Carlsberg – Group TreasuryLars Vestergaard, VP

Probably the best beer company in the world2

Group Treasury

Agenda

• A short introduction to Carlsberg's development

• Evolution in Treasury tasks

• Example

• Employee skill set

• What will the future bring?

Group Treasury

Probably the best beer company in the world3

Group Treasury

Transformation of Carlsberg

• Carlsberg have changed from Danishconglomerate to international brewer

• 3 transformational deals in 7 years– Merger with Orkla (2000)– Buyout of Orkla (2004)– Acquisition of Scottish and Newcastle (2008)

• Credit capacity is tight – but a lot stronger that2004

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Probably the best beer company in the world4

Group Treasury

Markets are changing

Probably the best beer company in the world5

Group Treasury

Development in debt

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21,0

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30,5

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Debt 1996 Debt beforetransaction

Acquisition AssumedBBH debt

Equity Debt aftertransaction

DK

K(b

n)

Probably the best beer company in the world6

Group Treasury

15 years ago

• Carlsberg was a conglomerate

• Board not approving any expansion outsideDenmark

• DKK 20bn assets under administration

• Generating more earning than beer business

• Bureaucracy

• Speculation in all financial markets

• 12 persons

Probably the best beer company in the world7

Group Treasury

5 years ago

• Carlsberg expanding internationally within beer• Cash management implementation• Internal bank• ALM modelling• “No speculation”• 8 persons

Group Treasury

Probably the best beer company in the world8

Group Treasury

Now

• Beer industry consolidation extremely fast

• Strategic transactions• M&A

• Complex funding process

• Business models and synergies

• Intra group capital structure and tax

• Credit rating

• Financial risk mgt. incl. commodities

• Reorganisation of business

• Cash race

• Plus everything we did 5 years ago.

• 7 persons

Business related

Probably the best beer company in the world9

Group Treasury

Core Treasury

• Core Treasury– Funding– Financial risk management– Internal bank– Etc

• Related Treasury tasks– Working capital– Tax– Reorganisation– Etc

• Where is the value?

Probably the best beer company in the world10

Group Treasury

Treasurys role is changing - fast

• From bank to business

• Manage and support fast growth

• Not to slow – not to fast

• Credit capacity is key constraint

• Value adding

• Cash flow

• Capital structure (significant impact !!)

• Manage big risks – ignore small (if symmetric)

• Prioritise

Probably the best beer company in the world11

Group Treasury

Example: Alumium hedging

REXAM TreasuryCarlsbergSubsidiary Bank

IC swap OTC swap

Probably the best beer company in the world12

Group Treasury

Aluminium hedging principles from 2008

Fixed volumes

J F M A M J J A S O N D

Vo

lum

e

J F M A M J J A S O N D

Pri

ce

…..are off set by intercompany aluminium swap

Volatile aluminium prices from supplier…..

Fixed prices inlocal currency

…hence some volume risk remains

Leading to…

Hedges are done on fixed budgeted volumes…

1

2

Probably the best beer company in the world13

Group Treasury

Group Treasury stakeholders

Procurement

AccountingShared Service

Centre

Group Legal &Risk

management

Group Financeand Tax

Subsidiaries

Group Treasury

BanksBond investors

Rating agencies

Executive Board

Other corporatefunctions

Probably the best beer company in the world14

Group Treasury

Employee pipeline

Financial

Operational

Banker

business controlling

15 yearsago

Today and inthe future

Probably the best beer company in the world15

Group Treasury

Trends in Treasury

• Strong financial competences, butnot product specialist

• Big picture understanding, butunderstand the details

• Simplification - not time forcomplicated solutions

• Project management skills - therewill be less bookkeeping andrepeated tasks

• Communication skills - with manydifferent stakeholders

• Knowledge of many disciplines(Tax, Accounting, Legal, business) –the Treasury angle is insufficient

• Prioritize - there will not be time tosolve everything

15 years ago

Bank Treasury

Today and going forwards

Bank Treasury

Probably the best beer company in the world16

Group Treasury

Credit crisis – may change Treasury significantly

Carlsberg Investors

Bank

Bonds

BondsBankloans

?

Probably the best beer company in the world17

Group Treasury

The future

• Less oriented towards banks

• Recruitment will be very difficult

• More integrated into the business

• Cleanup after credit crisis

HQ function - specialist

Operation

15 years ago

Today

Future