COMPANY ANNOUNCEMENT
2/2009
18 FEBRUARY 2009
PAGE 1 OF 39
FINANCIAL STATEMENT AS AT 31 DECEMBER 2008
Solid performance in 2008 - and well prepared for a challenging 2009
• For the full year, pro rata organic beer volume growth totalled 3% (33%
including
acquisitions), driven by mid-single-digit growth in Eastern Europe and
double-digit growth in Asia.
• Carlsberg achieved progress in all geographic segments. Net revenue was DKK
59,944m
(DKK 44,750m in 2007) with organic growth of 8% (5% in DKK), and operating
profit before special items was DKK 7,979m (DKK 5,262m in 2007) with organic
growth of 9% (6% in DKK).
• The beer category is resilient but not immune to economic recession. However,
market
conditions softened further in the fourth quarter of the year. In both
Northern & Western Europe and in Eastern Europe reduced consumer spending
combined with various market- specific factors have impacted performance.
Carlsberg's continued focus on strong execution and cost control has
compensated for the more challenging trading environment.
• Both pricing and mix contributed positively to the performance in all regions.
Premiumisation
in the total beer market in Russia has taken place in each and every quarter
of 2008 compared to 2007. In Northern & Western Europe there has been a
negative channel mix from on-trade to off-trade but no significant change to
mix between segments in the off- trade.
• In 2008 the Russian business achieved a market share of 38.3% (37.6% in 2007)
in an
overall flat market. In the fourth quarter Baltika again outperformed the
market, achieving flat volumes despite a drop in market volume of c. 5.4% and
once more demonstrating superior execution power in a tougher trading
environment.
• The international brands Carlsberg, Tuborg and Baltika continued to grow and
the Baltika
brand is now the biggest beer brand in Europe. Carlsberg's portfolio today
includes four of Europe's top ten beer brands.
• In spite of major movements in special items, financial items and corporation
tax, net profit
was DKK 2,631m (DKK 2,297m in 2007) and earnings per share was DKK 22.2 (DKK
24.3 in 2007). Proposed dividend of DKK 3.50 per share (adjusted, DKK 4.84 in
2007).
• In line with our plans, synergies of c. DKK 0.1bn were realised in 2008.
• Net interest-bearing debt end 2008 amounted to DKK 44.2bn.
COMPANY ANNOUNCEMENT
2/2009
Page 2 of 39
• Increasing cash flow and protecting earnings will be Carlsberg's top
priorities in 2009.
Restructuring plans in Denmark, Norway and the Baltics were announced in early
January 2009. Further plans across all markets and all functions in the Group
are currently being implemented to compensate for weak macroeconomic
conditions. These include initiatives to significantly reduce the cost base
and increase efficiency. In addition there will be a significant reduction in
capital spend across the Group.
• If operational or financial conditions become worse than currently expected,
contingency
plans for various scenarios across the Group will continue to be developed to
be able to take action quickly and effectively. Notwithstanding this,
Carlsberg will continue to drive brand growth through focused innovation,
marketing support and strong execution.
• For 2009 Carlsberg assumes and expects:
▪ Average EUR/RUB rate of 47.
▪ Net revenue of around DKK 63bn.
▪ Operating profit of more than DKK 9bn.
▪ Net profit of more than DKK 3.5bn.
▪ Free cash flow of more than DKK 6bn. Operating capital
expenditures of less than DKK 3.75bn.
▪
▪ Net interest-bearing debt vs EBITDA of around 3.
In DKK and excluding effects from acquisitions/divestments net revenue is not
expected/assumed to grow.
• According to Carlsberg's banking documentation, Carlsberg should be at an
adjusted net of no more than 4 (4.25 end June 2009).
interest-bearing debt vs EBITDA end
20091
• Baltika has announced proposed dividend for 2008 of c. EUR 265m (Carlsberg's
share).
• Monetisation of redundant assets, including the Valby site, remains a priority
for the Group
but is not factored into the current expectations for 2009.
“For Carlsberg 2008 was a year of significant progress," says CEO Jørgen Buhl
Rasmussen. “We completed the Scottish & Newcastle acquisition followed by
substantial business integration. At the same time Carlsberg continued to
develop its business in line with its stated strategy, building on its strong
brand portfolio and execution skills. A global economic recession is now a
reality. Consequently, our focus in 2009 will be on increasing cash flow and
protecting earnings, cost control, significantly reducing capital expenditure,
and accelerating debt repayment. After a solid performance in 2008 Carlsberg is
well prepared for a challenging 2009, ready to take all necessary actions to
protect our business as much as possible.”
1 The adjustment adds around 0.17 to the ratio calculated using the reported
numbers.
COMPANY ANNOUNCEMENT
2/2009
Page 3 of 39
Carlsberg will present the financial statements at a conference call for
analysts and investors today at 8.00 am CET (7.00 am GMT). The conference call
will refer to a slide deck, which will be available beforehand at
www.carlsberggroup.com.
Contacts:
Investor Relations: Mikael Bo Larsen +45 3327 1223
Media Relations: Jens Peter Skaarup +45 3327 1417
The Carlsberg Group is one of the in the world, with a large portfolio of
beer and
leading brewery groups brands. Its soft drinks
flagship brand - Carlsberg - is one of
the fastest growing and best-known beer
brands in the world. More than 45,000
people work for the Carlsberg Group,
and its products are sold in more than
150 markets. In 2008 the Carlsberg
Group sold more than 120 million
hectolitres of beer, which is about 100
million bottles of beer a day. Find out
more at www.carlsberggroup.com.
COMPANY ANNOUNCEMENT
2/2009
Page 4 of 39
KEY FIGURES AND FINANCIAL RATIOS
DKK
million
200 5 2006
2007 20 08
Sale s
volumes,
Beer 101.6 100.7
115.2 126.8
So ft 19.1 20.2
20.8 22.3
Income
stateme-
t
Net 38,047 4 1,083 44,7
50 59,944
revenue
Operat- 3,518 4,046
5,262 7,97 9
ng
profit
before
special
items
Spec ia -386 -160
- 427 -1,641
l item
s,
Consoli- 1,371
2,171 2,596 3,20 6
ated
profit
Attribu-
able to:
Minority 261 287
299 575
interes-
s
Sh areho 1,110 1,884
2,297 2,63 1
lde rs
Balance
sheet
Tot al 62,3 59 5 8,451
61,2 20 143, 306
ass ets
Invested 42,734 43,160 4
5,394 119, 326
capital
Int ere 20,753 1 9,229
19,7 26 44,156
st-b
eari ng
de bt,
Eq uity , 17,968 1 7,597
18,6 21 55,521
Cash flow
Cash 4,734 4,470
4,837 7,81 2
flow
from
operat-
ng
activi-
ies
Cash -2,3 54 65
-4,927 -57, 153
Free 2,380 4,535
-90 -49,34 1
cash
flow
Financi
al
ratios
Operat % 9.2 9 .8
11.8 13.3
ing
margin
Return on average invested capital (ROIC) 7.8 9 .2 11.7 8.2
Equity % 31.3 32.5
32.6 42.4
ratio
Debt/e- x 1.06
1.01 0.99 0.73
uity
ratio
(finan-
ial
gearin-
)
Debt/operating profit before depreciation 3.29 2.73 2.43 3.80
and
amortis-
tion
Interest x 2.84 4.72
4.38 2.31
cover
Stock
market
ratios*
Ea rnin - 11.7 19.9
24.3 22.2
gs per -
sh are K
(EP S)
Cash
sh are - sh sh 50.1 47.1 51.2
65.8
h are are
-
-
e
(CFPS)
Free - 25.2 48.0
-1.0 - 415.4
cash -
flow K
per
share
(FCFPS)
Divide- - 4.0
4.8 4.8 3 .5
d per -
share K
(propo-
ed)
Pa y-ou t % 34 24
20 20
Sh are - 272.8 452.9
498.1 171.3
-
K
Number - 76,2 78 76 ,271 76
,246 152, 554
of ,
shares
(perio-
-end)
Number of shares (average, excl. treasury 94,433 9 4,479 94,4 66 118, 778
shar es)
Calculation of some of the key figures and financial ratios was changed in 2007.
Comparative figures have been restated. * Stock market ratios have been adjusted
for bonus factor from rights issue in June 2008 in accordance with IAS 33. Numb
er of sh ares (pe rio d-en d) is not adj ust ed.
COMPANY ANNOUNCEMENT
2/2009
Page 5 of 39
BUSINESS DEVELOPMENT
2008 was a year of substantial business integration following the acquisition of
assets from Scottish & Newcastle. It was also another year of significant
progress and strong results. During the year Carlsberg continued to develop its
business in line with its stated strategy, building on its strong brand
portfolio and execution skills throughout the Group.
Although not immune, the beer category is resilient to economic recession.
However, market conditions softened further in the fourth quarter of the year.
In Northern & Western Europe, consumer spending declined in both the third and
fourth quarters resulting in market growth being lower than trend volume
development. However, the impact of the recessionary environment did not impact
all markets equally and significant individual factors impacted some markets.
The United Kingdom, Denmark and the Baltic markets in particular were severely
hit by sharp declines in consumption driven by the on-trade in the United
Kingdom, a significant increase in promotional price points in Denmark and
severely deteriorating economies across the Baltic States.
Growth in the markets in Eastern Europe also decelerated in the second half of
the year as the expected recovery in the Russian beer market failed to
materialise, initially due to extremely poor weather and then due to increasing
uncertainty about the economic outlook. In Asia, growth continued throughout the
year with beer markets only marginally affected by the weaker economic outlook.
Carlsberg Group beer volumes were up 33% to 109.3m hl of beer (calculated pro
rata) versus 82.0m hl in 2007. Organic growth accounted for 3% of this increase
and acquisitions for 30%.
Net revenue climbed 34% to DKK 59.9bn (DKK 44.8bn in 2007), organic growth
amounted to 8% (5% in DKK). Strong focus on brand-driven value growth through
pricing and mix continued, and price increases were implemented throughout the
year. However, above-average volume growth in low-priced markets capped the net
effect of growth on net revenue per hl beer at 5%.
Operating profit before special items increased by 52% to DKK 7,979m (DKK 5,262m
in 2007) with organic growth of 9% (6% in DKK). Beverage activities generated
operating profit of DKK 7,605m (DKK 5,001m in 2007), an increase of 52%, of
which 7% was organic growth (4% in DKK). This improvement was driven by
continued growth in Eastern Europe and Asia. Other activities, including the
sale of real estate, generated operating profit of DKK 374m (DKK 261m in 2007).
Net profit climbed 15% to DKK 2,631m (DKK 2,297m in 2007). The average number of
shares in circulation increased during the year from adjusted 94.5m to 118.8m
due to the rights issue, and earnings per share were DKK 22.2 (DKK 24.3 in
2007).
Earnings for the year were therefore in line with the updated expectations
published in connection with the financial statement for the third quarter
released on 5 November 2008.
A stronger Carlsberg
Carlsberg is now a stronger business, and the acquired businesses will play a
key role in the future development of the Carlsberg Group. Successful
integration of the acquired assets is key to our goal of building stronger
regional units. Previously announced plans for securing transaction synergies
are on track and being implemented in France and the former BBH
COMPANY ANNOUNCEMENT
2/2009
Page 6 of 39
business. Full control over the former BBH business allows us to respond more
quickly to changing market conditions and to ensure the unique strengths of this
business can be exploited versus competition in the region.
During the course of 2008 a series of initiatives was implemented to continue to
optimise the production network. In Denmark, the brewery in Valby, Copenhagen,
was closed as planned at the end of the year. In Italy, production has been
concentrated at the Varese brewery north of Milan, and production has ceased at
Ceccano. In Portugal, it has been decided to close the brewery in Loulé. In the
United Kingdom, Carlsberg has proposed the closure of the brewery in Leeds. The
brewing network will be further consolidated over the next few years.
Carlsberg also sold its 95.6% shareholding in the Turkish brewery Türk Tuborg
and its 20% stake in Israel Beer Breweries in order to continuously maximise
returns for shareholders.
Despite beer being a non-cyclical consumer product, the turbulent global
economic climate has created a more challenging business environment. Against
this background, Carlsberg is further intensifying its focus on significant
efficiency initiatives. In late 2008 and in early 2009 Carlsberg announced major
restructuring programmes, including headcount reductions of more than 500
employees and downsizing of operations.
In early 2009 Carlsberg also announced the strengthening of its Executive
Committee with the appointments of Khalil Younes, Senior Vice President, Group
Innovation, Sales & Marketing, and Nils Østbirk, Senior Vice President, Western
Europe. Both will add further international experience in branding and
commercial execution for fast-moving consumer goods to the Carlsberg Group.
2009 EARNINGS EXPECTATIONS - PROTECTING EARNINGS AND INCREASING CASH
FLOW
As a result of the global economic downturn in the second half of 2008, business
conditions are now tougher than our mid-year expectations. Carlsberg has
therefore adjusted its business plans for 2009 to reflect lower visibility and
greater uncertainty.
Although our long-term business strategy remains unchanged, action plans have
been put in place to ensure that Carlsberg emerges from 2009 as an even stronger
business.
2009 will demonstrate a sharp focus on increasing cash flow and protecting
earnings, cost control, significantly reduced capital expenditure, and
accelerated debt repayment.
Our focus on short-term planning and execution has increased. Consequently,
should external factors develop more negatively than currently expected,
Carlsberg will take the necessary actions to drive cash flow and protect
earnings.
To ensure that Carlsberg delivers on the business plans in each market, and
especially to protect against a less positive development in volumes and net
revenue than originally planned, all local businesses have revised their
business plans since end 2008 and worked intensively on implementing cost and
capital expenditure reductions and on contingency planning.
COMPANY ANNOUNCEMENT
2/2009
Page 7 of 39
The contingency plans are focused on further cost reductions to a high degree.
Carlsberg also intends to benefit from the reduced costs within several
categories of procured goods. Notwithstanding this Carlsberg will continue to
drive brand growth through focused innovation, marketing support and strong
execution. Furthermore focus has been and will be on all initiatives that can
increase free cash flow, such as improving working capital, and hereby reducing
capital employed and net interest-bearing debt.
Our internal expectations are based on an updated budget reflecting the
assumptions that we are currently using.
Developments in foreign exchange rates, especially the Russian rouble (RUB), are
important to the results being reported in Danish kroner (DKK). The RUB has been
devalued significantly since mid-2008. The guidance and expectations provided in
this announcement are based on an assumption of an average EUR/RUB rate in 2009
of 47.
The expectations for 2009 are based on an assumption of contraction of the beer
markets in Northern & Western Europe and largely flat beer markets in Eastern
Europe (slightly declining in Russia). On this basis, and including other
factors such as the above mentioned EUR/RUB rate, a rapid implementation of many
cost initiatives in all markets throughout the Group, and in general our
insights into our business as per today, we expect net revenue in 2009 to amount
to c. DKK 63bn. Excluding effects from acquisitions/divestments net revenue in
DKK is not expected to grow.
Operating profit is expected to grow to more than DKK 9bn, an increase of more
than 12%.
Net profit is expected to grow to more than DKK 3.5bn.
Carlsberg reconfirms the previously stated financial targets to improve the
operating margin to 14-16% in Northern & Western Europe and to 23-25% in Eastern
Europe in the medium term.
Since the significant acquisition in 2008 part of Carlsberg's strategy has been
to reduce debt. In the current environment, reducing the interest-bearing debt
more rapidly than originally planned can benefit our shareholders. Initiatives
to strengthen and improve working capital have been implemented. Consequently,
operating capital expenditures for 2009 are expected to be less than DKK 3.75bn
(DKK 5.3bn in 2008, exclusive of real estate projects).
The earnings and capital expenditure expectations lead to an expectation of free
cash flow of more than DKK 6bn. Consequently, significant deleverage of the
Group is expected to occur leading to a net interest-bearing debt to EBITDA
ratio end 2009 of around 3. Monetisation of redundant assets, including the
Valby site, is not factored into these expectations.
According to Carlsberg's banking documentation, Carlsberg should be at an
adjusted net interest- bearing debt vs EBITDA end 2009 of no more than 4 (4.25
end June 2009). The adjustment adds around 0.17 to the ratio calculated using
the reported numbers.
COMPANY ANNOUNCEMENT
2/2009
Page 8 of 39
2008 REGIONAL REVIEW
NORTHERN & WESTERN EUROPE
DK K mi lli on Q4 Q4 Cha nge Cha nge
200 8 2007 (%) 20 08 200 7 (%)
Beer sales (million hl) 12.1 10.7 13.1 51.0 44.4 14.8
Net revenue 8,915 7,988 11.6 37,128 32,087 15.7
Operating profit 847 731 15.9 3,953 3,383 16.8
Operating margin (%) 9.5 9.2 0.3 10.6 10.5 0.1
Total beer markets in the region declined by around 2% on average compared to
full-year 2007. The market contracted as weaker economies affected consumer
sentiment, especially in the fourth quarter with a decline of 4.1%, primarily
driven by the on-trade. Although the deteriorating business environment affected
overall beer market growth in late 2008, specific factors impacted individual
markets during the year. These factors include smoking bans in the United
Kingdom, France and Germany, a decline in Denmark due to the reduction of
promotional price support by retailers on beer and the severe economic crisis in
the Baltics affecting consumer spending. Some of Carlsberg's markets declined by
4-6%, while other markets continued to grow, with increases of 1-2% for the full
year.
Total beer volumes were 51.0m hl against 44.4m hl in 2007. This includes a total
of net 7.7m hl from the activities acquired in France, Greece and the Baltics.
Organic beer volumes were down 1.6% in line with overall market development,
resulting in average market shares at the same level as last year. Volume market
shares were flat or growing in more than half the markets in Northern & Western
Europe. Other beverages achieved a total volume of 16.5m hl, which organically
was on par with last year.
Net revenue climbed 16% to DKK 37,128m (DKK 32,087m in 2007) with organic growth
amounting to 3% (+1% in DKK). Organic growth has been driven by higher sales in
Switzerland, Poland, South East Europe and the Nordics, but offset by the
negative impact from the United Kingdom due mainly to the effects from the loss
of legacy contracts end 2007 and decline in the Baltics driven by the economic
crisis.
Throughout the year one of the key priorities has been to excel in execution.
Part of this has involved applying a strong focus on value management
initiatives and increasing beer prices to offset cost inflation in key inputs
such as malt, hops, cans and bottles. Average sales prices on beer have
increased by approximately 5% compared to last year. Combined with a volume
effect of -2% and a mix effect of +1%, these price increases have led to an
increase in organic beer net revenue of +4%. The positive mix effect has been
partly offset by negative channel mix as consumers have reduced spending in pubs
and restaurants as a consequence of the toughening economic environment. Based
on verified data from a number of key markets, there has been no significant
change in mix between the segments in the off-trade for both the full year and
by quarter in 2008 when compared to the same periods of 2007. Although
Carlsberg's commodity hedging policy allows for some flexibility in hedging
arrangements, the Group will benefit from declining spot prices on inputs with a
time lag.
Internal efficiency remains high on Carlsberg's agenda and the roll-out of
Excellence programmes targeting both top and bottom line improvements to newly
acquired assets began
COMPANY ANNOUNCEMENT
2/2009
Page 9 of 39
shortly after the acquisition. Significant restructuring projects have also been
rolled out in the United Kingdom and the Baltics to protect future earnings.
Organic net revenue in the fourth quarter increased by 2% with slightly
declining average market share driven by primarily the Baltic markets and other
Northern European markets. Price increases compared to the same period last year
combined with operational savings were achieved in a significant part of the
region in the fourth quarter, thus protecting earnings.
In 2008, operating profit was up 17% to DKK 3,953m (DKK 3,383m in 2007) with
organic development accounting for -4% (-5% in DKK) and growth from acquisitions
adding 22%. If adjusting for one-offs (sale of local brands in 2008, the
discontinued legacy payments on the former Punch Taverns contract in the United
Kingdom and the gain from sale of real estate in Poland in 2007) the organic
development would have been c. -2%. Reported operating profit margin increased
marginally by 10bp to 10.6%.
The integration of the French business and realisation of synergies are on track
and the relaunch of the Kronenbourg brand is progressing and is now at the early
stage. In Italy, the turnaround of the business has included exiting
non-profitable segments and significant reductions in the cost structure. South
East Europe has increased earnings through volume growth and market share
increases.
EASTERN EUROPE
DK K mi lli on Q4 Q4 Cha nge Cha nge
200 8 2007 (%) 20 08 200 7 (%)
Beer sales (million 10.9 5.9 84.7 46.8 27.7 68.9
hl)
Net revenue 4,616 2,066 123.4 19,137 9,658 98.2
Operating profit 799 345 131.6 4,109 2,134 92.6
Ope rat ing mar gin 17. 3 16.7 0.6 21.5 22.1 -0.6
The acquisition of the S&N assets provided Carlsberg with full control over the
former BBH business, which has been and will remain a key driver of long-term
value for the Group. In times of greater economic weakness the unique strengths
of our Baltika business are accelerating its differentiation and outperformance
from the rest of the market. Baltika is now more than twice the size of its
nearest competitor and in the fourth quarter of 2008 the rate of market share
growth increased further. Its brand portfolio, invested production footprint and
cooperation with top tier distributors position the business to take advantage
of this period of economic downturn with the greatest visibility on, and control
over, the changing dynamics of the market.
Following only moderate growth in the first half of the year, the Russian beer
market growth was expected to accelerate in the second half of the year.
Unseasonably rainy and cold weather in late third quarter significantly affected
outdoor consumption and led to a decline in overall market growth. In the fourth
quarter the market slowed down further and declined by 5.4% as concerns on wider
macroeconomic development affected consumer spending, resulting in full- year
Russian beer market growth of -0.4%. Against this background, Baltika's volumes
grew by 1.4% in Russia.
Premiumisation continued to be strong as Russian consumers trade up to more
premium products such as Baltika and Tuborg. Disposable income growth has slowed
in the second half
COMPANY ANNOUNCEMENT
2/2009
Page 10 of 39
of the year, but premiumisation in the beer category has still taken place in
each and every one of the four quarters of 2008 compared to 2007.
The Russian business achieved a full-year market share of 38.3% (37.6% in 2007).
In the fourth quarter Baltika outperformed the market, achieving flat volumes
despite a drop in market volume of 5.4%. Full-year performance was driven by
strong growth for the Baltika brand (especially Baltika 7 and Baltika Cooler)
which achieved a volume increase of 15%, and similarly positive growth for the
Tuborg brand, with growth of 20%, whilst Kronenbourg grew by 35%.
Inventory levels are closely monitored and Baltika's distribution model focuses
on high consistency and visibility. At year-end 2008, inventory levels (measured
as days of sale) at distributors/wholesalers were on par with end 2007. Given
Baltika's cooperation with the premium distributors/wholesalers, the business
has not experienced any unusual bad debts at distributors in 2008 and days
outstanding to distributors at the end of 2008 were in line with those in 2007.
Capacity expansion projects were to a large extent finalised in the first half
of 2008, including investments in the greenfield brewery in Novosibirsk in
Russia, which started production in the spring. Total production capacity in
Russia is now c. 50m hl, leaving Carlsberg's Russian operations well positioned
to capture further growth in the market without significant additional
investments in capacity. Furthermore, the integrated nationwide production and
logistic network in our Baltika business model allows for very flexible
cross-brewing and distribution to accommodate variations in demand between
regions, segments and packaging formats.
In 2008 the emerging markets in the other Eastern European countries showed a
mixed picture with volume growth in Uzbekistan (+11%) and in Belarus (+10%), a
flat market in the Ukraine, and market decline in Kazakhstan (-4.8%). Market
developments have been affected overall by weaker economies by the end of the
year but severe flooding also affected the beer market in the Ukraine in the
important third quarter.
Although the growth in the Ukraine has slowed significantly, the business has
performed well, driven by last year's relaunch of Slavutich, growth in the
Baltika brand and the much improved business model. Total beer volume increased
by 17% compared to 2007, leading to a significant volume market share gain of
3.1 percentage points to 23.7%. In both Kazakhstan and Uzbekistan, the
businesses continue to win market share. Market shares are now at 47.9% (up 4.0%
against last year) and 38.7% (in the first year in business) respectively, which
already now makes Sarbast the no. 1 brand and Carlsberg Uzbekistan the no. 1
brewer in Uzbekistan.
During the fourth quarter, Carlsberg continued to gain share in every market
thus partly offsetting the negative market development.
Total beer volumes in the Eastern European business increased to 46.8m hl equal
to growth of 69%. Organic volume growth amounted to 6%. Fourth-quarter organic
beer volume of 5.9m hl was in line with last year, despite market declines in
most countries.
Net revenue was up 98% to DKK 19,137m (DKK 9,658m in 2007) with acquisitions
contributing net revenue of DKK 8,114m. Organic growth was 20% (14% in DKK)
driven by continued strong value focus (mix and price) and volume growth. The
growth in net revenue is due to the strong performance of the Baltika and Tuborg
brands relative to overall market growth. Price increases
COMPANY ANNOUNCEMENT
2/2009
Page 11 of 39
contributed c. 11% and mix a further c. 3%, whilst exchange rate movements
impacted reported net revenue negatively by c. 6%.
In 2008 higher net revenue per hl was also driven by innovation and new product
launches, price increases and mix improvement, reflecting the ongoing strong
focus on balancing volume and value growth, offsetting higher costs for key
inputs like malt, hops and glass bottles.
Operating profit was DKK 4,109m (DKK 2,134m in 2007) with organic growth
amounting to 18% (13% in DKK) primarily driven by continuously strong results in
Russia. Operating margin was 21.5% against 22.1% last year. This includes
amortisations on additional value from purchase price allocation (PPA) of the
S&N transaction (with no impact on cash flow) amounting to DKK 246m. Excluding
this, the profit margin would have been 22.8% against 22.1% last year (in the
fourth quarter 18.3% against 16.7% in the same period last year).
Despite the short-term impact of the economic weaknesses, the medium-term growth
drivers for the Russian beer market remain very attractive and in line with our
previously stated average growth rate assumption of 3-5% per annum, with further
increases driven by higher per capita consumption, on-going premiumisation and
development of the on-trade segment.
ASIA
DK K mi lli on Q4 Q4 Cha nge Cha nge
200 8 2007 (%) 20 08 200 7 (%)
Beer sales (million 2.7 2.2 22.7 11.5 9.9 16.3
hl)
Net revenue 984 709 38.8 3,555 2,886 23.2
Operating profit 125 76 64.5 511 366 39.6
Ope rat ing mar gin 12. 7 10.7 2.0 14.4 12.7 1.7
Although Asian economies have slowed down, strong growth continued during the
year. Beer volumes grew in most markets across the region and growth in the
fourth quarter 2008 has overall been in line with the trend seen in previous
quarters. China remains the major growth engine for regional beer market growth,
although Cambodia and Laos also grew in 2008. The Malaysian beer market showed
impressive growth throughout the year.
Regional beer volumes increased by 16% to 11.5m hl with organic growth
accounting for 13 percentage points, driven by a broadly based operational
performance. The Chinese business grew organically by 17%, and Malaysia achieved
significant volume growth of 7% following last year's changes to the business
model which have successfully repositioned the business.
Net revenue climbed by 23% to DKK 3,555m (DKK 2,886m in 2007) with organic
growth accounting for 24% (21% in DKK). In general, net revenue per hl benefited
from price increases and by higher Carlsberg Chill sales in China. However,
rapid growth in countries with lower prices as well as adverse foreign exchange
movements capped the increase in reported average sales prices.
Operating profit climbed by an impressive 40% to DKK 511m (DKK 366m in 2007)
with organic growth equal to this (36% in DKK). The growth was in particular
driven by improvements in China and Singapore. Operating profit margin increased
by 170bp to 14.4%.
COMPANY ANNOUNCEMENT
2/2009
Page 12 of 39
Growth in the fourth quarter was overall in line with full-year 2008 performance
with organic growth in net revenue of 25% (37% in DKK) and in operating profit
of 41% (55% in DKK).
CENTRAL COSTS (NOT ALLOCATED)
Central costs totalled DKK 968m against DKK 882m in 2007. These costs are
incurred for ongoing support of the Group's overall operations and development
and driving Excellence programmes, in particular costs of running the
headquarters, costs incurred in connection with business development projects,
and costs for central marketing, including sponsorships. The increase on last
year of DKK 86m reflects an upgraded headquarters organisation as well as costs
relating to the EURO 2008 campaign.
OTHER ACTIVITIES
In addition to beverage activities, Carlsberg has interests within sale of real
estate, primarily at its former brewery sites, and the operation of the
Carlsberg Research Center. These activities generated net operating profit of
DKK 374m in 2008 against DKK 261m in 2007.
Monetising the value of redundant assets, including brewery sites which are no
longer used in operations, remains an important focus to provide additional
capital to the rest of the Group and enhance return on invested capital. The
move from Valby and the realisation of capital from this substantial site in
central Copenhagen remain on track, notwithstanding the changed economic
environment. In January 2009, the City of Copenhagen gave the necessary approval
for the redevelopment of this site. This approval provides for 600,000 sqm of
redeveloped space. Carlsberg will continue to work to release capital from this
site during 2009 and all capital expenditures to transfer production facilities
to Fredericia were completed prior to the end of 2008.
COMMENTS ON THE FINANCIAL STATEMENTS
ACCOUNTING POLICIES
The 2008 Annual Report of the Carlsberg Group has been prepared in accordance
with International Financial Reporting Standards (IFRS) as adopted by the EU and
additional Danish disclosure requirements for annual reports, cf. the reporting
requirements of NASDAQ OMX Copenhagen A/S for listed companies and the statutory
order on the adoption of IFRS issued pursuant to the Danish Financial Statements
Act.
In addition, the Annual Report has been prepared in compliance with the IFRS
issued by the IASB.
In October 2008 the IASB issued “Amendments to IAS 39 and IFRS 7:
Reclassification of Financial Assets” with effect from 1 July 2008. The Standard
was subsequently adopted by the EU. The changes, which were made in response to
the international financial crisis and allow reclassification of certain
financial instruments, did not affect recognition and measurement in the Group's
financial statements.
COMPANY ANNOUNCEMENT
2/2009
Page 13 of 39
IFRIC 14 "IAS 19 - The Limit on a Defined Benefit Asset" regarding retirement
benefit plans limited by the asset ceiling and introducing minimum funding
requirements is effective for financial years beginning on or after 1 January
2008. The interpretation was adopted by the EU in December 2008. In accordance
with EU regulations, the Interpretation is implemented before the effective date
with effect from 1 January 2008. The implementation did not affect the Annual
Report.
For 2008 the segment reporting of the Group's results has been changed. The new
segmentation reflects the structure used for the Group's internal management and
evaluation of strategic and financial objectives. Comparative figures have been
restated.
Acquisition of part of the activities in S&N
The total cash purchase price (i.e. following deduction of acquired debt; equity
value) of the acquisition of the activities in S&N is DKK 52,374m including
costs. Enterprise value is still expected to be approximately DKK 57bn.
Adjustments will be made to the purchase price as it is dependent on the final
allocation of debt between the consortium parties according to the net debt
statement mechanism provided for in the consortium agreement.
The determination of the fair value of identifiable assets, liabilities and
contingent liabilities at the acquisition date (28 April 2008) is almost
completed. For some of the estimated fair values, verification is still
outstanding, and minor adjustments to the recognised fair value might occur.
Changes to the opening balance sheet and cost will be made in accordance with
IFRS.
The negative impact on the income statement, among other things as a result of
increased amortisation of fair value adjustments, is slightly lower that the
estimates made in the prospectus (approximately DKK 280m for the period May to
December).
INCOME STATEMENT
In 2008 Carlsberg generated net revenue of DKK 59,944m (DKK 44,750m in 2007).
Organic growth amounted to DKK 3,677m (8%) and acquisitions net contributed DKK
12,867m (29%). Foreign exchange rate movements had a negative effect of DKK
1,350m (-3%) most notably caused by adverse currency development of the RUB and
GBP.
The growth in net revenue was driven by positive contributions from all regions,
with particularly strong revenue growth in Eastern Europe and Asia. In Eastern
Europe and Asia, growth was driven by higher volumes and positive price/mix.
Northern & Western Europe showed modest growth with a positive price/mix effect
that more than compensated for a slight volume decline. Price increases combined
with the continued premiumisation in several markets resulted in an organic
increase in net revenue per hl of 5% (2% in DKK).
Beer sales represented DKK 45,503m of total revenue (DKK 32,479m in 2007),
equivalent to 75.9% (72.6% in 2007).
Cost of sales amounted to DKK 31,248m (DKK 22,423m in 2007) with acquisitions
net representing DKK 6,985m resulting in an organic increase of 12% (8% in DKK)
driven by higher prices on key inputs like malt, hops, cans and glass bottles.
COMPANY ANNOUNCEMENT
2/2009
Page 14 of 39
Gross profit amounted to DKK 28,696m (DKK 22,327m in 2007), with acquired
activities net representing DKK 5,881m of this. Volume growth, higher price and
a more profitable product mix more than compensated for higher input costs.
Organic growth amounted to DKK 1,060m corresponding to +5% (+2% in DKK) mainly
driven by Eastern Europe (+12%; +7% in DKK) and Asia (+18%; +15% in DKK) while
Northern & Western Europe were flat (0%; -0.5% in DKK). Gross margin declined by
200bp to 47.9%.
Sales and distribution expenses amounted to DKK 17,592m, an increase of DKK
3,064m compared to 2007. Acquired activities net represented DKK 2,873m and
organic development DKK 553m (organic +4%; +1% in DKK) including the effect of
higher fuel costs. Administrative expenses increased by DKK 811m to DKK 3,934m,
with acquired activities net representing DKK 624m and organic development DKK
259m (+6% in DKK and +8% in local currencies). The development continues to
reflect an increased level of activity on the growth markets on the one hand and
strict cost control on the other.
Other operating income, net was DKK 728m against DKK 485m in 2007. This
development can primarily be attributed to gains on the sale of real estate.
Share of profit after tax in associates totalled DKK 81m against DKK 101m in
2007.
Operating profit before special items was DKK 7,979m against DKK 5,262m in 2007.
Beverage activities generated a profit of DKK 7,605m against DKK 5,001m in 2007,
an increase of DKK 2,604m. Acquired activities net represented DKK 2,382m of the
increase while organic growth was DKK 368m (+7%). In DKK, the growth was 4%. The
positive development was attributable to higher profits in Eastern Europe and
Asia.
Finally, the profit contribution from other activities, including sale of real
estate, was DKK 374m against DKK 261m in 2007.
Operating margin for the beverage activities improved by 150bp to 12.7% for 2008
compared to 11.2% for 2007.
Special items, net were DKK -1,641m against DKK -427m in 2007, and mainly
comprise restructuring costs, redundancies in connection with the Excellence
programmes, special items related to the sale of Türk Tuborg (DKK 232m),
restructuring in France (DKK 291m), impairment on the brewery in Leeds (DKK
197m) and a German brewery (DKK 135m), and losses on excess contracting of raw
materials for 2009 (DKK 245m). A more detailed specification is shown in note 4.
Net financial items were DKK -3,456m against DKK -1,201m in 2007. Net interest
was DKK -2,386m against DKK -1,076m in 2007 and is mainly attributable to the
higher level of debt due to the acquisition of part of the activities from S&N
as well as higher average interest rates. Other net financial items were DKK
-1,070m (DKK -125m in 2007). This change is on the one hand related to one-off
costs in connection with the establishment of the financing of the S&N
transaction (approximately DKK -315m) and, on the other hand, the inefficient
part of the currency options acquired to hedge GBP exposure on the S&N
transaction (DKK -110m). In addition, net foreign exchange effect on USD- and
EUR-denominated loans in Eastern Europe amounts to DKK 692m due to the sharp
devaluation in Eastern Europe in the fourth quarter of 2008. Financial gains of
net DKK 126m relate, among other things, to disposal of Israel Beer Breweries.
COMPANY ANNOUNCEMENT
2/2009
Page 15 of 39
Tax totalled DKK +324m against DKK -1,038m last year. The effective tax rate of
-11.2% is mainly due to a decrease in the Russian corporate tax rate as per 2009
(20% against 24% previously) resulting in a release of deferred tax of DKK
1,520m.
Consolidated profit was DKK 3,206m against DKK 2,596m in 2007. Minority
interests' share of this was DKK 575m against DKK 299m in 2007, reflecting the
continued earnings progress in Russia and Malaysia on the one hand and the fact
that minorities in BBH have been recognised at 100% since 1 May on the other
hand.
Carlsberg's share of profit was DKK 2,631m against DKK 2,297m in 2007.
BALANCE SHEET
At 31 December 2008, Carlsberg had total assets of DKK 143,306m against DKK
61,220m at 31 December 2007. The increase primarily relates to the acquisition
of part of the activities in S&N. At 28 April 2008 (acquisition date) the
balance sheet increased by DKK 91,956m from inclusion of the fair value of
identifiable assets, liabilities and contingent liabilities acquired, including
goodwill, and from revaluation of the originally owned 50% of BBH to fair value.
Due to developments in currency exchange rates during 2008 the impact on the
balance sheet at 31 December 2008 was DKK 83,437m calculated as the opening
balances in local currencies at the acquisition date translated into DKK at the
exchange rate at year-end 2008. The developments commented on below are
calculated at the exchange rate at year-end 2008.
Assets
Intangible assets totalled DKK 84.7bn against DKK 21.2bn at 31 December 2007.
Intangible assets mainly relate to goodwill, DKK 48.7bn, and trademarks, DKK
35.4bn. The total increase of DKK 63.5bn includes an addition of DKK 48.4bn from
the acquisition of part of the activities in S&N and DKK 14.6bn from revaluation
of the existing ownership share of the BBH Group. Acquisition and revaluation of
brands amounted to a total of DKK 31.8bn.
Property, plant and equipment totalled DKK 34.0bn (DKK 22.1bn at 31 December
2007). The total increase of DKK 11.9bn includes an addition from the
acquisition of part of the activities in S&N and revaluation of the originally
owned 50% of BBH to fair value which at year-end impacted the balance sheet by
DKK 11.6bn. Capital expenditure amounted to DKK 5.3bn (including real estate
projects DKK 6.4bn) which is particularly high due to capacity expansions in the
growth markets and investments in connection with capacity efficiency projects
in Denmark and Italy. These investments were completed in 2008. Exchange rate
effects reduced the value of property, plant and equipment by approx. DKK 3bn.
Non-current financial assets amounted to DKK 5.3bn (DKK 3.0bn at 31 December
2007), primarily as a result of the investment in Chongqing Brewery, an increase
in financial receivables mainly due to the increase in long-term trade loans
from the S&N transaction, investment in Habeco, and deferred tax assets.
Current assets totalled DKK 19.1bn against DKK 14.9bn at 31 December 2007, an
increase of DKK 4.2bn. Through the S&N transaction, current assets at a value of
DKK 6.3bn were acquired.
COMPANY ANNOUNCEMENT
2/2009
Page 16 of 39
Liabilities
Total equity was DKK 60.8bn, of which DKK 55.5bn can be attributed to
shareholders in Carlsberg A/S. The increase in equity compared to 31 December
2007 of DKK 40.8bn is due partly to the rights issue, which generated net
proceeds of approximately DKK 30bn for Carlsberg, and partly to equity
adjustments (DKK 14.8m at exchange rate at the acquisition date) regarding value
adjustment to fair value of the net assets in BBH already owned prior to the
acquisition. Costs directly set off against equity in connection with the
capital increase amount to DKK 573m.
Equity before minority interests has increased by profit for the year (DKK
2,631m). In addition it has been affected by exchange rate adjustments on
foreign subsidiaries of DKK 7.0bn, negative value adjustments on hedging and
securities of DKK 1.6bn and increased by tax on changes in equity of DKK 334m.
Dividends to shareholders (DKK 458m) and minority interests (DKK 265m) reduced
total equity by DKK 723m.
Exchange rate adjustments on foreign subsidiaries amount to DKK -7.4bn in total
equity. The total currency exposure of the Group has increased following the
acquisition of part of the activities from S&N resulting in significantly
increased balance sheet values of the Group. Of the total exchange rate
adjustment DKK -6.4bn relates to the acquisition of part of the activities in
S&N and revaluation of the existing ownership share of the BBH Group.
Value adjustments in equity mainly concern currency hedging of the GBP exposure
related to the S&N transaction. The currency options were settled in April 2008,
after which forward contracts were concluded to hedge the total purchase price
of GBP 5.5bn at a total weighted average exchange rate (DKK/GBP) of 945.79.
Value adjustment (loss) of the effective part of the hedging element of both
currency options and forward contracts has been recognised in equity.
Total liabilities were DKK 82.6bn (DKK 41.3bn at 31 December 2007). The total
increase of DKK 41.3bn primarily relates to the S&N transaction. Current
liabilities were DKK 25.6bn (DKK 17.2bn at 31 December 2007).
CASH FLOW AND INTEREST-BEARING DEBT
Cash flow from operating activities was DKK 7,812m against DKK 4,837m for 2007.
Operating profit before depreciation and amortisation was DKK 11,610m against
DKK 8,134m in 2007. The change in working capital was DKK 1,556m (DKK -230m in
2007). Working capital includes a positive contribution of c. DKK 1.1bn from the
contract concluded with The Coca-Cola Company. Paid net interest etc. amounted
to DKK -2,754m against DKK -1,320m for the same period of 2007, which mainly
reflects higher financing costs due to the S&N transaction.
Cash flow from investing activities was DKK -57,153m against DKK -4,927m in
2007. This marked increase is essentially attributed to the S&N transaction.
Also operational investments have increased by DKK 487m, which can largely be
attributed to capacity expansions and brewery constructions in Eastern Europe
(Russia, the Ukraine and Uzbekistan) as well as capacity efficiency projects in
Denmark and Italy related to brewery closures. It should be noted that
COMPANY ANNOUNCEMENT
2/2009
Page 17 of 39
investments in the former BBH are included at 50% for the first four months of
the year and at 100% for subsequent months.
Consequently, free cash flow was DKK -49,341m against DKK -90m for 2007.
Net interest-bearing debt was DKK 44,156m at 31 December 2008 against DKK
19,726m last year. This development essentially reflects increased borrowing
related to the S&N transaction less the cash contribution from the capital
increase.
FINANCING
At 31 December 2008, the gross interest-bearing debt amounts to DKK 48.5bn. The
difference of DKK 4.4bn in the net interest-bearing debt is other
interest-bearing assets, including DKK 2.9bn in cash and cash equivalents.
Of the gross interest-bearing debt of DKK 48.5bn, DKK 43.2bn (89%) is long term,
i.e. with maturity more than one year from 31 December 2008, and consists
primarily of facilities in EUR.
Committed credit facilities are more than sufficient to refinance maturing
short-term debt.
Approximately 57% is fixed interest (fixed-interest period exceeding one year).
The additional annual interest expense if interest rates increase by 1
percentage point is approx. DKK 197m (and vice versa should the interest rate be
reduced by 1 percentage point).
INCENTIVE PROGRAMMES
In 2008 a total of 530,871 share options were granted to members of the
Executive Board and other senior executives in the Carlsberg Group, of which the
Executive Board received 89,552 share options.
In addition, a total of 269,071 share options have been granted to other senior
executives and key management personnel as part of a new long-term incentive
programme. The number of options in this programme will change over the next two
years depending on terms in the incentive programme and developments in
Carlsberg's B-share price.
The share options, in total 799,942, were granted to a total of 173 key
employees at an average exercise price of DKK 383.34 (2007: 270,187 share
options to 145 employees at an average price of DKK 472.11)
In 2009 a total of c. 325,000 share options will be granted to c. 115 persons
(members of Executive Board and other senior executives), of which 60,000 will
be granted to the Executive Board. The exercise price will be calculated as the
average of the share price on the first five trading days after publication of
the present financial statement. In addition, members of the long-term incentive
programme will be granted share options based on performance, programme terms
and developments in Carlsberg's B-share price.
COMPANY ANNOUNCEMENT
2/2009
Page 18 of 39
ANNUAL GENERAL MEETING
The Annual General Meeting will take place on Thursday 12 March 2009 at 4.30 pm
(CET) at the Radisson SAS Falconer Hotel, Copenhagen.
BOARD RESOLUTIONS AND PROPOSALS TO THE ANNUAL GENERAL MEETING
The Parent Company recorded a profit of DKK 1,055m for 2008. The Board of
Directors will recommend to the Annual General Meeting that a dividend be paid
of DKK 3.50 per share or a total of DKK 534m.
ANNUAL REPORT
The Annual Report for 2008 is expected to be available no later than 4 March
2009.
FINANCIAL CALENDAR FOR THE FINANCIAL YEAR 2009
The financial year follows the calendar year, and the following schedule has
been set:
12 March 2009 Annual General Meeting
6 May 2009 Interim results for Q1 2009
5 August 2009 Interim results for Q2 2009
4 November 2009 Interim results for Q3 2009
Carlsberg's communication with investors, analysts and the press is subject to
special restrictions during a four-week period prior to the publication of
quarterly and annual financial statements.
RELATED PARTY TRANSACTIONS
The Carlsberg Foundation participated in the rights issue in June 2008. The
Carlsberg Foundation's ownership interest is now 30.3%. Apart from this, the
only transactions have been with the Carlsberg Foundation concerning grants to
the Carlsberg Laboratory and dividends paid for 2007.
DISCLAIMER
The forward-looking statements, including forecasts on sales and earnings
performance, reflect management's current expectations based on information
available at the date of this document, and are subject to risks and
uncertainty. Such statements are made on the basis of assumptions and
expectations which the Company believes to be reasonable at this time, but which
may prove to be erroneous. Many factors, some of which will be beyond
management's control, may cause actual developments to differ materially from
the expectations expressed. Such factors
COMPANY ANNOUNCEMENT
2/2009
Page 19 of 39
include, but are not limited to, economic and political uncertainty (including
developments in interest rates and exchange rates), financial and regulatory
developments, changes in demand for the Group's products, competition from other
breweries, the availability and pricing of raw materials and packaging
materials, price reductions resulting from market-driven price reductions,
market acceptance of new products, launches of rival products, stipulation of
market values in the opening balance of the acquired companies, major
litigations and other unforeseen factors. Should one or more of these risks or
uncertainties materialise, or should any underlying assumptions prove incorrect,
actual outcomes may vary materially from those indicated.
Carlsberg assumes no obligation to update or revise such forward-looking
statements or to update the reasons for which actual results could differ
materially from those anticipated in such forward-looking statements except when
required by law.
MANAGEMENT STATEMENT
The Board of Directors and Executive Board have today discussed and approved the
Company Announcement on the Financial Statement as at 31 December 2008.
The Board of Directors and Executive Board also discussed and approved the
Annual Report of the Carlsberg Group and Parent Company for 2008. The Annual
Report has been prepared in accordance with International Financial Reporting
Standards as adopted by the EU and additional Danish disclosure requirements for
annual reports for listed companies. We consider the accounting policies used to
be appropriate.
The Company Announcement on the Financial Statement as at 31 December 2008 has
been prepared using the same accounting policies as the Annual Report for 2008.
Copenhagen, 18 February 2009
Executive Board of Carlsberg A/S
Jørgen Buhl Rasmussen Jørn P. Jensen
Board of Directors of Carlsberg A/S
Povl Krogsgaard-Larsen Jens Bigum Hans Andersen
Chairman Deputy Chairman
Flemming Besenbacher Hanne Buch-Larsen Henning Dyremose
Niels Kærgård Axel Michelsen Erik Dedenroth Olsen
Bent Ole Petersen Jess Søderberg Per Øhrgaard
COMPANY ANNOUNCEMENT
2/2009
Page 20 of 39
FINANCIAL STATEMENT
Income statement
Statement of recognised income and expenses
Balance sheet
Changes in equity
Cash flow statement
Note 1 Segment reporting by region (beverages)
Note 2 Segment reporting by activity
Note 3 Segment reporting by quarter
Note 4 Special items
Note 5 Borrowings and facilities
Note 6 Net interest-bearing debt
Note 7 Acquisition of entities
Note 8 Recognition in the balance sheet at the acquisition date of the
acquisition of part
of the activities in S&N
Note 9 Financial ratios
This statement is available in Danish and English. In the event of any
discrepancy between the two versions, the Danish version shall prevail.
COMPANY ANNOUNCEMENT
2/2009
Page 21 of 39
INCOME STATEMENT
DKK million
Q4 Q4
200 8 2007 200 8 2007
Net re venue
14, 524 10,8 18 59,944 44,7 50
Cost of sales
-7,844 -5,664 -3 1,24 8 -22,423
Gro ss pro fit
6,68 0 5,154 28,696 22,3 27
-4,381 -3,667 -1 7,59 2 -14,528
-1,116 -789 -3,934 -3,1 23
191 195 728 485
pr- prof it afte r
13 35 81 101
f tax ,
it
1,387 928 7,979 5,262
Spec ia l item s
-1, 344 -243 -1,641 -427
Financial income
131 192 1,310 651
-1,412 -620 -4,766 -1,8 52
Pro fit befo re tax
-1, 238 257 2,882 3,634
Corporation tax
1,534 -173 324 -1,0 38
Con soli dat ed pr ofi t
296 84 3,206 2,596
Attributable to:
Minor ity inte rests
172 47 575 299
Shar eho lde rs in Car in Car 124 37
2,631 2,297
lsbe rg lsbe rg
A/S A/S
Ear nin gsper per sh ar e*
0.8 0.4 22.2 24.3
Ear nin gsper persh ar e,
0.8 0.4 22.2 24.2
* Adjusted for bonus factor from the rights issue in June 2008 in accordance
with IAS 33.
COMPANY ANNOUNCEMENT
2/2009
Page 22 of 39
STATEMENT OF RECOGNISED INCOME AND EXPENSES
Shareholders Shar- Share- Share-
Shareholders 20-
hold- olders olders
8
rs
DKK million Curr- Fair Retai-
in Carlsberg Minority
ncy value ed
tr ansl atio n tr adjus- earni-
A/S, total inte re To-
ansl ments gs
sts al
atio
n
Profit for the year - 2,631
2,631 5 75- 3,-
- 0 6
-
0
6
Foreign exchange adjustments:
Foreign entities - -
-6,913 -533 -7,4 46
Transferred to income statement on disposal - - -67
-67 -2 --
9
Value adjustments:
Hed gin g ins tr ument s, val ue ad jus tme nt -1,984 -
-1,525 - -1,5 25
for the y ear Hedging instruments, transferred
to income statement
- - - 27 - -27
-27 - --
7
Securities 75 - 75
75 - 75
Securities, transferred to income statement on - 17 - -17
-17 -4 --
disposal
1
Securities, -108 -
-108 - -1-
8
Other adjustments:
Retirement benefit obligations - -46 -46
-46 - --
6
Shar e- bas ed pa ymen t - 31 31
31 - 31
Value adjustment on step acquisition of - 13,060
1 3,060 1 ,750 14,81 0
subsidiaries
Other - - -10 -10
-10 1 -9
Tax on changes in equity 455 -112 3 34
3 34 1 335
Net rec -1,606 12,923
4,787 1 ,213- 6,-
ogn is
- 0 0
ed dir
-
ect ly
0
0
Total recognised income and expenses -1,606 15,554
7,418 1 ,788- 9,-
- 0 6
-
0
6
Shareholders Shar- Share- Share-
Shareholders 20-
hold- olders olders
7
rs
Currency Curr- Fair Retai-
in Carlsberg Minority
ncy value ed
tr ansl atio n tr adjus- earni-
A/S, total inte re To-
ansl ments gs
sts al
atio
n
Profit for the year - 2,297
2,297 2 99- 2,-
- 9 6
-
9
6
Foreign exchange adjustments:
Foreign entities - -
-600 -70 -6-
0
Value adjustments:
Hed gin g ins tr ument s, val ue ad jus tme nt 84 - 232
232 - 232
for the y ear Hedging instruments, transferred
to income statement
-3 3 -3 3 - - -33
-33 - --
3
Securities 42 - 42
42 4 46
Securities, transferred to income statement on -3 - - 3
- 3 -1 -4
disposal
Other adjustments:
Retirement benefit obligations - -532
-532 - -5-
2
Shar e- bas ed pa ymen t - 21 21
21 - 21
Other - - 1 1
1 1 2
Tax on changes in equity - 36 173 1 01
1 01 - 101
Net rec 87 -337
-771 -66 -8-
ogn is
7
ed dir
ect ly
Total recognised income and expenses 87 1,960
1,526 2 33- 1,-
- 5 9
-
5
9
Currency translation comprises foreign exchange adjustments arising on the
translation of the financial a
statements of foreign entitie s with functional currency other than the Group's
presentation currency, foreign
exchange adjustment of assets and liabilities which const it ute pa rt
of
the Group's net investment in a foreign entity and foreign exchange adjustments
of hedging transactions related to
the Group's net investment in a for eig n enti ty.
Fair value adjustments comprise changes in the fair value of hedging
transactions that qualify for recognition as cash flow hedges and where the
hedged transaction has not yet been realised. Fair value adjustments also
comprise a reserve for securities available for sale.
Value adjustment on step acquisition of subsidiaries relates to fair value
revaluation of assets held by the Carlsberg Group - and recognised by pr opo rti
onat e co nso lid ati on - pri or to ob tain ing co mpl ete co ntr ol ove r the
BBH Gro up as a resu lt of the ac quis itio n of pa rt of the activities in S&N.
The acquisition of additional ownership interests resulted in control, and in
accordance with IFRS the acquired intangible assets are re cog nis ed at fai r
val ue at the ac qu isi tio n date . The f air val ue ad jus tme nt of the as se
ts hel d pri or to t he ac qui si tio n has be en rec ogn is ed directly in
equity in accordance with IFRS.
COMPANY ANNOUNCEMENT
2/2009
Page 23 of 39
BALANCE SHEET
DKK million
31 31
De- De-
. .
20- 20-
8 7
Assets
Intangible assets
84- 21-
678 205
Property, plant and equipment
34- 22-
043 109
Financial assets
5,- 2,-
05 65
Total non-current assets
1 46-
24- 27
026 9
Inv ent ori es
- 1 10-
- 1,- 15
d8 6 9
Other receivables etc.
4,- 2,-
75 99
Cash and cash equivalents
2,- 2,-
57 49
Total
- 19- 14-
- 11 90
- 8 7
r
-
-
t
Assets held for sale
1 3 4
62
Tot al
1 61-
43, 22
306 0
Equity and liabilities
Eq uity , sh areh olde rs in Ca rlsb erg A/S Minori ty inte rests
5 18-
5,- 62
2 1 1
5,- 1,-
30 23
Total equity
60 19-
,7- 94
1 4
Bo rrow ing s
4 19-
3,- 38
3 0 5
Deferred tax, retirement benefit obligations etc.
1 4,-
3,3- 80
7
Total non-current liabilities
56 24-
,5- 06
7 5
Borrowings
5,- 3,-
91 69
Tra de pa yabl es
7,- 5,-
9 3 33
Ot her
- 1 7,-
u2,- 09
- 1 6
-
e
-
t
Total current liabilities
25- 17-
600 21
1
Liabilities associated with assets held for sale
3 -
68
Total equity and liabilities
1 61-
43- 22
306 0
DKK million
Equ ity at 1 Ja nuar y 200 8
Cap ita l inc re ase
Acq uisi tio n/di spo sa l of tr eas ury sh are s
Dividends paid to shareholders Acquisition of
minority interests Acquisition of entities
Disposal of entities
Total changes in equity
Equity at 31 December 2008
DKK million
Equ ity at 1 Ja nuar y 200 7 1,
-
Cap ita l inc re ase -
Acq uisi tio n/di spo sa loftr eas urysh are s -
Repurchase of shares -
Dividends paid to shareholders -
-
stments comprise changes in the fair value of hedging transactions that qualify
for recognition as cash flow hedges a The proposed dividend of DKK 3.50 per
share, in total DKK 534m (2007: DKK 4.84 per share, in total DKK 458m), is
included in re atined
nd w
am ount to DK K 458m (pa id ou t in 20 07 for 2006 : DKK 458m ), whi ch is DK K
4.8 4 per sha re (2 007: DK K 4.8 4). Div id end s pai d out to shar A/S.
Currency translation comprises accum
Total
CHANGES I
recogni
sed income and expens se
ulated foreign exchange adjustments arising on the translation of the
financial statements of foreign entit presentation currency, foreign
exchange adjustments of assets and liabilities which constitute part
of the Group's net investment in a fo isrdelhoe
rei gn en
itty
related to the Group's net investment in foreign entities. Total
recognised income and expenses for the year, cf. separate
statement
nsoitcansar tgngidhe fo stnemtsjue adganhcn exgeirod f an
sp'ourG eht anht reht oyncerruc alonitncu fa htiw sei
gerbslrCa n ieomcn ieblaaxt tacpim tono dS/Ag erbslra Cn
here the
hedged t
adjustments also comprise a reserve for securities
available fo aC n iserdlhoearhS
S/Ag erbslraC n
iserdlhoearhS
r sale of DKK -24m (2007: DKK 26m).
uelav riaF .desilearen e bte ytno s
haniotcansar - 854- - -
- -
- -521
1,526 -170
449,19 32,31 12,681 59,071
879,18 09,31 79,571 17,061 04,751 02-
153625
stseretin
ytironMi
srveesre
d l anatipac
erah slatTo
srvesere
ltaTo
ngsinare
deinatRe
stnemtsjuad
ue la viraF
notialsnatr
ycnrreuC
latipca
eraSh
stseretin
ytironMi
srveesre
d l anatipac
erah slatTo
srvesere
ltaTo
ngsinare
deinatRe
stnemtsjuad
ue la viraF
notialsnatr
ycnrreuC
latipca
eraSh
COMPANY ANNOUNCEMENT
2/2009
Page 25 of 39
Q4 Q4
2008 2007 2008 2007
1,387 928 7,97 9 5,262
depreci ation , amorti sati on and 992 767 3,63 1 2,872
Operating profit before depreciation, 2,379 1,695 11,61 0 8,134
amortisation and
-315 -138 -60 4 -403
2,437 1,014 1,556 -230
-191 -147 -48 2 -379
67 1 256 187
-61 5 -495 -3,0 10 -1,507
-183 -102 -1,5 14 -965
3,579 1,828 7,812 4,837
Acquisition of property, plant and -1,012 -1,495 -5,2 92 -4,929
equipment and
Disposal of property, plant and 255 97 374 351
equipment and
-106 -81 -29 0 -143
-863 -1,479 -5,2 08 -4,721
-191 -36 -51,44 4 -179
-278 -16 -1,2 48 - 43
3 -17 39 37
337 -298 427 -86
61 51 75 127
-68 -316 -52,15 1 -144
Other investments in property, plant -410 -5 -1,1 17 -667
and equipment
Disposal of other property, plant and 51 -20 1,32 3 605
equipment
-359 -25 206 -62
-1,2 90 -1,820 -57,153 -4,927
2,289 8 -49,341 - 90
111 25 29,48 2 -508
-13 0 -216 -54 9 -451
-2,724 58 21,15 1 775
-2,743 -133 50,08 4 -184
-454 -125 743 -274
per iod 6per iod 6per iod 6per iod 6 2,577 1,496 1,351 1,708
-58 -20 -29 -83
2,065 1,351 2,065 1,351
1Impairment losses excluding those reported in Special items. 2 Includes DKK
1,065m received from the licence agreement with The Coca-Cola Company in June
2008. 3 Includes costs of hedging instruments acquired prior to the acquisition
of part of the activities in S&N. 4 Other activities cover real estate and
assets under construction, separate from beverage
activities, including costs of construction contracts.
5 Includes loan raised for the financing of the acquisition of activities in S&N
and repayment of parts of the loan follo wing the capita l incre ase. 6 Cash and
cash equivalent less bank overdrafts
COMPANY ANNOUNCEMENT
2/2009
Page 26 of 39
NOTE 1 (PAGE 1 OF 2)
Segment reporting by region (beverages)
DKK million Q4 Q4
2008 2007
20- 2007
8
Beer (pro
Northern & Western Europe 12.1
10.7 51- 44.4
0
Eastern Europe 10.9 5.9
46- 27.7
8
Asia 2.7 2.2
11- 9.9
5
Total 25.7
18.8 109.3 82.0
Net revenue (DKK million)
Northern & Western Europe 8,915
7,988 37,128 32,0
87
Eastern Europe 4,616
2,066 19,137 9,658
Asia 984
709 3,555 2,886
Not allocated 9 55
124 119
Beverages, total 14,524 10,8
18 59,944 44,7-
0
Opera ting profi t special - (EBIT
DA - DKK
before -
million
-
)
-
s
Northern & Western Europe 1,353
1,262 6,08- 5,365
1 -
-
-
5
Eastern Europe 1,208
516 5,3- - 2,727
8 -
-
-
7
Asia 179
124 694 530
Not allocated -343 -306
-900 -765
Beverages, total 2,397
1,596 11,223 7,857
Operating profit before special items (EBIT - DKK million)
Northern & Western Europe
847
731 3,953 3,383
Eastern Europe 799
345 4,109 2,134
Asia 125 76
511 366
Not allocated -363 -318
-968 -882
Beverages, total 1,408 834
7,6- - 5,001
5 -
-
-
1
Operating profit margin (%)
Northern & Western Europe 9.5 9.2
10- 10.5
6
Eastern Europe 17.3 16.7
21- 22.1
5
Asia 12.7 10.7
14- 12.7
4
Not allocated … …
… …
Beverages, total 9.7 7.7
12- 11.2
7
COMPANY ANNOUNCEMENT
2/2009
Page 27 of 39
NOTE 1 (PAGE 2 OF 2)
Segment reporting by region (beverages)
DKK million
2008 2007
Capital expenditure, CAPEX (DKK million)
Northern & Western Europe
2,517 2,780
Eastern Europe
2,149 1,537
Asia
391 579
Not allocated
235 33
Beverages, total
5,292 4,929
Deprec iation
Northern & Western Europe
2,128 1,982
Eastern Europe
1,239 593
Asia
183 164
Not allocated
68 117
Beverages, total
3,618 2,856
Capital expenditure/Depreciation and
amortisation (%)
Northern & Western Europe
118 140
Eastern Europe
173 259
Asia
214 353
Not allocated
346 28
Beverages, total
146 173
In ves ted -
-
-
i
-
-
l
,
million)
Northern & Western Europe
31,484 20,5 03
Eastern Europe
69,646 8,639
Asi a
5,48 5 3,277
Not allocated
168 535
Beverages, total 1
06,783 32,9 54
Return on average invested capital,
ROIC (%) (running 12 months)
Northern & Western Europe
12.2 15.9
Eastern Europe
9.0 27.5
Asia
12.1 11.7
Not allocated
… …
Beverages, total
8.9 15.2
COMPANY ANNOUNCEMENT
2/2009
Page 28 of 39
NOTE 2
Segment reporting by activity
DKK million Q4 Q4
2008 200 7
Beverages Other Total Beverages
Other Total
activiti activ
Q4
es ities
Net revenue 1 4,524 - 14,52 4 10,818
- 10,818
Operating profit before special 1,408 -21 1,387 834
94 928
items
Special items, net -1,344 - -1,344 -243
- -243
Financial items, net - 1,313 32 -1,2 81 -383
-45 -428
Profit before tax - 1,249 11 -1,2 38 208
49 257
Corporation tax 1,535 -1 1,534 -348
175 -173
Con soli dat ed pr ofi t 2 86 10 296 -140
224 84
Attributable to:
Minority interests 1 72 - 172 4 4
3 47
Shareholders in Carlsberg A/S 114 10 124 -184
221 37
DKK million
2008 200 7
Beverages Other Total Beverages
Other Total
activiti activ
es ities
Net revenue 5 9,944 - 59,94 4 44,750
- 44,750
Operating profit before special 7,605 374 7,979 5,001
261 5,262
items
Special items, net - 1,641 - -1,6 41 -427
- -427
Financial items, net - 3,455 -1 -3,4 56 -971
-230 -1,201
Profi t before 2,50 9 373 2,882 3,60 3
31 3,634
Corporation tax 3 95 -71 324 - 1,190
152 -1,038
Consolidated profit 2,904 302 3,206 2,413
183 2,596
Attributable to:
Minority interests 5 74 1 575 294
5 299
Shareholders in Carlsberg A/S 2,330 301 2,631 2,119
178 2,297
COMPANY ANNOUNCEMENT
2/2009
Page 29 of 39
NOTE 3
Segment reporting by quarter
DKK Q1 Q2 Q3 Q4 Q1 Q2 Q3
Q4
mill-
on
2007 20 07 200 7 200 7 2008 200 8 2008
200 8
Net
reve-
ue
Northern & Western 6,434 9,04 1 8,62 4 7,988 6,633 10,77 6 10,8 04
8,915
Europe
Eastern Europe 1,693 2,83 0 3,06 9 2,066 1,972 5,888 6,661
4,616
Asia 704 727 746 709 811 828 932
984
Not a lloca ted 32 41 -9 55 20 49 46
9
Beverages, total 8,863 12,639 12,430 10,81 8 9,436 17,54 1 18,4 43
14,524
Other activities - - - - - - -
-
Total 8,863 12,639 12,430 10,81 8 9,436 17,54 1 18,4 43
14,524
Operating profit before
special items
Northern & Western 242 1,231 1,17 9 731 135 1,57 0 1,401
847
Europe
Eastern Europe 287 696 806 345 285 1,38 8 1,637
799
Asia 89 94 107 76 124 117 145
125
Not a lloca ted -215 -211 - 138 -31 8 -163 -19 9 -243
-363
Beverages, total 403 1,810 1,95 4 834 381 2,87 6 2,940
1,408
Other activities -1 44 124 94 7 274 114
-21
Total 402 1,854 2,07 8 928 388 3,15 0 3,054
1,387
Sp net -31 -111 -42 -24 3 - 37 -91 -169
-1,34 4
eci
al
Financial items, -253 -243 - 277 -42 8 -470 -81 2 -893
-1,28 1
net
-
Profi t before tax 118 1,500 1,75 9 257 -119 2,24 7 1,992
-1,23 8
Corporation tax -32 -372 - 461 -17 3 32 -65 9 -583
1,534
Con soli dat ed 86 1,128 1,29 8 84 - 87 1,58 8 1,409
296
prof it
Attributable to:
Minor ity inte 41 91 120 47 42 173 188
172
rests
Sh in Car A/S 45 1,037 1,17 8 37 -129 1,41 5 1,221
124
areholsb erg
lde
rs
COMPANY ANNOUNCEMENT
2/2009
Page 30 of 39
NOTE 4
Special items
DKK million
2008 200 7
Impairment, Türk - -100
Tuborg
Impairment of -197 -
Leeds Brewery,
Carlsberg UK
Impairment of -135 -
Braunschweig
Brewery,
Carlsberg
Deutschland
Impairment losses
and expenses
relating to
withdrawal from
the market for
discount soft
drinks in Denmark
(2007: reversal
of provision)
- 7
Loss on disposal -232 -
of Türk Tuborg
Provision for -245 -
onerous malt
contracts
Relocation costs,
termination
benefits and
impairment of
non-current
assets in
connection with
new production
structure in
Denmark (2007:
reversal of
provision)
-19 1 4
Termination
benefits and
impairment of
non-current
assets in
connection with
new production
structure at
Sinebrychoff,
Finland
-30 -3
Termination benefits etc. in -150 -190
connection with Operational
Excellence programmes Termination
benefits and expenses, transfer of
activities to Accounting Shared Se
rvic e Cent er in Pol and
-16 -29
Res tr uc tur -93 -67
ing,
Res tr uc tur -2 91 -
ing,
Res tr uc tur -26 -
ing,
Costs in - -26
connection with
outsourcing of
distribution,
Carlsberg Sweden
Othe r res tr uct
urin g cost s etc
.,
- -1 38 -33
-
-
e
r
-
-
t
-
-
i
-
s
Integration costs -69 -
related to
acquisition of
parts of the
activities in S&N
Sp eci alit ems, -1,641 -427
Sp eci alitem s Gro up' s or din aryoper atin g
activities and
are significant
over time.
COMPANY ANNOUNCEMENT
2/2009
Page 31 of 39
NOTE 5 (PAGE 1 OF 2)
Debt and credit facilities
DKK million
2008 2007
Non-current borrowings:
Iss ued bonds 3,42 5 7,0 34
Mortgages 1,98 4 2,1 80
Ba nk - 37,274 9,588
-
r
-
-
-
i
-
-
s
Financial lease liabilities 28 37
Other non-current borrowings1 519 546
Total 43,23019,385
Current borrowings:
Iss ued bonds 2,49 9 -
Mortgages 203 -
Current portion of other non-current 2 196
borrowings
Ba nk - 2,38 8 2,6 43
-
r
-
-
-
i
-
-
s
Financial lease liabilities 19 28
Other non-current borrowings 180 1,002
Total 5,29 1 3,8 69
Total non-current and current borrowings 48,521 23,254
Fairvalue 48,070 23,4 22
1 Other non-current borrowings include employee bonds of DKK 5m (2007: DKK 0m).
Borrowings are measured at amortised cost with the exception of two fixed-rate
mortgages swapped to floating rates which are measured at fair value. The
carrying amount of these borrowings is DKK 362m (2007: DKK 356m).
Time to maturity for non-current borrowings
DKK million 2008
1-2 years 2-3 years 3-4 years 4-5 years > 5 years Total
Issued bonds - 1,895 - 1 ,530 5 3
,430
Mortgages 1 - - - 1,983 1 ,984
Bank borr owi ngs 15, 053 2,180 1 8,990 175 876 3
7,274
Financial lease 14 8 5 1 - 28
liabilities
Other non-current 241 256 1 - 16 5 14
borrowings
Total 15,309 4,339 18,996 1,706 2,880 43,230
COMPANY ANNOUNCEMENT
2/2009
Page 32 of 39
NOTE 5 (PAGE 2 OF 2)
Debt and credit facilities
Interest rate risk
Net interest-bearing Interest rate* *
DKK million debt * Floating Fixed Floating % Fixed %
EUR 34,256 1 2,620 21,636 37% 63%
DKK 3,136 2 ,759 377 88% 12%
PLN 1,577 1 ,568 9 99% 1%
USD 1,863 1 ,458 405 78% 22%
CHF 2 ,468 2,468 - 100% 0%
RUB -807 -808 1 100% 0%
Other 3 ,171 -330 3,50 1 - -
Total 45,664 19,7 35 25,929 43% 57%
* After swaps and currency derivatives
** Before currency derivatives
COMPANY ANNOUNCEMENT
2/2009
Page 33 of 39
NOTE 6
Net interest-bearing debt
DKK million Q4 Q4
2008 2007 2008 2007
Net interest-bearing debt is calculated as follows:
Non-current borrowings 43,230
19,385
Current borrowings 5,291
3,869
Gr oss int eres t-b ear in g debt 48, 521
23,254
Cash and cash equivalents -2,857
-2,2 49
Lo ans to -6
-28
On-trade loans -2,278
-1,6 27
less non- inte res t-b ear ing 1,40 3
821
Other receivables -2,032
-1,3 91
less non- inte res t-b ear ing 1,40 5
946
Net interest-bearing debt 44,156
19,726
Changes in net interest-bearing debt:
Net interest-bearing debt at beginning of period
46,323 20,135 19,726 19,229
Ca sh
-3, 579 -1,8 28 -7,812 -4,8 37
Cas h flow
excl .
1,09 9 1,820 5,70 9 4,748
Cas h flow
29 -6 51,444 179
Dividend to shareholders and minority interests
34 16 723 685
Acquisition of minority interests
96 43 299 69
Acquisition/disposal of treasury shares
1 -1 -2 74
Acquired net interest-bearing debt
191 - 4,015 54
Change in interest-bearing lending
-270 -345 140 -209
Ca pita l
-11 2 - -29,938 -
Effects of currency translation
-280 -178 -226 -325
Other
624 70 78 59
Total change
-2,167 -409 24,430 497
Net interest-bearing debt end of period
44,156 19,726 44,156 19,726
COMPANY ANNOUNCEMENT
2/2009
Page 34 of 39
NOTE 7
Acquisition of entities
DKK million
Acquired 2008
owne rsh
ip Acquisition Main
inte re st date activity
Cos t
Activi S&N, includi - April
52,374
ties ng; 8
50.0% 28 April 2008 Brewery -
100.0% 28 April 2008 Brewery
-
100.0% 28 April 2008
Brewery -
-
17. 5-10
0.0%- Ap ril Bre wery -
8
100.0% 25 Aug. 2008 Brewery
455
52,829
Activities from
Baku-Castel Brewery Total
S&N
- Fair
Fair Carrying Fair
-
-
r
-
-
-
g
- value
at - value at amount prior val ue
-
-
o
-
-
u
-
-
t
t
DKK million
to acquisition
acquisition to acquisition acq uis it ion
acquisiti-
n
Intan asse ts asse ts
asse ts - 18,935 10
364 18,945
gible
-
4
10,624 90 7,302 10,714
2,304 - 1,21 7 2,304
Inv ent ori
- 1,9
35 - 23 1,9 16 1,95 8
es
-
3
8
-
3
3,5 40 - 35 4,4 66 3,57 5
5
Cas h an dcash cash
cash eq uival ent s - 1,4 46 - 32
1,3 72 1,47 8
- 2
3
-
0
for sale
-
177 - - - 177
- -1,212 - -
-910 -1,2 12
-
-
0
- -5,326 - 4
-213 -5,3 22
-
-
3
Borrowings
-
-5,827 - - -6,21 7 - 5,827
-
-
-
-
7
Ba nk - -92 - -
-77 - 92
-
7
Tra de and
oth er - -4,686 - -68
-4,71 2 - 4,754
- -
, 8
-
-
4
- -506 - - -
-506
Net assets
-
21,312 - 126 4,50 8 21,438
-
-
-
2
-
6
- -2,389 - -
-639 -2,3 89
-
-
9
- 18,923 - 126 3,86 9
19,049
- -
- 2
-
7
Goo dwi ll
33,4
51 329 33,780
pai d 52,3 74 455
52,829
Cas h an dcash cash
cash eq uival ent s, acqui red -1,446 -32
-1,4 78
Ba nk acqu ired 92 -
92
51,020 423
51,443
Ele men tsofca sh ca sh
ca shcons ider ati on
Cas h
52,1
76 455 53,312
198 - 198
Total
52,374 455 52,829
COMPANY ANNOUNCEMENT
2/2009
Page 35 of 39
The above stated figures for the acquisition of part of the activities in S&N
comprise the acquired 50% of the carrying amount prior to the acquisition and
the fair value of the acquired share at the acquisition date for the entities in
the BBH Group equivalent to the share that was acquired.
The determination of the fair value of identifiable assets, liabilities and
contingent liabilities acquired in the acquisition of S&N is almost complete.
For some of the estimated fair values, verification is still outstanding, and
minor adjustments to the recognised fair value might occur. Also, adjustments
will be made to the purchase price as the cost figures are dependent on the
final allocation of debt between the consortium parties according to the net
debt statement mechanism provided for in the Consortium Agreement. Such final
allocation has not yet been completed. Changes to the opening balance sheet and
cost will be made in accordance with IFRS.
The acquisition of activities from S&N increases the Carlsberg Group's
operations and long-term growth opportunities. The acquisition is a result of
Carlsberg's strategy of acquiring complete control over the most important
operating activities. The acquisition comprises the remaining 50% of BBH, which
operates in Russia, the Ukraine, the Baltic region, Kazakhstan, Uzbekistan and
Belarus. Also, complete ownership is acquired of Brasseries Kronenbourg and
other French activities and Mythos, Greece, and 17.5% of Chongqing, China, and a
50% interest in the joint venture Vinataba, Vietnam.
The acquisition will generate the following significant advantages:
• Complete control over BBH and the elimination of uncertainties as to long-term
control over
the asset and a considerable improvement of the Carlsberg Group's long-term
growth profile, including realisation of synergies.
• Complete ownership of BBH and the opportunity for the Carlsberg Group to take
full
advantage of the potential of the Carlsberg and Tuborg brands on BBH's
markets.
• Significant exposure to growth markets.
• The acquisition of the French and Greek breweries supports the Carlsberg
Group's existing
portfolio of leading market positions in Europe, which increases capacity and
provides the opportunity for synergies through the implementation of the
Carlsberg Group's Excellence programmes.
• Increased sales volumes provide the Carlsberg Group with the opportunity for
generating
significant synergies due to reduced indirect production overheads,
implementation of best practice in the brewing industry and cost savings on
purchases.
• The acquisition strengthens the Carlsberg Group's existing and growing
presence in Asia
through the acquisition of additional activities on the attractive Chinese and
Vietnamese markets.
Assets held for sale at the acquisition date mainly comprise logistic entities
in France following changes in logistics and distribution.
The preliminary goodwill represents a significant amount due to considerable
synergies that are expected to be generated in the acquired entities, the
intellectual capital represented by the acquired staff and the positive growth
expectations for BBH. The synergies comprise cost savings from the purchase and
Excellence programmes. Also, goodwill will reflect synergies in the form of
increased sales through presence in a larger part of Europe and Asia, the
opportunity to launch global and/or regional brands throughout the new
organisation, synergies from research and development and improved utilisation
of the workforce and its intellectual capital.
COMPANY ANNOUNCEMENT
2/2009
Page 36 of 39
Baku-Castel Brewery is the largest brewery in Azerbaijan, providing a solid
foundation for expanding the Carlsberg Group's activities in Eastern Europe.
Baltika Brewery is exporting beer to Azerbaijan giving a positive growth
potential. Goodwill represents the value of workforce acquired and synergies in
the expanded business. The balance sheet for Baku-Castel Brewery is based on a
preliminary estimate of the fair value of acquired assets and liabilities, which
may be adjusted in 2009.
The acquired activities contribute positively to operating profit before special
items by approximately DKK 2,367m and to the profit before tax by approximately
DKK 1,312m. No calculation has been made of the estimated profit for the period
January - December had the acquisition been completed at 1 January 2008, as this
is not possible due to material differences in accounting policies in some of
the acquired entities where the effect of the difference prior to the
acquisition cannot be determined.
COMPANY ANNOUNCEMENT
2/2009
Page 37 of 39
NOTE 8
Recognition in the balance sheet at the acquisition date of the acquisition of
part of the activities in S&N
When a business combination is achieved in stages (step acquisition), each
significant transaction is accounted for separately to determine the cost and
fair value of identifiable assets, liabilities and contingent liabilities
acquired, including any goodwill.
When a transaction in a step acquisition results in control, previously acquired
interests in identifiable assets, liabilities and contingent liabilities
associated with existing ownership interests are remeasured at fair value at the
acquisition date. The remeasurement is accounted for as a revaluation and
recognised in equity. In the acquisition of part of the activities from S&N,
Carlsberg achieved control over BBH, and the acquisition of the remaining 50% of
BBH is ac- counted for as a step acquisition. The acquisition date is 28 April
2008.
The part of the fair value adjustment of net assets which relates to the
existing 50% of BBH held by Carlsberg is recognised in the Carlsberg Group's
equity as a revaluation made in accordance with IFRS. In accordance with IFRS,
fair value adjustment is made of all assets, liabilities and contingent
liabilities at the acquisition date, and all fair value adjustments relating to
the 50% which had already been proportionately consolidated in the financial
statements of the Carlsberg Group, are recognised in equity as a revaluation.
The total effect at the acquisition date of the acquisition of part of the
activities from S&N on the carrying amount of the Carlsberg Group's recognised
assets, liabilities, contingent liabilities and equity (opening balance) is
specified below. In addition, the effect on the balance sheet at 31 December
2008 has been calculated by translating the opening balance sheet in local
currencies into DKK using the exchange rates at 31 December 2008:
Balance sheet totals (fair values) calculated with the 28 Apr. 2008 31
Dec.
exchange rate at: 2008
Reval uat ion of Total
Total
orig ina l50% of acquisiti-
ac quis itio
n n
DKK million Acquired BBH eff ec t
effect
Assets
Goodwill 33,451 - - 33,45 1
31,27 5
Other intangible assets 18,935 16,44 4 35,37 9
31,75 4
Property, plant and 10,624 3,062 13,68 6
11,63 7
equipment
Investments, excl. 2,304 10 2,31 4
2,301
deferred tax assets
Current assets 6,921 28 6,94 9
6,293
Asse ts - 177 - - 177
177
-
r
Total assets 72,412 19,54 4 91,95 6
83,43 7
Equity and liabilities
Equity 52,374 13,05 6 65,43 0 59,45 9
Minor ity inte rests 2,389 1,754 4,14 3 3,667
Total equity 54,763 14,81 0 69,57 3 63,12 6
Provisions, excl. deferred tax liabilities 1,212 3 1 ,215 1,211
Deferred tax, net 5,326 4,607 9,93 3 8,009
Borrowings 5,827 -73 5,75 4 5,971
Ba nk ove rdr aft s 92 25 117 111
Tra de pay abl es - 4,68 6 172 4,85 8 4,504
-
d
Liabilities associated with assets held for 506 - 506 505
sale
Total liabilities 17,649 4,734 22,38 3 20,31 1
Total equity and liabilities 72,412 19,54 4 91,95 6 83,43 7
COMPANY ANNOUNCEMENT
2/2009
Page 38 of 39
NOTE 9
Financial ratios
Earnings per share (EPS) and diluted earnings per share (EPS-D) are calculated
in accordance with IAS 33. Other financial ratios are calculated in accordance
with the Danish Society of Financial Analysts' guidelines on the calculation of
financial ratios, ”Recommendations and Financial Ratios 2005”, unless
specifically stated. The key figures and financial ratios stated have been
calculated as follows:
Cash flow per share (CFPS). Cash flow from operating activities divided by the
number of shares outstanding, fully diluted for share options in the money in
accordance with IAS 333.
Debt/operating profit before depreciation, amortisation and impairment*. Net
interest-bearing debt2 divided by operating profit before special items adjusted
for depreciation, amortisation and impairment.
Earnings per share (EPS). Consolidated profit for the year, excluding minority
interests, divided by the average number of shares outstanding.
Earnings per share, diluted (EPS-D). Consolidated profit for the year, excluding
minority interests, divided by the average number of shares outstanding, fully
diluted for share options in the money and the bonus element in a rights issue
in accordance with IAS 333.
Equity ratio. Equity at year-end as a percentage of total assets at year-end.
Financial gearing. Net interest-bearing debt2 at year-end divided by total
equity at year-end.
Free cash flow per share (FCFPS)*. Free cash flow4 divided by average number of
shares outstanding, fully diluted for share options in the money in accordance
with IAS 333.
Interest cover*. Operating profit before special items divided by interest
expenses, net.
Number of shares, average. The number of issued shares, excluding treasury
shares, as an average for the year (= average number of shares outstanding).
Number of shares, year-end. Total number of issued shares, excluding treasury
shares, at year- end (= number of shares outstanding at year-end).
Organic development. Measure of growth excluding the impact of acquisitions,
divestitures and foreign exchange from year-over-year comparisons. We believe
this provides investors with a more complete understanding of underlying trends.
Operating margin*. Operating profit before special items as a percentage of
revenue.
Operating profit. Expression used for operating profit before special items in
the management review.
Pay-out ratio. Dividend for the year as a percentage of consolidated profit,
excluding minority interests.
COMPANY ANNOUNCEMENT
2/2009
Page 39 of 39
Return on average invested capital, including goodwill (ROIC)*. Operating profit
before special items as a percentage of average invested capital1.
* This financial ratio is not defined in the Danish Society of Financial
Analysts' guidelines on the calculation of financial ratios,”Recommendations and
Financial Ratios 2005”. 1 The calculation of invested capital is specified in
note 32 to the consolidated financial statements. 2 The calculation of net
interest-bearing debt is specified in note 33 to the consolidated financial
statements. 3 The dilutive effect is calculated as the difference between the
number of shares that could be acquired at fair value for
the proceeds from the exercise of the share options and the number of shares
that could be issued assuming that the options are exercised.
4 The calculation of free cash flow is specified in the cash flow statement in
the consolidated financial statements.
