Report and Accounts 1999 / 2000 - Carlsberg Group

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Financial Review of the Carlsberg Group 59 Carlsberg is planning to implement changes in the accounting policies with effect from the financial year 2002 at the latest, which will harmonise them with the new Danish Company Accounts Act and consequently international accounting guidelines. The profit and loss account The operating profit of the Carlsberg Group amounted to DKK 2,934 million (DKK 2,087 million) against DKK 1,673 million last year. The comparable increase of DKK 414 million - or 25% - is the result of growth in the major Group companies. CCNB experienced a positive development in sales as well as improved results. Within the international beer business, the most substantial progress was achieved by Carlsberg- Tetley in the United Kingdom – among other things because of favourable exchange-rate developments – and in Falcon in Sweden, Carlsberg Brewery Malaysia Berhad and Svyturys in Lithuania. Satisfactory developments in earnings were also achieved in Denmark, and the effects of the restructuring projects are evident. Significant events for the Group In the spring of 2000, Carlsberg A/S increased its shareholding in Carlsberg Brewery Malaysia Berhad from 28% to 50%. As of 1 April 2000, the company is included as a subsidiary and consolidated 100%. On 31 May 2000, an agreement was concluded with Orkla ASA regarding the inclusion of Orkla’s beverage activities in Carlsberg Breweries. In accordance with the agreement, the company Carlsberg Breweries A/S was established on 1 July 2000 with headquarters in Copenhagen. With effect from 1 July 2000, Carlsberg A/S has contributed all national and international beer activities as well as Saltum og Neptun Bryggerier A/S to Carlsberg Breweries A/S. Final approval from the competition authorities regarding Orkla’s beverage activities was received on 2 January 2001. This means that Orkla will contribute all beverage activities to Carlsberg Breweries A/S with effect in the accounts from 1 January 2001. As regards the year 2000, Carlsberg Breweries A/S is thus a 100%-owned subsidiary of Carlsberg A/S and Orkla’s beverage activities are not included in the present annual accounts. When Orkla’s beverage activities have been included in Carlsberg Breweries A/S, Carlsberg will own 60% of the company and Orkla ASA the remaining 40%. As Carlsberg Breweries A/S is of substantial importance to Carlsberg A/S, the present annual accounts include unaudited, pro forma financial highlights of Carlsberg Breweries A/S, indicating the situation had the company existed throughout the calendar year 2000. For further details please see the relevant, separate section below. On 19 June 2000, the shareholding in Tivoli was sold to Skandinavisk Tobakskompagni A/S and Chr. Augustinus Fabrikker Aktieselskab for the amount of DKK 308 million. The profit from the sale, totalling DKK 182 million, is included in the profit and loss account under special items. On 9 August 2000, the 51%-owned Carlsberg Hong Kong Ltd. (CBHK) entered into a co-operation agreement with the Chinese brewery China Tsingtao Brewery Co. Ltd. (Tsingtao). The agreement entails, among other things, that Tsingtao has taken over a 75% shareholding in the brewery Carlsberg Brewery (Shanghai) Limited (CBS), which was previously 95%-owned by CBHK and 5% by a local partner. The sales price is approx. DKK 154 million. On 31 December 2000, the remaining 25% of the shares in CBS are held by CBHK, but they are expected to be transferred to Carlsberg Asia Ltd. as from 1 January 2001, cf. below. The agreement was approved by the Chinese authorities at the end of December 2000. As a consequence, the operations of the Shanghai brewery are included in the accounts up until 31 December 2000. The agreement entails that tangible fixed assets have been written down and provisions have been made for severance payments, etc. totalling DKK 241 million, which is registered in the profit and loss account under special items. On 3 November 2000, Carlsberg announced its acquisition of the largest brewery in Switzerland, Feldschlösschen Getränke Holding AG, for the amount of approx. CHF 870 million (approx. DKK 4.3 billion inclusive of external debt). The operations of the company are included in the Group
60 Financial Review of the Carlsberg Group accounts as from 1 December 2000, resulting in a negative impact of DKK 32 million on operations and of approx. DKK 4 billion on the balance sheet as at 31 December 2000. On 15 December 2000, Carlsberg entered into an agreement with Asian Chang Beverage Company regarding the establishment of Carlsberg Asia Ltd., a 50/50 joint venture that will administrate and develop the marketing and brewing activities of the companies in Asia. The agreement takes effect as from 1 January 2001 and will thus have no impact on the annual accounts of 1999/ 2000. Carlsberg Asia Ltd. is expected to be pro rata consolidated in Carlsberg’s accounts as from 1 January 2001. On 22 December 2000, Carlsberg announced a reduction in its shareholding in Royal Scandinavia A/S (from approx. 65% to 28%). The new owner of Royal Scandinavia will be the new-established company RS Holding, Frederiksberg a.s., in which Carlsberg holds 28%. The transaction has no influence on the results of the annual accounts as the results of Royal Scandinavia will be fully consolidated for the full financial year. No profit will be realised from the sale as the profit of DKK 69 million relates to goodwill written off against equity in previous years, which has been written back. As from 31 December 2000, the company will be included as a 28% shareholding in an associated company, corresponding to a value of DKK 35 million. The cash flow impact from the sale will be included in the accounts for the year 2001. In connection with the agreement with Orkla ASA, the Swedish and Norwegian competition authorities have required that Carlsberg cease bottling, sale and distribution of either Pepsi or Coca-Cola in the Swedish and Norwegian markets. Carlsberg will thus give up the Coca-Cola companies in Sweden and Norway as from 1 January 2001, whereas the Coca-Cola activities will continue in Denmark and Finland as 100%-owned operations. The company in Iceland will be sold. The positive trend in the Danish and Finnish Coca- Cola business is expected to continue. All consequences affecting the accounts as a result of the sale will be included in the financial year 2001. Turnover Sales of beer increased by 2.8 million hectolitres when using comparable figures, corresponding to an increase of 7.6% compared to last year. Soft drinks saw an increase of 1.0 million hectolitres, corresponding to an increase of 7.2% when using comparable figures. The net turnover, which also includes royalties, increased by about 6% to DKK 25.7 billion for the comparable 12-month period. The increase is primarily attributable to Coca-Cola Nordic Beverages (CCNB), Sinebrychoff in Finland and Falcon in Sweden. Furthermore, the acquisition of companies in Italy through the subsidiary Carlsberg Italia S.p.A. has had a considerable impact on turnover. As expected, turnover in the United Kingdom showed a declining trend. Focus on the Group’s brands – particularly the Carlsberg brand – continued. Production costs Production costs amounted to 49.5% of net turnover, which is about 3% points down on the annual accounts for 1998/99. This development is the consequence of, among other things, the considerable efficiency enhancing measures and restructuring initiatives implemented in recent years (particularly in Denmark and the United Kingdom) which are still in progress. Savings from these measures will continue to affect the annual accounts positively in the years to come. Sales and distribution costs In relation to net turnover, the sales and distribution costs amounted to 35.9%, corresponding to a rise of 2% points on last year. Substantial resources are still applied for advertising and sponsor activities in order to maintain and develop the brand value. During the financial year, attention has again been focused on continued improvement of distribution efficiency. This strategy will continue in the year 2001. Administration costs Administration costs amounted to 7.8% of the net turnover, which is somewhat higher than last year. The financial year has been characterised by many projects both in Denmark and abroad. The
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Report and Accounts 1999 / 2000
Page 3 and 4:
A Brief Presentation ▲ ▲ A Brie
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2 Letter to the Shareholders Letter
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4 Board of Directors and Executive
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6 Highlights and Key Figures, 5-yea
Page 11 and 12: 8 Report for 1999/2000 Report for 1
Page 13 and 14: 10 Report for 1999/2000 Provisions
Page 15 and 16: 12 Report for 1999/2000 Malaysia: E
Page 17 and 18: 14 Report for 1999/2000 ed a key pa
Page 19 and 20: 16 Management and Corporate Governa
Page 21 and 22: 18 Shareholder Information Investor
Page 23 and 24: 20 Group Staff Functions Group Staf
Page 25 and 26: 22 European Music Awards, the devel
Page 27 and 28: 24 Group Staff Functions the projec
Page 29 and 30: 26 Corporate Strategic Sourcing (CS
Page 31 and 32: 28 Group Staff Functions allocation
Page 33 and 34: 3030 Regional Reports Regional Repo
Page 35 and 36: 32 Regional Reports Finland The Fin
Page 37 and 38: 34 Regional Reports due to the posi
Page 39 and 40: 36 Regional Reports vourably. Today
Page 41 and 42: 38 Regional Reports new joint ventu
Page 43 and 44: 40 Soft Drinks Soft Drinks CCNB In
Page 45 and 46: 4242 The New Carlsberg A/S The New
Page 47 and 48: 4444 The New Carlsberg A/S Carlsber
Page 49 and 50: 46 The New Carlsberg A/S establishm
Page 51 and 52: 48 The New Carlsberg A/S Group Comp
Page 53 and 54: 50 The New Carlsberg A/S 2 3 4 5 Ca
Page 55 and 56: 52 52 The New Carlsberg A/S Carlsbe
Page 57 and 58: 54 The New Carlsberg A/S Carlsberg
Page 60 and 61: Accounts for 1999 / 2000 Accounts f
Page 64 and 65: Financial Review of the Carlsberg G
Page 70 and 71: Accounting Policies 67 running of t
Page 72 and 73: Profit and Loss Account 1999/00 69
Page 74 and 75: Balance Sheet 71 Balance Sheet at 3
Page 76 and 77: Notes to the Accounts 73 Notes to t
Page 84 and 85: Development in Results by Quarters
Page 86 and 87: Group Companies 83 Group Companies
Page 88 and 89: Auditors’ Report 85 Auditors’ R
Page 90 and 91: Subsidiaries 87 Carlsberg Malawi Br
Page 92 and 93: ▲ ▲ Board of Directors and Exec
Page 94 and 95: Carlsberg's primary activities are
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Report and Accounts 1999 / 2000 - Carlsberg Group

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