EXCHANGE RATES
Average 2003 vs 2002
Average Sterling / Euro US Dollars / Sterling Euro / Dollar Euro / Swedish Kroner US Dollar / Rouble 2003 0.69 1.64 1.13 9.12 30.68 2002 0.63 1.50 0.95 9.50 31.35 Change (%) 9.5 9.3 18.9 4.0 2.1
Note:
Change reflects impact on Group earnings
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EXCHANGE RATES
Year end : 2003 vs 2002
2003 31 Dec Sterling / Euro US Dollars / Sterling 0.71 1.79 2002 31 Dec 0.65 1.61 Change (%) 8.1 11.2
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EXCHANGE RATES
February 2004 vs average 2003
2004 27 Feb Sterling / Euro US Dollars / Sterling Euro / Dollar 0.67 1.86 1.24 2003 average 0.69 1.64 1.13 Change (%) 2.9 13.4 9.7
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UK CIGARETTES
Gallaher’s portfolio management : enhanced profitability Market
Value 56.6%
Gallaher
Value 48.8%
Premium 32.2%
Mid price 11.2%
Premium 40.6%
Mid price 10.6%
Source:
ACNielsen (Retail)
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UK CIGARETTES
Benson & Hedges : underpinning Eurasian growth
(%) 10
Share of UK market
8 6
4 2 0
20 02 Fe b M ar Ap r M ay Ju n O ct N ov Ja Dec n 20 03 M ar Ap r M ay Ju n Ju l Au g Se p Ja n Ju l Au g Se p Fe b O ct N ov D ec
B&H Gold
B&H Silver
Source:
ACNielsen (Retail)
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RUSSIAN CIGARETTE MARKET
Market segmentation : price sector
2003 % 2002 % 2001 %
Higher Premium (rb > 20) Mid price (rb 13-20) Intermediate Value (rb 8-13) Low filter (rb 4.5-8) Lower Plain Papirossy
26.0 8.8 17.2 58.7 26.7 32.0 15.3 13.6 1.7
22.4 7.7 14.7 56.1 27.6 28.5 21.5 19.1 2.4
18.5 6.8 11.7 55.8 30.5 25.3 25.7 22.8 2.9
Source:
Business Analytica (2001 : retail market audit / 2002 and 2003 : total market)
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RUSSIA
Relative pricing position : significant growth potential
• Average pricing per pack:
2003 (rb) Philip Morris BAT Japan Tobacco Gallaher Dec 16.15 13.31 13.08 8.77 2003 Jun 2002 Dec 2002 Jun 14.64 12.93 10.54 7.86 2001 Dec 14.11 11.44 9.84 7.25 2001 Jun 13.75 10.89 9.09 6.88 2000 Dec 13.70 10.31 9.02 5.85 2000 Jun 13.50 9.50 9.42 4.61 1999 Dec 12.72 9.89 7.42 3.45
15.38 14.63 13.23 13.28 12.29 11.20 8.69 8.10
Source:
Business Analytica
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2003 FULL YEAR RESULTS
Operating cash flows
£mn EBITDA(1) Non cash items Debtors Stocks Creditors
Operating cash flow(1) Conversion rate (%) Exceptional cash flow Operating cash flow after exceptional
(1)
2003 699 4 22 (15) 2
712 102 (21) 691
2002 644 2 (127) (68) 68
519 81 519
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Excludes Joint Ventures and Associate, and also the exceptional charge in 2003
CONTINENTAL EUROPE
Germany : underpinning Eurasian growth
Generic’s share of total market
(%) 20
15 10 5 0 15.4 16.1
• Total German market volumes : down c. 6% • Gallaher total volumes : up 3.0% • Gallaher’s branded market share : maintained at 0.7%
2002
2003
Gallaher’s share of generics
(%) 50 40 30 20 10 0
42.3
45.1
2002
Note: Source: Factory made cigarettes only Company
2003
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RUSSIAN CIGARETTE MARKET
Duty and VAT regime
• January 2002 – specific taxation doubled : passed through to consumer – duty and VAT : c. 26% of retail price • January 2003 – specific taxation increased – ad valorem introduced : 5% of ex-factory price – duty increases : largely absorbed by manufacturers – duty and VAT : c. 30% of retail price • January 2004 – specific taxation increased : partial absorbtion – duty increase – VAT decrease to 18% – duty and VAT : c. 30%-32% of retail price
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POLAND
House shares
Dec. 2003 %
L&M Caro Jan III Sobieski Marlboro Mocne Fox Fajrant Meskie Golden American West Brydzowe LD Strong Level Saint George Viva Gallaher total
Source: ACNielsen / Company
RRP €
1.02 0.99 0.99 1.25 0.80 0.84 0.68 0.68 0.99 0.99 0.66 0.75 0.76 0.67 0.72 0.97
12.4 7.7 7.4 7.2 7.0 6.2 6.0 3.8 3.8 3.3 0.8 0.8 0.4 0.2 0.2 0.2 2.6
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