Overview

The three important priorities for Cadbury, set out in the VIA business plan are shown below, together with our performance scorecard. Typically spanning a number of years, these represent the important milestones against which the successful delivery of our strategy will be measured. A detailed explanation of the measures is included later.

Year of significant change

As our Chairman pointed out in his opening remarks to this year’s Annual Report and Accounts, 2008 has been a year of significant change for Cadbury, in terms of our portfolio of activities as well as implementing the first stages of our VIA strategy.

When we completed the demerger of our Americas Beverages business in May 2008 to form the Dr Pepper Snapple Group (listed on the NYSE in New York, Symbol: DPS), we had largely completed the transformation from Cadbury Schweppes plc to Cadbury plc.

Underpinning the new Cadbury, in June 2007 we introduced our VIA, a strategy for 2008-2011 to drive the financial performance of the focused confectionery business. Implementing this strategy has been the top priority for our global team and has brought about a number of important changes in what we prioritise, how we measure our progress and the way we behave. I will expand on this when I look at how we have been implementing our VIA.

Strong financial performance

2008 has also been a year of strong financial performance for Cadbury as a standalone confectionery business. In brief, we have exceeded our revenue growth targets, improved our global market share, delivered strong margin progress, increased our dividend and made a healthy increase in our overall return on invested capital. We have put long-term financing in place and strengthened our balance sheet. Underpinning these commercial and financial goals, we have made good progress on our sustainability commitments.

Completing the transformation

To complete the transformation to a pure-play confectionery business, we announced a conditional agreement to sell Schweppes Australia at the end of 2008. This is the last of our beverage activities and we hope to complete the sale process during the second quarter of 2009.

Evolving our organisation

This year, we have also taken the opportunity to simplify and strengthen further the organisational structure of the business. From 2003 to 2008 the confectionery business was run using a regional structure, with strong leadership to drive strategic change and build strong commercial functions. Since the introduction of our global categories in 2006 for Chocolate, Gum and Candy, we are increasingly managing our commercial strategies on a global basis and driving in-market execution at a business unit level.

Reflecting these operational developments, and with the established strategic programme firmly embedded in the business units, we have taken the decision to remove the regional level from 2009 onwards and directly manage the seven underlying business units and the strong global functional leadership. This transition and the evolution of our structure are explained in more detail later and lead into a more detailed explanation of our businesses , which I hope you will find helpful.

We started on this journey in 2003 to create a more central organisation which is joined-up and unified while preserving the local entrepreneurial spirit of our managers. I strongly believe that we have made good progress towards this goal and that this new organisation will help us drive cost efficiencies, faster decision making and better in-market execution.

Implementing our Vision into Action

Our VIA sets out a clear strategic programme of action and change for Cadbury. We’re investing £450 million on restructuring and some £200 million of incremental capital expenditure over the four year programme to make significant changes to our organisation.

It is easiest to talk about these programmes and what we have done so far in the context of our three priorities and our sustainability commitments. They provide a structure for our teams to focus on relevant to their business unit, category or function.

The results of these initiatives in 2008 have already been significant, contributing to a strong top line performance and a major improvement in our underlying operating margins.