Alliance Boots plc

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 1995. 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
Six months ended 30 September

2006 million
2005 million
Growth
Revenue 7,039 6,839 2.9
Trading profit 267 260 2.7
Underlying trading profit 267
254 5.1
Adjusted earnings 193 175 10.3
Adjusted earnings per share
20.1p 18.2p 10.4
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
9
Pro forma divisional highlights continuing
operations
Six months ended 30 September 2006
Growth over first half of last year
Trading Revenue profit Trading million mill
ion Revenue profit
Retail 3,125 208 5.7 4.0
Wholesale 4,388 85 1.0 6.3
Other Commercial Activities Corporate Costs
47 (26) 6.8
Intra-group (521) -
Group 7,039 267 2.9 2.7
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
Group trading profit comprises profit from
operations before non trading items, amortisation
of certain acquired intangible assets and share
of associates post tax earnings
10
Pro forma Retail Division highlights - UK
Six months ended 30 September 2006
Trading profit 192m
Revenue 2.8bn
7.3
5.6
4.5
0.1p
Total
LFL
Underlyingmargin
Underlying
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
11
Pro forma Retail Division - UK
Six months ended 30 September 2006
Revenue by category


-1.8
Lifestyle 482m
Health 1,549m
8.4
Beauty Toiletries 792m
5.0
12
Pro forma Retail Division - UK
Six months ended 30 September 2006
Revenue by format

Total growth Like for like
9.56.3
Community Pharmacy 507m
Health Beauty 2,316m
Total growth Like for like
4.74.1
13
Pro forma Retail Division highlights -
International
Six months ended 30 September 2006
Revenue 302m
Trading profit 16m
7.1
6.7
0.0p
0.0
Margin
Total
LFL
Profit
14
Pro forma Wholesale Division highlights N.
Europe
Six months ended 30 September 2006
Trading profit 49m Trading margin 3.1
Revenue 1.6bn
8.8
2.1
Total
LFL
Profit
15
Pro forma Wholesale Division highlights S.
Europe
Six months ended 30 September 2006
Trading profit 36m Trading margin 1.3
Revenue 2.8bn
-2.3
-1.7
Total
LFL
Profit
16
Pro forma Other Commercial Activities
Corporate Costs
Six months ended 30 September 2006
Better/(worse) than first halfof last
year million
Total million
Revenue
Contract manufacturing 38 7
Own brand exports 9 (4)
Other Commercial Activities 47 3
Trading profit
Other Commercial Activities (8) (6)
Corporate Costs (18) -
(26) (6)
17
Pro forma Associates
Six months ended 30 September 2006
Alliance Boots share million Total Like for
like
Growth over first half of last year
Revenue 1,048 7.2 5.0
Trading profit 33 - 3.6
Earnings 23 9.5 11.5
18
Pro forma underlying net finance costs and tax
continuing operations
Six months ended 30 September
2006 million
2005 million
Underlying tax rate
Underlying tax rate
Trading profit Share of associates post tax
earnings Underlying net finance
costs Underlying tax Adjusted profit for the
period Minority interests Adjusted earnings
260 21 175 - 175
267 23 193 - 193
(37) (69)
(18) (79)
31.7
30.9

• 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

19
Pro forma cash flow continuing operations
Six months ended 30 September
2006 2005 million million
Cash generated by operations
471 320
Tax and interest
(53) (113)
Dividends (net)
(144) (158)
Acquisitions and disposals (23)
(8)
Net capital expenditure (110)
163
Other 10 (62)
Total cash inflow
151 142
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
20
Statutory accounts non trading items
Six months ended 30 September
2006 2005 million million
Costs in relation to merger synergies
(9) -
Restructuring (10) -
Profit/(loss) on sale of property, plant and
equipment 1 (2)
Profit on sale and leaseback - 151
Other (1) -
(19) 149
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

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UK Retail The power of brands

• Market leader in the growing Beauty market
• Brands provide differentiation
• Market leading products availableonly at Boots
• Brands drive profitability
• Natural Collection relaunch
• Extending the reach of our brands

25
Retail International growth opportunities

• Established credentials
• 372 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

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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