Carlsberg Acquires Switzerland's Largest Brewery Feldschlösschen
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28 November 2000 29/2000 12-month report as at 30 September 2000 of the Carlsberg Group Considerable progress in 12-month accounts from the Carlsberg Group · The improvement in results is greater than expected with operating profit rising to DKK 2,355m (26% up on last year when using comparable fig- ures). · The comparable change in volume is 3 per cent up on last year (beer: 41m hl (+1%) and soft drinks: 16m hl (+10%)). · For the full 15-month period of the financial year, operating profit is ex- pected to be 50 to 60 per cent up on the previous financial year (12 months) when using comparable figures. · Combio A/S, which was founded by Carlsberg A/S among others, re- ceived subordinated capital in the amount of DKK 60m from investors within the biotechnology and financial sectors. · Carlsberg A/S has acquired Feldschlösschen, the largest brewery group in Switzerland, for approx. CHF 870m (approx. DKK 4.3bn) including ex- ternal debt. Contact: President and Chief Executive Officer Flemming Lindeløv Group Managing Director Jørn P. Jensen Phone: +45 3327 3327 An information meeting for journalists and analysts will be held on Tuesday 28 November 2000, 16h00 at Carlsberg A/S, Ny Carlsberg Vej 100, Copenhagen Notice to the Copenhagen Stock Carlsberg A/S Financial statement 4:1999/2000 Exchange 28.11.2000 Page 1 of 9 HIGHLIGHTS AND KEY FIGURES for the period 1 October 1999 – 30 September 2000 Changes in the basis of accounts The accounting figures for twelve months of the present financial year are influ- enced by the fact that the companies in Malaysia and Poland are fully consoli- dated as a result of Carlsberg increasing its ownership share. Furthermore, a few Group companies which, for practical reasons, were previously included in the Group accounts with a certain time lag are now included up until 30 September 2000. The figures in brackets in the table below express the development had the basis of accounts not been changed (the comparable development). DKK million 1998/99 1999/00 Changes 12 months 12 months in % Audited Unaudited Turnover 31,285 37,934 +21 (+11) Net turnover 23,912 27,878 +17 (+7) Operating profit 1,673 2,355 +41 (+26) Special items 79 438 Profit before financials 1,752 2,793 +59 (+45) Financials -119 -190 Profit before tax 1,633 2,603 +59 (+41) Group profit 1,156 1,895 +64 (+47) Profit, Carlsberg A/S’ share 1,164 1,832 +57 (+45) Equity 11,853 12,710 Total assets 29,889 33,225 The accounting policies applied remain unchanged from the annual accounts for 1998/99. The attached appendix shows the Carlsberg Group's results divided into quarters. However, for comparison with 1998/99 please see the comments above regarding changes in the basis of accounts. The appendix also shows movements in Group equity. Comments on developments in the past 12 months The Carlsberg Group's beer and soft drink sales increased by 1 per cent and 10 per cent, respectively compared to last year. Before the changes in the basis of accounts, growth was up by a total of 3 per cent on last year. Notice to the Copenhagen Stock Carlsberg A/S Financial Statement 4:1999/2000 Exchange 28.11.2000 Page 2 of 9 The net turnover of the Carlsberg Group for the first 12 months amounted to DKK 27.9bn against DKK 23.9bn for the same period last year (+17%). The comparable increase (before changes in the basis of accounts) is 7 per cent and is mainly at- tributable to soft drink sales in Coca-Cola Nordic Beverages (CCNB), acquisitions of wholesale operations in Italy through the subsidiary Carlsberg Italia S.p.A., and positive exchange rate developments. Operating profit amounted to DKK 2,355m against DKK 1,673m last year. The comparable increase of DKK 438m (26%) covers progress in all major Group companies. The most pronounced progress was achieved by CCNB and the com- pany now contributes positively to operating profit, also before application of provi- sions in relation to start-up and running-in expenses. Within the international beer business, the most substantial progress was registered by Carlsberg-Tetley in the United Kingdom – particularly because of a favourable exchange-rate develop- ment – and by Falcon in Sweden. Satisfactory progress in earnings was also achieved in Denmark, and the effects of the restructuring projects are now be- coming evident. Total operating profit was higher than expected. Special items totalled DKK 438m and can be explained as follows: Sale of shares in Grupo Cruzcampo 354 Sale of shares in Tivoli 182 Sale of properties 41 Write-down of brewery in China -225 Net adjustment of provisions 86 438 Furthermore, DKK 247m of the total net sales price in connection with Grupo Cruzcampo has been taken directly to equity, writing back previously written-off Group goodwill. Compared to the financial statement of 30 June 2000, special items increased by DKK 10m due to a reduction in the write-down of the brewery in China. As expected, Financials showed expenditure of DKK 190m, which is the result of considerable investments in acquisitions of companies and production plant in re- cent years. In addition, the previous years were characterised by significant gains from the sale of shares and bonds. Financials includes a total of capital gains, etc. amounting to DKK 69m. Profit before tax thus totalled DKK 2,603m against DKK 1,633m last year, which is higher than expected. The period's effective tax rate of 27.2 per cent was influenced by, among other things, tax-exempt gains from sale of shares as well as non-deductible costs. During the period, the Group's provisions were reduced in line with plans. In total, the first 12 months saw disposals of DKK 837m as against DKK 1,299m last year. Notice to the Copenhagen Stock Carlsberg A/S Financial Statement 4:1999/2000 Exchange 28.11.2000 Page 3 of 9 Supplementary information: Beer consumption in Denmark shows decline although the situation seems to be stabilising. Because of the large differences in excise duties between Denmark and Germany, as much as 20 per cent of Danish beer consumption is still pur- chased south of the border and the trend is growing. In the United Kingdom, Carlsberg-Tetley achieved results above expectations. Carlsberg-Tetley continues the increased focus on the main brands Carlsberg and Tetley's as well as the restructuring programme within production, distribution, and administration. In 1995/96, Carlsberg-Tetley was granted a compensation to cover future reductions in income and additional expenses in relation to new supply agreements and pension schemes. Of this compensation, DKK 63m after tax was booked as income in the past 12 months as against DKK 141m last year. In Finland, earnings were higher than expected. Sinebrychoff increased its market share to about 42 per cent of the Finnish beer market and showed sales progress in other beverage sectors, for example for the energy drink Battery. In Sweden, the Falcon brewery registered progress in earnings and the market share for beer increased. The Asian markets are experiencing a positive trend in earnings. Conditions in the Chinese market, where Carlsberg did not make a profit, remain difficult, although results are better than expected. In August 2000, a co-operation agreement was entered into with Tsingtao Brewery in this market, which will mean substantial fu- ture annual savings, cf. below. Coca-Cola Nordic Beverages, which includes production and sale of Coca-Cola products in Denmark, Sweden, Norway, Finland and Iceland, registered increases in both sales and results compared to last year. In the 12-month period, DKK 240m after tax of the provisions was applied as against DKK 420m last year. Extraordinary General Meeting An extraordinary general meeting was held on 30 August 2000 with two proposals for amendments to the Articles of Association on the agenda: the number of Ex- ecutive Board members was reduced to 1-5 from 3-7, and the proposal to change the company's financial year to follow the calendar year was also adopted. The present financial year is extended until 31 December 2000 (15 months), and in future the financial year will follow the calendar year. Royal Scandinavia Notice to the Copenhagen Stock Carlsberg A/S Financial Statement 4:1999/2000 Exchange 28.11.2000 Page 4 of 9 As explained in the statement of 29 November 1999, the Supervisory Board of Carlsberg A/S approved a strategic plan entailing continued focus on the Group's beer and soft drink activities. Among other initiatives, it involved a decision to di- vest the majority shareholding in Royal Scandinavia A/S. Negotiations with potential buyers continue. Carlsberg A/S still expects a conclu- sion within the present year. Tivoli On 19 June 2000, the shareholding in Tivoli was sold to Skandinavisk Tobaks- kompagni A/S and Chr. Augustinus Fabrikker Aktieselskab for the total amount of DKK 308m. China As explained in the statement to the Copenhagen Stock Exchange of 9 August 2000, a co-operation agreement has been reached between the 51 per cent Carlsberg-owned Carlsberg Hong Kong Ltd. (CBHK) and the Chinese brewery China Tsingtao Brewery Co. Ltd. (Tsingtao). The agreement entails, among other things, that Tsingtao will take over a 75 per cent shareholding in Carlsberg Brewery (Shanghai) Limited (CBS), which is 95 per cent owned by CBHK and 5 per cent by a local partner. The purchase price is ap- prox. DKK 154m. The remaining 25 per cent shareholding in CBS will in due course be transferred from CBHK to Carlsberg A/S for the amount of approx.