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Alliance Boots plc 2006/07 Interim Results 14 November 2006.

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Presentation on theme: "Alliance Boots plc 2006/07 Interim Results 14 November 2006."— Presentation transcript:

1 Alliance Boots plc 2006/07 Interim Results 14 November 2006

2 Regulatory statement Origination of information Unless otherwise stated, the information contained in this presentation is derived from Alliance Boots own internal resources or research, or are the Companys estimates based on its existing knowledge and experience. Forward looking statements Certain statements included in this presentation, or made in response to questions during Questions & Answers, which are not historical facts are forward looking statements. Such forward looking statements are made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of These forward looking statements involve certain risks and uncertainties including, but not limited to, changes in interest rates, competitive pressures, changes in customer mix, financial stability of major customers, investment procurement opportunities, acquisitions, industry consolidation, asserted and unasserted claims, and changes in government regulations or the interpretation thereof, which could cause actual results to differ from those in the forward looking statements. Article 49 Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 This presentation is directed only at persons who (i) are persons falling within Article 49(2)(a) to (d) (high net worth companies, unincorporated associations etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or (ii) have professional experience in matters relating to investments or (iii) are outside the United Kingdom (all such persons together being referred to as relevant persons). This presentation must not be acted on, or relied on, by persons who are not relevant persons. Section 21 of the Financial Services and Markets Act 2000 This presentation does not constitute an invitation or inducement to engage in investment activity in the ordinary shares of the Company nor does it purport to contain information that shall form the basis of, or be relied upon in making such investment decisions. No representation or warranty, express or implied, is made or given by the Company as to the accuracy or completeness of the information or the opinions contained in this presentation and no liability accepted for any such information or opinions. Past performance cannot be relied on as a guide for future performance. US Securities Act This presentation is not an offer of securities for sale in the United States. The securities to which this presentation relates have not been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. There will be no public offering of the securities in the United States.

3 Richard Baker Chief Executive

4 An international pharmacy-led health and beauty group Retail - Market leader in the UK - Businesses in five other countries Wholesale - One of Europes leading pharmaceutical wholesalers - Europes biggest buyer of generic medicines A strong balance sheet with stable cash flows - Organic and acquisition growth opportunities The opportunity to deliver substantial mid-term cost savings

5 Delivering against our priorities Trading performance in line with expectations - Business as usual for retail and wholesale through merger completion - Pro forma Group revenue +2.9% - Pro forma underlying trading profit* +5.1% - Pro forma adjusted earnings per share** +10.4% Integration of management team well underway - Excellent collaborative working in key areas across the Group Hard work continues on delivery of cost synergies - Confident in plans and timescales to delivery *Underlying trading profit is after adjusting the trading profit for the six months ended 30 September 2005 to include a full six months rental charge on the 312 retail outlets which were sold and leased back in July 2005, so that the trading profits for both accounting periods are on a comparable basis **Adjusted earnings per share comprises adjusted earnings divided by the pro forma weighted average number of shares in issue during the period of 962 million

6 George Fairweather Group Finance Director

7 Basis of reporting Pro forma Prepared on a pro forma basis to show the results from continuing operations as if the two groups had been always been combined. Statutory Comprising six months results for the former Boots Group PLC businesses and two months results for the former Alliance UniChem Plc businesses.

8 Pro forma Group highlights – continuing operations *Trading profit comprises profit from operations before non trading items, amortisation of certain acquired intangible assets and share of associates post tax earnings **Underlying trading profit is after adjusting the trading profit for the six months ended 30 September 2005 to include a full six months rental charge on the 312 retail outlets which were sold and leased back in July 2005, so that the trading profits for both accounting periods are on a comparable basis ***Adjusted earnings comprises profit for the period attributable to equity shareholders before non trading items, amortisation of certain acquired intangible assets and IAS 39 timing differences, all net of tax and before exceptional tax credits ****Adjusted earnings per share comprises adjusted earnings divided by the pro forma weighted average number of shares in issue during the period of 962 million Adjusted earnings per share**** 20.1p 18.2p+10.4% Adjusted earnings*** % Revenue7,0396, % Underlying trading profit** **+5.1% Trading profit* % Six months ended 30 September 2006 £million Growth 2005 £million

9 Pro forma divisional highlights – continuing operations *Group trading profit comprises profit from operations before non trading items, amortisation of certain acquired intangible assets and share of associates post tax earnings Trading RevenueprofitTrading £million£millionRevenueprofit Retail3, %+4.0% Growth over first half of last year Other Commercial Activities & Corporate Costs 47(26)+6.8% Group*7, %+2.7% Wholesale4, %+6.3% Intra-group(521)- Wholesale Like for like revenue –0.8% Like for like trading profit +8.0% Retail Like for like revenue +4.1% Underlying trading profit*+7.2% Six months ended 30 September 2006

10 Pro forma Retail Division highlights - UK +5.6% +4.5% Revenue £2.8bn TotalLFL *Underlying trading profit is after adjusting the trading profit for the six months ended 30 September 2005 to include a full six months rental charge on the 312 retail outlets which were sold and leased back in July 2005, so that the trading profits for both accounting periods are on a comparable basis Trading profit £192m Underlying margin +7.3%* +0.1%p Underlying Six months ended 30 September 2006

11 Pro forma Retail Division - UK Health £1,549m Lifestyle £482m Beauty & Toiletries £792m Revenue by category Six months ended 30 September % +5.0% -1.8%

12 Health & Beauty £2,316m Community Pharmacy £507m Pro forma Retail Division - UK Revenue by format Six months ended 30 September 2006 Total growth Like for like Total growth Like for like +4.7% +4.1% +9.5% +6.3%

13 Pro forma Retail Division highlights - International Revenue £302mTrading profit £16m Margin +6.7% +7.1% 0.0% TotalLFLProfit Six months ended 30 September %p

14 Pro forma Wholesale Division highlights – N. Europe Revenue £1.6bn Trading profit £49m Trading margin 3.1% +8.8% 2.1% TotalLFL Margin +8.9% 0.0%p Profit Six months ended 30 September 2006

15 Pro forma Wholesale Division highlights – S. Europe Revenue £2.8bn Trading profit £36m Trading margin 1.3% -2.3%-1.7% TotalLFL Margin +2.9% +0.1%p Profit Six months ended 30 September 2006

16 Pro forma Other Commercial Activities & Corporate Costs Trading profit Total £million Other Commercial Activities(8)(6) Corporate Costs(18)- Revenue Contract manufacturing387 (26)(6) Better/(worse) than first half of last year £million Own brand exports9(4) Other Commercial Activities473 Six months ended 30 September 2006

17 Pro forma Associates Revenue1, %+5.0% Trading profit % Alliance Boots share £millionTotalLike for like Growth over first half of last year Earnings23+9.5%+11.5% Six months ended 30 September 2006

18 Pro forma underlying net finance costs and tax – continuing operations 2006 £million Trading profit* Share of associates post tax earnings Underlying net finance costs Underlying tax Adjusted profit for the period Minority interests Adjusted earnings** 2005 £million Underlying tax rate Trading profit comprises profit from operations before non trading items, amortisation of certain acquired intangible assets and share of associates post tax earnings **Adjusted earnings comprises profit for the period attributable to equity shareholders before non trading items, amortisation of certain acquired intangible assets and IAS 39 timing differences, all net of tax and before exceptional tax credits Six months ended 30 September Underlying tax rate (37) (69) (18) (79) 31.7%30.9%

19 Pro forma cash flow – continuing operations Acquisitions and disposals(23) (8) Net capital expenditure(110) 163* Other10 (62) Cash generated by operations Net borrowings**1,169 *Includes proceeds of £298 million from sale and leaseback transaction **Defined as borrowings net of cash and cash equivalents and derivative financial instruments Six months ended 30 September £million Tax and interest (53) (113) Total cash inflow Dividends (net) (144) (158)

20 Statutory accounts – non trading items (19) 149 Restructuring(10) - Costs in relation to merger synergies (9) - Profit/(loss) on sale of property, plant and equipment1 (2) Profit on sale and leaseback- 151 Other(1) - Six months ended 30 September £million

21 Financial summary Performance on track for the full year - Good trading in H1, in line with expectations - Businesses in good shape to meet the challenges in H2 Good cash flows - Cash generative businesses - Prudent financial stewardship Robust balance sheet Strong financial position to fund future growth

22 Richard Baker Chief Executive

23 UK Retail – The opportunity in healthcare Market leader in growing Healthcare market - More pharmacies than anyone else A common heritage - Developing the best of both The role of Pharmacy... moving from dispensing to Healthcare - New services Profitable operation with scope to expand

24 UK Retail – The power of brands Market leader in the growing Beauty market Brands provide differentiation - Market leading products available only at Boots Brands drive profitability - Natural Collection relaunch Extending the reach of our brands

25 Retail – International growth opportunities Established credentials retail outlets across the Republic of Ireland, Norway, Russia, The Netherlands, Italy and Thailand Profitable markets with growth potential Natural area for expansion - Potential deregulation in Western Europe - Developing markets - Financial resources and expertise in place Good synergies with pharmaceutical wholesale Wider distribution for own brands

26 Wholesale markets Healthcare led - Growth markets Regulated environment - Diverse portfolio delivers stability Changing product mix - Generics drive cost savings for government - Development of consumer healthcare offering Driven by service and efficiency - Competitive market place

27 Driving growth in Wholesale Potential expansion - Geographic and commercial Core service level - Optimum network shape e.g restructuring in France Commercial/loyalty offerings - Virtual chains: Pharmacy Alliance, Alphega and Kring Differentiated product offer - Almus in Boots stores and rolling out in Europe - Potential distribution of own brands Manufacturer services - Pfizer contract

28 Progress on integration Leadership team in place Cost synergies - Confident in £100 million by fourth full year - Key focus in first two years UK retail offer - Best of both pharmacy service - Ad Card technology developed - Key focus in years two and three Product offer for European pharmacy - Key focus in years three and four

29 Summary Good performance in H1, on track for the full year - Pro forma Group revenue +2.9% - Pro forma underlying trading profit* +5.1% - Pro forma adjusted earnings per share** +10.4% Confident in plans to deliver cost synergies Growth opportunities in existing markets and acquisition pipeline An encouraging start still much to do *Underlying trading profit is after adjusting the trading profit for the six months ended 30 September 2005 to include a full six months rental charge on the 312 retail outlets which were sold and leased back in July 2005, so that the trading profits for both accounting periods are on a comparable basis **Adjusted earnings per share comprises adjusted earnings divided by the pro forma weighted average number of shares in issue during the period of 962 million

30 Alliance Boots plc 2006/07 Interim Results 14 November 2006


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