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Baltika Breweries 2005 Results

Baltika Breweries 2005 Results. March 16, 2006. Contents. Financial Results Russian Beer Market and Baltika Breweries Future Developments. Financial Results. Overview of Developments in 2005. Russian market volume growth of 6% Strong volume growth

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Baltika Breweries 2005 Results

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  1. Baltika Breweries • 2005 Results March 16, 2006

  2. Contents • Financial Results • Russian Beer Market and Baltika Breweries • Future Developments

  3. Financial Results

  4. Overview of Developments in 2005 • Russian market volume growth of 6% • Strong volume growth • Total volumes 22,7 MHL, +13.8% • Beer Volume 22,4MHL, +13.1% • Export volume 1,4 MHL, +23% • Market share in Russia 24.1%, +1.3 %pts • Excellent profit performance • Net Sales977.2 MEUR, +22.2 % • EBITDA 302.9 MEUR, +37.6 % • EBIT 233.0 MEUR, +44.4 %

  5. Financial Results 2005 Significant volume growth and high financial results IFRS

  6. 4Q 2005 Financial Results IFRS

  7. Baltika Net Sales Development in 2005 Volume growth and average price increases contributed to net sales growth* 22.2% +1.6% +8.5% -1.0% 13.1% Mix Forex Price (/SKU) Volume Net Sales (EUR) * beer volumes only

  8. 2005 Results Breakdown IFRS * Including depreciation

  9. Baltika Margin Development Reduction of production, administrative and material costs contributed to margin development 0.1% 23.8% 0.5% -0.8% 0.1% 3.7% 20.2% Costof sales Logistics Expenses EBIT Margin2004 Marketing, sales, etc. Expenses Administrative Expenses Depreciation EBIT Margin2005

  10. Russian Beer Market and Baltika Breweries

  11. Russian Beer Market Development In 2005 Baltika grew twice as fast as the market in whole. *With all Heineken acquisitions of 2005 ** Estimate • Source: BBH, State Statistics Committee, Breweries Source: BBH, State Statistics Committee, Breweries Note: Domestic Volumes

  12. Packing Segments Development Baltika has increased market share in all packaging segments and HoReCa Share of the different packaging segments of the totalbeer market volumes Source: BusinessAnalitika * ITotalHoReCa Source: BusinessAnalitika

  13. Price Segments Development Share of different price segments of the total beer market volumes Source: BusinessAnalitika Source: Business Analitika

  14. Leading European Brands in 2004 Baltikais brand №1 in Russiaand brand №2 in Europe Volume in 2004, Mdkl 90,3 2005 - 106,6 Source: Canadean

  15. Beer Consumption Per Capita in Russia L/year Source: State Statistics Committee, Baltika internal estimate

  16. Performance of Baltika Brands in 2005 • Baltika (market share 10.9%) and Arsenalnoye (5.4%) are thetwo leading brands of Russia • Baltika brand volumes growth +11.5%, Arsenalnoye up +6.2% • Significant growth of regional brands – Leningradskoye +49%, DV +35%, Samara + 17% • Most growth noted in segments*: premium +6.6 %pts (market share 30.2%),mainstream +4 %pts (35.9%), discount +7,0 %pts (13%) * Source: Business Analitika

  17. Innovations at Baltika in 2005 • Re-styling of all Baltika sub-brands • First in Russia “Cash-Can” (can with cash inside) for Baltika brand national promo-action • Re-styling of Arsenalnoye and Medovoye brands • New sub-brand Arsenalnoye Zakalennoye with spicy chili launched • Re-styling of regional brands DV, Samara, Don • First produced brand in a bottle with transparent label - Carlsberg • Baltika №9 first produced in PET1,5 L

  18. Future Developments

  19. Integration of BBH Russian companies After integration: Leader of Russian beer market Today: 4 separate enterprises

  20. Major stages of the merger Having received the approval of Baltika shareholders the company expects to complete the merger process by the year end March 7 ~August ~October ~End 2006 Baltika shareholders approved all resolutions on merger Regulatory approvals andregistrations EGSMs of Pikra, Vena and Yarpivo Stock issue placement and cash offers Baltika Group becomes a single legal entity Baltika becomes majority shareholderin Pikra, Vena and Yarpivo

  21. “Baltika Group” in 2006 • 10 breweries: St.Petersburg (2 breweries), Rostov-on-Don, Tula, Samara Yaroslavl, Voronezh, Chelyabinsk Krasnoyarsk, Khabarovsk • Production Capacity: 40 MHL/year • 4 malt-houses: St.Petersburg, Tula, Chelyabinsk, Yaroslavl • About 11 000 employees • Total sales in 2005 – 1.4 billion euro

  22. Group Brewery Network in Russia 3,0 МHL 10,5 МHL ST PETERSBURG 6,0 МHL 6 МHL TULA YAROSLAVL 1 МHL 1,5 МHL 4,5 МHL VORONEZH 2,5 МHLin 2006, growth up to 4,5 МHL SAMARA ROSTOV-ON-DON 2,0МHL in 2006,growth up to 2,5 МHL CHELYABINSK 1,5 MHL BALTIKA KRASNOYARSK VENA PIKRA KHABAROVSK YARPIVO

  23. Portfolio of United Brands in 2006 Baltika after integration Baltika Yarpivo, Pikra, Vena Rating Rating Licensed #2 #6 Premium #1 #1 Балтика 0, 5, 6, 7, 8 Mainstream #1 #1 Балтика 2, 3, 4, 9 Lower mainstream #1 #1 Discount #1 #3

  24. Group Management as of 1 May, 2006 President Anton Artemiev Vice-President Personnel and Administration Daniil Briman Vice-President Marketing Andrey Rukavishnikov Vise-President Finances and Economics Ekaterina Azimina Vise-President Supply Chain Alexander Dedegkaev Vice-President Sales (West) Viktor Semak Vice-President Sales (East) Oleg Burkhanov Director Export Dmitry Kistev Director Security Vladimir Bezugly Director Legal Anton Rogachevsky Director Corporate Affairs and Information Mervi Heinaro Director Sales Development Elvira Chornaya

  25. Baltika Breweries2005 Results Thank you!

  26. Supplementary Information

  27. Baltika Worldwide • Export to 38 countries (3 new countries) • in 2005 1.4 MHL, up +23% • 6% of total Baltika sales CIS Countries 1 BELARUS 2 UKRAINE 3 MOLDOVA 4 UZBEKISTAN 5 KAZAKHSTAN 6 KYRGYZSTAN 7 AZERBAIJAN 8 GEORGIA 9 ARMENIYA 10 TURKMENISTAN 11 TAJIKISTAN • More than 70% of Russian beer exports • produced by Baltika • Award «The Best Russian Exporter» • 2001, 2002, 2003, 2004

  28. Baltika Investment Structure bln USD 83,3 Total volume of investments into the company’s development exceeded 1 bln USD

  29. Beer Market Development and Baltika sales (MHL) Source: State Statistics Committee, Baltika internal estimate

  30. Growth of Beer Market in Russia and Baltika Volume Source: State Statistics Committee, Baltika internal estimate

  31. Baltika Market Share Development Source: State Statistics Committee, internal Baltika estimate

  32. BBH Group Structure 50% 50% Scottish&Newcastle plc Carlsberg A/S BBH AB Baltics Russia Ukraine Kazakhstan Saku Aldaris SUA • Klaipeda • Utena Baltika • St. Petersburg • Tula • Rostov-on-Don • Samara • Khabarovsk Yarpivo • Yaroslavl • Voronezh Vena • St. Petersburg • Chelyabinsk Pikra Slavutich • Zaporozhje • Kiev Lvivska Derbes

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