H1 report 2009
H1 report 2009
August 26, 2009 at 12:00 AM EDT
fond-ru-24-2009-uk.pdf 520.1 KB
Company Announcement No 24/2009 26 August 2009 In H1 2009, Royal Unibrew realised an operating profit of DKK 87 million compared to DKK 63 million last year. At the same time, cash flows from operating activities improved by DKK 158 million. Net interest-bearing debt was reduced by DKK 53 million compared to year end 2008. The significant performance im-provement is due to the implementation of a number of activities to strengthen the Group's earnings and cash flow initiated at the beginning of the year as well as to increasing net selling prices and a changed sales mix. The significant performance and cash flow improvements were realised in spite of difficult market condi-tions and decreasing revenue. ”The performance for H1 2009 exceeded expectations and confirms that the activities initiated by us have had the intended effect. The development shows that the Group is fundamentally sound and capable of generating strong cash flow and reasonable results. Moreover, it is very positive that net interest-bearing debt has been reduced in spite of the seasonal activity increase. The conditional sale of the Caribbean breweries will further contribute towards improving the Group's debt position. At the same time, all relevant options are being considered to ensure an appropriate capital structure as previously announced,” says Henrik Brandt, CEO. HIGHLIGHTS • In H1, Royal Unibrew achieved significantly improved operating results: ? Operating profit (DKK 87 million) up by DKK 24 million (+38%) from 2008 ? Revenue decline by 8% due to the global recession, but market share wins or maintenance in main mar-kets ? Profit margin up to 4.5% (2008: 3.0%) due to net selling price increases, changed sales mix primarily geo-graphically as well as cost adjustments and enhanced efficiency ? Profit before tax but after special items amounting to DKK 23 million (2008: a loss of DKK 16 million) • Cash flow development was also above expectations in H1: ? Strong improvement of free cash flow (a positive DKK 49 million compared to a negative DKK 142 mil-lion in H1 2008) ? Working capital at the end of H1 2009 DKK 275 million below the figure at the same time in 2008 ? Cash flows from operating activities amounting to DKK 143 million (2008: a negative DKK 15 million) for H1 2009 ? Major investment projects initiated in 2008 completed in H1 2009 ? Net interest-bearing debt was reduced by DKK 53 million since the beginning of the year in spite of the seasonal sales increase usually resulting in an increase of net working capital, and thus net interest-bearing debt, which amounted to DKK 2.1 billion at the end of H1 2009. ? The Group has committed, unutilised credit facilities of some DKK 600 million. As a result of the earn-ings, the net working capital reduction and the effect of the sale in Poland, the Group's ratios at 30 June 2009 are significantly better than required in the covenants included in the funding agreement made with the banks. • Realisation of the strategic main priorities - see Announcement of Annual Results for 2008 - is progressing as planned: ? Poland: The Koszalin brewery and the local brands have been sold. This combined with the other adjustments in Poland results in realisation of the planned re-ductions of the number of employees (some 125 full-time employees). ? Denmark: The change of the production and distribution structure was completed in Q2 and as planned the number of salaried employees was reduced by some 100. ? Baltic countries: Joint operating management and integration of the organisations in Lithuania and Latvia were completed. ? Cash flow and capital structure: A strong cash flow in H1 2009 (DKK 143 million) means that net interest-bearing debt is considerably lower than expected due to, among other things, reduced inventories. The conditional agreement to sell the Group's Caribbean breweries as well as the sale of brewery and brands in Poland are expected to further reduce net interest-bearing debt towards the end of 2009. Efforts are still being directed at reducing the debt level and ensuring a more appropriate capital structure. • Based on the results realised for H1 2009 and taking into account that the general development remains sub-ject to uncertainty, full-year operating profit before special items is now expected to be at the level of DKK 170-210 million compared to the previous expectation of a figure in excess of DKK 135 million. The expecta-tion of special items amounting to an expense of DKK 35 million remains unchanged, whereas net financials are now estimated at DKK 125-135 million compared to the previously expected DKK 145-165 million. • Without taking into account the positive effect of the sale of the Caribbean breweries, net interest-bearing debt is expected to be reduced by some DKK 150 million in 2009 reaching a level of some DKK 2 billion at the end of the year. For further information on this Announcement: Henrik Brandt, CEO, tel + 45 56 77 15 13 The Announcement has been prepared in Danish and English. In case of discrepancy, the Danish version shall prevail. This Company Announcement consists of 33 pages. The primary activities of Royal Unibrew are to market, sell, distribute and produce quality beverages focusing on branded products primarily within beer, malt and soft drinks. The Group's products are sold in approx. 65 markets in Western Europe, Eastern Europe, the Caribbean, North America and Africa. Royal Unibrew comprises the Albani and Faxe breweries in Denmark, Kalnapilis in Lithuania, Livu Alus and the soft drinks bottlery Cido in Latvia, Browar Lomza and Strzelec in Poland. It is the vision of Royal Unibrew to develop the Group's position as a leading provider of beverages in Western and Eastern Europe and in our malt drinks markets with increasing profitability. Outside these areas, we will develop selected profitable export markets. To read more, visit www.royalunibrew.com. CONTENTS Side Highlights 1 Financial Highlights and Key Ratios 4 Management's Review 5 Financial Calendar 16 Company Announcements 16 Management's Statement 17 Financial Statements Income Statement 18 Assets 19 Liabilities and Equity 20 Statement of Changes in Equity 21 Cash Flow Statement 23 Notes Descriptive Notes 1 Significant Accounting Policies 24 2 Accounting Estimates and Judgements 24 3 Segment Reporting 25 Notes Relating to Income Statement, Balance Sheet and Cash Flow Statement 4 5 Special Items Tax on the Profit for the Period 27 28 6 Basis of Calculation of Earnings and Cash Flow per Share 28 7 Treasury Shares 29 8 Cash Flow Statement 30 Other Notes 9 Acquisitions 31 1 Financial Highlights and Key Ratios for H1 2005-2009 32 Definitions of Key Figures and Ratios 33 FINANCIAL HIGHLIGHTS AND KEY RATIOS H1 2009 H1 2008 Q2 2009 Q2 2008 2008 SALES (thousand hectolitres) 3,268.0 3,756.0 1,958.0 2,212.0 7,079.0 FINANCIAL HIGHLIGHTS (mDKK) Income Statement Net revenue 1,912.9 2,079.7 1,145.3 1,241.4 4,178.7 Operating profit before special items 86.9 63.3 114.8 98.4 134.9 Special items, net (24.8) (33.9) (8.3) (1.3) (50.1) Impairment 0.0 0.0 0.0 0.0 (385.0) Profit before financial income and expenses 62.1 29.4 106.5 97.1 (300.2) Impairment of other investments 0.0 0.0 0.0 0.0 (70.1) Other financials, net (39.2) (45.7) (39.6) (17.6) (82.7) Profit/(loss) before tax 22.9 (16.3) 67.0 79.4 (453.0) Consolidated profit/(loss) 16.9 (11.8) 51.5 56.4 (483.2) Royal Unibrew A/S' share of profit/(loss) 16.3 (11.8) 50.8 56.5 (484.3) Balance Sheet Total assets 4,086.6 4,285.1 4,086.6 4,285.1 4,051.4 Equity 553.4 1,040.8 553.4 1,040.8 574.8 Net interest-bearing debt 2,138.7 1,975.9 2,138.7 1,975.9 2,191.9 Free cash flow 48.9 (142.0) 178.8 0.7 (356.2) Per share Royal Unibrew A/S' share of earnings per share (DKK) 3.0 (2.1) 9.3 10.3 26.4 Royal Unibrew A/S' diluted share of earnings per share (DKK) 3.0 (2.1) 9.3 10.3 26.2 Cash flow per share (DKK) 25.9 (2.8) 31.2 23.0 19.0 Diluted cash flow per share (DKK) 25.9 (2.8) 31.2 23.1 19.0 Key figures (mDKK) EBITDA 138.7 108.8 136.7 134.9 254.6 EBIT 62.1 29.4 106.5 97.1 (300.2) Key ratios (%) Profit margin 4.5 3.0 10.0 7.9 3.2 EBIT margin 3.2 1.4 9.3 7.8 (7.2) Free cash flow as a percentage of net revenue 2.6 (6.8) 15.6 0.1 (8.5) Equity ratio 13.5 24.3 13.5 24.3 14.2 Debt ratio 386.5 189.8 386.5 189.8 381.3 The key ratios have been calculated in accordance with the “Recommendations and Financial Ratios 2005” of the Danish Society of Financial Analysts. MANAGEMENT'S REVIEW STRATEGIC MAIN PRIORITIES In 2009, Royal Unibrew has special focus on the Group's earnings, cash flows from operating activities, reduction of the investment volume considering the projects in progress as well as capital structure. Due to this focus as well as the general uncertainty of the economic development and consumer behaviour, Royal Unibrew is con-tinuously prepared and ready to implement all the necessary cost adjustments warranted by developments. As mentioned in the Announcement of Annual Results for 2008 (see Company Announcement No 2/2009), the changed strategy for Royal Unibrew is based on the following main areas: • Structural and operational adjustment in Poland The adjustment of the Polish activities is progressing as planned. As announced in Company Announcement No 22/2009 of 2 June 2009, the Koszalin brewery and two brands related to the region around the brewery were sold. The sale and other adjustments in Poland have resulted in a total reduction of the number of em-ployees by some 125. The activities implemented will have full financial impact during H2 2009. Efforts are still directed at enhancing efficiency in Poland, and the target is to create a basis for positive earnings (at EBITDA level) as of 2010. All necessary initiatives are being considered. • Structural and organisational adjustment in Denmark The production and distribution structure projects of transferring production from Aarhus to Faxe and Odense and changing the Danish distribution system were completed as planned in April 2009. Moreover, the planned structural and organisational adjustment has been completed and the number of salaried em-ployees has been reduced by some 100 full-time employees. The full impact of this adjustment will be felt during H2 2009. • Joint operating management in the Baltic countries The overall organisational framework has been determined and the executives to be in charge have been ap-pointed. The new operating management will focus on improved joint resource and competence utilisation both in the short and long term. This will strengthen the local market organisations and further enhance effi-ciency in other areas. • Cash flow and reduction of debt In spite of net interest-bearing debt being at a lower level than expected at 30 June 2009 and expectations - without taking into account the sale of the Caribbean activities - of a further reduction in H2, Management continues to believe that the Group's financial structure is inappropriate. The conditional sale of the shares in the Group's Caribbean brewery companies is expected to reduce the Group's net interest-bearing debt by just below DKK 200 million towards the end of 2009 as compared to the level at the beginning of 2009 (see Com-pany Announcement No 23/2009 of 12 August 2009). The sale of the Polish brewery and brands will have a positive cash flow effect in 2009 of some DKK 40 million, the main part at the end of the year. In the period to year end 2010, the Group does, however, wish to reduce net interest-bearing debt to a level corresponding to not more than 3 times EBITDA and to strengthen the Company's financial standing. The process to ensure a more appropriate financial structure therefore perseveres and, in that connection, consid-eration of all relevant possibilities will continue. The development of the brewery site in Aarhus continues to have high priority. Royal Unibrew does not in-tend to participate in development of the area, but wishes to sell the site. It is assessed that the comparatively best price may be achieved when the local plan for the area is in place. A proposal for a development plan for the area was submitted to the local authorities of Aarhus in April 2009 as a basis for a project evaluation and the preparation of a changed local plan. Multi-purpose use of the site is expected, primarily for offices and housing. A changed local plan is expected to be finally approved during 2010. As an additional element of the efforts to reduce interest-bearing debt, continued efforts are currently made to optimise net working capital. Net working capital at the end of H1 amounting to DKK 73 million was DKK 275 million below the figure at the same time in 2008. The Group's investments will be kept at a reasonably low level in the remaining months of 2009 and 2010. In H1 2009, gross investments in property, plant and equipment amounted to DKK 146 million, of which 85% relates to the completion of investments initiated in 2008. In the same period of 2008, investments amounted to DKK 172 million. As previously announced, the Group has entered into an agreement with its primary bankers that they will make available until 31 March 2011 the credit facilities considered necessary by the Group. At 30 June 2009, the Group had committed, unutilised credit facilities of some DKK 600 million and net interest-bearing debt was significantly lower than anticipated. At 30 June 2009, there is considerable headroom to the covenants determined by the banks. RESULTS 1 JANUARY - 30 JUNE 2009 In H1 2009, the Royal Unibrew Group realised a profit before tax of DKK 23 million, which is above expectations and a DKK 39 million improvement on 2008. The results for the period do not reflect a proportionate share of the full-year results as the period is used to carry out major maintenance work on production facilities before the peak season and, furthermore, includes only one month of the peak season of the year. In H1 2009, Royal Unibrew improved its earnings and market position as compared to the same period of last year in spite of the global crisis and the resulting changed customer and consumer behaviours causing lower sales and revenue. The estimate at the end of H1 2009 is that the negative growth rate has been diminishing in several of the Group's markets compared to the same period of 2008. However, demand continues to decline in several markets. In the period, the Group extended or maintained its market shares in most key markets. However, increased price competition must be noted in several of the Group's Northern European markets. In certain markets - in particular Latvia - significant efficiency enhancing measures and a dynamic cost adjustment have been implemented in the light of reduced sales, which has contributed towards protecting earnings in the areas in question. In Poland, a brewery and two brands were sold with effective transfer at 2 June 2009 (see Company Announcement No 22/2009 of 2 June 2009). The developments in the Group's activities for the period 1 January - 30 June 2009 break down as follows on market segments: Western Europe Eastern Europe Malt and Overseas Markets Unallocated Group Sales (thousand hectolitres) 1,648 1,369 251 - 3,268 Growth (%) -10.5 -15.6 -14.1 -13.0 Share of sales (%) 50 42 8 - 100 Net revenue (mDKK) 1,228 464 221 - 1,913 Growth (%) -2.8 -19.2 -8.5 -8.0 Share of net revenue (%) 64 24 12 - 100 Operating profit/loss (before special items) (mDKK) 104.8 (13.3) 15.5 (20.1) 86.9 Profit margin (%) 8.5 -2.9 7.0 4.5 Earnings before interest and tax EBIT (mDKK) 89.4 (15.3) 12.1 (24.1) 62.1 EBIT margin (%) 7.3 -3.3 5.5 3.2 Total group sales in H1 aggregated 3.3 million hectolitres of beer, malt and soft drinks, which is a 13% decrease from 2008. The net revenue of the Group was, however, only reduced by 8% from 2008 amounting to DKK 1,913 million. 3 percentage points of the revenue reduction are attributable to the decreasing PLN rate and the termination of unprofitable supply agreements concerning private label. Selling price increases were introduced in almost all markets. Moreover, a positive mix shift was realised as the sales reduction was lower in Western Europe than in Eastern Europe. Gross profit decreased from 2008 by DKK 65 million amounting to DKK 817 million, which is 7% below the 2008 figure. The estimate is that the lower sales have reduced gross profit by more than DKK 125 million, whereas the higher gross margin had a positive effect of more than DKK 60 million. The gross margin for H1 was 42.7% compared to 42.4% in the same period of last year. From an overall perspective, the higher realisable values per unit have thus more than compensated for the increase in production costs, primarily relating to raw materials the purchase prices of which are covered by forward contracts to a considerable extent. The focus on sales and marketing efforts and the implemented change of the distribution structure in Denmark resulted in an 11% reduction of the Group's sales and distribution expenses in H1 2009 compared to 2008. Administrative expenses were reduced by some 8%. The full impact of the adjustments implemented primarily in Denmark and Poland will be realised during H2 2009. Operating profit before ”special items” amounted to DKK 87 million in H1 2009, which is a DKK 24 million improvement on 2008. The improvement has been achieved by realising higher net selling prices per sales unit and material cost savings in production, sales and distribution as well as administrative functions. The earnings effect of this has thus been higher than the reduction in sales and gross profit, which is primarily a result of the economic decline. ”Special items” amounted to DKK 25 million in H1 2009 comprising primarily profits from the sale of assets in Poland and impairment of these assets, expenses and impairment losses related to the completion of the production and distribution structure change in Denmark as well as expenses for redundancy schemes, including for structural and organisational adjustments in Poland and Denmark (see Company Announcement No 2/2009 of 26 February 2009). Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by DKK 30 million amounting to DKK 139 million compared to DKK 109 million in 2008. Earnings before interest and tax (EBIT) amounted to DKK 62 million compared to DKK 29 million in 2008. Income from investments in associates increased by DKK 6 million to DKK 13 million. All associates saw improved results in H1 2009. The Group's net financial expenses amounted to DKK 53 million as in 2008. The unchanged net expenses comprise higher net interest expenses offset by exchange gains of some DKK 20 million. The higher interest expenses were partly due to the higher net interest-bearing debt in 2009 and partly to higher interest rates and expenses related to the agreement for credit facilities entered into with the primary bankers in Q1 2009. The profit before tax amounted to DKK 23 million compared to a loss of DKK 16 million in H1 2008. Consolidated profit (after tax) amounted to DKK 17 million, a DKK 29 million improvement on the loss of DKK 12 million realised in 2008. Tax on the profit for the period is in 2009 positively affected by an adjustment relating to prior year. DEVELOPMENTS IN INDIVIDUAL MARKET SEGMENTS Western Europe Western Europe 2009 2008 % change Sales (thousand hectolitres) 1,648 1,841 -11 Net revenue (mDKK) 1,228 1,264 -3 Operating profit (before special items) (mDKK) 104.8 84.4 24 Profit margin (%) 8.5 6.7 EBIT (mDKK) 89.4 50.5 77 EBIT margin (%) 7.3 4.0 The Western Europe segment comprises the markets for beer and soft drinks in Denmark and the Nordic coun-tries as well as in Germany and Italy. In H1 2009, Western Europe accounted for 50% of total sales and 64% of net revenue (2008: 50% and 61%, respectively). The Group won market shares on branded products in Denmark and on the key brand, Ceres Strong Ale, in Italy in H1 2009. However, the markets were affected by the economic decline and declining consumption, and sales and revenue were 11% and 3%, respectively, below the 2008 figures. The termination of unprofitable private label supply agreements accounted for 8 percentage points of the sales reduction and for all of the revenue reduction. The operating profit increased by DKK 20 million to DKK 105 million positively affected by higher net selling prices per unit as well as cost savings and negatively affected by the lower sales. EBIT was negatively affected by ”special items” of DKK 15 million net, primarily due to expenses relating to the business reorganisation in Denmark as well as completion of the production and distribution structure reorganisation in Denmark initiated in 2008. The impact of these measures will be fully felt during H2 2009. Western Europe Actual H1 2009 Growth over 2008 Net revenue (mDKK) Sales (thousand hectolitres) Net revenue (%) Sales (%) Denmark 583 720 -7 -16 Italy 364 248 2 -2 Germany 268 643 4 -4 Nordic countries 13 37 -47 -43 Other markets *) 0 0 0 0 Total Western Europe 1,228 1,648 -3 -11 *) The beer sales operations in France have as of 2009 been combined with the malt drinks sales operations in France. Therefore, segment reporting has been changed in accordance with IFRS 8 to the effect that as of 2009 beer sales in France are reported under the segment Malt and Overseas Markets. Comparative figures for 2008 have been restated accordingly. It is estimated that total branded beer sales in Denmark decreased by some 7% in H1 2009, whereas soft drinks sales were reduced by some 9%. The development in Royal Unibrew's total sales in H1 2009 was affected by the earlier closure of the Maribo brewery and the termination of unprofitable supply agreements concerning private labels in H1 2009. Adjusting for these reductions in the Company's sales, sales were 4% lower whereas net revenue in H1 2009 was almost 2% lower than in 2008. In H1, sales shifted partly from the Horeca sector towards the retail sector and partly towards sales units with higher volumes of soft drinks. Royal Unibrew's market shares were increased in H1 both for branded beer and for soft drinks. Price increases were introduced in Denmark in early 2009. The Egekilde brand range was extended with the introduction of a new taste variety. In Italy sales of Royal Unibrew's key brand, Ceres Strong Ale, increased in H1 by some 3% in a market declining by just above 2%, whereas sales of products with a lower market value were below those of H1 2008. Accordingly, Royal Unibrew's net revenue increased by 2% in spite of a 2% sales reduction. Royal Unibrew realised the planned price increases. Royal Unibrew's sales in Italy in H1 2009 are considered to have been affected by the rebuilding of inventories, and the Ceres Strong Ale market share is estimated to have increased both in the Horeca sector and in the retail sector. Also in the German market (including cross-border trade), the Group's net revenue increased in spite of decreasing sales. Royal Unibrew's branded product sales increased, which, combined with price increases introduced, resulted in total revenue in H1 2009 being 4% higher than in 2008. Eastern Europe Eastern Europe 2009 2008 % change Sales (thousand hectolitres) 1,369 1,623 -16 Net revenue (mDKK) 464 575 -19 Operating loss (before special items) (mDKK) (13.3) (13.8) 4 Profit margin (%) 2.9 2.4 EBIT (mDKK) (15.3) (13.8) -11 EBIT margin (%) -3.3 -2.4 The Eastern Europe segment comprises the markets for beer, fruit juices and soft drinks in Latvia, Lithuania and Poland. In H1 2009, Eastern Europe accounted for 42% of group sales and 24% of net revenue (2008: 43% and 28%, respectively). The markets in the segment were in 2009 affected by the reduction in beverages consumption which in the case of Latvia and Poland occurred in 2008 and which was seen in Lithuania too in Q1 2009. Sales declined by 16% and net revenue in the segment was reduced by 19% including 7 percentage points caused by the negative PLN rate development. In spite of the significant sales and revenue reduction, operating profit before ”special items” showed a DKK 0.5 million improvement on H1 2008 since, as a result of great focus on adjusting the capacity basis, significant cost savings were realised. EBIT was negatively affected by ”special items” of DKK 2 million in H1 relating to, among other things, reor-ganisation in Poland and the Baltic countries. Eastern Europe Actual H1 2009 Growth over 2008 Net revenue (mDKK) Sales (thousand hectolitres) Net revenue (%) Sales (%) Lithuania 175 410 -7 -6 Latvia 146 450 -23 -28 Poland 142 507 -25 -6 Other markets 1 2 -85 -88 Total Eastern Europe 464 1,369 -19 -16 In Lithuania the total beer market decline is estimated at more than 6% in H1 2009, whereas the total decline in the fruit juice market is estimated at some 23%. In H1, Kalnapilio-Tauro Grupe continued to increase its market shares on both beer and fruit juices and measured by both value and volumes. In H1 2009, price increases were introduced in Lithuania, and the Tauras brand was strengthened by launching the products in profile bottles. The total product portfolio was strengthened through the introduction of a cider range. The operating profit before special items in Lithuania in H1 2009 was significantly above expectations and an improvement on 2008. In Latvia it is estimated that the fruit juice, nectar and still drinks segment declined by some 25% in H1 2009, whereas total beer consumption is estimated at an approximate 5% decline. In 2009, Royal Unibrew's still drinks market share increased, whereas the market shares for fruit juices and branded beer were maintained. In 2009, price increases were introduced for most product categories. Furthermore, a cider range was launched. In spite of the substantial sales and revenue decline, operating profit for H1 2009 showed a significant improve-ment on 2008 and on expectations. Significant reductions of the cost base were realised in Latvia. In Poland national beer consumption is estimated at an approximate 8% decline in H1 2009 from the same period of last year caused partly by an increase of beer duties. Royal Unibrew's sales and revenue decreased by 6% and 25%, respectively. Adjusted for the negative PLN rate development, the revenue decline represents only 4%. The operating profit before special items for H1 was as expected but continues to be unsatisfactory. Malt and Overseas Markets Malt and Overseas Markets 2009 2008 % change Sales (thousand hectolitres) 251 292 -14 Net revenue (mDKK) 221 238 -7 Operating profit (before special items) (mDKK) 15.5 18.0 -14 Profit margin (%) 7.0 7.6 EBIT (mDKK) 12.1 18.0 -33 EBIT margin (%) 5.5 7.6 The Malt and Overseas Markets segment comprises the Group's breweries and distribution company in the Car-ibbean, the export and licence business for malt drinks as well as beer and soft drinks exports to other markets. In H1 2009, Malt and Overseas Markets accounted for 8% of total sales and 12% of net revenue of the Group (2008: 7% and 11%). Net revenue was positively affected by some DKK 10 million, net by the development in the USD and GBP rates. Malt and Overseas Markets Actual H1 2009 Growth over 2008 Net revenue (mDKK) Sales (thousand hectolitres) Net revenue (%) Sales (%) The Caribbean 139 123 4 -9 The UK 14 18 -59 -44 Africa 29 52 -6 -16 Other markets 39 58 -9 -11 Total Malt and Overseas Mar-kets 221 251 -7 -14 Developments in the Caribbean continued to be affected by the general economic crisis. Increasing unemployment rates, declining tourism and fewer money transfers from relatives residing in the USA resulted in declining sales in the local markets. While Vitamalt product sales therefore did not live up to expectations in H1 2009, the earnings of the three brewery subsidiaries in the region, viewed on an aggregated basis, were above expectations as a result of efficiency enhancing measures implemented. In spite of a general strike in the main part of Q1, net revenue of the Group's distribution companies in Guadeloupe and Martinique was at the H1 2008 level, and earnings showed significant improvement on 2008 and on expectations. In the UK sales and revenue were negatively affected by significant inventory reductions with a major customer. Moreover, revenue was negatively affected by some DKK 2 million due to the low GBP rate. The other markets in the segment realised lower sales than expected primarily due to the global economy, the Group's increased focus on credit granting and the reduction of inventories in the supply chain. Earnings in the segment, primarily profit before ”special items”, were DKK 2.5 million below the H1 2008 figure including a net positive effect of some DKK 1.5 million from the development in the USD and GBP rates. SHARE OPTIONS As announced in Company Announcement No 12/2009 of 31 March 2009, the Company's Supervisory Board de-cided to cancel the share option programme entered into for the period 2008-2010 applying to the Executive Board and some 20 executives as from 2008 to the effect that the grants for the 2008 financial year and grants for the 2009 and 2010 financial years lapse. After this, the following share options remain unexercised from previous share option programmes: Granted Total number unexercised Number held by Executive Board Exercise price Exercise period Re 2004 8,080 2,092 478 4/2008 - 4/2010 Re 2005 15,832 2,462 648 4/2009 - 4/2011 Re 2006 16,172 2,756 695 4/2010 - 4/2012 Re 2007 12,362 2,231 510 4/2011 - 4/2013 Granted 2008 re Strategic Plan 20,460 2,231 510 4/2011 - 4/2013 Total 72,906 11,772 The market value of the unexercised options is estimated at DKK 0.1 million under the Black-Scholes formula. The Company's obligations under the option programmes are covered by the Company's portfolio of treasury shares (106,674 shares). BALANCE SHEET AND CASH FLOW STATEMENT Royal Unibrew's balance sheet total amounted to DKK 4,018 million at 30 June 2009, which matches the level at the end of 2008. Group equity amounted to DKK 553 million at the end of June 2009 and was in all material respects affected only by the negative comprehensive income of DKK 23 million - comprising the profit of DKK 17 million for the pe-riod, negative exchange adjustments of the Group's foreign group enterprises of DKK 14 million as well as a negative development in the value of currency and interest rate hedging instruments of DKK 26 million. The eq-uity ratio represented 13.5% compared to 14.2% at the end of 2008. Free cash flow for H1 amounted to DKK 49 million compared to a negative DKK 142 million in H1 2008. Due to the peak season in the summer months, cash flow is traditionally negatively affected by an increasing net work-ing capital. Cash flows from operating activities (before financial income and expenses and tax) amounted to DKK 207 mil-lion, which was a DKK 120 million improvement on H1 2008, whereas net interest and corporation tax paid to-gether affected cash flows positively by DKK 38 million as compared to 2008. Overall, cash flows from operating activities totalling DKK 143 million showed a DKK 158 million improvement on 2008. Gross investments amounted to DKK 146 million, which is some DKK 26 million below the 2008 figure. The pro-ceeds from assets sold amounted to some DKK 40 million primarily relating to the Polish brewery in Koszalin. Investments in receivables and inventories were increased by DKK 118 million in the period (2008: DKK 321 mil-lion), whereas trade payables and other debt increased by DKK 177 million (2008: DKK 272 million - affected by investment creditors). On a total basis, net working capital was, as a result of focus on minimising working capi-tal investments, reduced by DKK 58 million in H1 2009 in spite of the season (2008: increased by DKK 50 mil-lion). FUNDING AND CAPITAL STRUCTURE As announced in the Announcement of Annual Results for 2008, Royal Unibrew has entered into an agreement with its primary bankers that for the next two years (until 31 March 2011) they will make available to the Group the credit facilities considered necessary by the Group based on plans and budgets. The credit lines provided by the agreement with the banks have been adjusted to the seasonal fluctuations in the Group's capital requirements. At 30 June 2009, the credit line amounts to DKK 2.75 billion, DKK 600 million of which is unutilised. At the end of 2009, the credit line will be reduced to DKK 2.5 billion of which not more than some DKK 2.0 billion is expected to be utilised. For 2010, the funding agreement requires reduction of the credit line from DKK 2.5 billion to DKK 2.0 billion during H2. Due to the cash flow development in H1 2009, which was above expectations, the Group will constantly consider a reduction of the committed, unutilised facilities (at 30 June 2009 some DKK 600 million). The funding agreement includes a number of covenants which are measured quarterly: EBITDA, the ratio of net interest bearing debt to EBITDA, solvency ratio, investments and cash flow targets. Based on the Group's plans and budgets, it is estimated that the Group will be able to comply with the agreed covenants. At the end of H1 2009, the target achievement was better than that required by the agreed covenants. Based on the estimated de-velopments in H2 2009, the agreed covenants will also be met by the end of 2009 with satisfactory margins. The credit commitment by the banks is based on the condition that the Company pay no dividend and buy back no shares. The Group will continue its focus on freeing as much cash as possible through reduction of investments in net working capital and by maintaining a reasonably low investment level. At the same time, as previously mentioned, all relevant options will be considered to strengthen the Company's financial standing and to ensure an appropriate financial structure. PROSPECTS The Group's results for H1 2009 showed improvement on the results for the corresponding period of last year and were also above expectations. The estimate at the end of H1 2009 is that the negative growth rate has been diminishing in several of the Group's markets compared to the same period of 2008, but general developments continue to be subject to great uncertainty, and several markets are seeing declining demand. Royal Unibrew's total sales and revenue will decrease from 2008 due to the generally declining demand. In H1 2009, the Royal Unibrew Group increased or maintained its market shares in most main markets, and these positions are expected to be maintained or strengthened in the coming quarters. The selling price increases planned for 2009 were realised in Q1. In Q2, intensified price competition has been seen in several markets in Northern Europe. The reorganisation of the Danish production structure and distribution system as well as the initiatives implemented in Poland and Denmark will continue to contribute towards increasing the Group's profitability. The full impact will be realised during H2 2009. These circumstances as well as dynamic adjustment of the cost base in relation to market developments especially in the Baltic countries will result in an increasing profit margin (operating profit before “special items”) as compared to last year. It is estimated that operating profit before ”special items” for 2009 will be at the level of DKK 170-210 million (previous expectation: in excess of DKK 135 million), whereas net financial expenses are now estimated at DKK 125-135 million (previous expectation: DKK 145-165 million) primarily due to improved cash flows and gains on an exchange rate contract. ”Special items” are still expected to represent an expense of some DKK 35 million in 2009 primarily attributable to reorganisation in Denmark and Poland. The effective tax rate for EBIT is expected to be some 30% and the rate for financial expenses is expected to be some 13% (previous expectation: 38% for EBIT and 12% for financials). Gross investments for the year are still expected to amount to some DKK 250 million and impairment losses for the year to some DKK 215 million. Based on the cash flow improvements achieved in H1, net interest-bearing debt at the end of 2009 is expected to amount to some DKK 2 billion, which is lower than the previous expectation and some DKK 150 million lower than at the beginning of the year without taking into account the sale of the Caribbean breweries. Due to this de-velopment as well as the earnings improvement mentioned above, a satisfactory margin to the financial ratios (covenants) included in the Group's funding agreement is still expected. STATEMENTS ABOUT THE FUTURE The statements about the future made in the H1 Report 2009 reflect Management's expectations in respect of fu-ture events and financial results, as well as of economic trends in key markets and developments in international money, foreign exchange and interest rate markets. Statements about the future will inherently involve uncer-tainty and may be affected by - in addition to global economic conditions - market-driven price reductions, mar-ket acceptance of new products, packaging and container types, unforeseen termination of working relationships and changes to regulatory aspects (taxes, environment, packaging), etc. The actual results may therefore deviate from the expectations stated. Royal Unibrew is a party to a limited number of legal actions. These legal actions are not expected to have any material impact on the financial position of Royal Unibrew. EVENT SUBSEQUENT TO INTERIM PERIOD END As mentioned in Company Announcement No 23/2009 of 12 August 2009, Royal Unibrew has entered into a con-ditional agreement with the Cerveceria National Dominicana (CND) brewery in the Dominican Republic to sell its shares of the breweries in Antigua, Dominica and St. Vincent to CND. The total consideration for Royal Unibrew's shares amounts to USD 31 million (some DKK 160 million). More-over, the purchasers will take over the debts of the companies. On an aggregated basis, the transaction will re-duce Royal Unibrew's interest-bearing debt by just below DKK 200 million. The net realisable value of the shares is at the level of their carrying amount. On a translated basis, the enterprise value (EV; 100%) of the companies sold amounts to some USD 44 million (some DKK 255 million), whereas the Group's EBITDA (100%) will be reduced by some DKK 30 million through the sale. The Group's malt brand Vitamalt will continue to be produced on licence by the breweries sold, and CND will commence licence production and sale of Vitamalt in the Dominican Republic. The agreements with CND are subject to, among other things, approval by the government in Antigua as well as to obtaining acceptance from certain licensors of the change of ownership. The transaction is expected to be clo-sed towards the end of 2009. Consequently, the transaction is not expected to affect the Group's earnings (EBIT) in 2009. MANAGEMENT After 17 years with the Royal Unibrew Group, Ulrik Sørensen, CFO, has requested retirement at the end of 2010 in continuation of his sixtieth birthday in 2010. With a view to ensuring the necessary continuity, a search for a new CFO will be initiated. In connection with the new CFO joining - foreseeably around year end 2009/2010 - Ulrik Sørensen will withdraw from the Company's Executive Board. Up until the date of his retirement, Ulrik Sørensen will - in addition to the work of transferring his responsibilities to the new CFO and assisting as re-quired - solve special assignments for the Executive Board, including the sale of the Ceres property. FINANCIAL CALENDAR 2009 Announcements of financial results: 6 November 2009 Q3 Report 2009 2010 General meeting: 27 April 2010 Annual General Meeting in Odense Announcements of financial results: 5 March 2010 Announcement of Annual Results 2009 27 April 2010 Q1 Report 2010 26 August 2010 H1 Report 2010 25 November 2010 Q3 Report 2010 ANNOUNCEMENTS TO NASDAQ OMX COPENHAGEN IN 2009 23 February 2009 01/2009 Major shareholder information pursuant to section 29 of the Danish Securities Trading Act 26 February 2009 02/2009 Announcement of Annual Results for 2008 11 March 2009 03/2009 Reporting according to the Danish Securities Trading Act section 28a 12 March 2009 04/2009 Reporting according to the Danish Securities Trading Act section 28a 19 March 2009 05/2009 Major shareholder information pursuant to section 29 of the Danish Securities Trading Act 23 March 2009 06/2009 Reporting according to the Danish Securities Trading Act section 28a 25 March 2009 07/2009 Reporting according to the Danish Securities Trading Act section 28a 26 March 2009 08/2009 Reporting according to the Danish Securities Trading Act section 28a 27 March 2009 09/2009 Royal Unibrew Polska Sp. z o.o. accelerates the divesture of the brewery in Koszalin 30 March 2009 10/2009 Reporting according to the Danish Securities Act section 28a 31 March 2009 11/2009 Major shareholder information pursuant to section 29 of the Danish Securities Trading Act 31 March 2009 12/2009 Cancellation of the Share Option Programme 1 April 2009 13/2009 Major shareholder information pursuant to section 29 of the Danish Securities Trading Act 8 April 2009 14/2009 Major shareholder information pursuant to section 29 of the Danish Securities Trading Act 15 April 2009 15/2009 Annual General Meeting - notice of meeting 29 April 2009 16/2009 Q1 Report 2009 29 April 2009 17/2009 Annual General Meeting 2009 25 May 2009 18/2009 Major shareholder information pursuant to section 29 of the Danish Securities Trading Act 27 May 2009 19/2009 Major shareholder information pursuant to section 29 of the Danish Securities Trading Act 29 May 2009 20/2009 Major shareholder information pursuant to section 29 of the Danish Securities Trading Act 29 May 2009 21/2009 Major shareholder information pursuant to section 29 of the Danish Securities Trading Act 2 June 2009 22/2009 Royal Unibrew's sale of the Polish brewery in Koszalin completed 12 August 2009 23/2009 Royal Unibrew enters into agreement to sell Caribbean breweries MANAGEMENT'S STATEMENT ON THE REPORT The Executive and Supervisory Boards have presented the H1 Report of Royal Unibrew A/S. The H1 Report has today been considered and adopted. The H1 Report, which has not been audited or reviewed by the Company's auditors, was prepared in accordance with IAS 34 “Interim Financial Reporting” as adopted by the EU and additional Danish disclosure requirements for listed companies. We consider the accounting policies applied appropriate and the accounting estimates made reasonable, and, in our opinion, the H1 Report provides the information relevant to assess the financial circumstances of the Group and the Parent Company. Accordingly, in our opinion, the H1 Report gives a true and fair view of the financial position of the Group as well as of the results of the Group operations and cash flows for the period 1 January - 30 June 2009. In our Opinion, Management's Review gives a true and fair view of the development in the activities and finan-cial circumstances of the Group, of results of operations for the period and of the overall financial position of the enterprises comprised by the Consolidated Financial Statements, and a description of the key risks and uncer-tainties facing them. Faxe, 25 August 2009 Executive Board Henrik Brandt CEO Ulrik Sørensen Hans Savonije CFO Executive Director Supervisory Board Steen Weirsøe Tommy Pedersen Chairman Deputy Chairman Ulrik Bülow Erik Christensen Erik Højsholt Allan Meier Jensen Kirsten Liisberg Hemming Van INCOME STATEMENT (DKK ‘000) 1/1 - 30/6 2009 1/1 - 30/6 2008 1/4 - 30/6 2009 1/4 - 30/6 2008 1/1 - 31/12 2008 Note Revenue 2,238,178 2,453,561 1,341,527 1,460,120 4,918,600 Beer and mineral water excises (325,273) (373,872) (196,267) (218,740) (739,897) Net revenue 1,912,905 2,079,689 1,145,260 1,241,380 4,178,703 Production costs (1,096,169) (1,198,217) (632,143) (691,067) (2,433,298) Gross profit 816,736 881,472 513,117 550,313 1,745,405 0 0 Sales and distribution expenses (619,727) (699,493) (341,153) (392,369) (1,387,543) Administrative expenses (111,590) (120,034) (57,890) (59,996) (226,844) Other operating income 1,462 1,392 737 458 3,835 Operating profit before special items 86,881 63,337 114,811 98,406 134,853 Special items 4 (24,780) (33,939) (8,274) (1,344) (50,125) Impairment losses 0 0 0 0 (384,957) Profit/(loss) before financial income and ex-penses 62,101 29,398 106,537 97,062 (300,229) Income after tax from investments in associates 13,469 7,128 13,562 11,653 22,654 Impairment losses (70,104) Financial income 29,927 2,856 3,482 352 33,899 Financial expenses (82,589) (55,715) (56,605) (29,639) (139,185) Profit/(loss) before tax 22,908 (16,333) 66,976 79,428 (452,965) Tax on the loss for the period 5 (6,000) 4,500 (15,500) (23,000) (30,200) Profit/(loss) for the period 16,908 (11,833) 51,476 56,428 (483,165) distributed as follows: Parent Company shareholders' share of loss for the period 16,268 (11,831) 50,772 56,502 (484,333) Minority shareholders' share of profit/loss for the period 640 (2) 704 (74) 1,168 Profit/(loss) for the period 16,908 (11,833 51,476 56,428 (483,165) Parent Company shareholders' share of earn-ings per share (DKK) 6 3.0 (2.1) 9.3 10.3 (89.0) Parent Company shareholders' share of diluted earnings per share (DKK) 6 3.0 (2.1) 9.3 10.3 (89.0) Comprehensive income Revaluation of project development properties 0 0 0 0 240,000 Value and exchange adjustment of foreign group enterprises (14,352) 4,016 (17,912) 8,348 (99,434) Value adjustment of hedging instruments (25,738) 36,247 (2,415) 49,070 (48,345) Tax on equity entries 0 (7,327) 0 (9,954) (56,315) Net gains recognised directly on equity (40,090) 32,936 (20,327) 47,464 35,906 Profit/(loss) for the period 16,908 (11,833) 51,476 56,428 (483,165) Comprehensive income (23,182) 21,103 31,149 103,892 (447,259) BALANCE SHEET, ASSETS (DKK ‘000) 30/6 2009 30/6 2008 31/12 2008 Note NON-CURRENT ASSETS Goodwill 314,851 506,597 311,275 Trademarks 167,143 283,977 167,885 Distribution rights 6,505 7,855 7,186 Intangible assets 488,499 798,429 486,346 Land and buildings 719,484 827,597 643,363 Project development properties 400,522 0 400,000 Plant and machinery 691,541 525,925 529,291 Other fixtures and fittings, tools and equip-ment 226,195 227,545 214,997 Property, plant and equipment in progress 67,271 188,603 291,787 Property, plant and equipment 2,105,013 1,769,670 2,079,438 Investments in associates 92,157 230,398 87,650 Receivables from associates 0 25,375 20,634 Other investments 53,169 3,054 56,900 Other receivables 8,623 12,711 11,939 Financial assets 153,949 271,538 177,123 Non-current assets 2,747,461 2,839,637 2,742,907 CURRENT ASSETS Raw materials and consumables 118,941 196,867 122,194 Work in progress 28,465 35,437 27,177 Finished goods and purchased finished goods 201,415 220,804 265,302 Inventories 348,821 453,108 414,673 Trade receivables 653,847 771,395 541,566 Receivables from associates 767 1,695 1,008 Corporation tax receivable 46,101 0 37,667 Other receivables 83,303 70,432 76,012 Prepayments 113,763 52,601 147,191 Receivables 897,781 896,123 803,444 Cash at bank and in hand 92,545 96,279 90,384 Current assets 1,339,147 1,445,510 1,308,501 Assets 4,086,608 4,285,147 4,051,408 BALANCE SHEET, LIABILITIES AND EQUITY (DKK ‘000) 30/6 2009 30/6 2008 31/12 2008 Note EQUITY Share capital 7 56,000 59,000 56,000 Revaluation reserves 180,000 0 180,000 Translation reserve (111,523) 4,417 (102,279) Hedging reserve (60,341) 37,177 (34,603) Retained earnings 437,689 914,712 925,121 Proposed dividend 0 0 0 Profit/(loss) for the period 16,268 (11,831) (484,333) Equity of Parent Company shareholders 518,093 1,003,475 539,906 Minority interests 35,282 37,312 34,922 Equity 553,375 1,040,787 574,828 Deferred tax 174,797 135,732 179,378 Mortgage debt 734,723 749,234 734,655 Credit institutions 1,496,486 1,013,280 968,887 Non-current liabilities 2,406,006 1,898,246 1,882,920 Mortgage debt 0 953 0 Credit institutions 0 334,047 599,336 Repurchase obligation, returnable packaging 64,566 78,078 74,056 Trade payables 569,426 664,210 523,175 Corporation tax 0 10,288 0 VAT, excise duties, etc 186,959 109,882 61,439 Other payables 306,276 148,656 335,654 Current liabilities 1,127,227 1,346,114 1,593,660 Liabilities 3,533,233 3,244,360 3,476,580 Liabilities and equity 4,086,608 4,285,147 4,051,408 STATEMENT OF CHANGES IN EQUITY FOR 1 JANUARY - 30 JUNE 2008 (DKK ‘000) Share capi-tal Revaluation re-serves Transla-tion re-serve Hedging re-serve Retained earnings Proposed dividend for the year Minority share Total Equity at 1 January 2008 59,000 0 (7,694) 10,057 960,411 59,000 38,689 1,119,463 Value and exchange adjustment of foreign group en-terprises 10,027 (4,636) (1,375) 4,016 Tax on value and exchange adjustment 1,800 1,800 Value adjustment of hedging instruments, end of pe-riod 49,690 49,690 Reversal of value adjustment of hedging instru-ments, beginning of period (13,443) (13,443) Tax on hedging instruments (9,127) (9,127) Net gains recognised directly in equity 0 0 10,027 27,120 (2,836) 0 (1,375) 32,936 Profit/(loss) for the period (11,831) (2) (11,833) Comprehensive income 0 0 10,027 27,120 (14,667) 0 (1,377) 21,103 Minority shares of acquired businesses 0 Dividend distributed to shareholders (54,901) (54,901) Dividend on treasury shares 4,099 (4,099) 0 Acquisition of shares for treasury (46,244) (46,244) Sale of treasury shares 1,551 1,551 Share-based payment (185) (185) Total shareholders 0 0 0 0 (40,779) (59,000) 0 (99,779) Total equity movements 1/1-30/6 2008 0 0 10,027 27,120 (55,446) (59,000) (1,377) (78,676) Equity at 30 June 2008 59,000 0 2,333 37,177 904,965 0 37,312 1,040,787 STATEMENT OF CHANGES IN EQUITY FOR 1 JANUARY - 30 JUNE 2009 (DKK ‘000) Share capital Revaluation reserves Translation re-serve Hedging re-serve Retained earnings Proposed dividend for the year Minority share Total Equity at 1 January 2009 56,000 180,000 (102,279) (34,603) 440,788 0 34,922 574,828 Value and exchange adjustment of foreign group en-terprises (9,244) (4,828) (280) (14,352) Tax on value and exchange adjustment 0 Value adjustment of hedging instruments, end of pe-riod (60,341) (60,341) Reversal of value adjustment of hedging instru-ments, beginning of period 34,603 34,603 Tax on hedging instruments 0 0 Net gains recognised directly in equity 0 0 (9,244) (25,738) (4,828) 0 (280) (40,090) Profit/(loss) for the period 16,268 640 16,908 Comprehensive income 0 0 (9,244) (25,738) 11,440 0 360 (23,182) Share-based payment 0 0 0 0 1,729 0 0 1,729 Total shareholders 0 0 0 0 1,729 0 0 1,729 Total equity movements 1/1-30/6 2009 0 0 (9,244) (25,738) 13,169 0 360 (21,453) Equity at 30 June 2009 56,000 180,000 (111,523) (60,341) 453,957 0 35,282 553,375 CASH FLOW STATEMENT (DKK ‘000) 1/1 - 30/6 2009 1/1 - 30/6 2008 Note Profit/(loss) for the period 16,908 (11,833) Adjustments for non-cash operating items 8 131,497 148,058 148,405 136,225 Change in working capital: +/- change in receivables (181,896) (219,813) +/- change in inventories 63,523 (101,594) +/- change in payables 176,613 271,664 Cash flows from operating activities before finan-cial income and expenses 206,645 86,482 Financial income 69,042 2,824 Financial expenses (111,104) (58,834) Cash flows from ordinary activities 164,583 30,472 Corporation tax paid (22,056) (45,992) Cash flows from operating activities 142,527 (15,520) Dividend received from associates 12,485 14,984 Sale of property, plant and equipment 39,877 30,434 Purchase of property, plant and equipment (146,020) (171,875) Free cash flow 48,869 (141,977) Acquisition of subsidiaries 8 0 (126,546) Acquisition of intangible and financial assets 21,669 (2,923) Cash flows from investing activities (71,989) (255,926) Proceeds from raising of non-current debt 0 180,362 Repayment of non-current debt 0 (574) Change in current debt to credit institutions (67,230) 130,823 Dividend paid 0 (54,901) Acquisition of shares for treasury 0 (46,244) Sale of treasury shares 0 1,551 Cash flows from financing activities (67,230) 211,017 Change in cash and cash equivalents 3,308 (60,429) Cash and cash equivalents at 1 January 90,384 157,832 Exchange adjustment (1,147) (1,124) Cash and cash equivalents at 30 June 92,545 96,279 NOTES TO THE H1 REPORT Note 1 Significant Accounting Policies The H1 Report is presented in accordance with IAS 34 “Interim Financial Reporting” as adopted by the EU and additional Danish disclosure requirements for interim financial reporting of listed companies. Except for the implementation of the amended IFRS 2 (Share-based Payment), IFRS 8 (Segment Reporting) and IAS 23R (Borrowing Costs), the accounting policies are unchanged from those applied in the Annual Report for 2008, to which reference is made. Only IAS 23R affects the financial statements as compared to the previous recognition and measurement as well as note disclosures. The implementation of IAS 23R, under which borrowing costs relating to own construction of non-current as-sets are to be capitalised, has affected results (financial expenses) for the period and the value of property, plant and equipment in progress positively by some DKK 4 million (2008: some DKK 1 million.) as compared to the accounting policy previously applied. The recognition for prior periods has not been adjusted. Except for the above description relating to the implementation of IAS 23R, the Annual Report for 2008 pro-vides a total description of accounting policies significant to the financial statements. Note 2 Accounting Estimates and Judgements The preparation of interim financial reporting requires that Management make accounting estimates and judgements which affect the application of accounting policies and recognised assets, liabilities, income and expenses. Actual results may deviate from these estimates. The key estimates made by Management in applying the Group's accounting policies and the key uncertain-ties relating to the estimates are the same when preparing the interim financial reporting as when preparing the Annual Report at 31 December 2008. The estimates made at 30 June 2009 of the fair value of project development properties and securities did not give rise to changing the fair values recognised at 31 December 2008. NOTES TO THE H1 REPORT Note 3 Segment Reporting The Group's activities break down as follows on segments (mDKK): 1/1 - 31/3 2009 1/1 - 31/3 2008 Western Europe Eastern Europe Malt & Overseas Markets Unallocated Total Western Europe Eastern Europe Malt & Overseas Markets Unallocated Total 491.3 180.8 95.5 767.6 Net revenue 508.4 228.8 101.1 838.3 0.1 (18.2) 2.1 (12.0) (28.0) Operating profit/(loss) (3.0) (22.3) 1.9 (11.7) (35.1) (8.4) (4.7) (3.4) (16.5) Special items (32.6) (32.6) (8.3) (22.9) (1.3) (12.0) (44.5) Earnings before interest and tax (EBIT) (35.6) (22.3) 1.9 (11.7) (67.7) (1.6) 0.0 1.5 (0.1 Share of income from associates (2.2) (3.2) 0.9 (4.5) (0.8) (5.5) 1.8 5.0 0.5 Other financial income and expenses (0.2) (2.3) 0.2 (21.3) (23.6) (10.7) (28.4) 2.0 (7.0) (44.1) Profit/(loss) before tax for the period (38.0) (27.8) 3.0 (33.0) (95.8) 9.5 9.5 Tax on the profit/(loss) for the period 27.5 27.5 (34.6) Profit/(loss) for the period (68.3) 0.0% -10.1% 2.2% -3.6% Profit margin -0.6% -9.7% 1.9% -4.2% 1/4 - 30/6 2009 1/4 - 30/6 2008 Western Europe Eastern Europe Malt & Overseas Markets Unallocated Total Western Europe Eastern Europe Malt & Overseas Markets Unallocated Total 736.4 283.8 125.1 1,145.3 Net revenue 758.2 346.2 137.0 1.241.4 104.7 4.9 13.4 (8.1) 114.9 Operating profit/(loss) 87.4 8.5 16.1 (13.6) 98.4 (7.0) 2.7 0.0 (4.0) (8.3) Special items (1.3) (1.3) 97.7 7.6 13.4 (12.1) 106.6 Earnings before interest and tax (EBIT) 86.1 8.5 16.1 (13.6) 97.1 12.9 0.0 0.7 13.6 Share of income from associates 9.0 1.6 1.0 11.6 (0.9) (15.4) (2.1) (34.8) (53.2) Other financial income and expenses (0.6) (8.7) (0.5) (19.4) (29.2) 109.7 (7.8) 12.0 (46.9) 67.0 Profit/(loss) before tax for the period 94.5 1.4 16.6 (33.0) 79.5 (15.5) (15.5) Tax on the profit/(loss) for the period (23.0) (23.0) 51.5 Profit/(loss) for the period 56.5 14.2% 1.7% 10.7% 10.0% Profit margin 11.5% 2.5% 11.8% 7.9% NOTES TO THE H1 REPORT Note 3 Segment Reporting 1/1 - 30/6 2009 1/1 - 30/6 2008 Western Europe Eastern Europe Malt & Overseas Markets Unallocated Total Western Europe Eastern Europe Malt & Overseas Markets Unallocated Total 1,227.7 464.6 220.6 0.0 1,912.9 Net revenue 1,266.6 575.0 238.1 0.0 2,079.7 104.8 (13.3) 15.5 (20.1) 86.9 Operating profit/(loss) 84.4 (13.8) 18.0 (25.3) 63.3 (15.4) (2.0) (3.4) (4.0) (24.8) Special items (33.9) 0.0 0.0 0.0 (33.9) 89.4 (15.3) 12.1 (24.1) 62.1 Earnings before interest and tax (EBIT) 50.5 (13.8) 18.0 (25.3) 29.4 11.3 0.0 2.2 0.0 13.5 Share of income from associates 6.8 (1.6) 1.9 0.0 7.1 (1.7) (20.9) (0.3) (29.8) (52.7) Other financial income and expenses (0.8) (11.0) (0.3) (40.7) (52.8) 99.0 (36.2) 14.0 (53.9) 22.9 Profit/(loss) before tax for the period 56.5 (26.4) 19.6 (66.0) (16.3) (6.0) (6.0) Tax on the profit/(loss) for the period 4.5 4.5 16.9 Profit/(loss) for the period (11.8) 8.5% -2.9% 7.0% 4.5% Profit margin 6.7% -2.4% 7.6% 3.0% NOTES TO THE H1 REPORT Note 4 Special Items 1/4 - 30/6 1/1 - 30/6 2008 2009 2009 2008 Profit on sale of non-current assets 21,500 related to reorganisation 21,500 0 21,500 Total special income 21,500 0 148 (6,973) Expenses and value adjustment of assets related to reorganisation in Denmark (15,385) (32,991) (1,492) (22,801) Expenses and value adjustments of as-sets related to foreign subsidiaries (30,895) (948) (1,344) (29,774) Total special expenses (46,280) (33,939) (1,344) (8,274) Total special items (24,780) (33,939) NOTES TO THE H1 REPORT Note 5 Tax on the Profit for the Period The tax expense for the period recognised in the income statement has been calculated on the basis of the expected EBIT and the expected net interest expenses of the Group in aggregate for 2009 with ef-fective tax rates of some 30% for EBIT and some 13% for net interest expenses, respectively (at 30 June 2008 a total effective tax rate of some 29%). The tax recognised includes an income of DKK 7 million as an adjustment relating to prior year. In addition to the tax recognised in the income statement, a tax income of DKK 0k has been recog-nised directly in equity related to the equity entries for the period (at 30 June 2008 an expense of DKK 9,127k and for the full year 2008 an expense of DKK 56,315k). Note 6 Basis of Calculation of Earnings and Cash Flow per Share 1/1 - 30/6 2009 1/1 - 30/6 2008 The Parent Company shareholders' share of profit for the year (DKK ‘000) 16,268 (11,831) The average number of treasury shares amounted to 106,674 393,718 The average number of shares in circulation amounted to 5,493,326 5,506,282 The average number of shares in circulation incl. share options "in-the-money" amounted to 5,493,326 5,536,282 Diluted earnings and cash flow per share have been calculated on the basis of the Parent Company shareholders' share of loss for the period. NOTES TO THE H1 REPORT Note 7 Treasury Shares Value of treasury shares held: Parent Company 2009 2008 Balance at 1 January 0 0 Additions 0 46,244 Disposals 0 (1,551) Transferred to equity. net 0 (44,693) Balance at 30 June 0 0 Treasury shares held: Number Nom, value % of capital Portfolio at 1 January 2008 316,847 3,168 5.4 Additions 93,374 934 1.6 Disposals (3,547) (35) (0.1) Cancelled upon reduction of capital 0 0 0.0 Portfolio at 30 June 2008 406,674 4,067 6.9 Portfolio at 1 January 2009 106,674 1,067 1.9 Additions 0 0 0.0 Disposals 0 0 0.0 Cancelled upon reduction of capital 0 0 0.0 Portfolio at 30 June 2009 106,674 1,067 1.9 NOTES TO THE H1 REPORT Note 8 Cash Flow Statement 1/1 - 30/6 2009 1/1 - 30/6 2008 Adjustments for non-cash operating items Financial income (29,927) (2,856) Financial expenses 82,589 55,715 Amortisation, depreciation and impairment of intan-gible assets and property, plant and equipment 96,152 97,329 Tax on the profit/(loss) for the period 6,000 (4,500) Income from investments in associates (13,469) (7,128) Net profit/(loss) from sale of property, plant and equipment (21,039) (4,320) Share-based payments and remuneration (631) (185) Other adjustments 11,822 14,003 Total 131,497 148,058 Acquisition of subsidiaries 1/1 - 30/6 2009 1/1 - 30/6 2008 Assets Non-current assets 125,577 Current assets 969 Acquisition price 0 126,546 NOTES TO THE H1 REPORT Note 9 Acquisitions No acquisitions were made in H1 2009. The following acquisitions were made in 2008: At 1 January 2008, Royal Unibrew A/S' subsidiary Lacpleasa Alus acquired assets and activity of the Latvian brewery Livu Alus. Livu Alus markets, sells and produces its own beer brand in Latvia, pri-marily in the Liepaja region. Fair value at date of acquisition Intangible assets 6,419 Property, plant and equipment 119,158 Inventories 969 Cash acquisition price 126,546 including acquisition costs (consulting fees) of 1,022 The carrying amounts prior to the acquisition are not available. FINANCIAL HIGHLIGHTS AND KEY RATIOS OF ROYAL UNIBREW (Group) 2009 2008 2007 2006 2005 SALES (thousand hectolitres) 3,268.0 3,756.0 3,351.0 3,061.0 2,709.0 FINANCIAL HIGHLIGHTS (mDKK) Income Statement Net revenue 1,912.9 2,079.7 1,826.0 1,619.0 1,514.8 Operating profit before special items 86.9 63.3 55.8 60.6 65.5 Special items (24.8) (33.9) 0.0 0.0 0.0 Profit before financial income and expenses 62.1 29.4 55.8 60.6 65.5 Net financials (39.2) (45.7) (18.3) (14.7) (11.8) Profit/(loss) before tax 22.9 (16.3) 37.5 45.9 53.7 Consolidated profit/(loss) 16.9 (11.8) 41.2 35.3 51.2 Royal Unibrew A/S' share of profit/(loss) 16.3 (11.8) 40.3 34.4 51.6 Balance Sheet Total assets 4,086.6 4,285.1 3,927.9 3,317.6 3,130.6 Equity 553.4 1,040.8 1,103.9 1,087.9 1,061.5 Net interest-bearing debt 2,138.7 1,975.9 1,567.8 1,154.0 1,154.0 Free cash flow 48.9 (142.0) (17.3) (57.5) (19.2) Per share Royal Unibrew A/S' share of earnings per share (DKK) 3.0 (2.1) 7.0 5.5 8.0 Royal Unibrew A/S' diluted share of earnings per share (DKK) 3.0 (2.1) 6.9 5.5 8.0 Cash flow per share (DKK) 25.9 (2.8) 12.3 4.6 5.4 Diluted cash flow per share (DKK) 25.9 (2.8) 12.1 4.6 5.4 Key figures (mDKK) EBITDA 138.7 108.8 139.0 156.9 159.2 EBIT 62.1 29.4 55.8 60.6 65.5 Key ratios (%) Profit margin 4.5 3.0 3.1 3.7 4.3 EBIT margin 3.2 1.4 3.1 3.7 4.3 Free cash flow as a percentage of net revenue 2.6 (6.8) (0.9) (3.6) (1.3) Equity ratio 13.5 24.3 28.1 32.8 33.9 Debt ratio 386.5 189.8 142.0 106.1 108.7 DEFINITIONS OF KEY FIGURES AND RATIOS Net interest-bearing debt Mortgage debt and debt to credit institutions less cash at bank and in hand, interest-bearing current investments and receivables Free cash flow Cash flow from operating activities less net investments in property, plant and equipment and plus dividends from as-sociates Earnings per share (DKK) Royal Unibrew A/S' share of the profit for the year/number of shares in circulation Cash flow per share (DKK) Cash flow from operating activities/number of shares in cir-culation Diluted earnings and cash flow per share (DKK) Royal Unibrew A/S' share of earnings and cash flow, respec-tively, from operating activities/average number of shares in circulation including share options "in-the-money" EBITDA Earnings before interest, tax, depreciation, amortisation and impairment losses as well as profit from sale of property, plant and equipment and amortisation of intangible assets EBIT Earnings before interest and tax Profit margin Operating profit before special items as a percentage of net revenue EBIT margin EBIT as a percentage of net revenue Free cash flow as a percentage of net reve-nue Free cash flow as a percentage of net revenue Equity ratio Equity at year end as a percentage of total assets Debt ratio Net interest-bearing debt at year end as a percentage of year-end equity