 10-K for the year ended December 31, 2013 and in our quarterly and current reports. These risk factors expressly qualify all forward-looking statements contained in this presentation and should be considered by the reader. We undertake 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. 1. All financial statements in this presentation are presented after eliminations of intercompany transactions 1

3 Executive summary Q Total CEDC volumes +0.1% (Ongoing Business +1.1%) vs. PY (Q1 2013) despite excise increase in Russia (+25%), Poland (+15%) & Kazakhstan Poland: strong volume performance +16.5%; Russia: volume -12.5%, vs. total vodka market -14.8%; Hungary: volume +23.8% driven by Royal vodka +21.4% and Jägermeister +40.8% International: overall volume +32.3% with Kazakhstan being +54% Market share gains Poland +1.9 ppt. to 24.7% vs Q Russia +0.1 ppt. to 10.6% vs Q Hungary +7.0 ppt. to 53.1% vs. December 2013 Strong CEDC s competitive position Portfolio well positioned to grow share in the largest vodka markets in the world Range of products to participate in growth of dynamic category in key International markets Benefiting from vertical and horizontal integration as brand owner, producer and distributor 5 year contract with William Grant & Sons re-signed in Poland in April

4 Net sales revenue Executive summary Q cont d Total CEDC of $140.9M; down -9.8%; -$15.3M vs. PY Adverse impact primarily due to forex (-$10.7M) and Whitehall (-$11.5M) Poland delivering +17.3% higher net sales Ongoing Business currency neutral of $141.5M; up by +5.0% vs. PY Gross margin of $57.2M; down -15.7%; -$10.7M vs. PY Ongoing Business currency neutral is flat of $60.1M year on year Gross margin percentage lower in 2014 due to changes in segment mix Operating expenses under control significant savings $20.7M, including: Whitehall $7.2M Total CEDC Operating Income +$10.0M to $3.4M vs. PY Ongoing Business currency neutral +$8.6M to $2.9M Strong profit performance delivery in EBITDA vs. PY Total CEDC +$8.0M at $5.9M Ongoing Business currency neutral +$6.8M at $5.4M 3

5 Working capital and cash under control AR rotation (DSO) favorable 1 day (40 days) Executive summary Q cont d Inventories rotation (DIO) favorable 11 days (42 days) Extended payment terms to suppliers by 30 days (75 days) Negative operating cash flow of $35.2M in Q1 due to phasing Factoring of AR in Q4/2013 in Russia resulted in accelerated cash collection in operating cash flow favorable vs $156M (cumulative 2013+Q1/2014 +$121M) Prebuild in Poland, Russia and Kazakhstan resulted in higher excise payments 2014 Bank debt reduced over $19M vs. exit 2013 (now $84M ongoing CEDC) Business improvements completed as planned Market shares growing in Poland, stable in Russia, better brand strategy, market execution Margins protected through proactive price increases and channel mix Discounts and allowances carefully controlled Operating expenses under control significant savings $20.7M Trademarks and Goodwill no impairment indicators; to be closely monitored throughout the rest of the year 4

6 Key alcohol market volume trends: decline greater than expected Alcohol market volumes Moving Annual Total vs. PY, % 2014 Estimate vs. PY, % Q vs. PY, % Russia: Vodka Poland: Vodka ,0-9.3 Hungary: Vodka Russia: Wine* Poland: Wine Russia: Brandy* Poland: Whiskey Russia: RTD Source: AC Nielsen *Gosstat RF 5

7 CEDC market share in Polish vodka Share now growing strongly [%] CEDC Stock Polska Sobieski Pernod Ricard Other Total 2012 Total YTD FM 13 AM 13 JJ 13 AS 13 ON 13 DJ 14 FM 14 Source: AC Nielsen Poland bi-monthly reporting

8 CEDC volume share in Russian vodka Top4 players lost share vs. previous period due to late minimal price appeared on shelf (on-shelf impact) [%] 100 CEDC SINERGIYA KRISTALL-LEFORTOVO ASG Others YTD FM'13 AM'13 JJ'13 AS'13 ON'13 DJ'13 FM'14 e.g. JJ June, July; AS August, September ON October, November Source: AC Nielsen Russia bi-monthly reporting

9 CEDC value share in Russian vodka: Together with Roust we are #1 market player [%] 100 CEDC/ROUST SINERGIYA KRISTALL-LEFORTOVO ASG Others FM'13 AM'13 JJ'13 AS'13 ON'13 DJ'13 FM'14 e.g. JJ June, July; AS August, September Source: AC Nielsen Russia bi-monthly reporting 8

10 Ongoing CEDC volumes increase Q % with market shares up or stable Q1 vs PY Thousand 9l cases Q1 vs. PY [%] Poland (incl. International sales) % Hungary % Russia (incl. International sales, excl. Whitehall) % Total Restricted Group % Unrestricted Subsidiaries (Whitehall) % Total CEDC % Key Drivers of ongoing CEDC volume increase (+1.1%) CEDC market shares up in Poland; stable in Russia vs. continuous declining Vodka Markets Poland in Q keeping the 2013 momentum, growing +16.5% vs. market drop of -9.3% 9

11 Q FINANCIALS 10

12 Reported US GAAP financials Q vs. Q Three months ended March 31, values in kus$ Volume (9 liter cases) % Net Sales (15 345) -9.8% Costs of goods sold % Gross Profit (10 666) -15.7% Gross Profit as % of NSR 43.4% 40.6% -2.8% Change 2014 vs 2013 % Operating expenses % Operating Income (6 595) Volumes stable +0.1% (Poland +16.5%) vs. PY despite: Excise increases in 2014 in Russia, Poland and Kazakhstan Decreases in CEDC s core vodka markets Unstable and difficult situation in Ukraine Volume down -135k cases; -39.0% vs. PY Gross profit of $57.2M; decrease -15.7%; -$10.7M; Ongoing business currency neutral Gross profit of $60.1M; flat vs. PY Gross profit % decrease by -2.8ppt operating segment mix changes year on year total CEDC business Poland vs. Russia Operating income reported +$10.0M vs. PY at $3.4M operating expenses: tight SG&A control and wind-down of Whitehall 11

13 Reported US GAAP financials Q vs. Q Three months ended Change March 31, values in kus$ vs 2013 % Operating Income (6 595) Interest income % Interest expense (28 677) (18 801) % Other financial income / (expense), net (37 553) (34 596) % Other non operating income / (expense), net (4 108) (4 022) % Net loss before income taxes (76 390) (51 334) % Income tax benefit / (expense) (3 066) (386) % Net loss attributable to the Company (79 456) (51 720) % Interest expense favorable +$9.9M lower debt in 2014 after restructuring Other financial income / (expense) mainly F/X Weakening of RUR vs. USD in 2014 from to (-15.3%) At constant business unit mix a 1 RUR movement impacts Operating Income by $1.5M 12

14 values in kus$ 2013 Ongoing business results Q vs. Q currency neutral Three months ended March 31, Volume (9 liter cases) % Net Sales % Costs of goods sold (6 682) -8.9% Gross Profit % Gross Profit as % of NSR 44.5% 42.4% -2.0% Change vs 2013 % Operating expenses % Operating Income (5 730) Volumes up +1.1% (Poland +16.5%, Hungary +23.8% and International +32.0%) vs. PY Currency neutral ongoing business Net Sales up +5.0% vs. PY Operating income at $2.9M; +$8.6M vs. PY 13

15 LTM EBITDA Schedule Q Successor values in kus$ June 2013 Q Q Q LTM * Net Sales Gross Profit Operating Income (6 714) (67 426) (61 982) Depreciation and amortization Impairment charge Fresh Start Adjustments Other One-time items EBITDA Underlying No One-Time Items recognized in Q1 2014, to be reported for 1H 2014, if material * LTM is calculated from June 6, 2013 (date of Emergence from Chapter 11) until March 31,

16 Roadmap Volumes Q vs Q , thousand 9-liter cases 5,000 4,000 5, , ,018 3,000 Volumes Q Poland Russia Hungary Volumes Restricted Group Q Whitehall Volumes Q of total CEDC 15

17 Roadmap Net Sales Revenue Q vs Q thousand USD Net Sales Q Poland Russia Hungary Net Sales Group Q at constant rate and constant WHG Whitehall FX Net Sales Q of total CEDC 16

18 Major costs summary Spirit prices changes: Russia March 2014 vs. March 2013 entry -2.5% Poland March 2014 vs. March 2013 entry -13.1% Discounts and allowances similar to last year of approximately $24M Operating expenses down $20.1 M being 28% vs. PY favorable in almost all categories Post emergence options in Russia under review 17

19 Cash Flow Snapshot Q Three months ended Mar 31, 2013 Q operating cash outflow of $35.2M caused by phasing Factoring of AR in Russia resulted in accelerated cash collection in 2013, 2013 operating cash flow favorable vs by $156M (cumulative 2013 and Q1/2014 +$121M) higher excise tax payments year on year, resulting from prebuild in Poland, Russia and Kazakhstan, whilst in Q prebuild was only in Russia, Three months ended Mar 31, 2014 Cash flow from operating activities $ 9,827 $ (35,235) $33.8M of cash at bank at March 31, 2014 (incl. $2.1M restricted cash) Bank debt reduced over $19M vs. exit 2013 (now $84M ongoing CEDC) Total unutilized credit limit available with banks of $38.0M as of Q1 For detailed schedule of all bank credit facilities, please see Note 11 in our 10-Q 18

20 Cash Flow Snapshot Q Amounts in days Mar 31, 2013 Dec 31, 2013 Mar 31, 2014 Days Sales Outstanding (DSO) (46 excl. Factored AR) 40 Days in Inventory (DIO) (41 excl. FSA and consigned inventories) Days Payables Outstanding (DPO) Net debt Mar 31, 2013 Dec 31, 2013 Mar 31, 2014 Net debt including utilized bank facilities and factored AR paid on CEDC account Working capital (excluding taxes) and cash under control DSO favorable 1 day (40 days) DIO favorable 11 days (42 days) DPO favorable 30 days (75 days) Coupon payment made on time (April 30, 2014) NSSN in the amount of $18.6M NCJSN in the amount of $10.4M made in kind $ 1,293,967 $ 752,378 $ 797,