Cadbury Schweppes Reports Good Performance in First Half 2004

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Cadbury Schweppes Reports Good Performance in First Half 2004 Results in Line With Expectations LONDON, July 21 /PRNewswire-FirstCall/ -- Cadbury Schweppes plc reports on financial performance for the 24 weeks ended 13 June 2004 Reported Constant Currency # 2004 2003 Growth % Growth % Growth % Base Business* Turnover m pounds sterling 2,954 2,700 +9 +14 +3 Underlying Group Operating m Profit pounds 448 412 +9 +16 - Share of associate m profits pounds 21 24 - Goodwill/ intangibles m amortisation pounds (67) (44) - Operating m exceptionals pounds (43) (26) Total Operating Profit including m associates pounds 359 366 -2 +5 Underlying Profit m Before Tax** pounds 371 365 +2 +9 +5 Profit Before Tax m pounds 265 294 -10 -3 Underlying EPS** p 12.6 12.4 +2 +9 +5 Basic EPS p 8.5 9.2 -8 -1 Dividend per share p 3.80 3.65 +4 * Base business excludes the impact of acquisitions and disposals (see note 2 on page 8) ** Both underlying profit before tax and underlying earnings per share (EPS) include associates, exclude goodwill/intangibles amortisation and exceptional items (see notes 7 and 8 on page 15 for a reconciliation to profit before tax and earnings per share) # Constant currency growth excludes the impact of exchange rate movements during the period 2004 Half Year Highlights# * Base business sales growth at 3% led by Smart Variety and innovation * Dr Pepper volumes ahead 3% and diet soft drinks 23% ahead in US * Cadbury Trebor Bassett continues to benefit from focus on core brands, with sales ahead by 3% * Fuel for Growth cost savings on track and underlying margins increase 30 basis points * Underlying EPS 9% ahead, benefiting from strong Adams contribution Todd Stitzer, Chief Executive Officer, said, "I'm pleased to report a good first half performance with results in line with expectations. Our focus on innovation and marketplace execution have driven sales growth and share gain, particularly in our US carbonated soft drinks business, our UK confectionery business and our major gum operations around the world. The Adams integration is on track and the business is performing well. "Fuel for Growth is delivering as expected and we are achieving margin growth despite some above inflation cost increases. Although we have a number of challenging integration projects in the second half, we remain cautiously optimistic about the outcome for the full year and expect to deliver results within our goal ranges." PERFORMANCE OVERVIEW 2004 Half Year Performance Summary We have had a good first half overall with the business performing in line with expectations. * Sales from our base business, excluding the impact of acquisitions, rose by 3% at constant currency. The rate of growth in the base business was impacted by the phasing of Adams sales between the first quarter when it was treated as an acquisition, and the second quarter when it was included in the base business comparatives. * Underlying operating margins were 30 basis points ahead at constant currency with good Fuel for Growth savings being offset by above inflation cost increases in a number of areas. * Underlying earnings per share grew by 9% at constant currency, with the base business (excluding acquisitions) growing by 5% and acquisitions (Adams) contributing the balance. Our performance in the first half was driven by our core markets and brands, notably: * Carbonated soft drinks in the United States led by Dr Pepper (volumes ahead by 3%) and our strong portfolio of diet products (volumes ahead by 23%) * Cadbury Trebor Bassett in the UK, which has continued to benefit from new product introductions under its main brand names. Sales rose by 3% during the half and market share was maintained at 31%, an 11 percentage point lead over our nearest competitor (Source: Nielsen) * Our core gum and medicated brands in the Americas * Our confectionery and food & beverage operations in Australia Adams performance was strong and accretive to first half earnings. The business is performing well, the brands are responding to greater innovation and investment, we are maintaining or growing market shares in key territories, are beginning to leverage our combined technologies and routes to market and are driving out costs. The early benefits of our Smart Variety strategy are evident throughout the business. In the UK we have leveraged the strength of the Cadbury Dairy Milk brand by introducing Dairy Milk variants from Australia. In Europe, Halls is growing rapidly through Cadbury Schweppes' strong distribution networks and in Russia, our gum brands have been relaunched using technology from the US and production assets in France and Spain. Fuel for Growth is on track with around 40% of the target savings for the year delivered in the first half. Cashflow performance is considerably ahead of prior year reflecting the stronger trading performance. Outlook Looking to the full year, we expect the good progress we made in the first half to continue. Our US beverage business is benefiting from the restructuring undertaken last year and the focus on its core brands, most notably Dr Pepper. The Adams businesses are responding well to increased focus, innovation and investment and we are seeing strengthening performances in many of our key markets around the world. We expect the Fuel for Growth cost reduction activities to deliver in line with expectations reflecting the successful execution of a number of key projects. We expect to continue to experience above inflation cost increases through the balance of the year which will offset some of the Fuel for Growth cost savings. Although we have a number of key integration projects to implement in the second half, particularly in Americas Confectionery, we remain cautiously optimistic about the outcome for the full year and continue to expect to deliver results within our goal ranges for financial performance. OPERATING REVIEW Americas Beverages Half Year Results (m pounds) Base Acquisitions/ Exchange 2003 Business Disposals Effects 2004 Turnover 848 19 -- (97) 770 2 % -- (11%) (9%) Underlying Operating Profit 245 12 -- (29) 228 5 % -- (12%) (7%) Underlying Operating Margins 28.9 % +70bps -- -- 29.6 % Performance from the Americas Beverages region in the half benefited from strengthened revenue results driven by our carbonated soft drinks (CSDs) portfolio in the US which grew volumes by 3%. Our stronger carbonates performance was driven by the combination of growth in: * Our flagship Dr Pepper brand where volumes were 3% ahead in the half. We saw strong growth in Diet Dr Pepper and sales through fountain and food service outlets, with performance overall benefiting from better sales and marketing execution, particularly in core markets. * Diet CSDs where our total portfolio increased volumes by 23%, significantly ahead of the market which grew by 9% (Source: Nielsen) * Our flavour range of products which, excluding 7 UP, grew volumes by 7% during the half, benefiting from the scale advantages conferred to the range through the transfer of 7 UP into our independent bottlers. Including 7 UP, volumes of our flavour brands were ahead by 3%. Sales from our non-CSD portfolio were flat overall at the half year, reflecting the combination of weak consumer demand and reduced levels of marketing and new product activity at Mott's/Snapple where the business was focused on integration. Hawaiian Punch grew strongly with sales up 6% and Clamato grew by 3%. This was offset by weaker performances from Snapple, where sales were down 2% and Mott's Apple Juice, down 3%. Margins in the half benefited from Fuel for Growth cost savings and improved mix although these were to some extent offset by higher employee and "one-off" IT related costs. The combination of our North American operations into a cohesive commercial unit is now complete and we expect to begin to see the real commercial benefits of the new structure in 2005. Americas Confectionery Half Year Results (m pounds) Base Acquisitions/ Exchange 2003 Business Disposals Effects 2004 Turnover 271 11 199 (24) 457 4 % 73 % (8%) 69 % Underlying Operating Profit 14 3 36 (2) 51 19 % 262 % (9%) 272 % Underlying Operating Margins 5.1 % +70bps +510bps +30bps 11.2 % The Americas Confectionery results were significantly impacted by the acquisition of Adams: the base business numbers above include second quarter results from the Adams operations which were consolidated from 31 March 2003. If we had owned Adams for the whole of the first half last year, sales would have been 8% ahead on a like-for-like basis at constant exchange rates. During the half we saw strong growth from our core gum businesses around the region as a result of strong consumer demand and new product activity, particularly under the Trident, Dentyne and Chiclets brand names. Overall, Halls performance was good with the exception of Canada where we were cycling significant innovation activity in the first half of 2003. Margins for the region rose strongly during the half due to the consolidation of higher margin Adams operations and Fuel for Growth cost savings. Adams integration projects continue to be implemented to plan with the successful installation of SAP in Brazil and the consolidation of back-offices across the Latin Americas region. In North America, significant resources have been allocated to planning for the transition from Pfizer's shared service system: the project is on track to be implemented in the US during the third quarter of this year and in Canada in the first quarter for 2005. Europe, Middle East and Africa (EMEA) Half Year Results (m pounds) Base Acquisitions/ Exchange 2003 Business Disposals Effects 2004 Turnover 913 15 43 (9) 962 2 % 4 % (1%) 5 % Underlying Operating Profit 130 6 10 (1) 145 5 % 7 % -- 12 % Underlying Operating Margins 14.2 % +40bps +40bps +10bps 15.1 % A 2% increase in base business sales in our EMEA region compares with a strong first half last year when sales were 6% ahead. Sales were, in addition, affected by softer sales in Ireland and Bromor in South Africa. Key highlights of the half around the region were: * In the UK, Cadbury Trebor Bassett (CTB) grew sales by 3% and market share was stable at 31%. The market share gap to the next largest player now stands at 11 percentage points. (Source: Nielsen) The business continues to show the benefits of our focus on a small range of powerful core brands which have been reinvigorated through new product activity, more focused marketing spend and improved sales execution. We saw double-digit sales growth in Cadbury Dairy Milk (CDM) following the relaunch of the brand in the second half of last year. * In France, the transformation of Hollywood from a sugarised gum brand into the leading sugar-free brand continued to drive market share gains with CS total gum share now standing at 52.4% an increase of 3.5 percentage points over prior year (Source: Nielsen). * In Spain, using our experience from our French gum business, we relaunched Trident in April with encouraging initial results. * In Ireland, our sales were down 8% in a market which remains challenging. * We saw an 11% increase in sales in Russia where we've successfully launched a range of pocket confectionery under the Dirol and Stimorol brands with product supplied from France and Spain. Cadbury chocolate products and Halls are also growing strongly. * Our operations in Africa and the Middle East once again did well although Bromor, our food and drinks business in South Africa, had a more difficult half. Margins rose by 90 basis points in the half, broadly equally split between improvements in the base business and the impact of consolidating higher margin Adams' businesses in the first quarter. Excellent Fuel for Growth cost benefits were partially offset by increases in raw material, IT and employee costs. Europe Beverages Half Year Results (m pounds) Base Acquisitions/ Exchange 2003 Business Disposals Effects 2004 Turnover 295 10 -- (2) 303 4 % -- (1%) 3 % Underlying Operating Profit 43 3 -- 0 46 8 % -- (1)% 7 % Underlying Operating Margins 14.7 % +60bps -- -- 15.3 % In our Europe Beverages region, the 4% increase in sales and 8% rise in operating profit at constant exchange rates, is a good result given weak and competitive markets in two of the regions most important territories -- Spain and Germany. A 4% sales increase in France was driven by a higher trade buy-in ahead of the peak summer season. In Spain, sales benefited from improvements in price and mix. In Germany, sales were 9% lower with our premium water business impacted by competition from hard discounters and growth of own-label. The expanded bottling arrangements with San Benedetto in France formally started trading in March. The transfer of Orangina assets took place smoothly. The integration of the commercial organisation in France is proceeding to plan and we expect to begin to see the benefits of the strengthened commercial and supply chain organisations in the second half and beyond. Asia Pacific Half Year Results (m pounds) Base Acquisitions/ Exchange 2003 Business Disposals Effects 2004 Turnover 368 30 44 16 458 8 % 12 % 4 % 24 % Underlying Operating Profit 33 3 3 3 42 9 % 10 % 7 % 26 % Underlying Operating Margins 8.9 % +10bps -20bps +20bps 9.0 % In Asia Pacific sales for the half-year were strongly ahead of last year. This principally reflects a healthy recovery in both our confectionery and food & beverages operations in Australia which had difficult first halves last year. Our Australian confectionery business benefited both from new product activity and good growth with key grocery customers and our chocolate market share grew by 40 basis points to 57% (Source: Nielsen). The food & beverage business also grew strongly, gaining share in both carbonated and non-carbonated soft drinks, with growth driven by increased sales of franchise products and sales in the higher margin impulse trade. In India, where the business was affected by a product storage issue in the fourth quarter of last year, we're seeing a steady recovery in chocolate sales although profits were lower as we invested in repackaging, trade promotions and marketing to rebuild consumer and customer confidence. In China, we acquired the Adams business in March. The commercial integration was completed in June. Losses are slightly higher year on year reflecting the integration of the Adams business. Elsewhere in Asia, we've seen further growth in sales and share in the key markets of Thailand and Japan, primarily through the introduction of new gum products. Margins in the region were only modestly ahead in the half with cost savings largely offset by the combination of higher raw material costs, higher losses in China and increased investment in the Cadbury brand in India. FINANCIAL REVIEW Sales at 3.0 billion pounds were 9% higher than last year, and 14% above prior year at constant exchange rates. Acquisitions, net of disposals, contributed 11% to revenue growth. The most significant contributor to growth from acquisitions was Adams. Like-for-like base business sales grew 3% (at constant currency). Underlying operating profit excluding associates (operating profit before goodwill/intangibles amortisation and exceptional items) was up 9%. At constant currency the growth was 16%, with the base business growing by 5% and acquisitions (primarily 11 weeks of Adams) contributing 11%. Currency movements had a 7% adverse impact on underlying operating profits with US dollar weakness more than offsetting strength in the Euro and Australian dollar. Central costs rose by 11 million pounds to 64 million pounds due to the costs of strengthening our Global Commercial and Science & Technology functions together with higher IT costs. Underlying operating margins fell by 10 basis points from 15.3% to 15.2%. Excluding the impact of exchange rate movements, underlying operating margins rose by 30 basis points to 15.6%. The dilution of margins due to exchange rate movements reflects the impact on overall Group margins of the weaker dollar on the translation of our high margin carbonates business in the US. Income from associates at 21 million pounds was 3 million pounds lower than in 2003. 2 million pounds of the adverse movement relates to currency movements with the remainder being due to lower contribution from our bottling arrangement in France. The Group charge for operating exceptionals of 43 million pounds was 17 million pounds higher than last year and relates to our four year Fuel for Growth cost reductions. Our activities are on track and we expect the full year benefit to be in line with previous guidance of 75 million pounds before reinvestment. Goodwill/intangibles amortisation at 67 million pounds was 23 million pounds higher than last year, reflecting the acquisition of Adams. The interest charge was significantly higher at 98 million pounds (2003: 71 million pounds), due to the cost of financing the Adams acquisition during the half year compared to 11 weeks in the first half of 2003. Underlying profit before tax (profit before tax and goodwill/intangibles amortisation and exceptional items) rose by 2% to 371 million pounds and by 9% at constant exchange rates. Reported profit before tax fell by 10% to 265 million pounds primarily reflecting higher restructuring and goodwill/intangibles amortisation items. The underlying tax charge was 28.3% as against 28.5%. Underlying earnings per share (earnings before goodwill/intangibles amortisation and exceptional items) at 12.6 pence were 2% ahead of last year. At constant exchange rates underlying earnings per share were up 9%. Acquisitions net of disposals contributed 0.5 pence or 4 percentage points of the total growth in underlying earnings per share. Basic earnings per share (after goodwill/intangibles amortisation and exceptional items) fell by 8% to 8.5 pence principally reflecting the increase in exceptional items (driven by business restructuring) and goodwill amortisation arising on acquisitions. Marketing Investment Marketing expenditure in during the half was 336 million pounds, an increase of 3% over last year and an increase of 8% at constant exchange rates. This represents a marketing to sales ratio of 11.4%, a 60 basis point reduction over prior year. This reflects in part the phasing of spending and in part higher investment in innovation and science & technology which are not classified as marketing expenditure. Capital Spend Capital spend fell by 25 million pounds to 103 million pounds as a result of phasing of Fuel for Growth expenditure. For the full year 2004, we expect capital spend to be in the range of 300 million pounds to 330 million pounds. Cash Flow The Group traditionally has a seasonal working capital outflow in the first half, which is reversed in the second half. This year's free cash flow outflow of 165 million pounds is 96 million pounds lower than last year mainly due to the improvement in trading performance and a positive cash contribution from Adams which produced a significant cash outflow for the same period in 2003. Debt Refinancing Following the Adams acquisition, the Group had 3.9 billion pounds of debt maturing in less than 2 years, reflecting both the 2.7 billion pounds acquisition price and 1.2 billion pounds of existing Group debt. Over the last year, 2.4 billion pounds of this debt has been refinanced in the bond markets with euro 1.2 billion raised following the end of the half year via the issue of fixed and floating rate euro notes. As a result, the percentage of fixed rate debt has increased to 79% from 54% a year ago (as at June 2003) and the proportion of debt with more than 3 years maturity has risen to 63% from 13% a year ago. The average interest rate on the Group's fixed rate debt is 4.8%. Dividends The Board has declared an interim dividend of 3.80 pence, up from 3.65 pence in 2003, an increase of 4%. This will be paid on 15 October 2004 to Ordinary Shareholders on the Register at the close of business on 17 September 2004. Interim Report The Interim Results Report of the Directors will be mailed to Shareowners in early August 2004. This will include a UK/ US GAAP reconciliation and the Independent Review Report of the Auditors. A presentation on the results will be webcast live on the Group's website http://www.cadburyschweppes.com/ at 09.30 a.m. Copies of the slides accompanying the presentation will be available on the website on 21 July from 11 am. High-resolution photographs are available to the media free of charge from 1.30 p.m. today at http://www.newscast.co.uk/ +44(0)20 7608 1000. Forward Looking Statements This material may be deemed to include forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933 and Section 21E of the US Securities Exchange Act of 1934. These forward-looking statements are only predictions and you should not rely unduly on them. Actual results might differ materially from those projected in any such forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. In evaluating forward-looking statements, which are generally identifiable by use of the words "may," "will," "should," "expect," "anticipate," "estimate," "believe," "intend" or "project" or the negative of these words or other variations on these words or comparable terminology, you should consider various factors including the risks outlined in our Form 20-F filed with the SEC. Although we believe the expectations reflected in forward-looking statements are reasonable we cannot guarantee future results, levels of activity, performance or achievements. This presentation should be viewed in conjunction with our periodic interim and annual reports and registration statements filed with the Securities and Exchange Commission, copies of which are available from Cadbury Schweppes plc, 25 Berkeley Square, London W1J 6HB, UK. Notes to Editors: 1. About Cadbury Schweppes Cadbury Schweppes is a major global Group which manufactures, markets and distributes branded beverages and confectionery products around the world. With origins stretching back over 200 years, today Cadbury Schweppes' products -- which include brands such as Cadbury, Schweppes, Halls, Trident, Dr Pepper, Snapple, Trebor, Dentyne, Bubblicious and Bassett -- are enjoyed in almost every country around the world. The Group employs around 54,000 people and is a leading world-wide confectionery company. It is number one in sugar and functional confectionery, a strong number two in gum and the world's third largest soft drinks company 2. The contribution from acquisitions during the period equates to the first twelve month's impact of businesses acquired or disposed of in the current and prior year. Once an acquisition or disposal has lapped its acquisition date then it is included within the base business results. 3. The following schedules are attached: Pages Group Profit & Loss Account 9 Movements in Shareholders' Funds 10 Group Balance Sheet 11 Group Cash Flow Statement 12 Turnover and Operating Profit Analysis 13 4. Notes to the Schedules 14-16 Cadbury Schweppes plc Group Profit and Loss Account For the 24 weeks ended 13 June 2004 (unaudited) Year 2003 Notes 2004 (Unaudited) Before Total exceptional Exceptional Total items and items and goodwill/ goodwill/ intangibles intangibles amortisation amortisation m pounds m pounds m pounds m pounds 6,441 Turnover 2,954 -- 2,954 (5,742) Operating costs (2,506) (110) (2,616) 699 Group Operating Profit 448 (110) 338 51 Share of operating profit in associates 21 -- 21 Total Operating Profit 750 6 Including Associates 469 (110) 359 (7) Profit/ (loss) on disposal of fixed assets -- 4 4 2 3 Profit/ (loss) on -- -- -- sale of subsidiaries and investments Profit on Ordinary 745 Activities Before Interest 469 (106) 363 (181) 4 Net interest (98) -- (98) Profit on Ordinary 564 7 Activities Before 371 (106) 265 Taxation (173) 5 Taxation (105) 21 (84) Profit on Ordinary 391 Activities After Taxation 266 (85) 181 (4) Equity minority interests (1) -- (1) (21) Non-equity minority interests (9) -- (9) 366 Profit for the Financial Period 256 (85) 171 Dividends paid and (242) proposed to Ordinary Shareholders (77) Profit Retained for 124 the Financial Period 94 8 Earnings per Ordinary Share of 12.5p 18.2 - Basic 12.6 (4.1) 8.5 18.1 - Diluted 12.6 (4.2) 8.4 Dividends per Ordinary Share 3.65 - Interim 3.80 8.35 - Final Year 2003 Notes 2003 (Unaudited) Before Total exceptional Exceptional Total items and items and goodwill/ goodwill/ intangibles intangibles amortisation amortisation m pounds m pounds m pounds m pounds 6,441 Turnover 2,700 -- 2,700 (5,742) Operating costs (2,288) (70) (2,358) 699 Group Operating Profit 412 (70) 342 51 Share of operating profit in associates 24 -- 24 Total Operating Profit 750 6 Including Associates 436 (70) 366 (7) Profit/ (loss) on disposal of fixed assets -- -- -- 2 3 Profit/ (loss) on -- (1) (1) sale of subsidiaries and investments Profit on Ordinary 745 Activities Before Interest 436 (71) 365 (181) 4 Net interest (71) -- (71) Profit on Ordinary 564 7 Activities Before 365 (71) 294 Taxation (173) 5 Taxation (104) 7 (97) Profit on Ordinary 391 Activities After Taxation 261 (64) 197 (4) Equity minority interests (2) -- (2) (21) Non-equity minority interests (10) -- (10) 366 Profit for the Financial Period 249 (64) 185 Dividends paid and (242) proposed to Ordinary Shareholders (74) Profit Retained for 124 the Financial Period 111 8 Earnings per Ordinary Share of 12.5p 18.2 - Basic 12.4 (3.2) 9.2 18.1 - Diluted 12.4 (3.2) 9.2 Dividends per Ordinary Share 3.65 - Interim 3.65 8.35 - Final Cadbury Schweppes plc Statement of Total Recognised Gains and Losses Movements in Shareholders' Funds For the 24 weeks ended 13 June 2004 (unaudited) Half Year Year (Unaudited) 2003 2004 2003 m pounds m pounds m pounds Statement of Total Recognised Gains and Losses 366 Profit for the period 171 185 (213) Currency translation differences (126) (19) 153 Total Recognised Gains and Losses in the period 45 166 Details of the prior year adjustment arising from the adoption of UITF Abstract 38 are given in Note 1. Half Year (Unaudited) 2003 Reconciliation of Movements in 2004 2003 (restated) Shareholders' Funds (restated) m pounds m pounds m pounds 3,020 Shareholders' Funds at the beginning of 3,020 the year (as previously stated) (177) Prior year adjustment - UITF 38 (see note 1) (177) 2,843 Shareholders' Funds at the beginning of the year (as restated) 2,780 2,843 153 Total recognised gains and losses in the period 45 166 (242) Dividends to Ordinary Shareholders (77) (74) 7 Movement in Own Shares reserve 22 5 19 New share capital subscribed 17 10 2,780 Shareholders' Funds at the end of the period 2,787 2,950 Cadbury Schweppes plc Group Balance Sheet At 13 June 2004 (unaudited) Half Year (unaudited) Year 2003 2004 2003 (restated) (restated) m Notes m pounds m pounds pounds Fixed Assets 5,827 Intangible assets and goodwill 5,614 6,115 1,633 Tangible fixed assets 1,571 1,665 313 Investment in associates 323 313 15 Investments 11 11 7,788 7,519 8,104 Current Assets 672 Stocks 713 721 Debtors 1,221 - due within one year 1,201 1,300 81 - due after one year 71 83 242 9 Investments 219 264 191 9 Cash at bank and in hand 169 167 2,407 2,373 2,535 Current Liabilities Creditors: amounts falling due within one year (1,069) 9 - Borrowings (1,164) (2,735) (1,977) - Other (1,671) (1,694) (639) Net Current Liabilities (462) (1,894) 7,149 Total Assets less Current Liabilities 7,057 6,210 Non-current Liabilities Creditors: amounts falling due after more than one year (3,575) 9 - Borrowings (3,495) (2,459) (123) - Other (132) (123) (428) Provisions for liabilities and charges (405) (420) (4,126) (4,032) (3,002) 3,023 Net Assets 3,025 3,208 Capital and Reserves 258 Called up share capital 259 257 1,071 Share premium account 1,090 1,062 59 Revaluation reserve 59 59 (80) Other reserves (58) (82) 1,472 Profit and loss account 1,437 1,654 2,780 Shareholders' Funds 2,787 2,950 Minority Interests 18 Equity minority interests 18 19 225 Non-equity minority interests 220 239 243 238 258 3,023 Total Capital Employed 3,025 3,208 Cadbury Schweppes plc Group Cash Flow Statement For the 24 weeks ended 13 June 2004 (unaudited) Half Year Year (Unaudited) 2003 Notes 2004 2003 (restated) (restated) m pounds m pounds m pounds Net cash flow from operating activities 699 Group operating profit 338 342 213 Depreciation 96 88 129 Goodwill/Intangibles amortisation 67 44 110 Other items (4) (8) (97) Changes in working capital (229) (287) 1,054 268 179 9 Dividends received from associates -- -- Returns on investments and servicing of finance (156) Interest paid, net (88) (52) (21) Dividends paid to minority interests (5) (5) (177) (93) (57) (195) Taxation (72) (94) Capital expenditure and financial investments (285) Net capital expenditure (including investments) (99) (128) Acquisitions and disposals (2,770) Acquisitions of businesses (15) (2,761) 13 Net cash assumed on acquisition 1 -- -- Spend against fair value provisions (1) -- Net proceeds from sale of investments, 5 3 associates and subsidiary undertakings -- -- (2,752) (15) (2,761) (234) Dividends paid to Ordinary Shareholders (169) (161) (2,580) Cash outflow before use of liquid (180) (3,022) resources and financing 52 9 Management of liquid resources 22 32 Financing 19 Issues of Ordinary Shares 17 10 10 Net movement of shares held under the Employee Trust 13 12 2,517 9 Net change in borrowings and other financing 90 2,998 2,546 Net cash inflow from financing 120 3,020 18 9 (Decrease)/Increase in cash (38) 30 Free cash flow (2,580) Cash outflow before use of liquid resources and financing (180) (3,022) 2,752 Add back: cash flows relating to acquisitions and disposals 15 2,761 172 (165) (261) Cadbury Schweppes plc Turnover and Operating Profit Analysis For the 24 weeks ended 13 June 2004 Half Year (Unaudited) Turnover 2004 2003 m pounds m pounds Americas Beverages 770 848 Americas Confectionery 457 271 EMEA 962 913 Europe Beverages 303 295 Asia Pacific 458 368 2,950 2,695 Central 4 5 2,954 2,700 Half Year (Unaudited) Group Operating profit before exceptional items 2004 2003 and goodwill/intangibles amortisation m pounds m pounds Americas Beverages 228 245 Americas Confectionery 51 14 EMEA 145 130 Europe Beverages 46 43 Asia Pacific 42 33 512 465 Central (64) (53) Underlying operating profit (a) 448 412 Exceptional restructuring costs (43) (26) Goodwill/ intangibles amortisation (67) (44) Group Operating profit 338 342 (a) Excluding exceptional restructuring costs of 43m pounds in 2004 (2003: 26m pounds) (Note 2), goodwill/intangibles amortisation of 67m pounds (2003: 44m pounds) and share of operating profit in associates of 21m pounds (2003: 24m pounds). Cadbury Schweppes plc Notes to the Schedules 1. Group Accounts a. The half year accounts are prepared on the basis of the accounting policies as set out in the Group's published accounts for the 52 weeks ended 28 December 2003, except: The Group has adopted UITF 38 "Accounting for ESOP Trusts". Shares purchased through Employee Share Option Trusts (ESOPs) are taken as a deduction in arriving at Shareholders' Funds. Previously these were held within investments. The balance sheets as at 15 June 2003 and 28 December 2003 have been restated to reflect this change in accounting policy. The impact on the profit and loss account has been immaterial. b. The half year accounts are unaudited and were approved by the Board of Directors on 20 July 2004. The full year figures for 2003 included in this announcement do not comprise statutory accounts for the purpose of Section 240 of the Companies Act 1985, and have been extracted from the Group's Report & Accounts and Form 20-F for 2003, a copy of which has been delivered to the Registrar of Companies and on which an unqualified report has been made by the auditors under Section 235 of the Companies Act 1985. 2. Exceptional Restructuring Costs During the first half of 2004, the Group incurred 43m pounds (2003: 26m pounds) of exceptional restructuring costs. These have been incurred as part of Fuel For Growth which commenced in 2003. 3. Profit on Sale of Subsidiaries and Investments There has been no sale of subsidiaries or investments in the period. During the prior period the Group completed the sale of Bouquet d'Or, a French confectionery company. 4. Net Interest Year Half Year (Unaudited) 2003 2004 2003 m pounds m pounds m pounds 166 Net interest arising in Group companies 93 64 15 Share of net interest arising in associates 5 7 181 98 71 5. Taxation Year Half Year (Unaudited) 2003 2004 2003 m pounds m pounds m pounds (31) UK (8) 3 195 Overseas 88 89 9 Associates 4 5 173 84 97 - Tax on profit on disposal of subsidiaries and investments -- -- 173 84 97 6. Underlying Total Operating Profit including Associates The calculation of underlying total operating profit including associates is as follows: Year Half Year (Unaudited) 2003 2004 2003 m pounds m pounds m pounds 750 Total Operating Profit including associates 359 366 224 Add: exceptional restructuring costs 43 26 129 Add: goodwill/intangibles amortisation 67 44 1,103 Total operating profit including associates 469 436 7. Underlying Profit before Tax The calculation of underlying profit before tax is as follows: Year Half Year (Unaudited) 2003 2004 2003 m pounds m pounds m pounds 564 Profit on Ordinary Activities Before Taxation 265 294 224 Add: exceptional restructuring costs 43 26 129 Add: goodwill/intangibles amortisation 67 44 5 Non-operating exceptional items (4) 1 922 Underlying profit before tax 371 365 8. Earnings per Ordinary Share Basic EPS for the half year is calculated on the weighted average of 2,024 million shares in issue during the half year (2003 half year: 2,011 million; 2003 full year: 2,013 million). Diluted EPS is calculated on the weighted average of 2,038 million shares (2003 half year: 2,015 million; 2003 full year: 2,019 million), which includes dilutive options outstanding. The earnings used in calculating the Basic and Underlying EPS figures were as follows: Year Half Year (Unaudited) Earnings EPS Earnings EPS 2003 2003 2004 2003 2004 2003 m pounds p m pounds m pounds p p 366.3 18.2 Earnings / Basic EPS 171.3 185.0 8.5 9.2 223.7 11.1 Add: Exceptional restructuring costs 43.0 26.4 2.1 1.3 129.3 6.4 Add: Goodwill/intangibles amortisation 67.1 44.2 3.3 2.2 (2.5) (0.1) Add: Loss on disposals -- 1.0 -- 0.1 7.3 0.4 (Profit)/loss on sale of fixed assets (4.3) -- (0.2) -- (80.7) (4.0) Effect of tax on above items (21.3) (7.6) (1.1) (0.4) 643.4 32.0 Underlying earnings / EPS 255.8 249.0 12.6 12.4 Cadbury Schweppes believes that underlying operating profit, underlying profit before tax, underlying earnings and underlying earnings per share provide additional information on underlying earnings trends to shareholders. These measures are used by Cadbury Schweppes for internal performance analysis and incentive compensation arrangements for employees. The term underlying is not a defined term under UK or US Generally Accepted Accounting Principles (GAAP), and may not therefore be comparable with similarly titled profit measurements reported by other companies. It is not intended to be a substitute for, or superior to GAAP measurements of profit. 9. Net Borrowings Net borrowings are made up as follows: Year Half Year (Unaudited) 2003 2004 2003 m pounds m pounds m pounds 191 Cash at bank and in hand 169 167 (31) Bank overdrafts (52) (19) 160 Net cash 117 148 242 Liquid resources 219 264 (1,038) Other short term borrowings (1,112) (2,716) (3,575) Long term borrowings (3,495) (2,459) (4,211) (4,271) (4,763) Movements in cash and net borrowings in the period were as follows: Total net Net Liquid borrowings cash resources Borrowings m pounds m pounds m pounds m pounds At 28 December 2003 (4,211) 160 242 (4,613) Cash flow for the period (150) (38) (22) (90) Assumed on acquisition (11) -- -- (11) Amortisation of prepaid fees and discount (3) -- -- (3) Exchange rate adjustments 104 (5) (1) 110 At 13 June 2004 (4,271) 117 219 (4,607) DATASOURCE: Cadbury Schweppes plc CONTACT: Cadbury Schweppes plc: +020-7409-1313; or Capital Market Enquiries: Sally Jones, +020-7830-5095, or Mary Jackets, +020-7830-5124; or Media Enquiries: Andraea Dawson-Shepherd, or Dora McCabe, +020-7409-1313; or The Maitland Consultancy: Angus Maitland, or Philip Gawith, +020-7379-5151, all for Cadbury Schweppes plc Web site: http://www.cadburyschweppes.com/ http://www.newscast.co.uk/

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