Interim Report 1 January - 31 March 2011

In Q1, Royal Unibrew closed the transaction with the Polish brewery group Van Pur S.A. to merge Royal Unibrew Polska with Van Pur (see Company Announcement No 4/2011 of 18 March 2011). As part of the agreement, Royal Unibrew A/S has transferred its shares of Royal Unibrew Polska Sp. z o.o. and subsequently received 20% of the shares of Van Pur S.A.  

Moreover, in Q1 a cooperation agreement was made with A. Enggaard A/S, Building Contractors, concerning the brewery site in Aarhus. The agreement is conditional upon adoption of the final local plan for the area and is based on an option model.

If the Supervisory Board's proposal to distribute dividend of DKK 12.50 per share for 2010 is adopted at the Annual General Meeting today, the dividend will be distributed on 4 May 2011. Furthermore, a DKK 110 million share buy-back is expected to be initiated immediately after the Annual General Meeting.

FINANCIAL REVIEW

income statement

Developments in activities for the period 1 January — 31 March 2011 broken down on market segments

Sales in Q1 2011 aggregated 1.3 million hectolitres of beer, malt and soft drinks, which is 3% below the Q1 2010 figure. Organic growth (growth adjusted for the divestment of the Caribbean breweries in 2010 and the Polish activities in 2011) represented more than 4%.

Net revenue was almost 5% lower than for the same period of 2010 amounting to DKK 745 million compared to DKK 782 million in 2010, but organically net revenue decreased by less than 1%. The decrease is primarily attributable to a changed market segment mix. The lower net revenue was expected due to the timing of Easter.

In spite of the lower net revenue, gross profit increased by 3% or DKK 11 million in Q1 2011 amounting to DKK 360 million (organically, DKK 22 million higher than in 2010). The gross profit increase is primarily due to a gross margin increase of 3.8 percentage points from 44.6% to 48.4% due to lower production costs, including higher efficiency at the breweries. Moreover, input prices were lower in Q1 2011 than in Q1 2010 and lower than expected in the remaining part of 2011. The change in 2010 of the estimate of depreciation periods for property, plant and equipment affected the gross profit for Q1 positively by approx 1 percentage point.

Sales and distribution expenses amounted to DKK 268 million in Q1 2011, which is DKK 13 million below the Q1 2010 figure (organically, DKK 10 million lower than in 2010). The decrease is primarily due to a planned timing change in respect of campaigns and product activities between Q1 and the remaining part of 2011.

Administrative expenses amounted to DKK 53 million in Q1 2011 compared to DKK 58 million in Q1 2010.

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by DKK 12 million in Q1 2011 amounting to DKK 76 million compared to DKK 64 million in Q1 2010.

Earnings before interest and tax (EBIT) amounted to DKK 40 million in Q1 2011, which is DKK 30 million above the Q1 2010 figure. Organically, EBIT increased by DKK 34 million,  approx DKK 10 million of which was due to the changed estimate of depreciation periods for property, plant and equipment. EBIT margin for the entire Group and in all segments increased compared to the same period of 2010. The increase relates to both Western and Eastern Europe.

Net financial expenses were DKK 12 million lower in Q1 2011 than in Q1 2010 amounting to DKK 19 million compared to DKK 31 million in 2010. Net interest expenses in Q1 2010 were DKK 16 million lower and positively affected by lower interest-bearing debt and better financing terms than in 2010. As communicated in Company Announcement No 4/2011 of 18 March 2011, the sale of Royal Unibrew's Polish subsidiary, Royal Unibrew Polska, and the write-down of the investments in Perla Browary Lubelskie in combination have not affected net financials. Income after tax from investments in associates was DKK 4 million lower in Q1 2011 than in Q1 2010.

The profit before tax of DKK 21 million for Q1 2011 was DKK 42 million above the Q1 2010 figure.

Tax on the profit for Q1 2011 was an expense of DKK 8 million compared to an income of DKK 3 million in 2010. Tax has been calculated on the basis of the expected full-year tax rate.

The profit for the period amounted to DKK 13 million, which is a DKK 31 million improvement on the loss of DKK 18 million realised in 2010.

Balance SHEET

In Q1 2011, the Group's working capital increased organically by approx DKK 82 million compared to the end of December 2010. The increase comprises increased inventories and receivables of DKK 125 million and increased payables of DKK 43 million. The working capital is negative by DKK 68 million at the end of Q1.

Royal Unibrew's balance sheet amounted to DKK 3,098 million at 31 March 2011, which is DKK 42 million higher than at 31 December 2010. The transaction relating to the Group's Polish activities has reduced the balance sheet by approx DKK 50 million. As stated above, current assets have increased by approx DKK 125 million from the end of 2010. Moreover, the balance sheet total has been reduced due to depreciation and impairment of property, plant and equipment exceeding net investments in non-current assets in 2011.

The equity ratio increased in Q1 2011 representing 42.7% at year end compared to 41.9% at the end of 2010. Equity amounted to DKK 1,324 million at the end of March 2011 and was increased in Q1 by the positive comprehensive income of DKK 43 million for the period. The comprehensive income comprises the profit for the period of DKK 13 million, positive exchange adjustments of foreign group enterprises of DKK 12 million and a positive development in the value of hedging instruments of DKK 18 million.

Net interest-bearing debt was increased by DKK 45 million in Q1 2011 (2010: reduced by DKK 178 million, including DKK 187 million relating to sale of subsidiaries) and amounted to DKK 815 million at 31 March 2011 (2010: DKK 1,238 million).

Cash FLOW STATEMENT

Cash flows from operating activities of a negative DKK 16 million comprised the profit for the period adjusted for non-cash operating items of DKK 77 million (2010: DKK 64 million), negative working capital cash flow of DKK 73 million (2010: DKK 0 million), net interest paid of DKK 11 million (2010: DKK 47 million) and taxes paid of DKK 9 million (2010: a negative DKK 16 million). Investment in working capital at the end of Q1 2010 was still negative by DKK 68 million (2010: a negative DKK 96 million). All entities continue their strong focus on managing inventories, trade receivables and trade payables.

Free cash flow for Q1 2011 was a negative DKK 28 million compared to a negative DKK 6 million in Q1 2010. The reduction related to a DKK 6 million increase in investments in non-current assets, whereas cash flows from operating activities were DKK 17 million lower amounting to a negative DKK 16 million in Q1 2011 compared to DKK 1 million in Q1 2010. Net investments in non-current assets in Q1 2011 amounted to DKK 13 million compared to DKK 7 million in Q1 2010.

SHARE OPTIONS

At 31 March 2011 a total of 60,325 share options remain unexercised from previous share option programmes. The market value of the unexercised options at 31 March 2011 is estimated at DKK 0.6 million (2010: DKK 0.5 million) under the Black-Scholes formula. Royal Unibrew's obligations under the option programmes are covered by the Company's portfolio of treasury shares (106,674 shares).

BrEWERY SITE IN AARHUS 

As mentioned in Company Announcement No 1/2011 of 4 March 2011, Royal Unibrew has entered into a cooperation agreement with A. Enggaard A/S, Building Constructor, concerning the brewery site in Aarhus. The agreement is conditional upon adoption of the final local plan for the area and is based on an option model. The first option comprises a building right for at least 30,000 square metres to be exercised not later than nine months after the approval of the final local plan. Conditional on the first option being exercised, the following options may be exercised for purchases in the period 2013-2016.

The realisation and timing of the total sale will thus be subject to considerable uncertainty. In Royal Unibrew's opinion — given market conditions —   the cooperation model adopted creates a good basis for realising the value of the total brewery site.

At Royal Unibrew's request, the draft local plan has been further adjusted to match potential user needs and is expected to be approved by the municipal authorities of Aarhus in August 2011. The draft local plan comprises a project of 140,000 square metres in total distributed with 65% for business, education and culture and 35% for housing. In the Interim Financial Statements for the period 1 January — 31 March 2011, the brewery site has been measured as in the Annual Report for 2010.

MERGER BETWEEN Royal Unibrew Polska AND van pur

As announced in Company Announcement No 26/2010 of 3 December 2010, Royal Unibrew entered into a conditional agreement with the Polish brewery group Van Pur S.A. to merge its Polish activities with Van Pur. 

The merger was finally realised on 18 March 2011 to the effect that Royal Unibrew has transferred its shares of Royal Unibrew Polska Sp. z o.o. with the breweries in Lomza and Jedrzejow and has become a 20% shareholder in Van Pur S.A.  

As of March 2011, Van Pur S.A. has been recognised in Royal Unibrew's Financial Statements as a 20%-owned associate, and Royal Unibrew Polska Sp. z o.o. has been included in the Royal Unibrew Group consolidation for January and February 2011. 

On final realisation of the transaction, a profit has been realised from the sale of the Royal Unibrew Polska shares and the ownership share in Perla has been fully written down as required by prudence. Combined, this has not affected the Group's net financials.

According to the agreement concluded, Royal Unibrew A/S's investment in Van Pur S.A. is approx PLN 110 million compared to the previously expected amount of approx PLN 100 million. In consequence of the transaction, the consolidated balance sheet of Royal Unibrew has been reduced by approx PLN 25 million. 

As previously announced, Royal Unibrew A/S has granted Van Pur S.A. and its shareholders a purchase option. Due to the changed transaction structure, the option has been changed so that in the period 1 June 2012 to 15 March 2014 (both days included) Van Pur S.A. and its shareholders may acquire all Royal Unibrew shares of Van Pur S.A. at an amount between PLN 111 million and PLN 116 million.

SHARE BUY-BACK PROGRAMME UNDER THE Safe Harbour metHOD

The Supervisory Board of Royal Unibrew A/S has decided to buy back shares for treasury as mentioned in the Annual Report for 2010. The share buy-back is conditional on adoption of the proposal to buy back shares for treasury at the Annual General Meeting today.

Objective

The objective of the Company's share buy-back is to adapt the capital structure. It is the intention that treasury shares not utilised to fulfil the Group's previous option programme will be cancelled.

Authorisation

The share buy-back programme will be implemented within the authorisation expected to be granted to the Supervisory Board at the Annual General Meeting today. After this, the Company may buy back shares for treasury up to 10% of the total share capital.  At a later General Meeting, the Supervisory Board will propose that the shares bought back be cancelled. The share buy-back programme has been established and structured in accordance with the EU Commission Regulation No 2273/2003 of 22 December 2003 (the so-called Safe Harbour Method), which ensures that the Company is protected against violation of the insider legislation in relation to the share buy-back programme.

Share buy-back programme

The share buy-back programme is expected to be realised in the period from 29 April 2011 to 31 October 2011.

The total share buy-back in the period will not exceed a market price of DKK 110 million. Based on yesterday's share price (27 April 2011), this will correspond to 301,370 shares at a total nominal value of DKK 110 million equivalent to approx 2.7% of the share capital. As at today, Royal Unibrew holds 106,674 treasury shares of a nominal value of DKK 10 each, corresponding to 1% of the share capital. Royal Unibrew has entered into an agreement with Nordea Bank Danmark A/S for Nordea as Lead Manager to handle the share buy-back on behalf of Royal Unibrew. Nordea will make all trading decisions independently of and without involving Royal Unibrew.  The maximum number of shares that can be bought back in one single trading day may not be greater than 25% of the average daily volume of Royal Unibrew shares in the 20 trading days preceding the given trading day.

No shares will be purchased under the share buy-back programme at a price exceeding the higher of the following two prices:

• the price of the latest independent trade, and
• the highest current independent bid on NASDAQ OMX Copenhagen.

Royal Unibrew will be entitled to stop the share buy-back programme in the event of significant changes to the Company's circumstances or the market. If the programme is stopped, Royal Unibrew will disclose this in an announcement to the stock exchange and Nordea will stop buying back shares in the market.

Royal Unibrew will in separate weekly announcements to the stock exchange disclose the number of shares purchased under the share buy-back programme and their value.

OUTLOOK

Royal Unibrew maintains the outlook for 2011 as announced in March 2011 as follows:

*In 2011 Poland is included in the results until the end of February, whereas the Caribbean breweries are not included. In 2010 Poland and the Caribbean were recognised with net revenue of DKK 345 million, EBITDA of DKK 26 million and EBIT of DKK 18 million in the periods that are not included in 2011.

** Full-year effect in 2011 of changed estimate of depreciation of property, plant and equipment affects the figure positively by approx DKK 20 million.

The outlook for Royal Unibrew's financial development in 2011 has been prepared taking into account a number of circumstances, including how the Company's markets are affected in the wake of the financial crisis, expectations of the development in material expense categories as well as the effect of initiatives completed and initiated.

The key assumptions for the financial development in 2011 are described in the Annual Report for 2010.

DEVELOPMENTS IN INDIVIDUAL MARKET SEGMENTS

western europe

The Western Europe segment comprises the markets for beer and soft drinks in Denmark and the Nordic countries, Germany and Cross-border Trade as well as Italy. In Q1 2011 Western Europe accounted for 53% of group sales and for 68% of net revenue (2010: 53% and 67%, respectively).

Both sales and net revenue in Western Europe decreased by 3% in Q1 2011 compared to 2010 primarily due to declining demand in the Nordic market as well as the timing of Easter in Q1 2010 compared to Q2 2011. Royal Unibrew generally defended its market shares on branded beer and soft drinks.

Earnings before interest and tax (EBIT) increased from DKK 28 million in 2010 to DKK 40 million, and EBIT margin increased by 2.6 percentage points to 8.0%. The earnings development is attributable to factors with opposing effects: production costs were lower than in 2010 due to higher efficiency at the Danish breweries as well as lower input prices in Q1 2011 than in Q1 2010. However, EBIT was negatively affected by the market and product mix.

It is estimated that total branded beer sales in Denmark decreased by approx 4% in Q1 2011, while sales of branded soft drinks is estimated to be stable.

Royal Unibrew's total sales decreased by 1% in Q1 2011, whereas net revenue decreased by 4% due to a changed channel mix. It is estimated that Royal Unibrew has generally defended or won market shares for both branded beer products and branded soft drinks products in Q1.

In Italy Royal Unibrew's sales decreased by 3% in Q1 2011 in a slightly declining market. The decrease is primarily attributable to accumulation of inventories by distributors in Q1 2010. In spite of this, Royal Unibrew's net revenue went up by 1% due to a favourable product mix development. The super premium brand Ceres Strong Ale is estimated to have defended its market share.

In the German market and Cross-border trade sales decreased by 7% in 2011, whereas net revenue decreased by 8%. It is estimated that Royal Unibrew's market shares have been defended. The revenue decline is primarily due to the timing of Easter.

EASTERN EUROPE

The Eastern Europe segment primarily comprises the markets for beer, fruit juices and soft drinks in Latvia, Lithuania and Poland. In Q1 2011 Eastern Europe accounted for 39% of group sales and 22% of net revenue (2010: 37% and 20%, respectively).

Sales increased by 2% in 2011, whereas net revenue in the segment was unchanged from 2010. The sale of Royal Unibrew Polska in March 2011 has reduced sales by 19% and net revenue by 17%. Thus, organic sales and net revenue growths were 21% and 17%, respectively, and the development is caused by both increased volumes and an improved product mix. It is estimated that Royal Unibrew's market shares have generally been increased or defended.

Earnings before interest and tax (EBIT) improved by DKK 21 million in 2011 as compared to 2010 and EBIT margin increased from a negative 10.8% to 3.7%. The considerable improvement is partly due to increased volumes, partly to lower production costs by way of higher efficiency at the breweries and lower input prices. The EBIT improvement in the segment was primarily realised in Poland.

Both Lithuania and Latvia are seeing stabilisation of the demand for beer and soft drinks, and a slightly increasing trend is now recorded.

In Lithuania the total beer market in 2011 is estimated to have increased by approx 6%, whereas the estimated increase in the total fruit juice and soft drinks market was approx 1%. It is estimated that Royal Unibrew has defended its branded beer and fruit juice market shares.

In Latvia it is estimated that total beer consumption has increased by approx 6%, whereas the fruit juice and soft drinks market increased by approx 5% in 2011. Royal Unibrew increased its market share for branded beer, and it is estimated that the Group has defended its market shares for fruit juices and soft drinks.

Royal Unibrew Polska was only included by two months in Q1 2011 compared to three months in Q1 2010. Adjusting for this, sales and net revenue showed a positive development in Q1 2011 as expected. In consequence of the divestment in March 2011, the activities of the Polish subsidiary are included only until the end of February.

Malt AND OVERSEAS MARKETS

The Malt and Overseas Markets segment comprises the Group's distribution company in the Caribbean, the export and licence business for malt drinks as well as beer exports to other markets. In Q1 2011 sales and revenue represented 8% and 11%, respectively, of group sales and revenue (2009: 10% and 13%, respectively).

Sales and net revenue decreased by 19% in Q1 2011, and organically sales and net revenue decreased by 12% and 11%, respectively.  The organic development is primarily due to the planned change of the distribution and inventory structures in Europe.

Earnings before interest and tax (EBIT) were almost DKK 1 million lower in Q1 2011 than in 2010. In Q1 2010, income relating to the sale of the Caribbean breweries was realised. Adjusting for this, an EBIT increase was realised in Q1 2011 also in this segment.

The Americas comprise the Caribbean, the USA and Canada. Sales and net revenue in the Americas adjusted for the divestment of the Caribbean breweries were in Q1 2011 below the 2010 figures. The organic decline in sales and net revenue represented 12% and 4%, respectively. The development is primarily related to shifts in licence-based sales in the Caribbean, which is also the explanation of the higher realised revenue per volume unit.

In Europe sales and revenue decreased compared to 2010. The decrease is the result of a reduction of the inventories accumulated by some distributors in 2010. The reduction is an element in Royal Unibrew's wish to change distribution in order to better support business development. As planned, this will also affect Q2 2011.

In Africa and in the other markets of the segment, Royal Unibrew's activities developed positively in Q1 2011 showing increases in both sales and net revenue. In Africa double-digit growth was recorded in sales through distributors.
STATEMENT BY THE SUPERVISORY AND EXECUTIVE BOARDS ON THE INTERIM REPORT

The Executive and Supervisory Boards have presented the Interim Report of Royal Unibrew A/S. The Interim Report has today been considered and adopted.

The Interim Report, which has not been audited or reviewed by the Company's independent auditors, was prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the EU and additional Danish disclosure requirements for listed companies.

In our opinion, the Interim Financial Statements give a true and fair view of the financial position of the Group at 31 March 2011 as well as of the results of the Group operations and cash flows for the period 1 January — 31 March 2011.

In our Opinion, Management's Review gives a true and fair account of the development in the activities and financial circumstances of the Group, of results of operations for the period and of the overall financial position of the Group, and a description of the key risks and uncertainties facing the Group.

Faxe, 28 April 2011

Executive Board

Henrik Brandt

CEO

Peter Ryttergaard                             Johannes F.C.M. Savonije

CFO                                                      International Director                    

Supervisory Board

Kåre Schultz                                      Tommy Pedersen

Chairman                                           Deputy Chairman

Ulrik Bülow                                       Søren Eriksen                                    Steen Justesen                                                                               Kirsten Liisberg

Søren Lorentzen                               Jens Due Olsen                                  Walther Thygesen                                          Hemming Van

INCOME STATEMENT (DKK ‘000)

STATEMENT OF COMPREHENSIVE INCOME (DKK ‘000)

Assets (DKK ‘000)

LIABILITIES AND EQUITY (dkk ‘000)

CASH FLOW STATEMENT (dkk ‘000)

STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD 1 JanuarY — 31 MARCH 2011 (dkk ‘000)

The share capital at 31 March 2011 remains unchanged at DKK 111,864,980 from 31 March 2010 and is distributed on shares of DKK 10 each.

 
NoteS TO THE INTERIM REPORT

Note 1 — Significant Accounting Policies; Accounting Estimates and Judgements

The Interim 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 9 on financial instruments and IAS 24 on related party disclosures, the accounting policies are unchanged from those applied in the Annual Report for 2010, to which reference is made. None of the changes implemented affect the financial statements as compared to the previous recognition and measurement as well as note disclosures.

Except for the above description, the Annual Report for 2010 provides a total description of accounting policies significant to the financial statements.

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 uncertainties relating to the estimates are the same when preparing the interim financial reporting as when preparing the Annual Report at 31 December 2010.

Change of accounting estimates of depreciation periods for property, plant and equipment

In connection with the presentation of the Interim Report for 1 January — 30 September 2010, Royal Unibrew changed its estimate of depreciation periods for property, plant and equipment.

The changed estimate of depreciation periods for property, plant and equipment primarily results in a shorter depreciation period for buildings and a longer depreciation period for plant and machinery. The changed estimate is based on experience of the actual life of the assets, whereas the previously estimated depreciation periods differed from the actual useful lives.

Overall, due to the changed depreciation periods, Royal Unibrew's depreciation has been reduced by approx DKK 10 million in the period 1 January — 31 March 2011, and equity at 31 March 2011 is positively affected by approx DKK 24 million. The balance sheet total has increased by DKK 30 million relating to property, plant and equipment, and the provision for deferred tax has increased by approx DKK 6 million.

Royal Unibrew's EBIT margin for the period 1 January — 31 March 2011 is positively affected by 1.3 percentage points.

NoteS TO THE INTERIM REPORT

Note 2 — Segment Reporting

The Group's results break down as follows on segments (mDKK):

NoteS TO THE INTERIM REPORT

NoteS TO THE INTERIM REPORT

Note 4 — Business Acquisitions and Sales

Sales

In February 2010 Royal Unibrew A/S sold its shares of the four Caribbean subsidiaries, St. Vincent Breweries Ltd., Antigua Brewery Ltd., Antigua PET Plant Ltd. and Dominica Brewery & Beverages Ltd. The companies were included in the Consolidated Financial Statements until the end of January 2010.

The companies sold were recognised in the Group's results in 2010 at revenue of DKK 345 million, EBITDA of DKK 26 million and EBIT of DKK 18 million in the periods that will not be included in the Group's results for 2011.

Acquisitions

In March 2011 Royal Unibrew A/S acquired 20% of the Polish brewery company, Van Pur S.A. The company is included in the Consolidated Financial Statements as an associate.

The provisional fair value amounts to DKK 208,942k.
FINANCIAL HIGHLIGHTS AND KEY RATIOS FOR 1 JANUARY — 31 MARCH 2007-2011

PraCTICAL INFORMATION

FINANCIAL CALENDAR

2011

24 August 2011            Q2 Report 2011

30 November 2011      Q3 Report 2011

2012

30 April 2012                Annual General Meeting

COMPANY ANNOUNCEMENTS TO NASDAQ OMX COPENHAGEN IN 2011

DISCLAIMER

This announcement contains "forward-looking statements". Undue reliance should not be placed on forward-looking statements because they relate to and depend on circumstances that may or may not occur in the future and actual results may differ materially from those in forward-looking statements. Forward-looking statements include, without limitation, statements regarding our business, financial circumstances, strategy, results of operations, financing and other plans, objectives, assumptions, expectations, prospects, beliefs and other future events and prospects. We undertake no obligation, and do not intend to publicly update or revise any of these forward-looking statements, whether to reflect new information or future events or circumstances or otherwise.