INVESTORS CALL PRESENTATION - Roustroust.com/uploads/investor-relations/Q1_2015.pdf · ·...

INVESTORS CALLPRESENTATIONROUST CORPORATION GROUP

FIRST QUARTER 2015

Investor Relations contact:

[email protected]

FORWARD LOOKING STATEMENTS

© ROUST | CONFIDENTIAL INFORMATION 2

This presentation contains forward-looking statements based on our

expectations and assumptions as of May 15, 2015. 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, 2014 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.

EXPLANATORY NOTE

On November 24, 2014 by filing of a certificate of amendment with the Secretary of State of the State of Delaware, CEDC changed its name from “Central European Distribution Corporation” to “Roust Corporation”.

On June 30, 2014 ROUST CORPORATION GROUP („ROUST”) acquired Roust Inc. from Roust Trading Limited ("RTL"), pursuant to a SPA, dated May 26, 2014.

Roust Inc. is a leading distributor of premium alcohol brands in Russia including Russian Standard Vodka, Gancia, Remy, Jägermeister and Concha Y Toro. The Roust Inc. transaction is accretive to our earnings and cash flows when measured under the Notes against the twelve month period ended March 31, 2014.

RTL is the sole shareholder of Roust Inc. and ROUST, therefore for accounting purposes, the acquisition was accounted for under the “as if pooling-of-interest” method of accounting applicable to the transfer of assets or exchange of equity interests between entities under common control. The Company has a retained deficit due to the requirement to charge the acquisition price of Roust Inc. directly to equity. The Company received an fairness opinion from a U.S. investment bank as the basis of the $250M purchase price.

As a result of acquisition under common control ROUST is recasting its historical financial statements for the quarter ended March 31, 2014 published on May 15, 2014.

In accordance with Accounting Standard Codification Topic 805-50, common control of Roust Inc. and ROUST is deemed to have existed since June 5, 2013, the date that RTL acquired ROUST. As a result, the subsequent transfer of the assets and liabilities was accounted for “as if pooling-of-interest” at Roust Inc. historical cost at June 5, 2013, including necessary consolidation adjustments. Accordingly, the consolidated financial statements of ROUST beginning as of June 5, 2013 have been recast to include Roust Inc. balance sheet, results of operations and cash flows.

As a result of the application of the accounting guidelines summarized above, the presentation of ROUST historical financial information herein is not consistent with certain historical financial information as previously reported. As discussed further in Note 2 in the 10-Q, the presentation of certain previously reported amounts included herein has been recast to conform to the current presentation.


• Q1 continued the successful trend of global share increases and profit improvement

• Global shipments + depletions trend vs PY improved Q1 2015 vs Q4 2014, further improvement

expected in Q2 2015

• Our Strategy is working to drive business improvements and strong financial results:

a) Operating income at $6.3M, +2% vs last year despite destocking impact, loss of 2014 pre-build tax margin benefit

and currency devaluation in Q1 2015

b) Operating income margin of 5.9%; +2.3pts vs Q1 2014

c) Dramatic improvement in Underlying EBITDA +$2.7M and EBITDA margin of 10.4%; +5.2pts vs. Q1 2014

d) Global revenue per case and margin growth continue from ‘Revenue Growth Management’ – price increases,

discount reductions, logistics optimization, indirects reduction

e) Innovation accelerates: further focus on the very profitable vodka flavors and small packs

• Outstanding Polish business performance – ROUST increased Market leadership in volume and value!

• Strong International growth and market share increase in Germany, UK, France

• Excellent performance in Hungary with record market share

• The Russian economy/currency has negative impact; ROUST staying MAT market leader

a) Integrations of 3 business units progressing and contributing to EBITDA growth

b) Significant price increase above inflation implemented in February

c) Strong Underlying EBITDA results of $3.6M, despite no prebuild profit like in Q1 2014 (was equal to +$7M in 2014)

d) Reduction of commercial terms to discounters a 5-7% of revenue

• Ukraine business is declining in volume due to crisis, but minimal EBITDA or cash impact on ROUST

• Significantly more potential in the business for growth and cost optimization


EXECUTIVE SUMMARY Q1 2015

OPERATING INCOME MARGIN +2.3PTS VS Q1/2014


Q1 2015 STRONG PROFITABILITY PERFORMANCE VS LY

• Volumes (shipments/depletions) -13% / -5% (more distributor destocking)

• Net Sales (currency neutral) -$7.0M; -4.0%

• Gross Profit margin of 41.6%; +0.3pts

• Operating expenses lower by $27.7M; -41.9%

• Operating Income at $6.3M; +2.0%

• Operating income margin of 5.9%; +2.3pts

• EBITDA growth despite lower volumes and currency depreciation

− Underlying EBITDA (currency neutral) +5.8M; +64.4%

as a % of Net sales of 8.8%; +3.6pts

− Actual Underlying EBITDA of $11.7M; +$2.7M; +29.8%

as a % of Net sales of 10.4%; +5.2pts


Our Strategic Business Pillars for Profitable Growth are driving positive results

EXECUTIVE SUMMARY FULL YEAR 2014

• Global expansion Global player, leader in Russia, Poland, Top 2 Western Europe, Expand rapidly in Asia, America

• Accelerate high margin brands Grow faster high margin brands Russian Standard Vodka, Green Mark, Żubrówka, Remy, Jägermeister

• Product Quality Improvements Upgrades to taste, quality and purity for our grain-based spirit for superior brands

• Product Appeal Enhancement Packaging improved (Green Mark, Parliament, Talka, Żubrówka, Zhuravli)

• Product innovation New brands to be > 5% of our 2015 volumes. Focus on Flavored/Infused vodkas, small packs

• Marketing expansion Driving brand equity with greater consumer marketing investment and programs

• Agency partnerships Long term contracts expanded: William Grant’s, Jägermeister, Concha Y Toro, Campari

• Distribution expansion Core SKU weighted distribution expansion, “Perfect Store” for A-grade outlets

• Revenue Growth Management Pricing, brand, package and channel mix optimization to increase margins

• Production efficiency Key Performance Indicator tracking for focus on efficiency and quality

• Indirect Cost management Continued headcount optimization, productivity tracking and increases

• People Upgrade Upgraded from leading FMCG companies, new team are driving business improvements

• Effective legislation Working with Industry/Government on responsible commercially viable Alcohol Industry Legislation

• NUMBER 1 Vodka Player in Poland in terms of volume & value share!

− In January 2015 we became TOP VODKA PLAYER in POLAND with 34.7% volume market share

− Further strengthening leader’s position with 35.0% share in March 2015

Volume market share, +5.0 pp.* above our main competitor Stock Spirits

In March we became the value share market leader with 34.0% (+0.3 pts vs previous period)

• ŻUBRÓWKA’S SUCCESS!

− 5.2M nine-liter cases sold in 2014

− No 1 among Polish vodkas

− No 7 vodka brand worldwide

− No 40 largest alcohol brand worldwide

• FASTEST GROWING BRAND among

TOP50 alcohol brands worldwide

(29.5% growth year-on-year)!**


MARKET LEADERSHIP IN POLAND EXPANDED

* Nielsen Report for March 2015 ** According to IMPACT magazine, February 2015

GENERAL BUSINESS OVERVIEW

• Positive news

− No excise increases in 2015, 2016 – Vodka shelf price increases likely below inflation

− Industry legislation to reduce and control key chain discounts is progressing quickly

and expected in 2015 – benefits to ROUST margins Q2 onwards

− Of the top customers we already have several new signed contracts with discounts

significantly reduced vs last year

− The Government has enacted new laws to reduce the black market including

confiscation of equipment and greater fines

− ROUST has already reduced Russia cost base by $20M in the last 18 months

− ROUST premium brands Russian Standard Vodka and Jägermeister showed growth

of +2% and +33% respectively in Q1 2015 in NKA and on-trade channels, Talka

showed growth of +20% in TT

• Economic issues

− Consumer goods inflation 2015 forecast at 12 to 15%

− GDP forecast to fall in 2015 by 1.5 to 3%

− Alcohol + vodka market was still declining by 11.6% in 2015


DESPITE RUSSIAN ECONOMY CHALLENGES WE HAVE

SIGNIFICANT POSITIVE NEWS IN RUSSIA


77% DEVALUATION OF RUSSIAN RUBLE IN 2014, Q1 2015 VS 2014 63%

STRENGTHENING ROUST’S INTERNATIONAL BUSINESS

Sources: Central Bank of Russia Forex rates

• Rubles depreciation decreases US$ EBITDA from Russia, but also decreases

US$ Cost of goods, making ROUST’s International business more profitable

and providing more opportunity for faster profitable International growth

• Ruble now stable appreciating for the last 8 weeks

30

35

40

45

50

55

60

65

70

75

Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15

RUB/USD

actual avg YTD budget LE 3+9 40.0

65.0

70.0

60.0


KEY MARKETS PERFORMING BETTER IN Q1 THAN IN PREVIOUS

QUARTER – FURTHER IMPROVEMENT EXPECTED Q2 ONWARDS

Market volumesQ1 2014

vs. PY, %

Q2 2014

vs. PY, %

Q3 2014 vs

PY, %

Q4 2014 vs

PY, %

Q1 2015 vs

PY, %

Russia: Vodka -14.8 -14.4 -21.0 -19.3 -11.6

Poland: Vodka -9.3 -2.2 -3.4 -6.3 -3.8

Hungary: Vodka +8.6 +11.6 +9.5 +6.2 -23.6*

Russia: Wine -3.5 +0.2 -2.5 +4.4 +2.4

Poland: Wine -1.7 +12.4 +10.5 +7.5 n/a

Russia: Brandy +5.3 +1.6 -6.0 +2.3 n/a

Poland: Whiskey -7.3 +13.2 +9.8 +8.9 n/a

Russia: RTD -8.8 -12.6 -11.7 -16.5 n/a

Source: AC Nielsen, *Gosstat of RF

Note: Q1 = FM, Q2 = AM, Q3 = AS, Q4 = ON’14-DJ’15 and MAT 2014 = FM’14 – DJ’15 Russia and Hungary vodka, Russia brandy, and

RTD. For Poland Vodka, Nielsen data are calendar based (monthly). For Russia Wine Q1 2015 = DJ’15

* New taxation for alcohol products was implemented from the 1st January, 2015 (“health tax” = +70% excise increase)

POLAND HIGHLIGHTS


POLAND HIGHLIGHTS: STUNNING SUCCESS Q1 2015

• Volume and market share growth

− Vodka Volumes retail sales (based on Nielsen March YTD) +34.5% year-on-year, despite

overall vodka market decline of -3.8% (Q1 2015)

− We became vodka market leader in vodka business (Jan’15) – highest share since 2008

and increasing our leadership

− Volume market share reached 35.0% (March’15) (+10.1pts vs PY), consistent growth

since 21.8% (Aug’13). While our competition Stock market share dropped to 30% losing

(9 pts vs PY) (swing vs Stock +19pts)

− Polish business reinforced its position across:

All the markets (modern trade, discounters, traditional trade)

All key vodka segments (clear vodka, flavored vodka, small packs, big packs)

• Our imported brands success

− Carlo Rossi, number one selling table wine in Poland by value with a 10.6% market

share (Dec/Jan'15)

− Our whisky volume market shares jumped to 18.5% (Dec/Jan'15) (+6.4pp vs. PY), driven

mainly by Grant’s (3rd whisky brand on Polish market) reaching 15.6% (+5.6pp vs. PY).

− Metaxa Honey launch in Q1 drove the development of total Metaxa range (+21.7% vs

PY) adding c.a. 1.8k 9lcs of incremental volume

− Carlo Rossi Pink Moscato was launched to the market in Q1 adding incremental 4.3k

9lcs of volume and driving the growth of the brand in Q1 to 15.5% vs PY

− Whisky together with table wine – the fastest growing category from alcoholic beverages

in Poland

ROUST IN POLAND EXPANDS VODKA MARKET LEADERSHIP

35.0% MARKET SHARE IN MARCH 2015 +10PTS VS PY

© ROUST | CONFIDENTIAL INFORMATION 14Source: AC Nielsen Poland monthly reporting

22,4%

35,0%37,8%

30,0%

17,5% 15,6%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Roust Corp Stock Polska Sobieski

Price strategy

implementation

MML* step-change

Promotional strategy

Perfect store

(including coolers,

shelf share, counter

activation)

Accelerated

innovation programs

to fuel our share in

flavored small packs

Program „Perfect

Store” and

communication matrix

Implementation of

„Route To Market”

and increased

coverage of the

market

Small pack

development

Volume market share (Last 2 Years) Key levers of growth

* Minimum must list

22,627,3

33,624,4 25,6 27,5 26,6 27,1 28,7 28,5 29,6 30,8 30,2 33,2 33,7 34,0

38,538,0

32,3

39,7 38,939,6 40,2 39,5 39,7 38,7 38,2 36,7 34,7

33,2 32,4 31,2

16,213,6 13,8 14,2 14,3 13,1 12,9 13,1 12,3 12,8 13,3 13,5

13,6 12,3 14,5 14,6

6,5 5,8 5,2 6,0 5,9 5,7 5,8 6,1 5,7 5,3 4,7 4,65,3 5,5 5,2 5,0

16,3 15,3 15,3 15,3 15,3 14,8 14,5 14,5 13,8 14,8 14,4 14,5 16,2 15,3 14,0 14,0

2013 2014 2015 MAR'14 APR'14 MAY'14 JUN'14 JUL'14 AUG'14 SEP'14 OCT'14 NOV'14 DEC'14 JAN'15 FEB'15 MAR'15

CEDC Stock Polska Sobieski Pernod Ricard Other


ROUST MARKET VALUE SHARE LEADERSHIP IN

POLISH VODKA

[%]

Source: AC Nielsen monthly reporting

• For the first time since May 2009 ROUST’s business in Poland (CEDC) became Market leader in Value, overtaking Stock in February and reached the highest result ever since January 2005

• February Year on Year ROUST in Poland grew 10.2 pts in value

ŻUBRÓWKA IS A STAR PERFORMER – MAINTAINS

LEADERSHIP FROM DECEMBER 2014


Source: AC Nielsen Poland monthly reporting

• Żubrówka has now reclaimed its leading position as number 1 brand in Poland

6,2%

14,4%

10,4%

10,8%

14,6%

12,7%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

JAN2012

MAR2012

MAY2012

JUL2012

SEP2012

NOV2012

JAN2013

MAR2013

MAY2013

JUL2013

SEP2013

NOV2013

JAN2014

MAR2014

MAY2014

JUL2014

SEP2014

NOV2014

JAN2015

MAR2015

Żubrówka Biala GZ Czysta De Luxe R Krupnik R

Żubrówka Biała vs. key competitors

Volume market share

Previous New


ŻUBRÓWKA BIAŁA LEADING BRAND ON POLISH MARKET:

UPGRADED LABEL AND BOTTLE LAUNCHED MARCH

Brand success

• Żubrówka Biała became market leader in Vodka

category with 14.5% of volume Market share (Nielsen

March 2015)

• Żubrówka Masterbrand 16.2% of volume market share

• Żubrówka became the 7th best selling vodka brand

in the world and the fastest growing vodka brand

Embossments:

Oryginalna

Polska

Marka

Claims:

500 years of

Tradition

With handpicked

bison grass

Label:

3D effect on Bison,

deeper colors

Embossment:

Underline Bison

stamp

Package improvement

• Upgraded Bottle design with adjusted Embossment to

underline bison stamp and polish text

• Upgraded Label design with 3D effect on bison, deeper

colors

• Underlined 500 years of Bison Grass tradition, the

secret of its taste

NEW ŻUBRÓWKA ALREADY ON THE MARKET


ŻUBRÓWKA, NATURAL INGREDIENTS AND TRADITION

HIGHLIGHTED IN THE UPGRADED LABEL AND BOTTLE

Previous New

Embossments:

Oryginalna

Polska

Marka

Claims:

500 years of

Tradition

With handpicked

bison grass

Label:

3D effect on Bison,

deeper colors

Embossment:

Underline Bison

stamp

Brand success

• Żubrówka Biała became market leader in Vodka

category with 14.5% of volume Market share (Nielsen

March 2015)

• Żubrówka Masterbrand 16.2% of volume market share

• Żubrówka became the 7th best selling vodka brand

in the world and the fastest growing vodka brand

Package improvement, launched in March

• Upgraded Bottle design with adjusted Embossment to

underline bison stamp and polish text

• Upgraded Label design with 3D effect on bison, deeper

colors

• Underlined 500 years of Bison Grass tradition, the

secret of its taste



ABSOLWENT REVOLUTIONARY PACKAGING

RE-LAUNCH IN MARKET IN JUNE

Brand success

• One of the most recognizable brand in Poland

• Awareness above 80%, market leading

• Successfully launched 3 flavors extensions in small

packs growing segments

Package improvement

• Revolutionary packaging with new embossments

and modern see-through label and silver cap

• Refreshed enlarged logotype with deep red colors

• Totally new smooth taste of ‘crystal clear vodka’

Current New

ŻUBRÓWKA, SOPLICA SHOT GLASSES

CONSUMER PROMO

Żubrowka Biała Shot Glasses

• Onpack Żubrówka Biała 700ml with tailor made

shot glass (1 million pcs)

• Value added benefit to consumer during sales

peak season (incl. Easter, May long weekend,)

on SKU with growing basket penetration

Soplica Shot Glasses

• Onpack Hazelnut, Cherry 500ml with tailor

made shot glass (2.0 million pcs)

• First value added promo for core NC driver

• Further trial and frequency of range base

flavours

21

Żubrówka

Złota

Soplica

Plum & Blackcurrant

Absolwent

Grapefruit & Apple Mint; Tangerine

& Wild Strawberry

Żytniówka


POLAND INNOVATION: DRAMATIC ACCELERATION

Soplica

Walnut

• Our flavour volume growth +39.9% Q1 2015 vs PY

• Share in flavour segment reached 32.2% and increased +9.7 pts vs Q1 2014

• Still potential to growth as gap to Stock is still 18 share points (March vs PY)


• Sales team expansion accelerates Perfect Store execution in top traditional trade outlets

• Increasing coverage from 22.5k (in 2014) outlets to 34.6k in 2015 will drive profitable share

• +1 pts of weighted distribution will lead to +0.5 pts of Market Share, strong payback

FURTHER BUSINESS GROWTH IN POLAND WILL BE

SUPPORTED BY STRONGER SALES TEAM

PHASE 1 (H1’14)

320 visits/month

22 min. per

visit

BASE SALES

REPRENSATIVES

PHASE 2 (H2’14)

300 visits/month

25 min. per

visit

PHASE 3+ (H2’15)

300 visits/month

+ 19% more

SALES

REPRENSATIVES

25 min. per visit CEDC

20 min per visit Agency

+ 37% more

SALES

REPRENSATIVES

Shelfliners Fluo frame

„HIT”

Fluo frame „NEW” Small packs shelf

Counter display Coolers

COMMUNICATION MATRIX ELEMENTSBEFORE AFTER

REACHED 10K PERFECT STORES IN APRIL IN POLAND

Q1 Q2


Small Packs PMP

• 415 pcs placed Q1

• Improve small packs visibility and rotation through

additional point of interaction

• Provide products’ availability in stores without full

permanent listings

• Improve small packs penetration in Modern Trade

Large Packs Permanent Stands

• 195 pcs already on the market (582 pcs to be placed in May)

• Drive visibility and forward stock for full Soplica range and

increase rotation

• Contains exchangeable panels

- adjustable to 200ml shelf

- double side merchandising

- flexible for wall/aisle placement

ACCELERATE SOPLICA FLAVOURS

SMALL AND LARGE PACKS PERMANENT STANDS



DISPLAYS BUILDING IN STORE DOMINANCE

Placed Modlin Airport (Warsaw)Placed in Chopin Airport (Warsaw)

DUTY FREE NEW PERMANENT STANDS


RUSSIA HIGHLIGHTS


RUSSIA HIGHLIGHTS: MAT MARKET LEADERSHIP,

ROUST SUCCESSFULLY INTEGRATED

– Roust Inc. acquisition producing synergies across sales and back

office structures

Additional efficiencies to be realized in 2015

– Integration significantly contributed to Q1 EBITDA increases

despite volume drop, no pre-build profit, currency depreciation

• ROUST MAT Feb-Mar 2015 market value share leader in vodka,

temporary loss of share in February / March

– NKA tough negotiations on price increases and contract discounts

were the main reason for the temporary share fall

– We choose to have these customer debates in low Q1 season so

no material impact on our financials

– We have already signed several of our top National customers to

new contracts with significantly reduced fixed contract discounts,

driving up profitability

– We expect these contract discussions to continue with other

customers in Q2, and by early Q3 to be resolved with subsequent

increase again in our National key accounts market share at this

time, but with much more profitable ongoing contracts

• Integration of Roust Inc. with ROUST (former Russian Alcohol) a success

• Excise tax – no increases in 2015 and 2016 – expect category to stabilize in Q3, Q4 2015

[%]

30

ROUST REMAINS MARKET MAT VALUE SHARE LEADER

IN VODKA

13,1 12,8 13,0 12,9 13,2 13,0 13,2 12,6 12,6 12,6 12,7 10,9

11,4 12,0 11,3 11,3 11,6 11,6 11,6 12,1 12,0 12,6 12,211,9

6,4 6,7 6,2 6,5 6,5 6,5 6,2 6,4 7,0 6,6 7,27,2

5,9 6,4 5,8 5,4 6,0 5,9 6,3 6,1 6,7 6,3 7,46,6

63,2 62,1 63,7 63,8 62,7 63,0 62,8 62,7 61,7 61,8 60,5 63,4

2013 2014 JJ'13 ON'13 DJ'14 FM'14 AM'14 JJ'14 AS'14 ON'14 DJ'15 FM'15

ROUST SINERGIYA KRISTALL-LEFORTOVO ASG Others

Source: AC Nielsen bi-monthly reporting, Russia © ROUST | CONFIDENTIAL INFORMATION

• Temporary loss of share driven largely by unprofitable modern trade volumes

• Q1 low season tough price and contracts negotiations with top 6 customers

• Significant price increase above inflation implemented in February

• Reduction of commercial terms to Key accounts a 5-7% of revenue, to be completed in Q2, 50% National customers already agreed


GREEN MARK REVOLUTIONARY RESTYLING DRIVES

APPEAL – LAUNCH IN JUNE

Brand success

• 4 million 9l cases in 2014

• 2nd biggest export brand after Russian Standard

• Market leading brand in 2014

Package improvement

• Revolutionary brand restyling will help to revive

the warm and soulful brand feeling

• Unique bottle and labels elements for counterfeit

protection

Consumer research

• Green Mark new design research showed that

new design is very attractive

- 70% of respondents preferred new bottle to old one

- New Green Mark design got average of 4.2 points

when 3.9 points for the old design

Current June 2015

GREEN MARK REVOLUTIONARY RESTYLING DRIVES

APPEAL – KEY DESIGN ELEMENTS



PARLIAMENT RESTYLING 2015: MODERN PREMIUM

DESIGN – LAUNCH SEPTEMBER 2015

Brand success

• Parliament has one of the strongest on the

market brand Equity with high level of

awareness (increased from 46% in 2013 to

53% in 2014)

• Loyalty is highest in sub-premium segment

+2 pts vs PY

Package improvement

• More premium and modern packaging to

justify premium price of the brand

• Unique bottle and labels elements for

counterfeit protection

Current Sep 2015


RUSSIAN STANDARD GOLD RE-LAUNCH

Package improvement

• Subtle high quality bottle

embossing

• Better modified cap

• New premium label screen

printing on the bottle

instead of paper one

Launch date – Q4, 2015

35

Package improvement

• Taller, thinner extended

premium shape of bottle

• Medallion with Russian

Standard logo

• New premium label screen

printing on the bottle

instead of paper one

Launch date – Q4, 2015

RUSSIAN STANDARD PLATINUM RELAUNCH

© ROUST | CONFIDENTIAL INFORMATION

36

RUSSIAN STANDARD INNOVATION 2015


Russian Standard Premium Infusions

• High quality infusions based on natural

juice and Russian Standard vodka

• Allow to enter the traditionally popular

infusions segment in Russia

• Revolutionary product bringing to the

market a premium and high quality

product guaranteed by a strong brand

name

Design research

• Russian Standard infused vodka design

research showed that respondents are

interested in purchasing of new product

• The most interested respondents of new

flavored vodka are women (40-55 years

old)

Launch date: June 2015

37

NEW PRODUCT IN ROUST RUSSIA PORTFOLIO


Bushmills sales started from May 2015

• Bushmills №2 in Irish whiskey worldwide and

in Russia

• Large distribution coverage and listings in

main chains

• Sales volume is over 45 000 9l cases in 2015

• Solid marketing support


• 12,000 perfects outlets by end 2015 including targeted SKU range, coolers, displays, shelf share

• Increase coverage of traditional trade from 37,000 to 50,000 outlets

• Sales structure focus on Perfect Outlet building & execution: new bonus scheme, 100 new merchandisers

• The program was presented successfully in the all-Russia Sales Conference on April 28 to 350 people

ROUST RUSSIA SALES FORCE BEGAN PERFECT STORES

PROGRAM IN APRIL 2015

80 stores

Coverage - 45k

215 visits/month

580 Sales

Representatives

300 visits/month

Roust Russia - 2014

100 stores

Coverage - 50k

680 Sales

Representatives

Roust Russia - 2015

PERFECT STORE STANDARDS IN TRADITIONAL TRADE

Golden Shelf

POSM

Equipment

Price

Golden Shelf

STRATEGIC PROGRAM TO WIN TRADITIONAL TRADE CHANNEL


• ROUST Russia organized the first National Sales Conference to 350 keypeople since the 3 business units were combined

• The Conference was aimed to send out Company’s Goal, Mission, Vision andalso team building


ROUST RUSSIA FIRST SALES CONFERENCE


ROUST RUSSIA FIRST SALES CONFERENCE

• Improving store execution and accelerating growth was the focus of the conference

IN 2015 WE WILL BUILD 12,000 PERFECT STORES

TO WIN IN TRADITIONAL TRADE

2015 vs 2014

Displays

+12,000Q2 6,000

Q3 10,000

Q4 12,000

Perfect

stores

TO

P O

UT

LE

TS

Coolers

Status

- 1,548 participants

- 1,239 out of them are

perfect as of end of April*

* - preliminary results

- Coming in June

- Coming in early August

+12,000Q2 3,000

Q3 7,000

Q4 12,000

+5,000Q2 0

Q3 2,000

Q4 5,000


INTERNATIONAL HIGHLIGHTS


HUNGARY HIGHLIGHTS Q1 2015 : DESPITE THE MARKET

DECLINE, OUTSTANDING MARKET SHARE INCREASES

• Volume decrease due to introduction of the Health Tax

− Total volumes year on year decreased by -29.4% in Q1 2015, driven mainly by Royal Vodka -72.0% due to pre-

tax stock load in Q4 2014

− Jägermeister sales increased by +46.9% due to de-stock in Q4 2014 and increased depletion supported by

competitive retail pricing as brand is excluded from the Health Tax

• Market share increasing

– Flagship brand Royal Vodka maintains no. 1 position, reaching 59.0% volume market share in the mainstream

vodka category +5.9% vs. the same period last year and 54.2% on MAT basis. +3.7%

– Jägermeister, in premium bitter category on MAT basis reached 36.3%, +2.8%

• Royal Vodka “Herbal project” was completed

− Royal Vodka recipe was reformulated to claim the Health Tax free status

New product was launched in the last week of March

Competitive, tax free pricing is expected to deliver +57% incremental volume

− Żubrówka BG and Żubrówka Złota recipies will be reformulated and launched in Q2

• Russian Standard continues to grow

– Despite significant price increase Russian Standard grew +32.4%


ROUST RECORD MARKET VALUE SHARE IN

HUNGARIAN VODKA MARKET

51,4 51,1 52,6 48,1 48,5 46,052,6 53,9 49,6 50,7 52,5 56,2 56,1

36,2 35,3 31,6 36,9 37,0 39,031,7 32,2

32,4 32,0 31,829,7 29,3

2012 2013 2014 AS'13 ON'13 DJ'13 FM'14 AM'14 JJ'14 AS'14 ON'14 DJ'15 FM'15

Royal Zwack - Kalinka B.Forman-Maximus Torley - Kaiser Others[%]

Source: AC Nielsen bi-monthly reporting, Russiae.g. JJ – June, July; AS – August, September

• Flagship brand Royal Vodka maintains No. 1 position, reaching 56.1% market share in the mainstream vodka category

• Fantastic volume share growth up to 59% which is +5.9 pts vs last year

• Double digit sales growth in 2014 vs 2013


ROUST RECORD MARKET VOLUME SHARE IN

HUNGARIAN VODKA MARKET

e.g. JJ – June, July; AS – August, September

• Flagship brand Royal Vodka maintains No. 1 position

21,918,5 17,0

12,5 12,26,8

22,3 24,618,2 19,7 21,2

27,631,7

53,3 53,3 52,9

48,9 48,946,1

53,155,5

50,251,4

53,0

56,859,0

31,4

34,8 35,9 36,4 36,739,3

30,7 30,9 32,0 31,7 31,829,3

27,3

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

FM2013

AM2013

JJ 2013 AS 2013 ON2013

DJ 2014 FM2014

AM2014

JJ 2014 AS 2014 ON2014

DJ 2015 FM2015

Ro

yal v

s. K

alin

ka s

har

e ga

p in

pts

Vo

lum

e m

arke

t sh

are

(in

% in

Mai

nst

ream

Vo

dka

cat

ego

ry)

Difference Royal vs. Kalinka ROYAL ZWACK KALINKA

+5.9 vs. PY

-3.4 vs. PY

Source: AC Nielsen bi-monthly reporting, Hungary


RUSSIAN STANDARD VODKA CONTINUES TO GAIN

MARKET VOLUME SHARE IN HUNGARY

e.g. JJ – June, July; AS – August, September Source: AC Nielsen bi-monthly reporting, Hungary

1,60,8

1,2

2,12,8

2,12,9

3,8

7,88,2

11,5

9,8

11,0

FM 2013 AM 2013 JJ 2013 AS 2013 ON 2013 DJ 2014 FM 2014 AM 2014 JJ 2014 AS 2014 ON 2014 DJ 2015 FM 2015

RUSSIAN STANDARD VODKA VOLUME MARKET SHARE (%) IN PREMIUM VODKA CATEGORY

+8.1% vs. PY

• In Q1 we saw strong acceleration in our businesses:

− In France with 5.1% value share in February which is +0.2 pts vs LY

− in Germany with 4.7% value share in February which is +0.6 pts vs LY

− in UK with 9.5% value share in March which is +1.3 pts vs LY

• We aim for a leading position in all of the top ten vodka countries in the world, and currently hold significant shares in seven of these ten countries.

• Our key goals are:

− Become the number 1 vodka player in the European Union

− Continued market share growth in Kazakhstan / CIS

− Build our business in USA

− Explosive growth in Asia and Africa

• ROUST dramatically expanded global distribution for its top five brands:


2014 WAS SUCCESSFUL FOR INTERNATIONAL GROWTH

Q1 CONTINUED THIS SUCCESS

Brand2013

(# countries)

Q1 2015

(# countries)

Żubrówka 30 37

Green Mark 22 30

Talka 12 13

Soplica 6 8

Parliament 10 13

1. ROUST portfolio grew +28% MAT end of Q1 2015 vs total

market growing at +3%

• UK is a strategically important export market for the Company and after a

successful 2014, brand growth momentum continues to be driven in Q1 2015

and total portfolio level, growth is accelerating from +21% at end of 2014 to

+28% at end of Q1 2015 on an MAT basis

• All brands in growth with RSV +24%, Green Mark +52% and Żubrówka +52%

based on MAT to end of March 2015

2. MAT end of Q1 2015 saw ROUST portfolio grow market share

by +2pts to 11.4% (vs 9.2% prior year)

• National listing for RSV 70cl in Co-op across 2.6k stores driving awareness, trial

and rate of sale in the UK’s largest Impulse customer

• RSV 35cl distribution in Tesco extended by +1.6k stores driving volume on this

SKU by +200%

3. In Q1 2015 RSV overtook rivals to become the No. 4 vodka in

UK Impulse channel

• Now bigger than Absolut, Vladivar, Prince Consort & growing at +43% MAT to

end of Q1 2015

• RSV Price Marked pack strategy delivering results with volume growing at

+166% in Q1 2015 vs Q1 2014, Green Mark Price Marked Packs to be launch

Q2 2015 to build on this momentum & success


UNITED KINGDOM – DRAMATIC ACCELERATION

CONTINUES IN Q1 2015


ROUST/RSV MARKET VALUE SHARE IN UK VODKA*

8,7 10,6 10,8 8,9 9,1 9,5 9,5 9,7 9,8 10,1 10,3 10,4 10,5 10,6 10,8 10,9

32,834,9 35,3

32,8 33,4 33,2 33,4 33,8 34,0 34,1 34,2 34,6 34,8 34,9 35,2 35,7

16,215,3 15,1

15,8 15,6 15,5 15,4 15,3 15,3 15,3 15,3 15,3 15,3 15,3 15,1 14,9

40,0 36,9 36,5 40,1 39,5 39,3 39,1 38,8 38,5 38,2 37,8 37,4 37,1 36,9 36,5 36,2

2013 2014 2015 MAR'14 APR'14 MAY'14 JUN'14 JUL'14 AUG'14 SEP'14 OCT'14 NOV'14 DEC'14 JAN'15 FEB'15 MAR'15

Roust Diageo Loch Lomond Group Booker Other[%]

Source: AC Nielsen monthly reporting, Rolling MAT * Roust share of RSV, Green Mark, Żubrówka

• Share increasing continuously, reducing gap to No 2 player by 1.5 times last year

• ROUST/RSV portfolio grew +2pts in March 2015 vs last year

1. Overall ROUST brands for 6%* share of German vodka market

(March YTD v 5.3% a year ago)

• Within the Premium sector (>€10) ROUST brands account for the largest share,

at 20% share, ahead of Pernod Ricard 19.1% and Diageo 17.5%

2. In Q1 ROUST/RSV portfolio grew +21% vs Q1 2014

3. Green Mark – 17k 9l cases depleted YTD to end of April (+105% vs

2014 YTD)

• Nielsen* performance YTD +440% to end of March

• Making it a bigger brand in the German market than Finlandia

4. Parliament Vodka - 55k cases 9l cases depleted YTD to end of April

(+5% vs 2014 YTD)

• Nielsen* performance YTD +19% to end of March

5. Yamskaya, exclusive with Aldi – continued great success in 2015

and looking to expand into Aldi North business in Germany in H2

6. Żubrówka is now launched into the German market and distribution

is growing each month, currently 5% Weighted Distribution in total

German Off trade

• We will continue to drive volume growth in 2015, with a plan of over 500k 9l

cases, including the launch of Romanoff vodka in the value sector


GERMANY – EXPLOSIVE GROWTH OF FULL PORTFOLIO

* Nielsen P3 March 2015 + Estimate for Yamskaya

1. Żubrówka is our priority ROUST brand focus in France with

strong historical equity and very premium pricing

2. 2014 Performance of Żubrówka kick started growth after

several years decline

• 62k 9l cases depleted in 2014 (+6% v 2013)

• Re-initiated ATL communication (first since 2007) with $820k out-of-home

spend

3. Żubrówka share in 2015 March YTD* is now 3.8%, up from

3.4% a year ago

• YTD March performance:

- Żubrówka volume +17%

- Żubrówka rate of sale 1.2 (+20% YoY) v Absolut 1.7

• Off trade distribution is now 96%, +3% pts versus a year ago, Biała already

0.5% market share and distribution of 47%

• April YTD 2015 shipments +33% vs 2014

4. 2015 Goals for Żubrówka

• Rapidly increase depletions in market to 105k 9l cases (+69% YoY volume

growth, including 30k 9l cases Biała)

• Up-weight advertising for Żubrówka : $1m planned in 2015 with 2x Outdoor

advertising bursts (+22% YoY media investment increase)

• Grow total brand share to 4.5% and achieve Brand awareness of 48%


FRANCE IS NOW ACCELERATING AND GROWING SHARE

* Nielsen P3 March 2015

FIRST QUARTER 2015 FINANCIALS

values in kUS$ 2014 2015 2014 vs 2015 %

Volume (thousands 9-liter cases) 5,191 4,525 (666) -12.8%

Net Sales 174,582 107,488 (67,094) -38.4%

Cost of goods sold 102,552 62,740 39,812 38.8%

Gross Profit 72,030 44,748 (27,282) -37.9%Gross Profit as % of NSR 41.3% 41.6% 0.3%

Operating expenses 66,219 38,498 27,721 41.9%

Provision for doubtful accounts (389) (74) (315) -80.9%

Operating Income 6,200 6,324 124 2.0%

Three months ended March 31, Change

OPERATING INCOME GROWTH Q1, DESPITE NO TAX PRE-

BUILD PROFIT AS IN Q1 2014

• Operating Income of $6.3M growing by $0.1M (2.0%) vs. PY

– Despite loss of pre-build tax profit from Q1 2014

– Excellent real margin increases with price increases, discount reduction, positive brand/channel mix

– Due to the decrease of operating expenses by 41.9% vs. PY

• Decrease in Volumes -12.8% vs PY – primarily driven by:

– Distributors’ destocking in Russia in Q1 2015

– Introduction of Health Tax in Hungary for certain alcohol products;

– Offset by volumes in Poland +6.9% and growing market share in Poland, Hungary and International

• Operating Expenses of $38.5M decreasing by $27.7M (41.9%) vs. PY

– Tight SG&A control, savings on staff costs and warehousing & transportation costs of $6.1M

– Foreign exchange impact of $21.2M

© ROUST | CONFIDENTIAL INFORMATION 54REPORTED US GAAP FINANCIALS Q1 2015

EXCELLENT PROFITABILITY GROWTH IN Q1 2015

DESPITE NO PREBUILD PROFIT AND CURRENCY DEPRECIATION


• Underlying Q1 2015 EBITDA +$2.7M vs. Q1 2014 with EBITDA margin +5.2pts

Revenue Growth Management Success drives margin

− Real price rises above inflation

− Greater analysis of promo spend for price activity

− Reduction of fixed discount for retailers

− Growth of high margin brands, packs, channels

− Substantial efficiency gains on Operating expenses

2014 vs 2015 %

Underlying EBITDA 9,011 11,698 2,687 23.0%

Underlying EBITDA % 5.2% 10.4% 5.2% 50.4%

values in kUS$ Q1 2014 Q1 2015Change

Sustained and ongoing

actions to benefit margin

for the rest of 2015

* Calculation of ratio includes destocking impact

*

2014 vs 2015 %

Sales 365,126 265,847 (99,279) -27.2%

Excise (190,544) (158,359) 32,185 16.9%

Net Sales 174,582 107,488 (67,094) -38.4%

COGS 102,552 62,740 39,812 38.8%

Gross Profit 72,030 44,748 (27,282) -37.9%Gross Profit as % of NSR 41.3% 41.6% 0.3%

Operating Expenses 66,219 38,498 27,721 41.9%

Provision for doubtful debts (389) (74) (315) -80.9%


Depreciation and amortization 2,811 2,325 (486) -17.3%

EBITDA 9,011 8,649 (362) -4.0%

Other Excluded Items - 3,049 3,049 -

Underlying EBITDA 9,011 11,698 2,687 29.8%

Underlying EBITDA % 5.2% 10.4% 5.2% 50.4%

Excise Change Impact (7,544) - 7,544 -

Pro forma Underlying EBITDA 1,467 11,698 10,231 87.5%

Pro forma Underlying EBITDA % 0.9% 10.4% * 9.5% 91.6%

ChangeQ1 2014 Q1 2015values in kUS$

UNDERLYING EBITDA OF $11.7M, 10.4% OF NET SALES


• Pro forma EBITDA % of Net Sales +9.5 pts vs. PY

– Q1 2014 gain from sales of stock built ahead of excise increase $7.5M

• Underlying EBITDA $11.7M (actual currency) affected by $3.1M negative currency impact

• Prebuild tax profit replaced by significant sustainable margin increases


STRONG GROWTH OF UNDERLYING EBITDA


• Underlying EBITDA growing in 2015 despite of:

– Vodka category markets decline in Russia and Poland;

– Sales and volumes down vs last year due to:

Q1 2015 distributors destocking in Russia

Introduction of the Health Tax in Hungary

CURRENCY NEUTRAL +$5.8M, +64.4% VS PY

values in kUS$ 2014 2015@ PY rates

2014 vs 2015 %

Volume (thousands 9-liter cases) 5,191 4,525 (666) -12.8%

Net Sales 174,582 167,630 (6,952) -4.0%

Costs of goods sold 102,552 101,308 1,244 1.2%

Gross Profit 72,030 66,322 (5,708) -7.9%Gross Profit as % of NSR 41.3% 39.6% -1.7%

Operating expenses 66,219 59,582 6,637 10.0%

Provision for doubtful accounts (389) 22 (411) -

Operating Income/(Loss) 6,200 6,718 518 8.4%

Depreciation and amortization 2,811 3,234 423 15.0%-

Other Excluded Items 4,864 4,864

EBITDA Underlying 9,011 14,815 5,804 64.4%


LTM UNDERLYING EBITDA GROWING COMPARING TO Q4 2014


• LTM Underlying EBITDA growth by $2.7M (+2.5%) compared to Q4 2014

• 2014 Pre-build profit benefit replaced by 2015 permanent margin increases

Net Sales 214,975 211,207 243,614 107,488 777,284

Gross Profit 83,490 82,373 85,441 44,748 296,053

Operating Income/(Loss) 24,181 22,040 23,974 6,324 76,519

Depreciation and amortization 3,099 3,032 2,869 2,325 11,325

Excluded Items 8,994 2,714 7,676 3,049 22,433

EBITDA Underlying 36,274 27,786 34,518 11,698 110,276

EBITDA as % of Net Sales 16.9% 13.2% 14.2% 10.4% 14.1%

LTMvalues in kUS$ Q2 2014 Q3 2014 Q4 2014 Q1 2015


**

MAJOR COSTS FAVORABLE


• Spirit prices costs slightly reduced in US $ terms for total ROUST:

− Poland Q1 2015 vs Q1 2014 decreased by 5.4%

− Russia Q1 2015 vs Q1 2014 increased by 20.8%

− Lower Cost of sales in Russia due to f/x driving profitability International business

• Operating expenses as a % of Net Sales declined from 37.9% to 35.8%

• Favorable cost reduction in all categories

− Savings on staff costs - headcount optimization, integration of businesses in Russia

− Lower warehousing and transportation costs due to lower volumes sold

− Administration expenses: high costs related to restructuring in 2014

IMPROVEMENT IN WORKING CAPITAL RATIOSNO DISTRIBUTOR OR ROUST PREBUILD FREES UP CASH


• Working capital (excluding taxes) ratios improving

− DSO on the same level as in Q1 2014 (39 days)

− DIO favorable 10 days (38 days) vs. Q1 2014 - strong control over inventories rotation and no excise

increase

Amounts in days March 31, 2014 December 31, 2014 March 31, 2015

Days Sales Outstanding (DSO) 38 30 39

Days in Inventory (DIO) 48 23 38

Days Payables Outstanding (DPO) 77 65 114

values in kUS$ March 31, 2014 December 31, 2014 March 31, 2015

Net debt including utilized bank facilities 943,300 885,522 927,647

• Q1 2015 operating cash out flow of $29.5M on comparable level with Q1 2014

• $50.3M of loans was rolled over in Q1 2015

• External bank debt further decreased by $8.3M vs year end 2014

• Total unutilized credit limit available with banks of $26.0 as of March 31, 2015

Q1 2015 KEY FINANCIALS VS Q1 2014 - SUMMARY


STRONG RESULTS

• Gross Profit as % of NSR Growth of +0.3%

• Operating Expenses improvement -$27.7M; -41.9%

• Operating Income growth Growth of +2.0%

Operating income margin (% of Net Sales) 5.9%; +2.3pts

• EBITDA

− Underlying EBITDA +$2.7; +29.8%

EBITDA margin (% of Net Sales) 10.4%; +5.2pts

− Underlying EBITDA (currency neutral) +$5.8M; +64.4%

• Decrease of total external bank debt -$8.3M

• No excise increase in Russia/Poland 2015 – expected volume growth on annual basis

NET RESULT AFFECTED BY INTEREST EXPENSES


• Foreign exchange losses in Ukraine offset by foreign exchange income in Poland

• Interest expense not covered by Operating income due to seasonality of our

business with Q1 being the lowest quarter in terms of profit delivery

values in kUS$ 2014 2015 2014 vs 2015 %


Interest income 5,638 2,515 (3,123) -55.4%

Interest expense (22,890) (22,393) 497 2.2%

Foreign exchange gains / (losses),net (31,415) (380) 31,035 98.8%

Other non operating income / (expense), net (3,913) (3,514) 399 10.2%

Net (loss) before income taxes (46,380) (17,449) 28,931 62.4%

Income tax benefit / (expense) (2,297) 696 2,993 -

Non-controlling interest - (27) (27) -

Net income/(loss) attributable to

the company(48,677) (16,726) 31,951 65.6%


• Globalization success continues: We will continue to expand our leadership in Russia,

Poland and Hungary, grow exponentially our successful Western Europe business, and

rapidly expand our Asian and American business. The lower ruble will help us profitably

accelerate our International business. The focus is on Green Mark and Żubrówka core

brands expansion.

• Renovation of core brands arrives in market Q2: By Q2 2015 we will have launched

new superior packaging for Green Mark, Parliament and Absolwent.

• Optimized portfolio progress Q2 reduces inventory: We have refocused on our critical

and high opportunity SKU’s in the last 18 months reducing from approximately 1,000 to 500

SKU’s. Given our biggest SKUs still have large growth opportunity we will further reduce by

at least 100 SKUs. Our inventories in Russia have reduced by 30% in the last 2 months.

• Strong new product innovation: The successful innovation pipeline in our Polish

business will continue, and we will accelerate innovation in our Russia business with the

aim that 5% of our revenue in 2015 comes from new brands, flavors and packaging.

• Revenue Growth Management continues: Our Revenue Growth Management focus will

continue to increase our margins and was very successful in Q1 as we replaced the pre-

build profit with real margin growth. We expect real price increases above inflation, growth

in high margin brands, channels, packs. In Russia we are also working with Industry and

the Government on new Retail discounts legislation that will be favorable for our margins

later in 2015.


IN 2015 …

• Integration completion in Russia: Whilst 80% of our Integration is completed in Russia,

we still have remaining opportunities in Moscow and St. Petersburg sales teams, Logistics

platform and Head-office efficiency, estimated up to $5M in 2015.

• Perfect Outlet expansion: We will continue to expand our core brand weighted

distribution as we have successfully in Poland, Hungary, UK, Germany and France. In

Russia we will begin in Q2 the implementation of our Perfect store program driving quality

shelf presence and activation, which has been a huge success in Poland, targeting stores

in Russia by June.

• Focus on quality continues: We have put tremendous work into upgrading the quality of

our product with new audit processes, equipment upgrade and consumer testing.

• Select Capital expenditure: We have large production capability and capacity, meaning

minimal capital expenditure to grow our business. We will however spend above $10M on

capital expenditures in 2015 to launch new products, expand small package capacity and

upgrade quality.

• Expand Agency partner business: We aim to expand selectively our portfolio, e.g. the

recent addition of the strong Bushmills whiskey brand in Russia starting sale in June, and

further extent our successful contracts with key global partners.

• Effective Industry legislation: We will continue to work actively with Industry and

Government to provide commercially effective but responsible legislation, push programs

to limit the black market, and partner with Government more effective retail discounts

legislation.


IN 2015 …

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