ANNUAL
REPORT
2021
MANAGEMENT
REVIEW
FINANCIAL
STATEMENTS
CARLSBERG GROUP ANNUAL REPORT 2021 TO OUR SHAREHOLDERS
2
TO OUR SHAREHOLDERS
Letter from the Chair & the CEO ......... 3
2021 HIGHLIGHTS
Strategic priorities ...................................... 5
Financial results .......................................... 7
OUR BUSINESS
Our regions ................................................... 9
Our brands ................................................. 10
2021 REVIEW AND 2022 EXPECTATIONS
Group ........................................................... 12
Western Europe ....................................... 16
Asia ............................................................... 18
Central & Eastern Europe .................... 20
Capital allocation .................................... 22
2022 earnings expectations ................ 23
OUR STRATEGY
Our purpose ............................................... 24
Business model ........................................ 25
Delivering on SAIL’22 ............................ 26
Our new strategy – SAIL’27 ................ 31
Addressing climate risks ....................... 33
Managing risks ......................................... 34
GOVERNANCE
Corporate governance ........................... 37
Supervisory Board................................... 43
Executive Committee ............................. 46
Share information ................................... 48
Forward-looking statements and
ESEF ............................................................. 49
CONSOLIDATED FINANCIAL STATEMENTS
Statements ...........................................51
Notes ......................................................55
PARENT COMPANY FINANCIAL
STATEMENTS
Statements ........................................ 124
Notes ................................................... 127
REPORTS
Management statement ................ 134
Auditor’s reports .............................. 135
OUR ANNUAL REPORTING
Our annual reporting suite comprises our Annual
Report, our Environment, Social & Governance
Report and our Remuneration Report. Each
includes content tailored to its specific audience,
and cross-references to the other reports where
relevant. The Environment, Social & Governance
Report serves as our annual Communication on
Progress to the United Nations Global Compact
and is, as such, our disclosure in accordance with
sections 99a, 99b and 99d of the Danish
Financial Statements Act. It can be downloaded
at this link:
https://www.carlsberggroup.com/reports-
downloads/carlsberg-group-2021-esg-report/
Front page: The DraughtMaster system enables
our on-trade customers to serve a wide selection
of core and premium beers and alcohol-free
brews.
ENVIRONMENT, SOCIAL &
GOVERNANCE REPORT
Our Environment, Social &
Governance Report provides
detailed information and data
on sustainability and our
responsible business behaviour.
ANNUAL REPORT
Our Annual Report is our detailed
annual dislosure relating to
company performance, strategy,
corporate governance and
financial results.
REMUNERATION REPORT
Our Remuneration Report
includes full disclosure of
Supervisory Board and Executive
Management remuneration.
To our shareholders
LETTER FROM THE CHAIR & THE CEO
A COMPANY
IN GOOD HEALTH
CARLSBERG GROUP ANNUAL REPORT 2021 TO OUR SHAREHOLDERS
3
Flemming Besenbacher has been a highly committed and
dedicated Chair. He has reinforced the unique legacy of Carlsberg,
while supporting long-term value creation for all stakeholders.
Cees ’t Hart
CEO
Cees ’t
Hart
The Carlsberg Group delivered
a strong set of results despite
the continued challenges
posed by COVID-19.
Despite the ongoing challenges of
the pandemic, we are pleased to
report good financial, strategic and
organisational health for the
Carlsberg Group.
Once again in 2021, our people,
businesses, customers and societies
at large were, to different degrees
and at different times, affected by
the pandemic. As was the case in
2020, our main focus remained the
health and wellbeing of our people
and at the same time ensuring the
health of our business.
It was encouraging to see that many
beer markets, particularly in Western
Europe, recovered during the summer
months, with consumers eager to
socialise and return to the on-trade.
This gives us confidence in the
resilience of the beer markets. We do
recognise, though, that many markets
are still suffering and continue to
face significant adversity.
FINANCIAL HEALTH
Our financial results saw strong
progress in 2021, albeit supported by
favourable comparables. Revenue
grew organically by 10.0%, the result
of 7.4% volume growth and 3%
higher revenue/hl. Operating profit
was DKK 10.9bn, with organic
growth 12.5%. These results brought
our 2021 figures well ahead of 2019.
Free cash flow was DKK 8.9bn, and
ROIC improved by 140bp to 10.3%.
Read more about our Group results
on pages 12-15.
These results were achieved thanks
to the strength of our brand portfolio
and geographic footprint, and the
embedding of our Funding the
Journey culture across the business.
Combined, these factors safeguard
both the short- and long-term
health of the Carlsberg Group.
Uncertainty and volatility continued
during 2021. However, thanks to
better-than-expected results across
the Group, we were able to upgrade
our earnings expectations twice – in
August and October.
During the year, we made significant
cash returns to our shareholders. In
March, we paid a dividend of DKK
3.2bn. In addition, we carried out
quarterly share buy-back
programmes amounting in total to
DKK 3.6bn in fiscal 2021. On 4
February 2022, we initiated a new
quarterly share buy-back programme
of DKK 1bn. More information on
the share buy-back programmes can
be found on page 22.
STRATEGIC HEALTH
The choices made in SAIL’22 and the
execution of our strategic priorities
have been key for our financial
Cees
’t Hart
Flemming
Besenbacher
CARLSBERG GROUP ANNUAL REPORT 2021 TO OUR SHAREHOLDERS
4
performance since 2016 – and for
our ability to navigate through the
rough seas of COVID-19.
in diverse thinking and input to
ensure relevance and viability.
Priorities such as craft & speciality
and alcohol-free brews delivered
strong progress during 2021. Our
core beer business also saw good
recovery from the severe headwind
in 2020. And we are well on track to
achieve our 2022 sustainability
targets.
Read about the progress on our
strategic priorities on pages 26-30.
More specifically, our Environment,
Social & Governance Report,
available online on
www.carlsberggroup.com, contains a
wealth of information and data on
our Together Towards ZERO
sustainability programme and targets.
A NEW HORIZON
Since 2016, SAIL’22 has guided us
well on our journey to become a
successful, professional and
attractive company in our markets.
As its name suggests, SAIL’22 is now
coming to an end, and 2022 will be
a year of transition. During the
second half of 2021 and early 2022,
we went through the process of
defining our next strategy. In doing
so, we engaged a large number of
colleagues from various markets and
functions across our regions, bringing
As we are confident that there is still
more on tap for many of the SAIL’22
priorities, the new strategy is an
evolution rather than a revolution.
We have therefore named it SAIL’27.
SAIL’27 will define our business
agenda and support continued value
growth in the years to come. SAIL’27
is presented on pages 31-32.
ORGANISATIONAL HEALTH
Considering the immense challenges
for all employees – on a personal
and professional level – in both 2020
and 2021, we were very pleased
with the results of our 2021
employee survey.
The results were largely on a par
with the latest survey conducted in
2019, indicating that our many
initiatives during the challenging
times of COVID-19 to support and
take care of our employees, to
empower them and to ensure good
communication have resonated well.
We are proud of our strong purpose
and raison d’être (see page 24). We
are confident that this has been an
important contributing factor for the
motivation of our people and our
ability to navigate the uncharted
waters of COVID-19.
In 2021, we intensified our focus and
commitment in relation to diversity
and inclusion (D&I). Our D&I Council
will play a pivotal role in driving our
D&I agenda across our business and
shaping our future D&I journey.
CHANGING REGIONAL
STRUCTURE AND EXCOM
In 2021, we changed our regional
structure to optimise the regional
management and ensure a better
balance between our European
regions.
During the year, we welcomed three
new members to the Executive
Committee: Leo Evers took over the
responsibility for Asia from Graham
Fewkes, who went to Western
Europe; Victor Shevtsov became
head of Supply Chain; and Joris
Huijsmans joined as CHRO. Meet
the ExCom on pages 46-47.
SUPERVISORY BOARD CHANGES
AND NEW CHAIR
At the Annual General Meeting
(AGM) on 14 March 2022, the
Carlsberg Foundation will reduce its
representation on the Supervisory
Board from five to three members.
Lars Fruergaard Jørgensen and Lars
Stemmerik have notified the Board
that they are not standing for re-
election. Both have been valued
members of the Board and we would
like to extend our gratitude to them.
The Board will propose Punita Lal
and Mikael Aro as new members.
See page 45.
THANK YOU
Once again this past year, we were
impressed by the high level of
engagement and commitment from
Carlsberg’s employees and would
like to say thank you to each and
every one.
We greatly appreciate the continued
support and trust shown to us by our
shareholders. We also extend our
thanks to all suppliers and customers
– not least our on-trade customers,
many of whom have been through
another very difficult year – for their
cooperation during 2021.
We are well prepared for 2022 which
will bring headwind in the form of
cost inflation and possibly further
COVID-19 obstacles. We remain
hopeful that the continued roll-out
of vaccines across the world will be
successful in curtailing the pandemic.
Flemming Besenbacher, Chair
Cees ’t Hart, CEO
PASSING ON THE BATON
The upcoming AGM will mark the
end of my ten-year Chairship of the
Supervisory Board. As the end of
SAIL’22 approaches, I have decided
that the time is right to pass on the
responsibility to Henrik Poulsen,
whom the Supervisory Board will
propose as new Chair. The Board will
propose the Chair of the Board of
Directors of the Carlsberg Foundation,
Majken Schultz, as new Deputy Chair.
I am proud to hand over a company
that has seen some really impressive
development since Cees ‘t Hart took
the helm in 2015, and that today is
stronger than ever. Since June 2015,
Carlsberg’s share price has increased
by around 90%, dividend per share
has increased two-and-a-half times
and share buy-backs totalling DKK
10.6bn have been carried out.
The changing of the guards also
involves an historic change with the
reduced representation of the
Carlsberg Foundation on the Board.
In 2023, the Foundation will further
reduce its representation on the
Board to only two members. This
change is in line with good corporate
governance and to the benefit of
Carlsberg. The Foundation will
remain a committed, value-oriented
shareholder, safeguarding the long-
term health of the Carlsberg Group.
I would like to personally thank the
employees and management team
for the excellent cooperation during
the past years, and the Carlsberg
shareholders for trusting me with the
Chairship of this great company.
Flemming Besenbacher, Chair
STRATEGIC PRIORITIES
RESILIENCE
AND DELIVERY
CARLSBERG GROUP ANNUAL REPORT 2021 2021 HIGHLIGHTS
5
The resilience of our SAIL’22 strategy was confirmed
again in 2021. We saw strong progress on our strategic
priorities despite the continued challenges posed by
COVID-19 in many of our markets.
POSITION FOR GROWTH
STRENGTHEN THE CORE
CHINA
+15%
+3%
VOLUME
GROWTH
REVENUE/
HL
Our Chinese business delivered strong
volume and value growth, driven by our
attractive portfolio of local and international
premium brands. Read more on page 19.
FUNDING
THE
JOURNEY
Our Funding the Journey culture, with its
continuous focus on efficiencies and costs,
remained an important driver of our financial
performance. Read more on pages 12-15.
POSITION FOR GROWTH
POSITION FOR GROWTH
STRENGTHEN THE CORE
+15%
GROWTH IN
CRAFT & SPECIALITY
Our craft & speciality portfolio had
another year of strong volume growth,
supported in particular by the global
speciality brands 1664 Blanc and
Somersby. Read more on page 28.
+17%
GROWTH IN
ALCOHOL-FREE BREWS
Baltika 0 continued to lead the alcohol-
free brew (AFB) category in Eastern
Europe, including Russia and Ukraine.
Local brands have been key for our AFB
growth. Read more on page 28.
>50%
E-COMMERCE
REVENUE GROWTH
Working with third-party retailers and
using our own Carl’s Shop, our e-commerce
business is rapidly expanding. Supported
by strong volume growth, revenue was up
by more than 50%.
STRATEGIC PRIORITIES
TOGETHER
TOWARDS ZERO
CARLSBERG GROUP ANNUAL REPORT 2021 2021 HIGHLIGHTS
6
We believe sustainability and profitability can work
together in harmony. Our aim is to create sustainable
value growth by optimising the balance between our
financial performance and sustainability progress.
-2%
In 2021, we reduced CO2 emissions per hl
of beer produced by 2% to 4.2 kg CO2/hl.
Since 2015, the reduction has been 40%.
We were again included in the CDP A List,
which recognises corporate leaders for
transparency and action on climate risks
and opportunities.
ZERO
IRRESPONSIBLE
DRINKING
ZERO
CARBON
FOOTPRINT
83
We are proud of our great beer
brands, which for many people are
at the heart of social occasions,
and we want everyone to enjoy our
products responsibly. In 2021, we ran
83 responsible drinking campaigns,
reaching more than 33 million people
across our markets.
-4%
In 2021, we reduced our water use
by 4%, averaging 2.7 hl of water
to produce 1 hl of beer. In total, we
have achieved a 21% improvement
since 2015. We also achieved an A
rating from CDP for transparency
and action on water.
ZERO
ACCIDENTS
CULTURE
ZERO
WATER
WASTE
32
In 2021, 32 of our breweries achieved the
safety milestone of 1,000 days without a
lost-time accident. However, our overall
employee accident rate rose by 44% to 4.3,
mainly due to the breweries that recently
joined our business. We are working hard
to embed our ZERO accidents culture
across every site.
Read more about our Together Towards ZERO achievements in
the Environment, Social & Governance Report, available online on
www.carlsberggroup.com
FINANCIAL RESULTS
BALANCING OUR
GOLDEN TRIANGLE
CARLSBERG GROUP ANNUAL REPORT 2021 2021 HIGHLIGHTS
7
Balancing our Golden Triangle
has been and will remain
an important performance
management KPI at Group,
regional and market level.
The Golden Triangle aims to
optimise the balance between
market share/ volumes, gross
profit after logistics (GPaL) margin,
operating profit and cash generation,
thereby creating sustainable value
growth.
The strong results in 2021 were
supported by our Funding the
Journey culture and achieved
despite continued impact from
COVID-19 across many of our
markets, albeit to different degrees
and at different times. Read about
Group and regional results on
pages 12-22 and in the consolidated
financial statements.
We significantly increased the cash
returns to our shareholders while
maintaining the leverage ratio well
below our target of below 2x. For
2021, total cash returns in the form
of dividends and share buy-backs
amounted to DKK 6.8bn. Read more
on page 22.
TOP- AND BOTTOM-LINE GROWTH, STRONG CASH FLOW AND INCREASING RETURNS
REVENUE AND ORGANIC GROWTH¹
OPERATING PROFIT AND MARGIN¹
CASH FLOW
70
60
50
40
30
20
10
12%
8%
4%
0%
-4%
-8%
-12%
12
10
8
6
4
2
0
18%
16%
14%
12%
10%
8%
6%
12
10
8
6
4
2
0
2016
2017
2018
2019
2020
2021
2016
2017
2018
2019
2020
2021
2016
2017
2018
2019
2020
2021
Revenue
(DKKbn)
Organic growth
(%, rhs)
Operating profit
(DKKbn)
Operating margin
(%, rhs)
Free operating
cash flow (DKKbn)
Free cash flow
(DKKbn)
NET INTEREST-BEARING DEBT (NIBD)
AND LEVERAGE
RETURN ON INVESTED CAPITAL (ROIC)
CASH RETURNS TO SHAREHOLDERS
35
30
25
20
15
10
5
0
3.5x
3.0x
2.5x
2.0x
1.5x
1.0x
0.5x
0.0x
28%
24%
20%
16%
12%
8%
4%
0%
7
6
5
4
3
2
1
0
70%
60%
50%
40%
30%
20%
10%
0%
2016
2017
2018
2019
2020
2021
2016
2017
2018
2019
2020
2021
2016
2017
2018
2019
2020
2021
NIBD
(DKKbn)
NIBD/
EBITDA (rhs)
ROIC (%)
ROIC excl. goodwill (%)
Dividends
(DKKbn)
Share buy-back
(DKKbn)
Adj. payout
ratio (%, rhs)
1 Comparative figures for 2016-2018 and 2016 have not been restated to include IFRS 16 and IFRS 15 respectively.
5-year key figures
Volumes (million hl)
Beer
Other beverages
DKK million
Income statement
Revenue
Gross profit
EBITDA
Operating profit before special items
Special items, net
Financial items, net
Profit before tax
Income tax
Consolidated profit
Attributable to
Non-controlling interests
Shareholders in Carlsberg A/S (net profit)
Shareholders in Carlsberg A/S, adjusted²
Statement of financial position
Total assets
Invested capital
CARLSBERG GROUP ANNUAL REPORT 2021 2021 HIGHLIGHTS
8
2021
2020
2019
2018¹
2017¹
2021
2020
2019
2018¹
2017¹
119.6
22.6
110.1
20.0
113.0
21.9
112.3
20.8
107.1
19.2
66,634
58,541
65,902
62,503
60,655
31,327
15,474
10,862
-253
-381
10,228
-2,219
8,009
28,361
14,085
9,699
-247
-411
9,041
-2,233
6,808
32,638
15,007
10,465
501
-738
10,228
-2,751
7,477
31,220
13,420
9,329
-88
-722
8,519
-2,386
6,133
30,208
13,583
8,876
-4,565
-788
3,523
-1,458
2,065
1,163
6,846
6,943
778
6,030
6,363
908
6,569
6,160
824
5,309
5,359
806
1,259
4,925
Investments
Acquisition of property, plant and
equipment and intangible assets, net
Acquisition and disposal of subsidiaries,
net
Financial ratios
Gross margin
EBITDA margin
Operating margin
Effective tax rate
Return on invested capital (ROIC)
ROIC excl. goodwill
Equity ratio
NIBD/equity ratio
NIBD/EBITDA
Interest cover
Stock market ratios
Earnings per share (EPS)
Earnings per share, adjusted (EPS-A)²
Free cash flow per share (FCFPS)
Dividend per share (proposed)
Payout ratio
Payout ratio, adjusted³
Share price (B shares)
Market capitalisation
-4,223
-4,396
-4,592
-4,027
-4,053
-635
-2,409
-
-974
268
%
%
%
%
%
%
%
x
x
x
DKK
DKK
DKK
DKK
%
%
47.0
23.2
16.3
21.7
10.3
27.5
34.8
0.39
1.24
48.4
49.5
24.1
16.6
24.7
8.9
23.2
33.1
0.49
1.51
22.8
15.9
26.9
8.8
22.4
35.3
0.41
1.25
50.0
21.5
14.9
28.0
8.1
20.9
38.5
0.36
1.29
49.8
22.4
14.6
41.4
6.9
15.7
41.1
0.40
1.45
28.52
23.59
14.17
12.92
11.26
47.6
48.3
61.5
24.0
51
49
41.3
43.6
34.5
22.0
55
50
43.7
41.0
65.9
21.0
49
50
34.8
35.2
40.2
18.0
52
51
8.3
32.3
56.9
16.0
194
50
DKK
1,129.5
975.2
993.8
692.6
745.0
DKKm
163,149
142,676
145,805
104,830
112,116
Invested capital excl. goodwill
Net interest-bearing debt (NIBD)
31,152
19,162
31,049
33,032
21,263
18,776
17,313
Equity, shareholders in Carlsberg A/S
43,941
39,308
43,449
45,302
46,930
126,383
118,816
123,063
117,700
83,636
81,541
86,162
82,721
31,792
114,251
84,488
33,991
19,638
Statement of cash flows
Cash flow from operating activities
Cash flow from investing activities
Free cash flow
13,259
10,928
-4,383
-5,871
8,876
5,057
12,239
-2,277
9,962
12,047
-5,891
6,156
11,834
-3,154
8,680
Number of shares at year-end, excl.
treasury shares
Weighted average number of shares,
excl. treasury shares
1,000
141,892
145,102
147,996
152,457
152,390
1,000
143,848
146,104
150,411
152,428
152,496
Number of issued shares at year-end
1,000
145,257
148,157
152,557
152,557
152,557
¹ Comparative figures for 2017-2018 have not been restated to include IFRS 16.
² Adjusted for special items after tax.
³ Proposed dividend on number of shares at year-end as a percentage of net profit adjusted for special items after tax.
Please refer to section 9.2 General accounting policies in the consolidated financial statements for a definition and
calculation of key figures and financial ratios.
OUR REGIONS
A WELL-BALANCED
MARKET PORTFOLIO
Our regions provide an attractive exposure to
mature and emerging markets. We have a number
1 or 2 position in 22 markets, and around 70% of
our volumes are sold in these markets.
CARLSBERG GROUP ANNUAL REPORT 2021 OUR BUSINESS
9
WESTERN EUROPE
ASIA
CENTRAL & EASTERN EUROPE
SHARE OF VOLUME
SHARE OF VOLUME
SHARE OF VOLUME
France & Switzerland
Nordics
Malaysia & Singapore
China & Hong Kong SAR
Export & License
Russia
India & Nepal
Laos, Vietnam
& Cambodia
Baltics, Italy
& Greece
Balkan markets
Other CIS markets
UK, Poland
& Germany
SHARE OF GROUP RESULTS
SHARE OF GROUP RESULTS
SHARE OF GROUP RESULTS
30%
46%
36%
VOLUME
REVENUE
OPERATING
PROFIT
31%
29%
40%
VOLUME
REVENUE
OPERATING
PROFIT
39%
25%
24%
VOLUME
REVENUE
OPERATING
PROFIT
See pages 16-22 for the 2021
regional results.
OUR BRANDS
AN ATTRACTIVE
BEER PORTFOLIO...
CORE BEER
+17%
volume
growth
+5%
volume
growth
S
D
N
A
R
B
L
A
N
O
T
A
N
R
E
T
N
I
I
S
D
N
A
R
B
R
E
W
O
P
L
A
C
O
L
CRAFT &
SPECIALITY
+24%
volume
growth
ALCOHOL-FREE
BREWS
CARLSBERG GROUP ANNUAL REPORT 2021 OUR BUSINESS
10
Our beer portfolio spans our core beer brands, including local
power brands and international premium brands, craft & speciality
brands and alcohol-free brews. This combination of brands has
been an important driver of results in recent years.
6%
Craft & speciality1
4%
Alcohol-free brews
90%
Core beer
SHARE OF
OWN BEER
VOLUMES
81%
Core beer
14%
Craft & speciality1
5%
Alcohol-free
brews
SHARE OF
OWN BEER
REVENUE
1 Including Somersby.
OUR BRANDS
... AND APPEALING
OTHER BEVERAGES
CARLSBERG GROUP ANNUAL REPORT 2021 OUR BUSINESS
11
Our other beverages encompass both alcoholic and non-
alcoholic beverages and account for 16% of total Group
volumes. These categories are expected to deliver attractive
growth potential in the coming years. As part of SAIL’27,
we will therefore increase our focus on other beverages.
OTHER BEVERAGES
WITH ALCOHOL
+10%
volume
growth1
OTHER BEVERAGES
WITHOUT ALCOHOL
16%
Other alcoholic
and non-alcoholic
beverages
84%
Total beer2
SHARE OF
TOTAL GROUP
VOLUMES
21%
Other alcoholic
and non-alcoholic
beverages
79%
Total beer2
SHARE OF
TOTAL GROUP
BEVERAGE
REVENUE
1 Somersby is included in the craft & speciality category in SAIL'22.
2 Core beer, craft & speciality and alcohol-free brews.
2021 review and 2022 expectations
GROUP
A STRONG
SET OF RESULTS
2021 performance was well
ahead of pre-COVID 2019,
delivering strong top-line
growth and operating cash
flow, and increasing returns
to shareholders.
As a result of the continued high
level of uncertainty in 2021, we
issued a broad guidance for organic
operating profit growth at the
beginning of the year. Due to strong
performance, we were able to
upgrade our earnings expectations
twice. See table to the right.
VOLUMES
Total Group volumes were 142.2m
hl, increasing organically by 7.4%
and by 9.3% including acquisitions.
Beer volumes grew organically by
6.4%, driven by solid growth in Asia
and Central & Eastern Europe, and
supported by easy comparables.
Other beverage volumes grew
organically by 12.9%, supported by
double-digit growth in all three
regions.
INCOME STATEMENT
Revenue was DKK 66.6bn. Organic
revenue growth was 10.0%, while
reported revenue growth was 13.8%,
mainly impacted by the acquisition
of Marston’s brewing activities in the
UK in October 2020. The small
negative currency impact was due
to adverse currency movements
across Central & Eastern Europe and
certain markets in Asia, partly offset
by a strengthening of primarily the
Chinese, Norwegian, British and
Swedish currencies.
Revenue/hl grew organically by 3%
as a result of recovery of the on-
trade in some markets due to fewer
restrictions in 2021 compared with
2020 and solid growth of premium
products across the regions.
Gross profit increased organically by
8.7% and by 10.5% in reported terms,
positively impacted by acquisitions
and negatively by currencies. The
gross profit margin declined due to
acquisitions that came in with a
lower gross margin than the Group,
the higher cost of goods sold
CARLSBERG GROUP ANNUAL REPORT 2021 2021 REVIEW AND 2022 EXPECTATIONS
12
(COGS), particularly in Central &
Eastern Europe, and a negative
country mix.
Operating expenses, including
marketing investments, grew
organically by 8%, mainly driven
by higher marketing investments
and higher administrative expenses.
Marketing investments grew
organically by 11%. The higher
administrative expenses were the
result of higher accruals related to
variable pay due to the strong
financial performance for the year,
the impact of acquisitions, currencies
and certain one-off provisions.
Despite this, total SG&A (excluding
marketing) to revenue declined by
approximately 60bp to 14.0% (-40bp
organically).
Earnings expectations 2021
Date
5 February 2021
28 April 2021
18 August 2021
27 October 2021
4 February 2022
Group
Expectation for operating profit
Organic growth in operating profit within the range of 3-10%
Organic growth in operating profit within the range of 5-10%
Organic growth in operating profit within the range of 8-11%
Organic growth in operating profit within the range of 10-12%
Organic growth in operating profit of 12.5% (reported)
2020
Organic
Acq., net
Change
Volumes (million hl)
Beer
Other beverages
Total volume
DKK million
Revenue
Operating profit
Operating margin (%)
110.1
20.0
130.1
58,541
9,699
16.6
6.4%
12.9%
7.4%
10.0%
12.5%
2.2%
0.0%
1.9%
4.6%
0.3%
FX
-
-
-
-0.8%
-0.8%
Change
2021
Reported
119.6
22.6
142.2
66,634
10,862
16.3
8.6%
12.9%
9.3%
13.8%
12.0%
-30bp
CARLSBERG GROUP ANNUAL REPORT 2021 2021 REVIEW AND 2022 EXPECTATIONS
13
Operating profit before depreciation,
amortisation and impairment losses
(EBITDA) grew organically and in
reported terms by 9.9%. The EBITDA
margin declined by 90bp to 23.2%
due to acquisitions.
Special items were also impacted by
one-off costs related to COVID-19,
including safety measures and
donations. Read more about net
special items in section 3.1 in the
consolidated financial statements.
Group operating profit grew
organically by 12.5%, supported by
growth in all three regions. Reported
operating profit grew by 12.0%.
Excluding the impact from
acquisitions, the operating profit
margin increased by 30bp to 16.9%.
The reported operating margin
declined by 30bp to 16.3% due to the
margin-dilutive impact of Marston’s
brewing activities.
Section 1 in the consolidated
financial statements contains more
details on operating activities.
Net special items (pre-tax)
amounted to DKK -253m (2020:
DKK -247m). Special items were
positively impacted by reversal of
provisions made in purchase price
allocations in prior years in China
and Cambodia of DKK 1,238m,
mainly related to indirect taxes and
certain employee obligations that
were either settled during the year
or are no longer expected to be
realised. This was partly offset by
impairment and write-downs of the
Baltika brand in Russia and our
investment in Tibet Lhasa Brewery.
Financial items, net, amounted to
DKK -381m (2020: DKK -411m).
Excluding currency gains and losses,
financial items, net, amounted to
DKK -319m (2020: DKK -550m),
positively impacted by the reversal
of the previous write-down of the
loan to our partner in Carlsberg
South Asia Pte Ltd. This was partly
offset by higher provisions related to
interest on tax cases in certain
markets. Net currency losses and fair
value adjustments amounted to DKK
-62m, mainly related to USD/EUR
deposits and hedging of packaging
materials in Eastern Europe and
USD-related currency losses in Asia.
Read more about net financial items
in section 4.1 in the consolidated
financial statements.
Tax totalled DKK -2,219m (2020:
DKK -2,233m). The effective reported
tax rate declined by 300bp to 21.7%,
impacted by non-taxable gains in
special items and lower net tax
provisions. Excluding special items,
the effective tax rate was 23.5%.
The Carlsberg Group’s share of
consolidated profit (net profit) was
DKK 6,846m (2020: DKK 6,030m).
The increase was primarily driven by
the higher operating profit, lower net
financials and the lower tax rate.
Adjusted net profit (adjusted for
special items after tax) grew by
9% to DKK 6,943m, and adjusted
earnings per share (excluding
treasury shares) grew by 11% to
DKK 48.3. In addition to the higher
operating profit, lower net financials
and lower tax rate, earnings per
share were supported by the share
buy-backs.
STONEWALL
INN IPA
Brooklyn Brewery has been a proud partner of
the Stonewall Inn since 2017, when the brewery
was asked to create a beer to help raise awareness,
generate funds and make real change for the
LGBTQ+ community and its non-profit The
Stonewall Inn Gives Back Initiative (SIGBI). SIGBI
exists to support LGBTQ+ communities in their fight
by funding grassroots activists and their work.
Read more in our Environment, Social &
Governance Report. In 2021, Carlsberg launched
the unapologetically refreshing Stonewall Inn IPA in
markets in Western Europe and Asia. Our total
Brooklyn brand portfolio grew volumes by 16%.
GROW CRAFT & SPECIALITY
CARLSBERG GROUP ANNUAL REPORT 2021 2021 REVIEW AND 2022 EXPECTATIONS
14
Non-controlling interests were
DKK 1,163m (2020: DKK 778m),
positively impacted by strong growth
for Carlsberg Chongqing Breweries
Group in China, the reversal of
provisions made in purchase price
allocations in China (DKK 189m
impact on non-controlling interests)
and the inclusion of Carlsberg
Marston’s Brewing Company in the
UK. Excluding the impact from
special items, non-controlling
interests were DKK 1,082m.
STATEMENT OF FINANCIAL
POSITION
ASSETS
Total assets amounted to DKK
126,383m at 31 December 2021 (31
December 2020: DKK 118,816m).
The increase was mainly due to
higher intangible assets, inventories,
trade and other receivables.
Total non-current assets amounted
to DKK 103,292m (31 December
2020: DKK 99,820m). Intangible
assets totalled DKK 68,475m (31
December 2020: DKK 66,061m).
The increase was mainly due to the
acquisition of Marston’s brewing
activities and Wernesgrüner Brewery
as well as currency appreciation,
primarily of the Russian and
Chinese currencies, partly offset by
impairment of brands and other
intangible assets. Property, plant and
equipment totalled DKK 26,648m
(31 December 2020: DKK 26,299m),
impacted by currency movements
and capital expenditure offset by
disposals and depreciation. Financial
assets totalled DKK 8,169m (31
December 2020: DKK 7,460m). The
increase was due to recognition of
the business in Nepal as an
associate.
Total current assets amounted to
DKK 22,900m (31 December 2020:
DKK 18,996m). Inventories increased
by DKK 778m to DKK 5,391m,
impacted in Asia by stocking prior to
the Chinese New Year and currency
appreciation. Trade receivables
increased by DKK 1,985m due to
higher sales than in 2020. The
increase in other receivables was
mainly due to fair value adjustments
linked to higher aluminium prices and
the reversal of the write-down of the
loan to our partner in Carlsberg
South Asia Pte Ltd. Cash and cash
equivalents amounted to DKK
8,344m (31 December 2020: DKK
8,093m).
Section 2 in the consolidated
financial statements contains more
details on assets.
EQUITY AND LIABILITIES
Equity
Equity amounted to DKK 48,756m
at 31 December 2021 (31 December
2020: DKK 43,362m), DKK 43,941m
of which was attributed to share-
holders in Carlsberg A/S and DKK
4,815m to non-controlling interests.
The net change in equity of DKK
+5,394m was explained by the
consolidated profit of DKK 8,009m,
non-controlling interests of DKK
+941m and foreign exchange
adjustment in other comprehensive
income of DKK +3,307m, offset by
the dividend payout of DKK -3,686m
and the share buy-backs of
DKK -3,600m.
Liabilities
Total liabilities were DKK 77,627m
(31 December 2020: DKK 75,454m).
At 31 December 2021, non-current-
and current borrowings amounted
to DKK 28,922m. Non-current
borrowings declined by DKK
6,536m, while current borrowings
increased by DKK 5,208m due to the
reclassification of a EUR 750m bond,
which matures in November 2022.
Non-current tax liabilities, retirement
benefit obligations etc. were DKK
11,590m (31 December 2020:
DKK 17,714m). The decline was
mainly due to the revaluation and
reclassification to current liabilities of
the put option held by our partner in
Carlsberg South Asia Pte Ltd and
the reversal of provisions made in
purchase price allocations in previous
years in China and Cambodia.
Current liabilities excluding current
borrowings increased to DKK
37,115m (31 December 2020: DKK
27,490m). Trade payables increased
by DKK 4,044m, impacted by
currencies and a higher activity level.
Other current liabilities, excluding
deposits on returnable packaging,
increased by DKK 5,353m,
impacted by the above-mentioned
reclassification of the put option held
by our partner in Carlsberg South
Asia Pte Ltd and higher bonus
accruals. Read more about the
put option held by our partner in
Carlsberg South Asia Pte Ltd in
section 5.4 in the consolidated
financial statements.
CASH FLOW
Free operating cash flow was DKK
9,460m, an increase of DKK 2,367m.
Free cash flow amounted to DKK
8,876m (2020: DKK 5,057m). The
increase was mainly impacted by
the higher EBITDA, a higher net
contribution from the change in
working capital and lower financial
investments than in 2020.
Net cash flow amounted to
DKK -72m (2020: DKK +3,247m),
impacted by higher cash returns to
shareholders in the form of dividends
and share buy-backs, in total
amounting to DKK 6,787m, and
net cash flow in 2020 being
positively impacted by two bond
placings of EUR 500m each.
CASH FLOW FROM OPERATING
ACTIVITIES
Cash flow from operating activities
amounted to DKK 13,259m (2020:
DKK 10,928m).
EBITDA was DKK 15,474m (2020:
DKK 14,085m).
The change in trade working
capital was DKK +802m (2020: DKK
+1,321m), mainly due to strong cash
management discipline and higher
trade payables. Average trade
working capital to revenue for the
year was -18.4%, on par with 2020
(-18.6%).
The change in other working
capital was DKK +617m (2020:
DKK -1,033m), mainly impacted by
VAT, bonus accruals and provisions.
Section 6 in the consolidated
financial statements contains more
details on assets.
Restructuring costs paid amounted
to DKK -372m (2020: DKK -531m).
Net interest etc. paid amounted to
DKK -920m (2020: DKK -424m).
The increase was mainly due to the
settlement of financial instruments
and provisions. Corporation tax paid
was DKK -1,977m (2020:
DKK -1,958m).
CARLSBERG GROUP ANNUAL REPORT 2021 2021 REVIEW AND 2022 EXPECTATIONS
15
CASH FLOW FROM INVESTING
ACTIVITIES
Cash flow from investing activities
was DKK -4,383m (2020: DKK -
5,871m).
Operational investments totalled
DKK -3,799m (2020: DKK -3,835m).
Acquisition of property, plant and
equipment and intangible assets
(CapEx) amounted to DKK -4,221m
(2020: DKK 4,396m). Excluding the
purchase of the Brooklyn brand
rights in 2020, operational
investments increased by DKK 625m.
Total financial investments
amounted to DKK -582m (2020:
DKK -2,036m), impacted by deferred
considerations related to the
acquisition of Marston’s brewing
activities and the deconsolidation of
the business in Nepal.
RETURN ON INVESTED CAPITAL
Return on invested capital (12-
month average) increased by 140bp
to 10.3%, driven by higher profits and
the lower tax rate. ROIC excluding
goodwill improved by 430bp to
27.5%.
FINANCING
At 31 December 2021, gross
financial debt amounted to DKK
28,922m and net interest-bearing
debt to DKK 19,162m (2020: DKK
21,263m). The strong free cash flow
more than offset the cash out-flow
from the share buy-back programme
(DKK 3.6bn) and dividends to
shareholders and non-controlling
interests (DKK 3.7bn). The difference
of DKK 9,760m between gross
financial debt and net interest-
bearing debt mainly comprised cash
and cash equivalents of DKK
8,344m.
At 31 December 2021, the average
debt duration was 4.8 years (2020:
5.6 years). Of the gross financial
debt, 79% (DKK 22,755m) was long
+10%
SOMERSBY VOLUME GROWTH
Developed in 2008, the Somersby brand was originally launched in Denmark.
Today, Somersby is available in more than 70 markets world-wide. Somersby is
associated with optimism and playfulness, and the brand portfolio, which includes
several fruity variants, was recently extended with alcohol-free variants. The
Somersby portfolio and its repeatable model are powerful drivers for the brand’s
strong global growth, and in 2021 Somersby volumes grew by 10%. In SAIL’27, we
will further strengthen our focus on categories beyond beer, including Somersby.
GROW CRAFT & SPECIALITY AND
WIN IN ALCOHOL-FREE BREWS
term, i.e. with maturity of more than
one year from 31 December 2021.
Net interest-bearing debt/EBITDA
was 1.24x (2020: 1.51x). The
financial leverage was kept slightly
more conservative than in past years
to ensure financial flexibility to
potentially purchase the 33%
shareholding in Carlsberg South Asia
Pte Ltd.
SHARE BUY-BACKS
2021 PROGRAMME
In 2021, the buy-back was carried
out in quarterly tranches due to
the uncertainty related to the
development of COVID-19 across
our markets. The total buy-back
programme was DKK 4bn, with
shares worth DKK 3.6bn bought
back in 2021 and the remaining DKK
400m in January 2022. A total of
3.7m shares were bought at an
average price of DKK 1,076.
2022 PROGRAMME
In 2022, the Group intends to
execute the 2022 share buy-back
as quarterly programmes. During
the first programme, launched on 4
February, the Group intends to buy
back Carlsberg B shares amounting
to DKK 1bn.
Read more about the share buy-
back programmes, including the
2021 programme, on page 22.
WESTERN EUROPE
MIXED PERFORMANCE
ACROSS MARKETS
CARLSBERG GROUP ANNUAL REPORT 2021 2021 REVIEW AND 2022 EXPECTATIONS
16
Western Europe saw mixed
performance across markets,
as COVID-19-related
restrictions impacted markets
differently due to different
channel structures.
The Western Europe region
encompasses mature beer markets
and accounts for roughly one third of
Group volumes, revenue and
operating profit.
We have particularly strong market
positions and business models
that include both beer and other
beverages in the Nordic markets
and Switzerland.
In the Nordic markets, we are
mainly competing against local or
regional players. Elsewhere, we are
predominantly in competition with
global players.
REGIONAL RESULTS
The Western Europe region had a
very volatile year. H1 especially was
impacted by COVID-19-related on-
trade restrictions in most markets. In
H2, we benefited from abandonment
of restrictions in Q3 and easy
comparables in Q4, as restrictions
were more severe in 2020.
Beer volumes grew organically by
1.3% and total volumes by 4.2%.
Other beverage volumes grew by
11.2% thanks to strong growth of
the soft drinks and energy drinks
businesses in the Nordics. The
positive acquisition impact of
approximately 2.5m hl primarily
related to Marston’s brewing
activities. In most markets, the year
ended on a soft note due to renewed
restrictions.
Revenue/hl improved organically
by 2%, impacted in all markets by
a positive channel mix. In H2,
revenue/hl improved considerably
thanks to the recovery of the on-
trade. For the year, our on-trade
volumes grew by 12%, although for
the full year they remained at index
65 compared with the pre-pandemic
level in 2019. In Q4, on-trade
volumes were at about index 80
compared with 2019.
Our markets in Western Europe
Consumption characteristics
Our position
Our
operations
Per capita
beer
consumption
(litres)
On-trade
share of
market,
approx. (%)
Market
position (no.)
Market
share¹ (%)
Breweries²
63
50
50
77
30
55
102
68
90
46
14
14
10
12
8
33
7
24
18
44
1
1
1
1
2
1
3
4
3³
1
53
26
50
30
25
37
20
12
10³
47
1
1
1
1
1
1
3
4
3
1
Markets
Denmark
Sweden
Norway
Finland
France
Switzerland
Poland
UK
Germany
Portugal
¹ Sept. 2021 MAT. ² Breweries with capacity above 100,000 hl. ³ North-eastern Germany.
Source: GlobalData, Carlsberg estimates.
Western Europe
Volumes (million hl)
Beer
Other beverages
Total volume
DKK million
Revenue
Operating profit
Operating margin (%)
2020
Organic
Acq., net
Change
26.8
11.2
38.0
1.3%
11.2%
4.2%
9.2%
0.0%
6.5%
FX
-
-
-
25,875
3,926
15.2
6.4%
8.9%
10.3%
1.3%
1.2%
1.9%
Change
2021
Reported
29.7
12.4
42.1
30,501
4,401
14.4
10.5%
11.2%
10.7%
17.9%
12.1%
-80bp
CARLSBERG GROUP ANNUAL REPORT 2021 2021 REVIEW AND 2022 EXPECTATIONS
17
Organic revenue growth was 6.4%,
with reported revenue growth of
17.9% due to positive acquisition and
currency impacts.
Organic operating profit in Western
Europe grew well ahead of revenue.
Important drivers of the 8.9% growth
were the positive channel mix and
tight cost control and cost savings
during 2020 and 2021. The reported
operating margin declined by 80bp
to 14.4% due to acquisitions, with
Marston’s brewing activities having a
significantly lower operating margin
than the rest of the region because
of the impact on the business of its
high on-trade exposure.
In Denmark, our business benefited
from the removal of restrictions in
Q2, which very positively benefited
all channels – on-trade, off-trade
and border trade. We saw good
progress for all beverage categories,
including core beer, craft & speciality
and soft drinks.
negatively impacted by the closed
border with Norway.
In Finland, our volumes were
slightly down. We saw a solid
price/mix development due to fewer
promotional beer volumes and
improved category and channel mix.
Our Norwegian business delivered
another very good year. The double-
digit volume growth was supported
by COVID-19 border restrictions and
successful innovations for key brands.
Our local power brand Frydenlund,
Tuborg and craft & speciality,
including Somersby, performed
particularly well.
FRANCE AND SWITZERLAND
In a slightly growing French market,
our volumes declined slightly, while
revenue grew due to a positive
channel and brand mix. Our craft &
speciality portfolio and alcohol-free
brands, especially Tourtel, delivered
solid growth, while the mainstream
brand Kronenbourg declined.
THE NORDICS
In the Nordics, volumes grew by
high-single-digit percentages, with
double-digit growth in Denmark and
Norway.
Our Swedish business had a difficult
H1 but rebounded in H2. We saw
particularly strong results for our
alcohol-free brews and soft drinks.
During the year, the business was
Our business in Switzerland had
another challenging year due to its
high on-trade exposure and the
continued COVID-19 restrictions.
As a result, our volumes declined
slightly. Our alcohol-free and craft &
speciality brands grew, while
mainstream brands declined. From
January 2022, we have entered into
a strategic partnership with PepsiCo,
becoming its bottler in Switzerland.
POLAND AND GERMANY
In a declining Polish market, we
kept volumes flat. We saw good
performance for our alcohol-free
brews, for the core beer brands
Carlsberg, Tuborg and Zatecky,
and for Garage in the flavoured
beverage category. Q4 performance
was strong due to extra sell-in
because of announced price increases
and an excise tax increase on 1
January 2022.
The German market suffered due to
extended lockdowns and restrictions.
Nevertheless, our German business
delivered solid organic volume
growth. Our local power brands
Lübzer and Astra as well as
Carlsberg, Somersby and our
alcohol-free brews performed well.
The Wernesgrüner acquisition was
fully integrated very early in the year
and is delivering supply chain benefits.
THE UK
A key focus for our UK business in
2021 was to execute the integration
of Marston’s brewing activities. The
integration was successful, delivering
very well against expectations and
achieving synergies. Due to its high
on-trade exposure, the business was
severely impacted by COVID-19-
related restrictions, particularly in
H1, whereas it improved considerably
in H2 when restrictions were lifted.
We saw very good performance for
Carlsberg, Poretti and some of our
licence brands.
TOTAL VOLUME (m hl)
REVENUE (DKKbn)
OPERATING PROFIT (DKKbn)
OPERATING MARGIN
45
41
37
33
29
25
35
31
27
23
19
15
6
5
4
3
2
1
20%
18%
16%
14%
12%
10%
2019
2020
2021
2019
2020
2021
2019
2020
2021
2019
2020
2021
ASIA
STRONG PERFORMANCE
SUPPORTED BY CHINA AND INDIA
CARLSBERG GROUP ANNUAL REPORT 2021 2021 REVIEW AND 2022 EXPECTATIONS
18
While China saw a strong
development in 2021, most
other beer markets in our Asia
region remained severely
impacted by COVID-19.
The importance of Asia for the Group
has increased significantly over the
past decade, during which we have
expanded our presence in the region
organically and through acquisitions.
Today, we have an attractive overall
position, with no. 1 and 2 positions
in six markets. China is the Group’s
largest market in terms of volume,
revenue and operating profit.
The competitive landscape varies
significantly between markets, with
global players and local brewers
both present.
Both SAIL’22 and SAIL’27 specifically
target Asia as an important growth
driver, supported by both volume
growth and premiumisation.
REGIONAL RESULTS
During the year, the development
in Asia varied significantly between
markets. Most markets were
impacted by restrictions and
lockdowns, although these varied
in timing and severity.
Organic beer volumes grew by 12.3%,
mainly driven by China and India.
Volumes in most other markets also
grew, albeit at a slower pace and
helped by easy comparables. Our
other beverage volumes grew by
10.6% due to good performance of
soft drinks and energy drinks in
Cambodia and Laos.
Organic revenue growth was
strong at 15.6%. Revenue/hl grew
organically by 3%, supported by a
positive brand mix and, in some
markets, a positive channel mix,
partly offset by country mix.
Our markets in Asia
Markets
China
Laos
India
Vietnam
Cambodia
Malaysia
Nepal
Myanmar
Singapore
Hong Kong SAR
Consumption characteristics
Our position
Our
operations
Per capita
beer
consumption
(litres)
On-trade
share
of market,
approx. (%)
Market
position (no.)
33
44
2
41
53
9
2
6
21
24
47
33
11
23
10
38
65
32
46
36
5/1³
1
3/24
4
4
2
1
3
2
2
Market
share¹ (%)
8/66³
Breweries²
26
94
15
6
6
42
51
9
23
29
2
7
1
1
1
1
1
-
-
¹ Sept. 2021 MAT. ² Breweries with capacity above 100,000 hl. ³ Total China/western China. 4 In states with own brewery.
Source: GlobalData, Carlsberg estimates.
Asia
2020
Organic
Acq., net
Change
Volumes (million hl)
Beer
Other beverages
Total volume
DKK million
Revenue
Operating profit
Operating margin (%)
34.8
4.8
39.6
16,959
3,991
23.5
12.3%
10.6%
12.1%
15.6%
23.9%
FX
-
-
-
0.0%
0.0%
0.0%
0.0%
-0.4%
-0.9%
-1.8%
Change
2021
Reported
39.1
5.3
44.4
19,459
4,855
24.9
12.3%
10.6%
12.1%
14.7%
21.7%
140bp
CARLSBERG GROUP ANNUAL REPORT 2021 2021 REVIEW AND 2022 EXPECTATIONS
19
Operating profit increased organically
by 23.9%. The operating margin was
up by 140bp to 24.9%, driven by
higher revenue/hl and ongoing tight
cost control.
CHINA
The Chinese beer market grew by an
estimated 5% (-3% compared with
2019), and our volumes grew by 15%
(+19% compared with 2019). Local
COVID-19-related restrictions and
lockdowns disrupted the beer market
during the year.
We saw a modest volume decline in
Q4 due to tough comparables, as
volumes rebounded in Q4 2020,
growing by 15%, following a
lockdown in western China in
Q3 2020.
The full-year growth was driven by
our international and local premium
brands, continued big-city growth
and expansion in growing channels,
such as the modern off-trade
channel and e-commerce. As a
result, revenue/hl grew by 3%.
INDIA
Our Indian business recovered
strongly following the very difficult
2020, despite the second wave of
COVID-19 impacting India in Q2
2021. Volumes grew by more than
30%.
Revenue/hl was up mid-single-digit,
benefiting from strong growth of the
premium Carlsberg brand, price
increases and packaging mix. Tuborg
also grew strongly. At the end of the
year, new restrictions were again
imposed in light of rising COVID-19
infection rates.
VIETNAM
In Vietnam, our volumes grew by
high-single-digit percentages, with a
strong acceleration of volumes at
year-end due to sell-in to Tet
celebrations.
Our local power brands, Huda and
Halida, continued to perform well
and were the main volume drivers.
1664 Blanc grew strongly, although
from a very small base. In addition,
we strengthened our route-to-
market and expanded the coverage
and number of outlets selling our
products.
LAOS
In Laos, our total volumes declined
due to severe lockdowns and alcohol
bans, especially in H2. Despite the
prolonged on-trade closures, our
premium portfolio achieved high-
single-digit growth. We saw very
strong growth for our local economy
brand Lanexang, with demand
surging in the wake of increasing
unemployment and poverty caused
by COVID-19.
year, we saw improved performance
for our beer volumes.
MALAYSIA AND SINGAPORE
Our Malaysian business was heavily
impacted by restrictions, including a
complete suspension of brewery
operations for 2.5 months in Q2 and
Q3. Consequently, volumes declined
significantly. Revenue/hl grew
considerably due to strong premium
growth and price increases.
CAMBODIA
Our business in Cambodia delivered
very strong volume performance,
driven by the energy brand Sting,
as the beer market was heavily
impacted by restrictions, including
alcohol bans. When all restrictions
were lifted towards the end of the
Our business in Singapore performed
well due to strong growth in the off-
trade, while the on-trade was
severely impacted by prolonged
restrictions..
TOTAL VOLUME (m hl)
REVENUE (DKKbn)
OPERATING PROFIT (DKKbn)
OPERATING MARGIN
50
44
38
32
26
20
22
18
14
10
6
2
5
4
3
2
1
0
27%
25%
23%
21%
19%
17%
2019
2020
2021
2019
2020
2021
2019
2020
2021
2019
2020
2021
CENTRAL & EASTERN EUROPE
A SOLID SET
OF RESULTS
The impact of COVID-19
differed significantly between
the markets in Central &
Eastern Europe, albeit the
situation across the region
became increasingly
challenging towards the
end of the year.
Central & Eastern Europe consists of
the large Russian and Ukrainian beer
markets, a number of smaller
markets across southern and eastern
Europe, and our export & licence
business.
The competitive environment is
generally characterised by the
presence of large global players. In
certain markets, such as Russia, a
large number of small, local players
make up a significant part of the
beer market.
Our export & licence business
services markets where we do not
have our own breweries. These
markets include Turkey, Australia,
South Korea and Canada.
REGIONAL RESULTS
The Central & Eastern Europe region
delivered solid results. Beer volume
growth was 4.9%, and other beverage
volume growth was strong at 20.3%,
mainly due to growth of energy
drinks in the eastern part of the
region. Total volumes were up by
6.1%, supported by a positive
contribution from most markets.
Revenue grew organically by 10.1%.
Revenue/hl improved during the
year, supported by price increases in
some Eastern European markets, a
positive product mix and an improved
channel mix in south-eastern Europe
due to fewer on-trade restrictions.
The region delivered a modest 1%
organic operating profit growth. The
operating margin contracted by
140bp to 17.6%, as the improved
revenue/hl and several cost-saving
initiatives were offset by higher
COGS and logistics costs, and a
difficult competitive environment in
Russia.
CARLSBERG GROUP ANNUAL REPORT 2021 2021 REVIEW AND 2022 EXPECTATIONS
20
Our markets in Central & Eastern Europe
Consumption characteristics
Our position
Our
operations
Markets
Russia
Ukraine
Belarus
Kazakhstan
Azerbaijan
The Baltics
Italy
Greece
Bulgaria
Croatia
Serbia
Per capita
beer
consumption
(litres)
On-trade
share
of market,
approx. (%)
64
43
49
34
7
10
16
8
26
24
34
29
80
80
65
29
45
15
26
17
Market
position (no.)
Market
share¹ (%)
Breweries²
2
2
1
1
1
27
31
31
39
77
7
24
43
16
22
8
3
1
1
1
2
1
2
2
1
1
82-93
3-7
1-2
27-40
¹ Sept. 2021 MAT. ² Breweries with capacity above 100,000 hl.
Source: GlobalData, Carlsberg estimates.
Central & Eastern Europe
2020
Organic
Acq., net
Change
Volumes (million hl)
Beer
Other beverages
Total volume
DKK million
Revenue
Operating profit
Operating margin (%)
48.5
4.0
52.5
15,682
2,984
19.0
4.9%
20.3%
6.1%
10.1%
1.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Change
2021
Reported
50.8
4.9
55.7
4.9%
20.3%
6.1%
-3.8%
-2.8%
16,665
2,932
17.6
6.3%
-1.8%
-140bp
4
2
1
3
3
FX
-
-
-
RUSSIA
In a slightly growing Russian market,
we delivered 5% organic volume
growth. Revenue/hl grew by mid-
single-digit percentages, improving
during the year because of price
increases and a positive product mix.
We saw strong growth of brands
such as 1664 Blanc, Somersby,
Tuborg, Baltika and the energy drink
Flash Up. Craft & speciality and
alcohol-free brews grew strongly.
SOUTH-EASTERN EUROPE
Our markets in south-eastern Europe
grew by double-digit percentages,
mainly because there were fewer
COVID-19 restrictions than in 2020.
Markets such as Italy and Greece did
particularly well, further supported
by a recovering tourist industry.
Revenue/hl improved in all markets
due to the positive channel mix from
an improved on-trade channel and
positive brand mix.
UKRAINE
The Ukrainian beer market declined
slightly due to adverse weather
during the year and declining
consumer confidence following a
significant increase in inflation. Our
volumes grew slightly. Revenue/hl
increased because of price increases
and an improved product mix. Craft
& speciality, alcohol-free brews,
Baltika, Carlsberg and Tuborg saw
solid growth.
EXPORT & LICENSE
Volumes in the Export & License
business grew by double-digit
percentages. Tuborg and Carlsberg
grew well in the European markets,
and 1664 continued its solid
performance in the Asian markets.
Somersby grew strongly in Asia
Pacific and Canada, and our alcohol-
free brands did particularly well in
the Middle East.
CARLSBERG GROUP ANNUAL REPORT 2021 2021 REVIEW AND 2022 EXPECTATIONS
21
+21%
GROWTH IN 2021
FLASH UP VOLUME
The Flash Up energy drink originated in Russia
and has been around for more than 20 years.
In recent years, Flash Up has become
increasingly popular among young adults
across Russia. From 2018 to 2020, annual
growth was more than 20% (CAGR), making
Flash Up the market leader in the energy drinks
segment in Russia. Flash Up has also become
popular in neighbouring markets.
GROW BEYOND BEER
TOTAL VOLUME (m hl)
REVENUE (DKKbn)
OPERATING PROFIT (DKKbn)
OPERATING MARGIN
60
55
50
45
40
35
20
16
12
8
4
0
5
4
3
2
1
0
22%
20%
18%
16%
14%
12%
2019
2020
2021
2019
2020
2021
2019
2020
2021
2019
2020
2021
CAPITAL ALLOCATIONL
DELIVERING ON CAPITAL
ALLOCATION PRINCIPLES
CARLSBERG GROUP ANNUAL REPORT 2021 2021 REVIEW AND 2022 EXPECTATIONS
22
SAIL’22 has clear priorities for
delivering shareholder value:
organic growth in operating
profit, improved return on
invested capital and optimal
capital allocation.
Our capital allocation principles are
well defined:
1.
Investing in our business to drive
long-term sustainable growth.
2. Targeting NIBD/EBITDA of
below 2.0x.
3. Targeting an adjusted payout
ratio of around 50% (adjusted
for special items after tax).
4. Distributing excess cash to
shareholders through share
buy-backs and/or extraordinary
dividends.
5. Deviating from the above if
value-enhancing acquisition
opportunities arise.
2021, we scaled up our marketing
investments during the year. As in
2020, we adjusted the investment
level during the year to the local
market conditions, including the
extent of lockdowns and various
restrictions.
For the year, marketing investments
grew organically by 11%. Reported
marketing investments amounted to
7.5% of revenue. The strong progress
on our growth priorities (see page 28)
and the rebound of organic volumes
to above 2019 levels serve as proof
points for the quality and sufficiency
of our investments.
Excluding the acquisition of the
Brooklyn brand rights in 2020, CapEx
in 2021 increased by DKK 625m,
bringing the CapEx/revenue ratio to
6.3%.
Our capital allocation principles will
remain unchanged in SAIL’27.
DRIVING LONG-TERM GROWTH
Notwithstanding the continued
challenges posed by COVID-19 in
LEVERAGE
Despite significant cash returns to
shareholders, net interest-bearing
debt to EBITDA at the end of the year
was 1.24x, well below our target of
below 2.0x.
DIVIDEND PAYOUT
In March, we paid out a dividend of
DKK 22 per share, equal to an
increase of 5% on the previous year.
In line with our dividend policy, the
dividend amounted to DKK 3.2bn,
corresponding to an adjusted payout
ratio of approximately 50%.
At the Annual General Meeting on
14 March 2022, the Supervisory
Board will propose an increase in the
dividend of 9% to DKK 24 per share.
This corresponds to an adjusted
payout ratio of 49%.
SHARE BUY-BACK
In 2019, the Supervisory Board
decided, for the time being, to return
excess cash to shareholders by
means of share buy-back.
Consequently, up to 28 January
2022 the Group had bought back
11,525,300 shares – equal to 7.6%
of the number of shares at the end
of 2018 – in total amounting to
DKK 11.0bn.
2021
In 2021, the Group executed its
share buy-back programmes on a
quarterly basis due to the continued
business uncertainty related to the
COVID-19 pandemic.
Accordingly, the Group announced
four share buy-back programmes,
in total amounting to DKK 4.0bn.
The last quarterly programme was
initiated on 28 October and ran until
28 January 2022.
In fiscal 2021, 3,355,625 B shares
were repurchased at a total purchase
price of DKK 3.6bn.
At the Annual General Meeting on
14 March 2022, the Supervisory
Board will recommend that
3,400,000 treasury shares not used
for hedging of incentive programmes
be cancelled.
2022
Due to the continuing business
uncertainty related to the COVID-19
pandemic in some of our markets,
the Group intends to execute the
2022 share buy-back as quarterly
programmes.
Consequently, up until 22 April, the
Group intends to buy back Carlsberg
B shares amounting to DKK 1bn.
The size of subsequent share buy-
backs will be determined on a
quarterly basis, with information on
the next quarterly share buy-back
programme being announced in
connection with the Q1 trading
statement on 28 April.
More information regarding the share
buy-back can be found in the 2021
financial statement announcement of
4 February 2022.
VALUE-ENHANCING M&A
The Group remains committed to
value-enhancing M&A and will
continue to explore relevant
opportunities.
In 2021, we completed the acquisition
of Wernesgrüner Brewery in Germany
and a few other minor acquisitions.
CARLSBERG GROUP ANNUAL REPORT 2021 2021 REVIEW AND 2022 EXPECTATIONS
23
2022 EARNINGS EXPECTATIONS
EARNINGS
EXPECTATIONS
2022 will be another
challenging year, impacted by
COVID-19 and substantial
increases in input costs.
categories, and the COGS
development for the year may be
impacted by changes in spot prices
on unhedged input costs.
COVID-19 is expected to continue
to impact our markets to various
degrees. At the same time, our
business will be impacted by
substantial increases in input costs,
which we aim to offset in absolute
terms through higher revenue/hl
and continued tight focus on costs.
The higher revenue/hl may have a
negative impact on beer consumption.
As a result, 2022 guidance is:
• Organic operating profit growth of
0-7%.
In the second half of 2021, we began
seeing significant price increases for
commodities, packaging materials
and energy, albeit with large
variations between categories and
between markets and regions. As
a result, we are assuming an
increase in cost of goods sold per
hl (COGS/hl) of 10-12%. However,
volatility remains high for many
Moreover, the earnings outlook is
based on the following regional
assumptions:
• In Western Europe, we assume that
the on-trade channel will be less
impacted by COVID-19 than in
2021, although we are expecting
some on-trade disruption at the
beginning of the year due to
restrictions.
• In Asia, we expect another volatile
year. While the vaccination rate is
increasing in many markets in the
region, COVID-19 outbreaks still
pose a risk of national or regional
lockdowns.
• In the southern part of the Central
& Eastern Europe region we
assume a lower impact on the on-
trade from COVID-19 than in
2021. In the eastern part of the
region, we expect consumer
sentiment to be increasingly
impacted by accelerating inflation,
which may impact beer market
dynamics negatively.
Based on the spot rates at 3
February, we assume a translation
impact of around DKK +250m for
2022.
Other relevant assumptions are:
• Financial expenses, excluding
currency losses or gains, are
expected to be around DKK 550m.
• The reported effective tax rate is
expected to be around 22-23%.
• Capital expenditure at constant
currencies is expected to be around
DKK 5.0bn.
Forward-looking statements
Forward-looking statements are
subject to risks and uncertainties that
could cause the Group’s actual
results to differ materially from
those expressed in the forward-
looking statements.
This is particularly relevant in 2022
due to the very high uncertainty
related to the continuing development
and impact of COVID-19 and the
substantial increases in input costs.
Accordingly, forward-looking
statements should not be relied on
as a prediction of actual results.
Please see page 49 for the full
forward-looking statements notice.
Our strategy
OUR PURPOSE
BREWING FOR A BETTER
TODAY AND TOMORROW
CARLSBERG GROUP ANNUAL REPORT 2021 OUR STRATEGY
24
We pursue perfection every
day. We strive to brew better
beers. Beers that stand at the
heart of moments that bring
people together. We do not
settle for immediate gain when
we can create a better
tomorrow for all of us.
Our purpose is rooted in our heritage
and in the mentality of our founders,
who left a rich legacy that still
greatly influences how we run our
business today. Their pioneering
spirit, passion for brewing and
proactive contribution to society are
what make us who we are.
We live our purpose every day by
focusing on our brands and the art of
brewing, exciting our consumers with
quality brews that strengthen our
identity and pride as brewers, and by
continuously aiming to do better.
The embedding of our purpose has
been further strengthened during the
past two years. Our people have
tirelessly demonstrated a high level
of engagement and an innovative
mindset at all levels of the
organisation, helping local
communities, supporting our
customers and minimising the impact
of the pandemic on our business,
while at the same time finding
flexible and safe ways of working.
We will continue to live our purpose,
as it is key for the successful
execution of our strategy and
achieving our ambition of being
successful, professional and
attractive in our markets:
Successful in achieving a sustainable
balance of our Golden Triangle (see
page 7).
Professional in being the preferred
supplier for our customers.
Attractive in creating value for our
shareholders, facilitating a great
working environment and high-
performance culture for our
employees, and being a responsible
and sustainable corporate citizen for
society at large.
BUSINESS MODEL
CARLSBERG GROUP ANNUAL REPORT 2021 OUR STRATEGY
25
OUR BUSINESS MODEL
ROOTED IN OUR PURPOSE
Our business model is rooted in our purpose and ambition.
It takes its starting point in our focus on our brands and the
art of brewing, how we excite our consumers with quality
brews, and our continuous striving to do better.
WE FOCUS ON THE MARKETS
WHERE WE HAVE A NO. 1 OR 2
POSITION...
… WHERE WE DELIVER AN
ATTRACTIVE BEER PORTFOLIO FOR
ALL CONSUMER OCCASIONS...
… AND STRIVE TO EXCEL
IN OUR SERVICE TO ON- AND
OFF-TRADE CUSTOMERS...
... BY OPTIMISING OUR
SUPPLY CHAIN AND IMPROVING
PROCESSES AND SYSTEMS.
Core beer is a volume business, and strong
market positions are key drivers of profitability.
We have particular focus on the 22 markets in
Western Europe, Asia and Central & Eastern
Europe where we are no. 1 or 2.
The strength of our beer portfolio lies in the
strong local roots of our local power brands,
combined with our excellent craft & speciality
brands, alcohol-free brews and international
beer brands.
Our customers range from on-trade to
off-trade, from online to offline. We aim to
become their preferred beer supplier, providing
products and services that deliver value
growth for them and us.
Our Funding the Journey culture drives
efficiencies and reduces costs. The focus of
our integrated supply chain is optimising asset
utilisation while brewing high-quality beer and
enabling our commercial growth agenda.
BREWING FOR A BETTER
TODAY AND TOMORROW
In all our markets, we aim to lead in
sustainability because it is central to our purpose
and because we genuinely believe it is the right
thing to do – delivering tangible benefits for our
business and for society as a whole.
BREWING FOR A BETTER
TODAY AND TOMORROW
Our brands offer us powerful opportunities for
communicating with consumers. We use these
opportunities to encourage moderate, responsible
consumption of our products. We also increase
the availability of alcohol-free brews.
BREWING FOR A BETTER
TODAY AND TOMORROW
We develop digital solutions and services to help
our customers grow their business. We engage in
developing sustainable packaging solutions and
launching initiatives to increase collection and
recycling rates.
BREWING FOR A BETTER
TODAY AND TOMORROW
Recognising the need for strong actions in
the face of complex sustainability challenges,
Together Towards ZERO sets clear and
ambitious targets for carbon emissions, water
usage and health & safety.
DELIVERING ON SAIL’22
CONTINUED
EXECUTION
CARLSBERG GROUP ANNUAL REPORT 2021 OUR STRATEGY
26
Our SAIL’22 choices and priorities have strengthened
the Group and we’re satisfied with the top- and
bottom-line delivery.
Cees ’t Hart
CEO
Our SAIL’22 strategy has
served us well since its launch
in 2016, resulting in a strong
and resilient company.
SAIL’22 has focused on improving
our business organically. Since 2016,
it has guided our actions, setting
clear priorities for how we brew
for a better today and tomorrow.
While providing a clear overall
direction for our business, SAIL’22
has been a “living” strategy.
Since its launch in March 2016, we
have continuously adjusted the
application of the strategy to reflect
learnings and also the market
environment, which has significantly
changed, especially with COVID-19.
Coupled with a significantly
strengthened performance
management culture and a good
organisational balance between
markets, regions and central
functions, we have been able to
leverage scale while remaining close
to local consumers and customers.
EXECUTING SAIL’22
2016-2017
Our headline for 2016-2017 was
Funding the Journey. Our main focus
was on delivering the benefits of this
efficiency and savings programme,
thereby allowing us to invest in the
SAIL’22 priorities for driving long-
term value growth and to improve
operating profit.
2018-2019
In 2018, we shifted focus to organic
top-line growth by means of
delivering on the SAIL’22 priorities.
Our investments and execution paid
off and the average annual organic
growth from 2017 to 2019 was 3%
for volumes and 4% for revenue.
2020-2021
The resilience of our strategic
priorities was stress-tested and
proven during the significant
challenges posed by COVID-19
across our markets. Despite the
setback and volatility caused by the
pandemic in 2020-2021, the
resilience of the Carlsberg Group was
strong, and our financial results in
2021 were well above the pre-
pandemic levels of 2019: volumes
+5% compared with 2019, revenue
+1% and operating profit +4%.
EVALUATING PROGRESS
SAIL’22 is now coming to an end,
and 2022 will be a year of transition
to SAIL’27. 2023 will therefore be
the first year of SAIL’27 (see pages
31-32).
On the following pages, we present
the results for selected SAIL’22
initiatives and priorities achieved
since 2016.
DELIVERING ON
STRENGTHEN
THE CORE
SAIL’22 sharpened our focus on our core beer business, our execution
capabilities and efficiency, and our cost culture. The strategy has
delivered well, and the strength of our core business has been evident
in results during the past two challenging years of COVID-19.
CARLSBERG GROUP ANNUAL REPORT 2021 OUR STRATEGY
27
LEVERAGE OUR STRONGHOLDS
FUNDING THE JOURNEY CULTURE
+5%
CORE BEER GBC
Core beer remains an important part of our business,
and revitalising core beer has been an important part of
SAIL’22. We have measured our success by our ability
to grow the gross brand contribution (GBC) from core
beer. In 2021, GBC was up by 5%. Excluding the years
impacted by COVID-19, GBC grew organically by an
average of 4% per year from 2017 to 2019.
-320bp
SG&A/REVENUE 2016-2021
Funding the Journey, our three-year efficiency and cost reduction
programme, was launched in late 2015. By the end of 2018, the
programme had delivered savings of more than DKK 3bn, well
ahead of initial expectations. More than DKK 1bn was reinvested
in the company to support our SAIL’22 growth priorities. The
mindset of Funding the Journey has become part of our corporate
culture, resulting in a continual reduction in sales, general and
administrative expenses (SG&A, excluding marketing).
CORE BEER GBC, ORGANIC GROWTH
EXCEL IN EXECUTION
SG&A EXCLUDING MARKETING/REVENUE
+4%
REVENUE/HL GROWTH
ON CARL’S SHOP
Carl’s Shop – our online business-to-business platform serving
our on-trade customers – was first launched in 2018 in Western
Europe. The platform is now available in ten markets across our
three regions, serving more than 40,000 customers. Supporting
our premiumisation efforts, revenue/hl on Carl’s Shop grew by
4% in 2021 and revenue was up by around 60%.
17.2%
16.7%
14.6% 14.0%
2016
2018
2020
2021
+3%
+6%
+3%
-7%
+5%
2017
2018
2019
2020
2021
DELIVERING ON
POSITION
FOR GROWTH
Our three SAIL'22 growth priorities have delivered strong results.
COVID-19 proved them to be complementary, illustrated by the strength
of alcohol-free brews during a time when on-trade closures led to
challenging market conditions for the craft & speciality portfolio.
CARLSBERG GROUP ANNUAL REPORT 2021 OUR STRATEGY
28
GROW CRAFT & SPECIALITY
WIN IN ALCOHOL-FREE BREWS
+11%
CRAFT & SPECIALITY
VOLUME 2016-2021 (CAGR)
Supported by the global success of the iconic 1664 Blanc
and the Somersby cider brand, our craft & speciality
(C&S) portfolio has delivered strong results since 2016.
Volume growth from 2016 to 2021 (CAGR) was 11%
despite the negative impact on the on-trade channel of
COVID-19 in 2020 and 2021.
+14%
ALCOHOL-FREE BREWS
VOLUME 2016-2021 (CAGR)
Helped by growing consumer awareness of health and
wellbeing, pioneering brewing techniques and category
outperformance, our alcohol-free brew (AFB) volumes have
more than doubled since 2016. Our AFB portfolio includes
beer and radler line extensions of both our strong local
power brands and the international premium brands.
C&S SHARE OF GROUP BEER VOLUME AND REVENUE
AFB SHARE OF GROUP BEER VOLUME AND REVENUE
Volume
Revenue
Volume
Revenue
GROW IN ASIA
6%
14%
3%
7%
5%
3%
4%
2%
2016
2021
2016
2021
2016
2021
2016
2021
+12%
OPERATING PROFIT IN ASIA 2016-2021 (CAGR)
Our Asia region has been a key component in our growth
algorithm. During the past five years, the region has delivered
volume growth, premiumisation and strong progress in
operating profit. China has been a particularly strong
contributor, more than tripling operating profit, and our
businesses in markets such as India, Vietnam and Laos have
also significantly strengthened their results.
DELIVERING ON
CREATING A
WINNING CULTURE
LIVE BY OUR COMPASS
UPDATED CODE OF
ETHICS & CONDUCT
Our new Code of Ethics & Conduct is designed to help
everyone across the Group to live by our Compass every
day. It is available in 29 languages and accompanied by
updated e-learning, which includes real-life scenarios and
examples of non-compliance red flags and how to mitigate
them. It also encourages people to speak up about any
instances where the code may have been violated. Read
more about how we live by our Compass, including our new
Code of Ethics & Conduct, and find more details on our
Speak Up system in the ESG Report.
CARLSBERG GROUP ANNUAL REPORT 2021 OUR STRATEGY
29
Our winning culture continues to define what we want to be: team-based and
performance-driven, governed by high ethical standards, and committed to
responsibility and sustainability. We have stepped up within all of these areas as part
of SAIL'22, and we are on track to deliver on our Together Towards ZERO targets.
TOGETHER TOWARDS ZERO
40%
REDUCTION IN RELATIVE
CARBON EMISSIONS 2015-2021
Our ambitious carbon targets are approved by the Science-
Based Targets Initiative and in line with the latest climate
science to limit global warming to 1.5°C. In 2021, we reduced
relative brewery carbon emissions by 2%. Since 2015, our
relative brewery carbon emissions are down by 40%, while
our relative value chain (beer-in-hand) emissions in were
reduced by 7% from 2015-2019.
21%
IMPROVEMENT IN WATER
EFFICIENCY 2015-2021
Water is an essential ingredient in our products, and other
key ingredients like grains and hops need it to grow. At 2.7
hl/hl in 2021, we have made a 21% improvement in water
efficiency from our 2015 baseline. Our 2030 target is to
halve the amount of water we use per hl of beer, from the
2015 baseline, and we are on track to reach the halfway
mark of a 25% reduction in 2022.
Read more about our winning culture in
the ESG Report, available online on
www.carlsberggroup.com
TEAM-BASED PERFORMANCE
82%
ENGAGEMENT SCORE
Our Group-wide employee survey – MyVoice – is carried
out every other year. On the back of the very challenging
working conditions in the past two years, we were pleased
that 92% of our workforce participated in the 2021 survey
and that results were stable compared with 2019. The overall
engagement score was 82%, while 89% of employees are
satisfied with our company as a place to work.
DELIVERING ON
DELIVER VALUE
FOR SHAREHOLDERS
CARLSBERG GROUP ANNUAL REPORT 2021 OUR STRATEGY
30
Since the launch in 2016, SAIL'22 has significantly improved the strategic
health of the Group. Successful achievements for our strategic priorities have
led to consistent progress on our KPIs for delivering value for shareholders,
albeit results in 2020 and 2021 were impacted by COVID-19.
ORGANIC GROWTH
IN OPERATING PROFIT
+7%
2016-2021 (AVERAGE)
ROIC IMPROVEMENT
OPTIMAL CAPITAL ALLOCATION
+440bp 1.24x
2016-2021
NIBD/EBITDA 2021
6.8bn
CASH RETURNS (DKK)
TO SHAREHOLDERS 2021
8
6
4
2
0
16%
12%
8%
4%
0%
-4%
12%
9%
6%
3%
0%
2,0x
1,5x
1,0x
0,5x
0x
2016
2017
2018
2019
2020
2021
Dividends
(DKKbn)
Share buy-back
(DKKbn)
2016
2017
2018
2019
2020
2021
2016
2017
2018
2019
2020
2021
2016
2017
2018
2019
2020
2021
Except in 2020, the Group has consistently
grown operating profit organically through
top-line growth and continuous focus
on efficiencies and costs as part of our
Funding the Journey culture.
We have consistently
improved return on
invested capital (ROIC) by
strengthening earnings and
reducing invested capital.
Our capital allocation principles are well defined (see page 23). We have been
successful in keeping our leverage below the target of net interest-bearing debt/
EBITDA below 2x and maintaining our dividend policy: a payout ratio of around
50% of adjusted net profit. We have engaged in value-accretive acquisitions and
returned excess cash to shareholders by means of share buy-backs.
OUR NEW STRATEGY – SAIL’27
CONTINUING THE
SUCCESS OF SAIL’22
CARLSBERG GROUP ANNUAL REPORT 2021 OUR STRATEGY
31
An evolution of SAIL’22,
SAIL’27 is built around our
purpose and our ambition of
being the most successful,
professional and attractive
brewer in our markets.
SAIL’27 was developed as a
collaborative, company-wide effort,
co-created by over 200 Carlsberg
employees from more than 30
different markets to ensure that we
incorporated the learnings from
SAIL’22 and that SAIL’27 will be
strongly embedded in our local
markets and central functions from
the very beginning.
In developing SAIL’27, we aimed at
keeping and sharpening our strong
strategic, organisational and financial
dynamics while ensuring that our
direction-setting was refreshed and
that our new strategy reflects
expected consumer, customer,
societal, regulatory, economic and
geopolitical trends and their likely
impact on the beer category in terms
of both volume and value. As such,
SAIL’27 reflects the learnings from
the past and assumptions for the
future blended together.
SAIL’27 PRIORITIES
SAIL’27 focuses on five strategic
levers – portfolio, geographies,
execution, culture and funding the
journey – for which we have made
distinct strategic choices, defining the
focus of our efforts and resource
allocation. Our strategic levers and
choices should be viewed as an
integrated set of activities that
together will drive shareholder value.
INCREASING OUR AMBITIONS
With SAIL'27, we will continue our
successful journey. We believe we
can successfully capture long-term
growth opportunities, and we are
therefore increasing our financial and
sustainability ambitions for the
SAIL'27 period:
• Organic revenue growth of 3-5%
CAGR
• Organic operating profit growth
above revenue growth.
• Continued ROIC focus
• Disciplined capital allocation
(unchanged from SAIL'22, see
page 22)
• Ambitious sustainability targets.
SAIL’27 is presented in detail in
the stock exchange announcement
of 3 February, available on
www.carlsberggroup.com.
CARLSBERG GROUP ANNUAL REPORT 2021 OUR STRATEGY
32
We worked with 138 co-strategists
to build SAIL’27. They provided
valuable insights and fantastic
views, helping us frame and
develop our strategic priorities and
ensuring that they fit the needs of
all our markets and functions.
Marcela Wiwe
Director and leader of the co-strategist
programme
138
SAIL’27 CO-CREATORS
SAIL’27 was co-created with talents from
across the Carlsberg Group. In addition to our
Extended Leadership Team, 138 co-strategists
from our markets, regions and Group functions
participated in reviews as well as the
development of 34 different workstreams with
the ambition to capture even more diverse
thinking in the considerations and choices for
the next strategy period. Our co-strategists
brought valuable experience, local market
insights, learnings and ideas to the strategy
process and were an important contributor to
the strategic choices and priorities of SAIL’27.
OUR WINNING CULTURE
ADDRESSING CLIMATE RISKS
CLIMATE-
RELATED RISKS
CARLSBERG GROUP ANNUAL REPORT 2021 OUR STRATEGY
33
Climate change is already
affecting our operations and
markets. Across our regions,
we see its impact through land
degradation, more hot and dry
weather, and intense rainfall.
We are working to understand the
related risks and opportunities, and to
mitigate impact on our business.
Our annual Environment, Social &
Governance Report details our
Together Towards ZERO approach,
progress on our ambitious ZERO
carbon targets, and the action we
are taking to support the Paris
Agreement on Climate Change to
limit the increase in global average
temperature to a maximum of 1.5°C.
The report also addresses our
exposure to climate change risk and
the impact on our value chain.
In the table, we outline the relevant
sections for TCFD reporting in
this Annual Report and in our
Sustainability and Remuneration
Reports.
Task Force on Climate-related Financial Disclosures (TCFD) reporting recommendations
Recommendation
Our disclosure in brief
Governance
Disclose the organisation's
governance around climate-
related risks and opportunities.
Strategy
Disclose the actual and
potential impacts of climate-
related risks and opportunities
on the organisation’s
businesses, strategy and
financial planning, where such
information is material.
Risks
Disclose how the organisation
identifies, assesses and
manages climate-related risks.
The Supervisory Board has ultimate responsibility for risk management, including climate-related risks.
As part of the ongoing review of SAIL'22, the Supervisory Board reviews Together Towards ZERO,
including progress towards our targets on ZERO carbon and ZERO water waste.
The Executive Committee (ExCom) is responsible for sustainability, including climate change, with the CEO
assuming ultimate responsibility. ExCom approves policies and targets for the entire organisation and
monitors performance on a quarterly basis.
Sustainability measures, including the reduction of carbon and water use, are included in the short-term
incentive scheme for the CEO, CFO and other ExCom members.
Together Towards ZERO is an integrated part of our SAIL’22 strategy. It was developed in partnership
with global experts and includes science-based targets to reduce emissions in line with the goal of the
Paris Agreement to limit global warming to a maximum of 1.5°C.
Together Towards ZERO’s focus areas and targets are based on a sustainability materiality assessment,
updated in 2020, to ensure we focus on the sustainability risks and opportunities that are most relevant to
our stakeholders, including those related to climate change and water.
Our new strategy, SAIL’27, incorporates an even more ambitious approach to sustainability issues,
including carbon, water. More details on the expanded Together Towards ZERO and Beyond will be
provided in April 2022.
Mid- and long-term risks, including climate-related risks and opportunities, are reviewed annually at
Group level. We use a materiality assessment to identify the most important sustainability management
topics, risks and impacts.
The latest assessment in 2020 confirmed that climate change was among the highest-ranking issues for
us to address. We updated our analysis of our beer-in-hand value chain footprint (Scope 1, 2 and 3
emissions) in 2020 to measure our progress from the 2015 baseline and identify where to focus our
efforts to reduce emissions and mitigate risk.
We used WWF’s Water Risk Filter to identify which of our breweries are in areas of high water risk. We
were also the first multinational to test WWF’s ground-breaking scenario analysis tool to examine the
potential impacts of climatic and socioeconomic changes on water and subsequent implications for our
business by 2030 and 2050, and to help us identify priority sites for investments and community
partnerships. In addition, we conducted a water risk assessment of two key commodities, rice and barley.
Learn more
• Risk management framework, page
34.
• Overview of Supervisory Board and
Audit Committee work and
responsibilities, pages 39-41.
• Environment, Social & Governance
Report, description of governance,
pages 55-58.
• Remuneration Report, pages 6-7.
• SAIL’22, Together Towards ZERO,
pages 6 and 30.
• Environment, Social & Governance
Report, carbon and water sections,
pages 10-20 and 21-27.
• Environment, Social & Governance
Report, materiality assessment, page
61.
• Risk management framework, page
34.
• Environment, Social & Governance
Report, carbon and water sections,
pages 10-20 and 21-27.
• Environment, Social & Governance
Report, materiality assessment, page
61.
Metrics and targets
Disclose the metrics and targets
used to assess and manage
relevant climate-related risks
and opportunities, where such
information is material.
Our annual Environment, Social & Governance Report discloses our approach, progress against our
Together Towards ZERO targets for 2022 and 2030, key performance indicators and actions to support
the UN Sustainable Development Goals and the UN Global Compact.
We disclose a comprehensive set of seven-year comparable quantitative data for energy, carbon
(including Scope 1, 2 and 3 emissions, with a full Scope 3 analysis every three years) and water. We have
also disclosed detailed information to CDP on our greenhouse gas emissions and approach to climate
change management annually since 2007.
• Environment, Social & Governance
Report, data summary table, pages
72-78.
• Environment, Social & Governance
Report, SDG actions, pages 64-69.
MANAGING RISKS
MANAGING
BUSINESS RISKS
CARLSBERG GROUP ANNUAL REPORT 2021 OUR STRATEGY
34
In conducting our business and
executing our strategy, we
seek to manage risks in such a
way as to minimise their
threats while making the best
use of their opportunities.
Our business is subject to a number
of risks and uncertainties that could
have both short-term and long-term
implications for the Group.
The purpose of our risk management
approach is to address these risks
and uncertainties in due time.
GOVERNANCE STRUCTURE
The Supervisory Board is ultimately
responsible for risk management
and has appointed the Audit
Committee to act on its behalf in
monitoring the effectiveness of the
Group’s risk management.
The Audit Committee monitors
developments and ensures that plans
are in place for managing individual
risks, including strategic, operational,
financial and compliance risks.
The Executive Committee (ExCom)
is responsible for reviewing the
overall risk exposure associated with
the Group’s activities and ensuring
that appropriate actions are taken.
SHORT-TERM RISK ASSESSMENT
Risks are assessed according to a
two-dimensional heat map that
estimates the impact of the risk on
operating profit or brand/image and
the likelihood of the risk materialising.
Based on this assessment, ExCom
identifies the high-risk issues for the
coming year. ExCom assigns risk
owners, who are responsible for
mitigating the risks through a
programme of risk management
activities.
Local and functional risk assessment
follows the same principles and
methodology as Group-level risk
assessment.
Risk reporting is incorporated in
regular business reviews, and Group
Risk Management is responsible for
the framework and Group Finance
for facilitating and following up on
risk action plans for the most
significant risks in connection with
regular business reviews.
MID- AND LONG-TERM RISK
ASSESSMENT
A review of mid- and long-term risks
is conducted annually at Group level.
RISKS IDENTIFIED FOR 2022
The identified risks for 2022 are
shown in the box on the right. Based
on the heat map assessment, the six
highest ranked risks are elaborated
on in the following, including in each
case a description of the risk and
associated mitigation efforts.
Based on input from various central
functions, including finance, legal,
sustainability, human resources and
investor relations, and regional
teams, the Group strategy team
identifies risks within the areas
of commercial & competition,
governance, consumer, macro-
economic and geopolitical
environment, reputation, supply
chain and climate.
For climate-related risks, see our
TCFD reporting on page 33.
Based on this risk identification,
ExCom will evaluate and assess
the Group’s risk exposure, applying
our two-dimensional heat map
methodology, and determine
appropriate actions.
Our mitigating actions and
opportunities for three out of six
risks are closely related and benefit
from the well-established SAIL’22
execution capabilities.
The risk movement paragraph
indicates whether the likelihood of
risk has increased, decreased or
remained unchanged versus last
year.
IMPACT FROM COVID-19
Risk movement
Decrease versus last year.
Description
COVID-19 continues to affect our
people and business across our
regions. While government
interventions vary by geography,
lockdowns and other restrictive
IDENTIFIED
RISKS
FOR 2022
RISKS WITH HIGHEST
POTENTIAL IMPACT AND
LIKELIHOOD
• Impact from COVID-19
• Ability to mitigate input
cost inflation
• Economic instability
• Partnerships
• Legal and regulatory
compliance
• Cyber and IT security
OTHER IDENTIFIED RISKS
• Regulatory changes, incl.
duties
• Financial flexibility
• Business interruption
• Consumer action in the
event of non-performance
on ESG matters
• Talent and workforce
shortage
CARLSBERG GROUP ANNUAL REPORT 2021 OUR STRATEGY
35
measures across all three regions
affect consumer off-take in both the
on-trade and off-trade channels.
Further, supply chains may be
impacted by raw material shortages
and the ability to brew and distribute
our products. Depending on
geography and go-to-market
models, our markets may therefore
be impacted in terms of volume, mix,
margin and cash flow performance.
We anticipate continuous impact
from COVID-19 in 2022 in
accordance with how the pandemic
develops and with the distribution
and efficacy of vaccines.
Mitigation
Our first priority will remain the
health and safety of our employees.
Operationally, we will continue to
apply the ways of working from
2020 and 2021. These include
frequent planning cycles, utilising
our sales and operation planning
(S&OP) practices to enable fast
adaptation and response to changing
market demand and supply chain
circumstances. In addition, we also
leverage our Funding the Journey
culture, including the Operating Cost
Management (OCM) toolkit.
Our actions and activities will
continue to be tailored to local
markets to ensure an appropriate
response to country-specific
challenges and situations.
and category mix, pricing and
Funding the Journey initiatives.
INPUT COST INFLATION
Risk movement
New.
Description
Many of our input costs, including,
but not limited to, barley and malt
and various packaging materials,
saw significant price increases
during 2021. Further, in some
markets adverse foreign exchange
movements are exacerbating the
inflationary pressure.
Competition in most markets is
generally fierce, and in many
markets across our regions this is
leading to a challenging pricing
environment. In addition, increasing
inflation may negatively impact
consumer sentiment and purchasing
power.
Mitigation
Being well hedged for our major
commodities, we have a high degree
of transparency on the input cost
headwind, which enabled us to begin
preparing for the challenging situation
from mid-2021 onwards at market,
regional and Group level.
Per market, we are determining the
right balance of mitigating actions,
including value management, channel
Commodity risks and hedging of raw
materials are described in more
detail in section 1.2 and foreign
exchange risk in section 1.3 in the
notes to the consolidated financial
statements.
ECONOMIC INSTABILITY
Risk movement
Increase versus last year.
Description
In continuation of the COVID-19
risk, the pandemic has led to high
macroeconomic uncertainty. Growing
inflation, interest rate increases in
key economies, adverse currency
movements and geopolitical tensions
are further exacerbating the
macroeconomic risk.
Exchange rate fluctuations can have a
significant impact on the Group’s
financial results. The high economic
uncertainty also poses a downside
risk to disposable incomes, possibly
impacting beer markets negatively.
Mitigation
During the past two years, our
planning has become more short-
term and highly flexible to allow
appropriate actions within a short
time horizon.
Our strategic priorities are well
founded in the business, enabling us
to leverage our value management
capabilities, continue our portfolio
optimisation efforts, including
premiumisation, focus on alcohol-
free brews and increasingly also on
other beverage categories, and
leverage our Funding the Journey
culture.
Our exposure to exchange rate
fluctuations and our related actions,
including the impact on the income
statement and borrowings and our
hedging arrangements, are described
in sections 1 and 4 in the consolidated
financial statements.
PARTNERSHIPS
Risk movement
Unchanged versus last year.
Description
We cooperate with partners in some
markets in Western Europe and Asia,
and we also have local joint venture
partners in some Asian and European
markets.
Disagreements with partners on the
operational management and
strategic direction of partnerships
may limit our ability to manage the
growth and risk profile of our
business.
Cooperation with most of our partners
is positive. However, over a period of
time, we have had serious disagree-
ments with our partner in Carlsberg
South Asia Pte Ltd (CSAPL), in which
the Group has 67% ownership and
our partner has 33% ownership.
CSAPL owns 100% of our business in
India and 90% of our business in
Nepal. Several of the disagreements
pertaining to the Shareholders’
Agreement between Carlsberg and
our partner have been referred to
arbitration in Singapore. We expect
the arbitration award in H1 2022.
Carlsberg called in a loan made to
the partner that had become due
and payable in full. This issue had
been subject to separate court
proceedings in Singapore for some
time. In January 2022, the Singapore
court of appeal finally confirmed that
the loan with interest is repayable by
the partner to Carlsberg in full.
In Nepal, the local shareholder
owning the remaining 10% of the
shares in the business is a related
party to the Group’s partner in
CSAPL. The above-mentioned
disagreements include a dispute with
the local 10% shareholder. Contrary
to its legal and contractual rights,
the Group’s influence on the business
operations in Nepal is currently being
restricted through actions that
hamper its right of decision-making
and insight into the business.
CARLSBERG GROUP ANNUAL REPORT 2021 OUR STRATEGY
36
We are contesting these actions in
Nepal through the local courts and
anticipate that the operations and
management of the Nepalese
business will eventually be normalised
in line with the Group’s legal and
contractual rights. However,
consolidation of the Nepalese
business was ceased at the end of
2021 until such time as our rights as
majority shareholder are re-
established.
Disputes always carry some inherent
risk. The outcome of the above-
mentioned disputes could limit the
Carlsberg Group’s freedom to
operate in India and Nepal, and
affect our operational and financial
performance.
The arbitration could have various
outcomes, including either party
being awarded a call option to buy
out the other shareholder. If the
tribunal were to find that Carlsberg
has materially breached the
Shareholders’ Agreement, although
this is not expected, the partner
could become entitled to a call
option to acquire the Group’s 67%
shareholding in CSAPL. From the
time that such a call option were to
become exercisable, the Group
would, for accounting purposes, be
required to cease consolidation of
CSAPL, including Carlsberg India,
and derecognise the investment in
Gorkha Brewery, Nepal. If such a call
option were to be awarded but not
exercised, the Group would resume
consolidation when the option lapses.
Conversely, if the award is in favour
of the Group, it could result in the
acquisition of the 33% shareholding
in CSAPL held by the partner. A
party being awarded a call option
that is subsequently exercised could
lead to that party taking possession
of 100% of the shares in CSAPL,
resulting in the other party no longer
being involved in the business of
CSAPL. See sections 3.4 and 5.4 in
the consolidated financial statements
for further details of the partnership.
Mitigation
The Group continuously seeks to
promote a fair and mutually
beneficial development of its
partnerships in order to safeguard
their success.
We seek to have an ongoing
dialogue with our partners to identify
issues at an early stage. The relevant
members of ExCom are actively
involved in partner relationships,
participating in the ongoing
dialogues to ensure constructive
negotiations and fast and effective
resolution of potential issues.
LEGAL AND REGULATORY
COMPLIANCE
Risk movement
Unchanged versus last year.
Description
Legal and regulatory compliance
risks include competition law and
data protection compliance (GDPR),
as well as non-compliance with
anti-bribery & corruption regulations
and trade sanctions. Failure to
comply with regulations and Group
policies may lead to fines, claims,
and brand and reputation damage.
In recent years, the Group has
experienced competition-law dawn
raids in a few jurisdictions. Non-
compliance with competition law is a
real and growing risk, and the Group
is party to certain lawsuits and
disputes. These and their significance
are described in section 3.4 of the
consolidated financial statements.
Mitigation
We continuously strengthen the
Group-wide control framework
covering legal compliance areas,
including, but not limited to, compe-
tition law, anti-bribery & corruption,
trade sanctions and data protection.
In 2021, we also further enhanced
the compliance control framework to
reflect insight and learning from
Speak Up cases, regulatory guidance
and enforcement action.
We regularly review and, where
necessary, update relevant Group
legal and compliance policies, and
conduct compulsory training of all
relevant employees.
We actively set a strong tone from
the top and have developed toolkits
to help managers in all markets
better understand their role in shaping
ethical behaviour every day.
We have enhanced our compliance
training programme and updated our
e-learning modules, including in
2021 updated training on the Code
of Ethics & Conduct. Relevant new
and existing employees are required
to complete compliance e-learning
modules on an ongoing basis in
order to maintain awareness of
relevant risks and how to mitigate
them.
In 2021, we reviewed, simplified and
rationalised the suite of compliance
policies, manuals, guidance etc. to
facilitate greater understanding and
awareness by the wider business of
the behaviour expected of all
employees to reduce compliance
risk. This included the launch of and
Group-wide training in our updated
Code of Ethics & Conduct in the third
quarter (see page 30).
Read more about our compliance
efforts in the Responsible business
section of the Environment, Social &
Governance Report.
CYBER AND IT SECURITY
Risk movement
Decrease versus last year.
Description
Like all other businesses, the
Carlsberg Group relies heavily on
technology and IT infrastructure
for its day-to-day business. A cyber
attack or non-availability of IT
systems could have severe financial,
regulatory and reputational
consequences for our business.
The decrease of the risk versus 2021
is due to the introduction of new
incident monitoring and response
capabilities as well as advanced
defensive technologies.
Mitigation
Our IT security organisation has
regular dialogue with ExCom and the
Supervisory Board to agree on risk
mitigation plans and activities. Our
Chief Information Security Officer
leads an independent cyber security
function within our IT organisation.
As the cyber security threat
assessment has intensified in recent
years, we have strengthened our
protective work to counter the risk.
Furthermore, we deploy a wide array
of advanced defensive technologies,
as well as continuing to embed our
risk management framework at all
layers of the organisation. We
undertake regular testing of our
security controls via an ongoing
series of technological audits and
breach simulations.
Governance
CORPORATE GOVERNANCE
FOCUS ON
CORPORATE GOVERNANCE
CARLSBERG GROUP ANNUAL REPORT 2021 GOVERNANCE
37
Our governance framework
aims to ensure value creation,
safeguard active and
transparent stewardship across
the Group and reduce risk.
The governing bodies of the
Carlsberg Group are the Supervisory
Board and the Executive Board.
None of the members of the
Supervisory Board are or have been
involved in the executive
management of the Group.
The Supervisory Board hires and
supervises the Executive Board,
which consists of the CEO and the
CFO, who are not members of the
Supervisory Board. The division of
responsibilities is described in the
Rules of Procedure.
the Company, the Executive
Committee collectively prepares and
implements the Company’s strategic
plans.
RECOMMENDATIONS ON
CORPORATE GOVERNANCE
The Supervisory Board is responsible
for the Company’s corporate
governance framework and
compliance with the corporate
governance recommendations and
statutory requirements.
The Supervisory Board applies the
Recommendations on Corporate
Governance issued by the Danish
Committee on Corporate Governance.
Committee and of the Remuneration
Committee were independent.
• With respect to the recommendation
that at least half of the members of
the Supervisory Board elected by
the general meeting should be
independent, four out of ten
members were considered
independent in 2021. After the
Annual General Meeting in March
2022, the Company expects to be
compliant with the recommendation.
• With respect to the recommendation
to include external assistance in the
board evaluation at least every
third year, the Supervisory Board
evaluation in 2021 was not
facilitated by an external advisor.
The Company complies with all but
four of the current recommendations:
• With respect to the recommendation
The Company’s statutory report on
corporate governance includes the
full list of recommendations, with
The Group also has an Executive
Committee (ExCom), which, in
addition to the CEO and the CFO,
consists of a wider group of
Executive Vice Presidents, portrayed
on pages 46-47. While the Executive
Board members are formally
registered as executive directors of
to publish quarterly reports, the
Group has chosen to only publish
full- and half-year reports.
• With respect to the recommendation
that a majority of the members of
a board committee should be
independent, in 2021 two of the
four members of the Nomination
Download our statutory
report on corporate
governance
www.carlsberggroup.com/who-we-are/
corporate-governance/#statutoryreports
comments on the Group’s position on
each recommendation. The report
also includes the reporting on internal
controls and risk management
systems applied as a basis for the
financial reporting process.
OUR COMPASS
The Supervisory Board is responsible
for overseeing that the Executive
Committee has an adequate system
and resources in place to ensure
compliance with the Company’s
codes and policies in relation to its
business activities.
The Group’s core values are integrity,
responsibility, honesty and ethical
business conduct. Living by these
values – our Compass – supports our
strategy, mitigates risks and protects
our reputation as a responsible
brewer.
Our Compass consists of a Code of
Ethics and Conduct and our Group
policies, which guide everyone in the
Group on how to act every day,
setting out the ethical standards for
our behaviour both within the
company and towards external
business partners such as customers
and suppliers.
Group policies include, but are not
limited to, anti-bribery & corruption,
labour & human rights, diversity &
inclusion, competition law, trade
sanctions, data protection, risk
management, finance, marketing,
corporate communication,
responsible drinking and public &
government affairs. In 2021, we
drew up a policy on data ethics.
The Environment, Social &
Governance Report includes a
thorough description of how we
implement and live by our Compass
in our day-to-day actions, including
areas such as anti-bribery &
corruption, compliance and our
Speak Up system, as well as how we
work with and seek to ensure high
standards for data ethics as dscribed
in our Data Ethics Policy.
Download our policies
www.carlsberggroup.com/sustainability/
download/download-our-policies
THE ANNUAL GENERAL
MEETING
The 2021 Annual General Meeting
(AGM) took place on 15 March. The
minutes of the meeting are available
on www.carlsberggroup.com.
Rules and deadlines applying to the
AGM and other general meetings are
stipulated in the Company’s Articles
of Association, available on
www.carlsberggroup.com along with
other AGM-related information.
COMPOSITION OF THE
SUPERVISORY BOARD
The members of the Supervisory
Board and their board meeting
attendance are shown in the table
below.
The Supervisory Board currently has
ten members elected by the General
Meeting and, in accordance with the
Danish Companies Act, five members
elected by the employees.
Five of the ten members elected by
the General Meeting have an
international business background in
addition to competencies related to
FMCG, digital, finance, ESG, supply
chain, procurement and emerging
markets.
The other five members are affiliated
to the Carlsberg Foundation, the
Company’s largest shareholder, and
have an academic background.
These members are bearers of the
Carlsberg Group culture and the
heritage and values stemming from
founder J.C. Jacobsen, and the
Chairship
meetings attended
Board
meetings attended
Supervisory Board meetings
Board member
Flemming Besenbacher (Chair)1
Henrik Poulsen (Deputy Chair)1,2
Hans Andersen3
Carl Bache1
Magdi Batato1,2
Lilian Fossum Biner1,2
Richard Burrows1
Eva Vilstrup Decker3
Domitille Doat-Le Bigot1,2
Lars Fruergaard Jørgensen1,2
Finn Lok3
Erik Lund3
Søren-Peter Fuchs Olesen1
Peter Petersen3
Majken Schultz1
Lars Stemmerik1
1 Elected by the General Meeting. 2 Independent. 3 Employee-elected.
Attended meeting.
Did not attend meeting.
Not a Board/Chairship member at the time.
CARLSBERG GROUP ANNUAL REPORT 2021 GOVERNANCE
38
THE CARLSBERG
FOUNDATION
The Carlsberg Foundation is the
Company’s largest shareholder.
According to its Charter, the Foundation
must own shares equivalent to at least
51% of the votes in Carlsberg A/S. At
31 December, the Carlsberg Foundation
held 30% of the capital and 76% of the
votes in Carlsberg A/S.
The Foundation is a long-term, value-
oriented shareholder, supporting the
Group in creating sustainable value
growth through the execution of its
strategy and adherence to the
Company’s capital allocation priorities.
The Foundation participates pro rata in
the share buy-back programmes (see
page 22).
The dividends from Carlsberg A/S are
given back to society by granting funds
to foster and support academic research
within natural sciences, humanities and
social sciences, and funds for cultural
and socially beneficial purposes. The
Foundation also grants funds to the
Carlsberg Research Laboratory. In
2021, dividends received by the
Foundation amounted to DKK 964m.
CARLSBERG GROUP ANNUAL REPORT 2021 GOVERNANCE
39
Supervisory Board sees these
members as patrons of the same.
The employee representatives are
elected for a term of four years.
They hold the same rights and
obligations as the members elected
by the General Meeting. The current
employee representatives were
elected in 2018 and the next election
will take place in 2022.
Information on the Supervisory
Board members is available on
pages 43-45. Detailed CVs can be
found on www.carlsberggroup.com.
DIVERSITY AND COMPETENCIES
The Supervisory Board recognises
the benefits of diversity in respect of
experience, culture, international
experience and gender.
Diversity is of high priority for the
Supervisory Board, and it has laid
down the following specific
objectives in relation to international
experience and gender:
• With regard to international
experience, the objective is that
50% or more of the Supervisory
Board members elected by the
General Meeting should have
substantial international experience
from managing large corporations
or institutions.
• The proportion of the under-
represented gender (currently
women) on the Supervisory Board
should reach at least 40% of the
members elected by the General
Meeting no later than 2021. The
gender target applies to the boards
of all Danish Carlsberg Group
companies that are required to set
such objectives.
The Supervisory Board fulfils the
objective regarding international
experience.
In 2021, the Supervisory Board did
not meet the objective with regard to
gender diversity, as only two
Supervisory Board members elected
by the General Meeting were
women, i.e. 20%.
At the Annual General Meeting in
March 2022, the Supervisory Board
will propose three female candidates,
bringing the ratio of women on the
Supervisory Board to 33%. The
objective with regard to gender
diversity is therefore not expected to
be met in 2022. However, the
Company expects to meet the
gender diversity target at the Annual
General Meeting in 2023.
At Carlsberg Breweries A/S, the four
Supervisory Board members elected
by the General Meeting are men,
being the members of the Chairship
and of the Executive Board of
Carlsberg A/S. After the Annual
General Meeting in 2022, it is
expected that one of four members
will be a woman, being the Deputy
Chair of Carlsberg A/S. At Carlsberg
Danmark A/S and Carlsberg Supply
Company Danmark A/S, one of
three Supervisory Board members is
a woman. At Carlsberg Integrated
Information Technology A/S, one of
four Supervisory Board members is a
woman.
The Supervisory Board believes that
the current composition of the Board
ensures an appropriate level of skills,
breadth and diversity in the
members’ approach to their duties,
thereby helping to ensure that
decisions are well considered and
that both short- and long-term
perspectives are taken into account.
The 2021 Environment, Social &
Governance Report contains
information on our work with
diversity and inclusion in the
Carlsberg Group.
The Supervisory Board continuously
assesses, including as part of its
annual board evaluation, whether
the board members possess the
required skills and competencies to
best support the Carlsberg Group
and its strategy, and whether the
composition can be further optimised
for this purpose.
The skills and competencies
that should be represented on
the Supervisory Board are described
in the Specification of Competencies,
available on
www.carlsberggroup.com. On the
basis of a recommendation from the
Nomination Committee, the
Supervisory Board reviews the
Specification of Competencies
annually.
SUPERVISORY BOARD
EVALUATION PROCESS
Each year, the Chair of the
Supervisory Board heads a structured
evaluation of the Board’s work,
accomplishments and competencies.
In 2021, the evaluation process was
headed by the Chair and Deputy
Chair and led to a short catalogue of
ideas for the Supervisory Board
work. Together with management,
the ideas will be considered and,
where relevant, implemented.
During the evaluation process in
2021, the Supervisory Board
members generally expressed that
meeting material is of a high quality,
that agendas cover relevant topics,
that meetings are well planned, and
that the time and discussions are
well prioritised.
The members also appreciated the
discussions with the Executive Board
and other management members,
and the mutual trust and
cooperation with the Executive
Board.
THE WORK OF THE
SUPERVISORY BOARD
The main topics of discussion at the
Supervisory Board meetings in 2021
are presented in the box on page 40.
The Executive Board always attends
the Supervisory Board meetings and,
in order to improve transparency, the
members of ExCom are also invited
and attend when relevant. This gives
the Supervisory Board better insight
into the business.
In connection with most Supervisory
Board meetings, key people from the
Group present a market, a function
or other relevant topics. In 2021,
these covered updates on Carlsberg’s
COVID-19 plans, including the
impact on employees and the
business, internal audit, research, IT
security, quality, the people agenda,
including diversity & inclusion, the
businesses in Germany and France,
commercial priorities and three-year
plans.
BOARD COMMITTEES
The Supervisory Board has
established three board committees:
the Audit, Nomination and
Remuneration Committees. Each
year, the Supervisory Board
considers whether the number and
Nomination Committee meetings
Committee member
Flemming Besenbacher (Chair)
Carl Bache
Lars Fruergaard Jørgensen1
Richard Burrows
Henrik Poulsen1
1 Independent.
Committee meetings attended
Attended meeting.
Not a Committee member at the time.
Remuneration Committee meetings
Committee member
Richard Burrows (Chair)
Magdi Batato1
Domitille Doat-Le Bigot1
Søren-Peter Fuchs Olesen
Henrik Poulsen1
Flemming Besenbacher2
Committee meetings attended
1 Independent. 2 Not a member of the Committee; attends meetings in his capacity as Chair
of the Supervisory Board.
Attended meeting.
Not a Committee member at the time.
Audit Committee meetings
Committee member
Lilian Fossum Biner1 (Chair)
Magdi Batato1
Richard Burrows
Lars Fruergaard Jørgensen1
Henrik Poulsen1
Flemming Besenbacher2
Committee meetings attended
CARLSBERG GROUP ANNUAL REPORT 2021 GOVERNANCE
40
SUPERVISORY
BOARD 2021
MAIN TOPICS OF DISCUSSION
Strategy
• Review and discussion of the Group's
COVID-19 strategy and plans.
• Follow up on SAIL'22, including potential
impact of COVID-19 on strategic priorities.
• Continuous review and discussion of and
feedback on the development of SAIL’27.
• Review of the progress of Together
Towards ZERO, including as part of
SAIL’27.
• Review of and debate on R&D,
innovation, branding, quality and other
strategic initiatives.
• Monitoring of the Funding the Journey
culture in the Group's ways of working,
including application of the Operating
Cost Management toolkit.
• Review and approval of the Group's
capital structure, funding, dividend and
share buy-backs.
• Review and discussion of organic
opportunities.
• Review of various markets and functions,
and discussions with the heads of the
same.
Organisation, people, succession planning
and talent management
• Review of the Supervisory Board
composition.
• Succession planning for the executive
management.
• Review of the Group's approach to taking
care of employees during the COVID-19
crisis and beyond, including global
guidelines on flexible workplaces.
• Review and endorsement of the
Group’s people agenda.
• Review and endorsement of the
Group’s strategic diversity & inclusion
agenda.
• Discussion and approval of the bonus
structures in the Group’s incentive
programme, ensuring support of and
alignment with SAIL’22.
Compliance
• Review of Carlsberg’s compliance risks
and set-up, including discussion of
compliance-enhancing efforts.
Governance and risk management
• Review of the outcome of the
Supervisory Board evaluation process,
including follow-up on all
suggestions.
• Review and discussion of the internal
audit & control reports, working
processes and continued improvement.
• Review and discussion of the Group’s
IT & cyber security strategy.
• Discussion of relevant issues and
ways of working with the external
auditor.
• Approval of the external auditor for
election at the 2021 AGM.
1 Independent. 2 Not a member of the Committee; attends meetings in his capacity as Chair of
the Supervisory Board.
Attended meeting.
Not a Committee member at the time.
Did not attend meeting.
CARLSBERG GROUP ANNUAL REPORT 2021 GOVERNANCE
41
scope of the committees are
appropriate.
Committee members are appointed
for one year at a time. The members
of the respective committees and
their meeting attendance are shown
in the tables on page 40.
THE NOMINATION COMMITTEE
The Terms of Reference for the
Nomination Committee are available
on www.carlsberggroup.com.
In 2021, the Committee had
particular focus on:
• Planning the Board's evaluation
process.
• Reviewing the Specification of
Competencies for Board members
to ensure that they reflect the skills
and experiences needed to best
support the execution of SAIL'22.
• Succession planning at
management and Supervisory
Board level, including nomination
of a new Deputy Chair.
• Evaluating the composition of
ExCom and the composition,
structure and size of the
Supervisory Board.
THE REMUNERATION COMMITTEE
The Terms of Reference for the
Remuneration Committee are
available on
www.carlsberggroup.com.
In 2021, the main activities of the
Remuneration Committee were:
• Preparing the 2020 Remuneration
Report in line with new reporting
standards under the EU
Shareholder Rights Directive.
• Increasing the weighting of ESG
in the short-term incentive plan
from 2021 onwards as well as
considering inclusion in the long-
term incentive.
• Amending the peer group for total
shareholder return to better align
with our most direct industry peers.
• Reviewing the approach to target-
setting for, and ongoing
performance against, STI and LTI
plans in light of the uncertain
business environment.
• Considering the incentive
arrangements in light of the
developing future business strategy.
The work of the Committee is
described in more detail in the
Remuneration Report, available on
www.carlsberggroup.com.
THE AUDIT COMMITTEE
The Terms of Reference for the Audit
Committee are available on
www.carlsberggroup.com.
The Committee members have the
relevant financial expertise and
necessary experience of the
Company’s sector.
The Audit Committee works according
to the Terms of Reference and a
detailed annual meeting plan.
In 2021, the Audit Committee had
particular focus on a number of
areas, including:
• Monitoring the effectiveness of the
control environment and overseeing
the progress on improving and
further developing the effectiveness
of the controls over financial
reporting.
• Monitoring the external financial
reporting and the work of the
external auditors.
• Reviewing the progress of the work
of the Group Internal Audit function.
• Reviewing the external financial
reporting, including the annual
reporting.
• Reviewing the work regarding
Speak Up matters.
• Managing financial risk.
• Reviewing the risk management
process.
• Reviewing Global Shared Services.
• Receiving updates on Group tax.
• Reviewing succession planning for
financial personnel.
• Reviewing the Company’s
preparation for compliance with the
EU Green Taxonomy.
INTERNAL CONTROL AND RISK
MANAGEMENT RELATED TO
THE FINANCIAL REPORTING
PROCESS
OVERALL CONTROL ENVIRONMENT
The Supervisory Board and ExCom
have overall responsibility for the
Carlsberg Group’s internal control
environment.
The Audit Committee is responsible
for monitoring the effectiveness of
the overall internal control
environment and risk management
systems, in particular related to the
financial reporting process.
The Group has a number of policies
and procedures in key areas of
financial reporting, including the
Finance Policy, the Accounting
Manual, the Controller Manual, the
Use of Auditors Policy, the Chart of
Authority, the Risk Management
Policy, the Financial Risk
Management Policy, the Corporate
Governance Policy, the Information
Security & Acceptable Use Policy,
the Records Management &
Personal Data Protection Policy, the
Stock Exchange Compliance Policy,
the Tax Policy, and the Code of
Ethics & Conduct.
The policies and procedures apply to
all subsidiaries, and similar
requirements are set out in
collaboration with the partners in
joint ventures.
The Group’s internal control
framework for financial reporting is
designed to reduce and mitigate
financial risks identified and ensure
reliable internal and external
financial reporting. It defines who is
responsible and provides assurance
that key risks are covered by internal
control activities.
As a consequence of the Group’s
growth due to acquisitions, systems
and processes are not standardised
across entities.
The Group will continue to strengthen
the internal control environment
through further standardisation,
increased automation, strong
analytics and transparent governance.
The financial reporting control
framework is monitored through
entities’ self-assessment of the
effectiveness of the implemented
controls and continuous testing of
performance by the Group’s Risk &
Internal Control function. The
monitoring of the performance of the
controls focuses on the adequacy of
the controls, their effectiveness and
the efficiency of the overall
controlling processes.
CARLSBERG GROUP ANNUAL REPORT 2021 GOVERNANCE
42
RISK ASSESSMENT
With the implementation of the
internal control framework for
financial reporting, the Group has
identified the risks that could have a
direct or indirect material impact on
the financial statements. Group
entities are required to document
and report transaction processes and
the controls in place to cover the key
risks identified.
Group entities are required to
reassess their controls biannually
and must update changes to the
control framework for financial
reporting, including new risks and
controls.
CONTROL ACTIVITIES
The Group has implemented a
formalised financial reporting
process, budget process, estimates
and monthly reporting on actual
performance. The accounting
information reported by all Group
companies is reviewed by controllers
with regional or functional in-depth
knowledge of the individual
companies/functions and by
technical accounting specialists.
Controllers are continuously updated
on best practice relating to internal
financial controls, and trained in new
accounting and reporting
requirements.
The entities in the Group are
dependent on IT systems. Any
weaknesses in the system controls
or IT environment are compensated
for by manual controls in order to
mitigate any significant risk relating
to the financial reporting.
risks related to the segregation of
duties and implement necessary
compensating controls, thereby
continuously strengthening the
internal control environment and
enforcing optimal segregation of
duties in the ERP systems.
In 2021, the Group completed a
project on standardising finance and
accounting processes in Western
Europe. The Group has established
a global process function in order
to continue the work with
standardisation and simplification
throughout the Group for all areas.
The quality of processes and
associated internal controls are
subject to continuous monitoring and
testing by the Group’s Risk & Internal
Control function as well as to regular
internal audits.
INFORMATION AND
COMMUNICATION
The Group has established
information and communication
systems to ensure accounting and
internal control compliance. During
the risk assessment process, Group
entities are required to report on
missing or inadequate controls.
Each entity assesses any need for
compensating controls, or for design
and implementation of new controls.
Furthermore, Group entities are
required to maintain mapping of
MONITORING
The Audit Committee’s monitoring
covers both the internal control
environment and business risk.
Monitoring of the internal control
environment is covered by the
Group’s control framework for
financial reporting.
The financial risks are assessed
and reviewed at multiple levels
in the Group, including monthly
performance review meetings at
ExCom level, periodic review of
control documentation, and audits
performed by Group Internal Audit.
GROUP INTERNAL AUDIT
Group Internal Audit provides
objective and independent
assessment of the adequacy,
effectiveness and quality of the
Group’s internal controls. Group
Internal Audit works in accordance
with a charter, which is reviewed
periodically and approved by the
Audit Committee.
Taking into account the annual
review of business risks (see pages
34-36), an internal audit plan is
drawn up for the year. The plan is
reviewed and approved by the Audit
Committee. In 2021, Group Internal
Audit conducted audits mainly in the
areas of financial reporting controls,
compliance (internal and external
regulation), information technology
and third-party risk management.
In addition, Group Internal Audit
continuously assesses the adequacy
of actions implemented by
management to address previously
raised risks and control issues.
SPEAK UP
The Carlsberg Group has a Speak Up
system that enables employees to
report misconduct. Reports typically
relate to suspected violations of the
Carlsberg Code of Ethics & Conduct.
The Speak Up system is operated
by an external provider and allows
concerns to be brought to the
attention of the Group Speak
Up Review team anonymously,
confidentially and via multiple
channels.
The Speak Up Review team is
responsible for reviewing and
overseeing all reported Speak Up
matters. Furthermore, an Integrity
Committee, chaired by the CFO,
oversees the follow-up of major
Speak Up investigations and provides
a report to ExCom and the Audit
Committee at least quarterly.
The Speak Up Summary report
contains an overview of all open and
closed investigations during the
quarter and the time taken to resolve
cases.
The Misconduct Investigation
Handbook was updated in 2020 to
clarify how investigations should be
undertaken. In 2021, there was a
relaunch of a communication
campaign to raise awareness of the
various Speak Up channels available
and the importance of speaking up.
These communication efforts will
continue in 2022.
Since the establishment of the Speak
Up system, some reports and their
subsequent investigation have led to
disciplinary sanctions, including
dismissal on the basis of violation of
the Code of Ethics & Conduct and/
or Group policies.
The incidents have not had any
material impact on the financial
results of the Group except for those
items recognised in the statement of
financial position.
More information regarding the
Speak Up system, including reported
concerns and disciplinary actions,
can be found in the Environment,
Social & Governance Report.
SUPERVISORY BOARD
SUPERVISORY
BOARD
CARLSBERG GROUP ANNUAL REPORT 2021 GOVERNANCE
43
SUPERVISORY
BOARD
MEMBERS
FLEMMING BESENBACHER
CHAIR (SINCE 2012)
Nationality: Danish
Year of birth: 1952
Appointed (until): 2005 (2022)
BOARD FUNCTION
Non-executive, non-independent
director.
BOARD COMMITTEES
Nomination Committee (Chair).
PROFESSION
Professor, D.Sc., h.c. mult, FRSC.
OTHER BOARD POSITIONS
Board Chair Aarhus Vand, UNLEASH,
ONE\THIRD, DANIAS.
Board Member Unisense,
SulfiLogger.
Flemming Besenbacher has notified the
Supervisory Board that he is not standing for
re-election at the Annual General Meeting.
HENRIK POULSEN
DEPUTY CHAIR (SINCE 2021)
Nationality: Danish
Year of birth: 1967
Appointed (until): 2021 (2022)
BOARD FUNCTION
Non-executive, independent director.
BOARD COMMITTEES
Audit Committee, Nomination
Committee, Remuneration
Committee.
PROFESSION
Non-executive board director.
OTHER BOARD POSITIONS
Board Chair Faerch Group.
Board Deputy Chair ISS.
Board Member Ørsted, Novo
Nordisk, Novo Holdings,
Bertelsmann SE & Co.
The Supervisory Board will propose Henrik
Poulsen as the new Chair of the Supervisory
Board.
CARLSBERG GROUP ANNUAL REPORT 2021 GOVERNANCE
44
HANS ANDERSEN
Nationality: Danish
Year of birth: 1955
Appointed (until): 1998 (2022)
MAGDI BATATO
Nationality: Swiss
Year of birth: 1959
Appointed (until): 2018 (2022)
RICHARD BURROWS
Nationality: Irish
Year of birth: 1946
Appointed (until): 2009 (2022)
BOARD FUNCTION
Employee representative.
BOARD COMMITTEES
None.
PROFESSION
Brewery worker, Carlsberg Supply
Company Danmark.
OTHER BOARD POSITIONS
None.
CARL BACHE
Nationality: Danish
Year of birth: 1953
Appointed (until): 2014 (2022)
BOARD FUNCTION
Non-executive, non-independent
director.
BOARD COMMITTEES
Nomination Committee.
PROFESSION
Professor, Ph.D., Dr.Phil. Head of
the Doctoral School of the
Humanities at the University of
Southern Denmark. Member of the
Board of Directors of the Carlsberg
Foundation.
OTHER BOARD POSITIONS
None.
BOARD FUNCTION
Non-executive, independent director.
BOARD COMMITTEES
Audit Committee, Remuneration
Committee.
PROFESSION
Executive Vice President and Head of
Operations, Nestlé.
OTHER BOARD POSITIONS
None.
BOARD FUNCTION
Non-executive, independent director.
BOARD COMMITTEES
Remuneration Committee (Chair),
Audit Committee, Nomination
Committee.
PROFESSION
Non-executive board director.
OTHER BOARD POSITIONS
Board Chair Pepco Group.
LILIAN FOSSUM BINER
Nationality: Swedish
Year of birth: 1962
Appointed (until): 2019 (2022)
EVA VILSTRUP DECKER
Nationality: Danish
Year of birth: 1964
Appointed (until): 2014 (2022)
BOARD FUNCTION
Non-executive, independent director.
BOARD COMMITTEES
Audit Committee (Chair).
PROFESSION
Non-executive board director.
OTHER BOARD POSITIONS
Board Member Givaudan, Scania,
L.E. Lundbergföretagen, Alfa Laval,
a-connect.
BOARD FUNCTION
Employee representative.
BOARD COMMITTEES
None.
PROFESSION
Senior Director, Carlsberg
Breweries.
OTHER BOARD POSITIONS
None.
CARLSBERG GROUP ANNUAL REPORT 2021 GOVERNANCE
45
LARS FRUERGAARD JØRGENSEN
Nationality: Danish
Year of birth: 1966
Appointed (until): 2019 (2022)
ERIK LUND
Nationality: Danish
Year of birth: 1964
Appointed (until): 2015 (2022)
PETER PETERSEN
Nationality: Danish
Year of birth: 1969
Appointed (until): 2010 (2022)
LARS STEMMERIK
Nationality: Danish
Year of birth: 1956
Appointed (until): 2010 (2022)
BOARD FUNCTION
Non-executive, independent director.
BOARD COMMITTEES
Nomination Committee.
PROFESSION
President & CEO, Novo Nordisk.
OTHER BOARD POSITIONS
None.
BOARD FUNCTION
Employee representative.
BOARD COMMITTEES
None.
PROFESSION
Head Brewer, Carlsberg.
OTHER BOARD POSITIONS
None.
Lars Fruergaard Jørgensen has notified the
Supervisory Board that he is not standing for
re-election at the Annual General Meeting.
FINN LOK
Nationality: Danish
Year of birth: 1958
Appointed (until): 2014 (2022)
BOARD FUNCTION
Employee representative.
BOARD COMMITTEES
None.
PROFESSION
Ph.D. and Brew Master, Principal
Scientist, Carlsberg.
OTHER BOARD POSITIONS
None.
SØREN-PETER FUCHS OLESEN
Nationality: Danish
Year of birth: 1955
Appointed (until): 2012 (2022)
BOARD FUNCTION
Non-executive, non-independent
director.
BOARD COMMITTEES
Remuneration Committee.
PROFESSION
Professor, D.M.Sc. CEO of the
Danish National Research
Foundation. Member of the Board of
Directors of the Carlsberg
Foundation.
OTHER BOARD POSITIONS
None.
BOARD FUNCTION
Employee representative.
BOARD COMMITTEES
None.
PROFESSION
President of the Staff Association.
Process Lead, Carlsberg Supply
Company Danmark.
OTHER BOARD POSITIONS
None.
MAJKEN SCHULTZ
Nationality: Danish
Year of birth: 1958
Appointed (until): 2019 (2022)
BOARD FUNCTION
Non-executive, non-independent
director.
BOARD COMMITTEES
None.
PROFESSION
Chair of the Board of Directors of the
Carlsberg Foundation. Professor,
Ph.D., Copenhagen Business School.
International Research Fellow, Saïd
Business School, Oxford University.
OTHER BOARD POSITIONS
Board Member Realdania.
The Supervisory Board will propose Maiken
Schultz as the new Deputy Chair of the
Supervisory Board.
BOARD FUNCTION
Non-executive, non-independent
director.
BOARD COMMITTEES
None.
PROFESSION
Professor, D.Sc., University of
Copenhagen. Member of the Board
of Directors of the Carlsberg
Foundation.
OTHER BOARD POSITIONS
None.
Lars Stemmerik has notified the Supervisory
Board that he is not standing for re-election
at the Annual General Meeting.
The Supervisory Board
members’ full CVs,
including their skills
and competencies, are
available online at
www.carlsberggroup.com/who-we-
are/about-the-carlsberg-group/
supervisory-board/
NEW BOARD
MEMBERS
The Supervisory Board will propose
Mikael Aro and Punita Lal as new
members to be elected at the Annual
General Meeting on 14 March 2022
MIKAEL ARO
Nationality: Finnish
Year of birth: 1965
BOARD FUNCTION
Non-executive, independent director.
PROFESSION
Senior Industry Advisor, Triton.
OTHER BOARD POSITIONS
Board Chair Kojamo, Glamox, Geia
Foods, Flokk.
Board Member Avarn security.
PUNITA LAL
Nationality: Indian
Year of birth: 1962
BOARD FUNCTION
Non-executive, independent director.
PROFESSION
Non-executive board director.
OTHER BOARD POSITIONS
Board Member DBS Group Bank,
Cipla.
EXECUTIVE COMMITTEE
OUR SENIOR
MANAGEMENT TEAM
CARLSBERG GROUP ANNUAL REPORT 2021 GOVERNANCE
46
CARLSBERG GROUP ANNUAL REPORT 2021 GOVERNANCE
47
2016, he became Managing Director
of Carlsberg Malaysia. Prior to
joining Carlsberg, Lars was with
Action Nordic and Unilever Denmark.
VICTOR SHEVTSOV
EXECUTIVE VICE PRESIDENT
SUPPLY CHAIN
Nationality: Russian
Year of birth: 1970
Appointed: 2021
Victor joined Carlsberg from PepsiCo
in 2015 as Vice President for our
supply chain in Asia. Victor has solid
end-to-end supply chain expertise
accrued through a variety of roles
during his career.
EXECUTIVE
COMMITTEE
MEMBERS
CEES ’T HART
CEO
Nationality: Dutch
Year of birth: 1958
Appointed: 2015
Prior to joining the Carlsberg Group,
Cees was CEO of the Dutch dairy
company Royal FrieslandCampina, a
position he had held since 2008.
Prior to FrieslandCampina, Cees
spent 25 years with Unilever, holding
management positions across
Eastern Europe, Western Europe and
Asia and with the last position being
member of the Europe Executive
Board. Cees is Chair of the
Supervisory Board of KLM and a
member of the Board of AFKLM.
HEINE DALSGAARD
CFO
Nationality: Danish
Year of birth: 1971
Appointed: 2016
Heine joined the Carlsberg Group
from ISS, one of the world’s largest
facility services companies. He went
to ISS in 2013, prior to the
company’s IPO in 2014. Before ISS,
he was Group CFO at Grundfos.
Heine’s previous experience includes
various senior management and
financial positions at Carpetland,
Hewlett Packard and Arthur
Andersen. Heine is a member of the
Board of Directors and Chair of the
Audit Committee of Novozymes and
a member of the Board of Directors
and Chair of the Audit Committee of
Pandora.
JOÃO ABECASIS
CHIEF COMMERCIAL OFFICER
Nationality: Portuguese
Year of birth: 1972
Appointed: 2019
João joined the Carlsberg Group in
2011 as CCO and later Managing
Director of Super Bock, our associate
in Portugal. In 2016, he became Vice
President for smaller markets in the
Western Europe region. He also
served as interim Managing Director
of Carlsberg Danmark. In 2017, he
became Managing Director of our
French business, Kronenbourg.
Earlier in his career, João held a
range of sales and marketing roles at
Unilever.
SØREN BRINCK
EXECUTIVE VICE PRESIDENT
STRATEGY AND DIGITAL
Nationality: Danish
Year of birth: 1974
Appointed: 2021
Søren joined Carlsberg’s commercial
team in 2005. During his career at
Carlsberg, he has held various
management positions at Group,
regional and market level. From
2009 to 2019, he was Managing
Director in Denmark, Norway and
Greece, while most recently he was
SVP, Asia.
LEO EVERS
EXECUTIVE VICE PRESIDENT
ASIA
Nationality: Dutch
Year of birth: 1964
Appointed: 2021
Leo Evers joined Carlsberg from
Heineken, where since 1990 he had
held several managerial positions,
most recently Managing Director of
Heineken Vietnam and Regional
Managing Director APAC. As the
latter, he was responsible for
Singapore, Malaysia, Papua New
Guinea, Australia, New Zealand,
Laos, Sri Lanka, Philippines, New
Caledonia and Solomon Islands.
GRAHAM FEWKES
EXECUTIVE VICE PRESIDENT
WESTERN EUROPE
Nationality: British
Year of birth: 1968
Appointed: 2014
from 2015 to 2021. Graham has
strong experience in the global drinks
business, having served in a wide
range of international sales and
marketing roles for Grand
Metropolitan plc, Foster’s Brewing
Group and S&N plc.
JORIS HUIJSMANS
CHIEF HUMAN RESOURCES OFFICER
Nationality: Dutch
Year of birth: 1975
Appointed: 1 January 2022
Joris joined Carlsberg in 2016. Prior
to becoming CHRO in 2021, he
headed up Carlsberg Export &
License. Before that, he was VP,
Urban Development and New
Business, and VP, Group Strategy.
Joris joined Carlsberg with over 20
years of FMCG industry and
emerging markets experience,
including various roles at Heineken.
LARS LEHMANN
EXECUTIVE VICE PRESIDENT
CENTRAL & EASTERN EUROPE
Nationality: Danish
Year of birth: 1966
Appointed: 2019
Graham joined the Carlsberg Group
as Vice President Commercial, Asia,
in 2008, before becoming SVP of
Group Sales, Marketing &
Innovation, in 2014. Prior to his
current role, he served as EVP, Asia,
Lars joined the Carlsberg Group in
2003 as Commercial Development
Director. Since then, he has held
several management positions,
including VP, Commercial, for
Eastern Europe & BBH and head of
Export, License & Duty Free. In
SHARE INFORMATION
INFORMATION
FOR SHAREHOLDERS
CARLSBERG GROUP ANNUAL REPORT 2021 GOVERNANCE
48
Carlsberg A/S is listed on
Nasdaq Copenhagen. The
Company has around 56,000
registered shareholders.
The Company has two share classes:
Carlsberg A and Carlsberg B. An A
share carries 20 votes, while a B
share carries two votes and is
entitled to a preferential dividend.
The B share is included in the
Nasdaq OMX Nordic Large Cap and
OMXC20 blue-chip indices.
As a supplement to its Copenhagen
listing, the Company has established
a sponsored level 1 ADR (American
Depository Receipt) programme with
J.P. Morgan. The ADRs trade over-
the-counter in the USA under the
symbol CABGY. More information on
the ADR programme is available on
our investor website.
MAJOR SHAREHOLDERS
At 31 December 2021, the
Company’s largest shareholder was
CARLSBERG B SHARE 2021
(DKK)
SHAREHOLDER GEOGRAPHIC SPLIT
(excluding the Carlsberg Foundation
and treasury shares)
the Carlsberg Foundation with 30%
of the capital and 76% of the votes.
In accordance with section 29 of the
Danish Securities Trading Act,
Massachusetts Financial Services
Company (Boston, USA) has notified
Carlsberg that it too owns more than
5% of the share capital.
SHAREHOLDER RETURN
The Carlsberg Group’s dividend policy
stipulates an adjusted payout ratio of
around 50%. In addition, the Company
conducted four share buy-back
programmes in 2021. For more
information, see page 22.
INVESTOR RELATIONS
The Carlsberg Group aims to give
shareholders and the market the
best possible insight into factors
considered relevant for ensuring
market-efficient and fair pricing of
the Company’s shares. This is
achieved through the quality,
consistency and continuity of the
information provided to the market,
which is handled by the Group’s
Investor Relations department.
We observe a four-week silent
period prior to the publication of the
annual and half-year reports, and a
two-week silent period prior to the
Q1 and Q3 trading statements.
GROUP WEBSITE
www.carlsberggroup.com provides
comprehensive information about
the Group and its shares and bonds,
including Company announcements,
annual and quarterly reports, share
prices and financial data, investor
presentations, webcasts and
transcripts, and a financial and event
calendar.
At the end of 2021, a total of
30 brokers had coverage of the
Company. The analysts’ names
and consensus estimates can be
found on the website.
1,300
1,200
1,100
1,000
900
800
700
Other 25%
US
42%
n
a
J
b
e
F
r
a
M
r
p
A
y
a
M
n
u
J
l
u
J
g
u
A
p
e
S
t
c
O
v
o
N
c
e
D
DK
16%
UK
17%
Share information
Share class
Number of issued shares¹
Number of issued shares,
excl. treasury shares¹
Carlsberg Foundation
Votes per share
Par value
A
B
Total
33,699,252
111,557,554
145,256,806
33,699,252
108,193,036
141,892.288
33,065,996
9,811,629
42,877,625
20
2
DKK 20
DKK 20
Financial calendar
2022
Event
Annual General Meeting
Q1 trading statement
H1 interim financial
statement
Date
14 March
28 April
17 August
Share price, year-end
DKK 1,215.0
DKK 1,129.5
Capital Markets Day
28 September
Proposed dividend per share
DKK 24.0
DKK 24.0
Q3 trading statement
27 October
¹ At 31 December 2021.
Forward-looking statements and ESEF
CARLSBERG GROUP ANNUAL REPORT 2021 FORWARD-LOOKING STATEMENTS AND ESEF
49
FORWARD-LOOKING
STATEMENTS AND ESEF
This Annual Report contains
forward-looking statements,
including statements about the
Group’s sales, revenues, earnings,
spending, margins, cash flow,
inventory, products, actions, plans,
strategies, objectives and guidance
with respect to the Group's future
operating results.
Forward-looking statements include,
without limitation, any statement
that may predict, forecast, indicate
or imply future results, performance
or achievements, and may contain
the words “believe, anticipate,
expect, estimate, intend, plan,
project, will be, will continue, will
result, could, may, might”, or any
variations of such words or other
words with similar meanings.
Any such statements are subject to
risks and uncertainties that could
cause the Group’s actual results to
differ materially from the results
discussed in such forward-looking
statements.
Prospective information is based on
management’s then current
expectations or forecasts. Such
information is subject to the risk that
such expectations or forecasts, or the
assumptions underlying such
expectations or forecasts, may
change.
The Group assumes no obligation to
update any such forward-looking
statements to reflect actual results,
changes in assumptions or changes in
other factors affecting such forward-
looking statements.
Some important risk factors that
could cause the Group’s actual results
to differ materially from those
expressed in its forward-looking
statements include, but are not
limited to: economic and geopolitical
uncertainty (including interest rates
and exchange rates), financial and
regulatory developments, demand
for the Group’s products, increasing
industry consolidation, competition
from other breweries, the availability
and pricing of raw materials and
packaging materials, cost of energy,
production- and distribution-related
issues, information technology
failures, breach or unexpected
termination of contracts, market-
driven price reductions, market
acceptance of new products, changes
in consumer preferences, launches of
rival products, stipulation of fair
value in the opening balance sheet of
acquired entities, litigation,
environmental issues and other
unforeseen factors.
New risk factors can arise, and it
may not be possible for management
to predict all such risk factors, nor to
assess the impact of all such risk
factors on the Group’s business or
the extent to which any individual
risk factor, or combination of factors,
may cause results to differ materially
from those contained in any forward-
looking statement.
Accordingly, forward-looking
statements should not be relied on
as a prediction of actual results.
ESEF data
Domicile of entity
Description of nature of entity’s operations and principal
activities
Country of incorporation
Principal place of business
Legal form of entity
Denmark
Brewing company
Denmark
Global
A/S
Name of reporting entity or other means of identification
Carlsberg A/S
Address of entity's registered office
1 J. C. Jacobsens Gade
1799 Copenhagen V
Consolidated financial statements
CONSOLIDATED
FINANCIAL STATEMENTS
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
50
CONSOLIDATED FINANCIAL
STATEMENTS
Income statement ................................... 51
Statement of comprehensive
income ......................................................... 51
Statement of financial position ......... 52
Statement of changes in equity ........ 53
Statement of cash flows ...................... 54
Notes ............................................................ 55
PARENT COMPANY FINANCIAL
STATEMENTS
Statements .............................................. 124
Notes ......................................................... 127
REPORTS
Management statement ................... 134
Auditor’s reports ................................... 135
SECTION 1
OPERATING ACTIVITIES
1.1 Segmentation of operations ..................57
1.2 Operating expenses, inventories
and deposit liabilities ................................60
1.3 Foreign exchange risk related to
earnings ........................................................62
1.4 Cash flow from operating
activities ........................................................63
1.5 Trade receivables and on-trade
loans ..............................................................64
SECTION 2
ASSET BASE AND RETURNS
2.1 Segmentation of assets and
returns ...........................................................68
2.2 Impairment ..................................................69
2.3 Intangible assets and property,
plant and equipment ................................76
SECTION 3
SPECIAL ITEMS, PROVISIONS AND
OTHER LIABILITIES
3.1 Special items ...............................................80
3.2 Provisions .....................................................82
3.3 Other liabilities ...........................................82
3.4 Contingent liabilities .................................83
SECTION 4
FINANCING COSTS, CAPITAL
STRUCTURE AND EQUITY
4.1 Financial income and expenses ............85
4.2 Net interest-bearing debt .......................86
4.3 Capital structure ........................................86
4.4 Borrowings and cash................................89
4.5 Interest rate risk .........................................90
4.6 Foreign exchange risk related to
net investments and financing
activities ........................................................91
4.7 Funding and liquidity risk ........................93
4.8 Derivative financial instruments............95
SECTION 5
ACQUISITIONS, DISPOSALS,
ASSOCIATES AND JOINT VENTURES
5.1 Investment model and risks ...................97
5.2 Acquisitions and disposals ......................98
5.3 Non-controlling interests .................... 101
5.4 Contingent considerations ................... 102
5.5 Associates and joint ventures ............. 103
SECTION 6
TAX
6.1 Income tax ................................................ 104
6.2 Tax assets and liabilities ...................... 105
SECTION 7
STAFF COSTS AND REMUNERATION
7.1 Staff costs ................................................. 107
7.2 Remuneration .......................................... 108
7.3 Share-based payments ........................ 108
7.4 Retirement benefit obligations
and similar obligations ......................... 110
SECTION 8
OTHER DISCLOSURE REQUIREMENTS
8.1 Earnings per share ................................. 113
8.2 Fees to auditors ...................................... 114
8.3 Related parties ........................................ 114
8.4 Events after the reporting period ...... 114
SECTION 9
BASIS FOR PREPARATION
9.1 Significant accounting estimates
and judgements ...................................... 115
9.2 General accounting policies ................ 115
9.3 Changes in accounting policies .......... 119
9.4 New legislation ....................................... 119
SECTION 10
GROUP COMPANIES
10 Group companies.................................... 120
.
INCOME STATEMENT
STATEMENT OF COMPREHENSIVE INCOME
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
51
DKK million
Revenue
Cost of sales
Gross profit
Sales and distribution expenses
Administrative expenses
Other operating activities, net
Share of profit after tax of associates and joint ventures
Operating profit before special items
Special items, net
Financial income
Financial expenses
Profit before tax
Income tax
Consolidated profit
Attributable to
Non-controlling interests
Shareholders in Carlsberg A/S (net profit)
DKK
Earnings per share
Earnings per share of DKK 20
Diluted earnings per share of DKK 20
Section
1.1
1.2.1
2021
66,634
-35,307
31,327
2020
DKK million
58,541
Consolidated profit
-30,180
28,361
Other comprehensive income
1.2.3
-16,729
-15,373
Retirement benefit obligations
-4,165
-3,453
Share of other comprehensive income in associates and joint ventures
1.2.4
5.5
3.1
4.1
4.1
6.1
1.1
8.1
93
336
10,862
-253
582
-963
10,228
-2,219
8,009
-151
315
9,699
-247
Income tax
Items that will not be reclassified to the income statement
Foreign exchange adjustments of foreign entities
Fair value adjustments of hedging instruments
373
Income tax
-784
9,041
-2,233
6,808
Items that will be reclassified to the income statement
Other comprehensive income
Total comprehensive income
Attributable to
Non-controlling interests
Shareholders in Carlsberg A/S
1,163
6,846
778
6,030
47.6
47.4
41.3
41.1
Section
2021
8,009
2020
6,808
7.4
5.5
6.1
4.1
4.1
6.1
578
10
20
608
3,307
-323
83
3,067
3,675
11,684
1
-4
-42
-45
-7,640
198
-22
-7,464
-7,509
-701
1,246
10,438
456
-1,157
STATEMENT OF FINANCIAL POSITION
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
52
DKK million
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Investments in associates and joint ventures
Receivables
Tax assets
Total non-current assets
Current assets
Inventories
Trade receivables
Tax receivables
Other receivables
Prepayments
Cash and cash equivalents
Total current assets
Assets held for sale
Total assets
Section 31 Dec. 2021
31 Dec. 2020
DKK million
Section 31 Dec. 2021
31 Dec. 2020
EQUITY AND LIABILITIES
2.2, 2.3
2.2, 2.3
5.5
1.5
6.2
68,475
26,648
5,172
1,075
1,922
Equity
66,061
Share capital
26,299
Reserves
4,188
Retained earnings
1,505
1,767
Equity, shareholders in Carlsberg A/S
Non-controlling interests
103,292
99,820
Total equity
1.2.1
1.5
1.5
4.4.2
5,391
5,710
171
2,355
929
8,344
22,900
191
4,613
3,725
Non-current liabilities
Borrowings
Retirement benefit obligations
211
Tax liabilities
1,585
Provisions
769
8,093
18,996
Other liabilities
Total non-current liabilities
-
Current liabilities
126,383
118,816
Borrowings
Trade payables
Deposits on returnable packaging materials
Provisions
Tax payables
Other liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
4.3.2
2,905
-37,817
78,853
43,941
4,815
48,756
2,963
-40,824
77,169
39,308
4,054
43,362
4.2, 4.4.1
22,755
29,291
7.4
6.2
3.2
3.3
4.2, 4.4.1
1.2.2
3.2
2,345
6,350
2,446
449
34,345
6,167
20,642
1,504
942
1,350
3.3
12,677
43,282
77,627
126,383
2,934
6,265
3,319
5,196
47,005
959
16,598
1,276
1,277
925
7,414
28,449
75,454
118,816
STATEMENT OF CHANGES IN EQUITY
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
53
DKK million
2021
Equity at 1 January
Consolidated profit
Other comprehensive income
Total comprehensive income for the year
Cancellation of treasury shares
Share-based payments
Dividends paid to shareholders
Share buy-back
Non-controlling interests
Acquisition of entities
Deconsolidation of entities
Total changes in equity
Equity at 31 December
DKK million
2020
Equity at 1 January
Consolidated profit
Other comprehensive income
Total comprehensive income for the year
Cancellation of treasury shares
Share-based payments
Dividends paid to shareholders
Share buy-back
Non-controlling interests
Acquisition of entities
Total changes in equity
Equity at 31 December
Section
Shareholders in Carlsberg A/S
Share
capital
2,963
-
-
-
-58
-
-
-
-
-
-
Currency
translation
-40,215
-
2,891
2,891
-
-
-
-
-
-
-
Hedging
reserves
Total
reserves
-609
-40,824
-
116
116
-
-
-
-
-
-
-
-
3,007
3,007
-
-
-
-
-
-
-
-58
2,891
2,905
-37,324
116
-493
3,007
-37,817
4.3.4
4.3.2
7.3
4.3.3
4.3.3
5.3
5.3
5.3
Section
Shareholders in Carlsberg A/S
Share
capital
3,051
-
-
-
-88
-
-
-
-
-
Currency
translation
-32,930
-
-7,285
-7,285
-
-
-
-
-
-
Hedging
reserves
-721
-
112
112
-
-
-
-
-
-
-88
-7,285
2,963
-40,215
112
-609
4.3.4
4.3.2
7.3
4.3.3
4.3.3
5.3
5.3
Total
reserves
-33,651
-
-7,173
-7,173
-
-
-
-
-
-
-7,173
Retained
earnings
77,169
6,846
585
Total
39,308
6,846
3,592
7,431
10,438
58
82
-3,187
-3,600
957
-57
-
1,684
78,853
Retained
earnings
74,049
6,030
-14
6,016
88
47
-3,093
-2,900
3,144
-182
3,120
-
82
-3,187
-3,600
957
-57
-
4,633
43,941
Total
43,449
6,030
-7,187
-1,157
-
47
-3,093
-2,900
3,144
-182
-4,141
39,308
Non-
controlling
interests
4,054
1,163
83
1,246
-
-
-499
-
-16
131
-101
761
4,815
Non-
controlling
interests
2,585
778
-322
456
-
-5
-805
-
614
1,209
1,469
4,054
Total
equity
43,362
8,009
3,675
11,684
-
82
-3,686
-3,600
941
74
-101
5,394
48,756
Total
equity
46,034
6,808
-7,509
-701
-
42
-3,898
-2,900
3,758
1,027
-2,672
43,362
-40,824
77,169
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
54
STATEMENT OF CASH FLOWS
DKK million
Operating profit before special items
Depreciation, amortisation and impairment losses
Section
2.3
Operating profit before depreciation, amortisation and impairment losses
Other non-cash items
Change in trade working capital
Change in other working capital
Restructuring costs paid
Interest etc. received
Interest etc. paid
Income tax paid
Cash flow from operating activities
Acquisition of property, plant and equipment and intangible assets
Disposal of property, plant and equipment and intangible assets
Change in on-trade loans
Total operational investments
Free operating cash flow
Acquisition and disposal of subsidiaries, net
Acquisition and disposal of associates and joint ventures, net
Acquisition and disposal of financial investments, net
Change in financial receivables
Dividends received
Total financial investments
Other investments in real estate
Total other activities
Cash flow from investing activities
Free cash flow
Shareholders in Carlsberg A/S
Share buy-back
Non-controlling interests
External financing
Cash flow from financing activities
Net cash flow
Cash and cash equivalents at 1 January
Foreign exchange adjustment of cash and cash equivalents
1.4
1.4
5.2
5.2
4.3.3
4.3.3
4.3.3
4.4.1
2021
10,862
4,612
15,474
-365
802
617
-372
117
-1,037
-1,977
13,259
-4,221
274
148
-3,799
9,460
-635
-52
1
-187
291
-582
-2
-2
-4,383
8,876
-3,187
-3,600
-550
-1,611
-8,948
-72
7,958
458
Cash and cash equivalents at 31 December
4.4.2
8,344
2020
9,699
4,386
14,085
-532
1,321
-1,033
-531
97
-521
-1,958
10,928
-4,396
222
339
-3,835
7,093
-2,409
8
6
42
317
-2,036
-
-
-5,871
5,057
-3,093
-2,900
-877
5,060
-1,810
3,247
5,149
-438
7,958
Cash and cash equivalents are reported less bank overdrafts.
SECTION 1
OPERATING
ACTIVITIES
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
55
66.6bn
REVENUE (DKK)
Revenue increased by 13.8% to DKK 66,634m
(2020: DKK 58,541m). Revenue was positively
impacted by the recovery of the on-trade in
some markets due to fewer restrictions in 2021
than in 2020 and solid growth of premium
products. The acquisition impact related mainly
to the acquisition of Marston’s brewing
activities in the UK in October 2020. The small
negative currency impact was due to adverse
currency movements across Central & Eastern
Europe and certain markets in Asia, partly
offset by a strengthening of primarily the
Chinese, Norwegian, British and Swedish
currencies.
Operating profit before depreciation,
amortisation and impairment losses (EBITDA)
increased by 9.9% to DKK 15,474m. The
EBITDA margin declined by 90bp to 23.2% due
to acquisitions.
47.0%
GROSS MARGIN
The gross margin declined by 140bp to 47.0%
due to acquisitions, higher cost of goods sold,
particularly in Central & Eastern Europe, and a
negative country mix.
Group operating profit grew by 12.0% to DKK
10,862m, driven by strong growth in Asia and
Western Europe, while operating profit declined
in Central & Eastern Europe due to a negative
currency impact.
The operating margin declined by 30bp
to 16.3% due to the margin-dilutive impact of
Marston’s brewing activities.
REVENUE DEVELOPMENT (%)
OPERATING PROFIT DEVELOPMENT (DKKbn)
4.6% -0.8%
10.0%
68
66
64
62
60
58
56
10.9bn
OPERATING PROFIT (DKK)
Operating expenses increased by 11%, mainly
impacted by higher marketing and
administrative expenses. The latter was the
result of higher accruals related to variable
pay, and the impact of acquisitions, currencies
and certain one-off provisions. Operating
expenses as a percentage of revenue declined
by 80bp.
10.0
8.0
6.0
4.0
2.0
0.0
6.8bn
NET PROFIT (DKK)
Special items, net, amounted to DKK -253m
(2020: DKK -247m), impacted by reversal of
provisions made in purchase price allocations in
prior years, offset by impairment and write-
downs. Special items are detailed in section 3.1.
Financial items, net, amounted to DKK -381m
(2020: DKK -411m). Excluding currency gains
and losses, financial items, net, amounted to
DKK -319m (2020: DKK -550m), positively
impacted by the reversal of the previous write-
down of the loan to our partner in Carlsberg
South Asia Pte Ltd ("CSAPL"). Financial items
are detailed in section 4.1.
Tax totalled DKK -2,219m (2020:
DKK -2,233m). The effective tax rate declined
by 300bp to 21.7%, impacted by non-taxable
gains in special items and lower net tax
provisions. Tax is detailed in section 6.1.
Consolidated profit was DKK 8,009m (2020:
DKK 6,808m). The Carlsberg Group’s share of
the consolidated profit was DKK 6,846m
(2020: DKK 6,030m).
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
56
plant and equipment and intangible assets
(CapEx) amounted to DKK -4,221m (2020:
DKK -4,396m). Excluding the purchase of the
Brooklyn brand rights in 2020, operational
investments increased by DKK 625m.
Total financial investments amounted to
DKK -582m (2020: DKK -2,036m), impacted
by deferred considerations related to the
acquisition of Marston’s brewing activities and
the deconsolidation of the business in Nepal
(see section 5.2).
FREE CASH FLOW (DKKbn)
10
8
6
4
2
0
Free operating cash flow
Free cash flow
Non-controlling interests were DKK 1,163m
(2020: DKK 778m), positively impacted by
strong growth for Carlsberg Chongqing
Breweries Group in China, the reversal of
provisions made in purchase price allocations in
Asia and the inclusion of Carlsberg Marston’s
Brewing Company in the UK.
47.6
EARNINGS PER SHARE (DKK)
Earnings per share increased by 15% to DKK
47.6 (2020: DKK 41.3). Adjusted for special
items after tax, earnings per share increased by
11% to DKK 48.3 (2020: DKK 43.6).
EARNINGS PER SHARE (DKK)
50
40
30
20
10
0
EPS
EPS-A
13.3bn
OPERATING CASH FLOW (DKK)
Cash flow from operating activities amounted
to DKK 13,259m (2020: DKK 10,928m).
The change in trade working capital was DKK
+802m (2020: DKK +1,321m), mainly due to
strong cash management discipline and higher
trade payables. Average trade working capital
to revenue for the year was -18.4%, on par
with 2020 (-18.6%).
The change in other working capital was DKK
+617m (2020: DKK -1,033m), mainly
impacted by VAT, bonus accruals and
provisions.
Restructuring costs paid amounted to
DKK -372m (2020: DKK -531m). Net interest
etc. paid amounted to DKK -920m (2020:
DKK -424m). The increase was mainly due to
the settlement of financial instruments and
provisions. Corporation tax paid was
DKK -1,977m (2020: DKK -1,958m).
8.9bn
FREE CASH FLOW (DKK)
Free cash flow amounted to DKK 8,876m
(2020: DKK 5,057m), while free operating cash
flow amounted to DKK 9,460m (2020: DKK
7,093m).
Operational investments totalled DKK -3,799m
(2020: DKK -3,835m). Acquisition of property,
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
57
SECTION 1.1
SEGMENTATION OF
OPERATIONS
CHANGES TO SEGMENTATION
The Group’s regional structure was changed
effective 1 January 2021, in order to optimise
regional management and ensure a better
balance between the European regions.
Entities in the Baltic and Balkan countries,
Greece and Italy as well as Carlsberg Export &
License moved from the Western Europe region
to Eastern Europe, now renamed Central &
Eastern Europe. The disclosure in the Annual
Report follows the new regional segmentation
as was used in the internal reporting to the
Executive Committee throughout 2021.
REVENUE
The Group’s revenue arises primarily from the
sale of beverages to its customers.
In 2021, total revenue was positively impacted
by volume growth, revenue/hl growth and the
acquisitions of Marston’s brewing activities in
the UK and Wernesgrüner Brewery in
Germany.
Other revenue by category is sales of products
other than beverages that do not drive any
volume, such as merchandise, services, by-
products etc. In aggregate, other revenue
accounts for around 1% of Group total revenue
and is therefore not considered material.
Segmentation of income statement
DKK million
2021
Revenue
Total cost
Share of profit after tax of associates and joint ventures
Operating profit before special items
Western
Europe
30,501
-26,295
195
4,401
Central &
Eastern
Europe
16,665
Asia
19,459
9
-14,653
-13,747
-1,328
49
4,855
14
1
2,932
-1,318
Not
allocated
Beverages,
total
Non-
beverage
Carlsberg
Group, total
Special items, net
Financial items, net
Profit before tax
Income tax
Consolidated profit
Operating margin
2020*
Revenue
Total cost
Share of profit after tax of associates and joint ventures
Operating profit before special items
Special items, net
Financial items, net
Profit before tax
Income tax
Consolidated profit
Operating margin
14.4%
24.9%
17.6%
25,875
-22,143
194
3,926
16,959
15,682
25
58,541
-13,057
-12,713
-1,208
-49,121
89
3,991
15
-
2,984
-1,183
66,634
-56,023
259
10,870
-333
-379
10,158
-2,182
7,976
16.3%
298
9,718
-244
-403
9,071
-2,240
6,831
16.6%
-
-85
77
-8
80
-2
70
-37
33
-
-36
17
-19
-3
-8
-30
7
-23
66,634
-56,108
336
10,862
-253
-381
10,228
-2,219
8,009
16.3%
58,541
-49,157
315
9,699
-247
-411
9,041
-2,233
6,808
16.6%
15.2%
23.5%
19.0%
* 2020 figures have been restated to reflect the new regional segmentation.
Revenue by category
Revenue and excise duties
DKK million
Beer revenue
Other beverages
Other revenue
Total revenue
2021
52,240
13,554
840
66,634
2020
DKK million
2021
2020
46,230
11,494
Revenue, including
excise duties
817
Excise duties
58,541
Revenue
93,235
-26,601
66,634
83,182
-24,641
58,541
Not allocated revenue, DKK 9m (2020:
DKK 25m), consisted of DKK 894m (2020:
DKK 1,112m) in revenue and DKK -885m
(2020: DKK -1,087m) from eliminations of
sales between the geographical segments.
SECTION 1.1 (CONTINUED)
SEGMENTATION OF
OPERATIONS
Geographical allocation of revenue
DKK million
Denmark (Carlsberg
A/S’ domicile)
China
Russia
Other countries
Total
2021
2020
3,897
11,946
6,537
44,254
66,634
3,512
9,858
6,405
38,766
58,541
OPERATING PROFIT BEFORE
SPECIAL ITEMS
Not allocated operating profit before special
items, DKK -1,318m (2020: DKK -1,183m),
related to central costs not managed by the
regions, including costs of developing branding
activities to support the strategic initiatives and
general costs of centralised functions as well
as various eliminations of DKK 82m (2020:
DKK 62m).
Group operating profit grew by 12.0%,
supported by growth in all three regions.
Organically operating profit grew by 12.5%.
VOLUMES
The organic growth in total volumes was a
result of growth in all three regions. Reported
volume growth was positively impacted by
Western Europe, with the acquisitions of
Marston’s brewery activities in the UK and
Wernesgrüner Brewery in Germany having a
full-year impact in 2021.
NON-CONTROLLING INTERESTS
The Group’s non-controlling interests consist of
Lao Brewery, Carlsberg Chongqing Breweries
Group, Carlsberg Malaysia Group and
Carlsberg Marston's Brewing Group.
Furthermore it consist of other minor interests,
primarily in the Asia region. Non-controlling
interests are not individually material to the
Group’s total profit.
OPERATING MARGIN
The operating margin declined to 16.3%
compared to 16.6% in 2020. The decline was
due to the margin-dilutive impact of Marston’s
Group financial performance
Volumes (million hl)
Beer
Other beverages
Total volume
DKK million
Revenue
Operating profit before special items
Operating margin (%)
Change
Change
Organic
Acq., net
FX
2021
Reported
6.4%
12.9%
7.4%
2.2%
0.0%
1.9%
-
-
-
119.6
22.6
142.2
2020
110.1
20.0
130.1
58,541
9,699
16.6
10.0%
12.5%
4.6%
0.3%
-0.8%
-0.8%
66,634
10,862
16.3
8.6%
12.9%
9.3%
13.8%
12.0%
-30bp
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
58
Management makes judgements when deciding
whether supporting activities with a customer should
be classified as a discount or a marketing expense.
Generally, activities with the individual customer are
accounted for as a discount, whereas costs related to
broader marketing activities are classified as
marketing expenses.
Whether the Group is acting as a principal or an agent
is evaluated by management on a country-by-
country basis. The Group has concluded that it is the
principal in its revenue arrangements because it
controls the goods before transferring them to the
customer.
Excise duties, taxes and fees
The classification of duties, taxes and fees paid to
local authorities or brewery organisations etc.
requires judgements on the classification to be made
by management.
Locally imposed duties, taxes and fees are typically
based on product type, alcohol content, consumption
of certain raw materials, such as glue, plastic or
metal in caps, and energy consumption. These are
classified as either sales- or production-related.
Excise duties are generally imposed by the tax
authorities as taxes on consumption and are collected
by the Group on behalf of the authorities when the
goods are transferred to the customers and thereby
ready for consumption.
Taxes and fees related to the input/use of goods in
production, distribution etc. are recognised as part of
the cost of the goods or services purchased. The type
of authority or organisation imposing the duty, tax or
fee and the objective of these are key factors when
determining the classification.
brewing activities, which were severely
impacted by extensive on-trade restrictions.
Excluding the acquisition impact, the operating
margin increased to 16.9%.
ACCOUNTING ESTIMATES
AND JUDGEMENTS
The Group considers all terms and activities in
contracts with customers in order to determine the
performance obligation, the transaction price and the
allocation of the transaction price.
If the consideration in a contract includes a variable
amount, the Group estimates the consideration to
which it will be entitled in exchange for transferring
goods to the customer. The variable consideration is
estimated at contract inception based on expected
sales volumes using historical and year-to-date sales
data and other information about trading with the
individual customer or with a group of customers.
The Group estimates discounts using either the
expected value method or the most likely amount
method, depending on which method better predicts
the amount of consideration to which it will be
entitled.
The most likely amount method is used for contracts
with a single contract sum, while the expected value
method is used for contracts with more than one
threshold due to the complexity and the activities
agreed with the individual customer.
Certain contracts related to specific major events that
are held within such a short time period that it is not
possible to sell all the goods during the event (e.g.
football matches) give the customer the right to
return the goods within a specified period.
The Group uses the expected value method to
estimate the goods that will not be returned, as this
method best predicts the amount of variable
consideration to which the Group will be entitled. For
goods that are expected to be returned, the Group
recognises a refund liability instead of revenue.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
59
SECTION 1.1 (CONTINUED)
SEGMENTATION OF
OPERATIONS
ACCOUNTING
POLICIES
Revenue
Recognition and measurement
Revenue from contracts with customers comprises
sales of goods, royalty income, rental income from
non-stationary equipment, service fees and sales of
by-products.
Revenue from the sale of own-produced finished
goods, goods for resale (third-party products) and
by-products is recognised at the point in time when
the control of goods and products is transferred to
the customer, which is generally upon delivery. For
contracts providing the customer with a right of return
within a specified period, the Group considers the
timing of recognition.
Revenue from sales- or usage-based royalties is
recognised when (a) the customer subsequently sells
or uses the goods, or (b) the performance obligation
to which some or all of the sale- or usage-based
royalty has been allocated is satisfied (or partially
satisfied), whichever is later.
Revenue from contracts with customers is measured
at an amount that reflects the expected consideration
for those goods. Amounts disclosed as revenue
exclude discounts, VAT and excise duties collected on
behalf of authorities.
The Group considers whether contracts include
separate performance obligations to which a portion
of the transaction price needs to be allocated. In
determining the transaction price, the Group considers
the effects of variable consideration. No element of
financing is deemed present, as payment is generally
made on the basis of cash on delivery or up to 30
days of credit.
Variable consideration
The Group offers various discounts depending on the
nature of the customer and business.
Discounts comprise off-invoice discounts, volume- and
activity-related discounts, including specific promotion
prices offered, and other discounts. Furthermore,
discounts include the difference between the present
value and the nominal amount of on-trade loans to
customers, cf. section 1.5.
Segment information
The Group’s beverage activities are segmented
according to the three geographical regions where
sales take place. These regions make up the Group’s
reportable segments.
The segmentation reflects the geographical and
strategic management, decision and reporting
structure applied by the Executive Committee for
monitoring the Group’s strategic and financial targets.
Segments are managed based on business
performance measured as operating profit before
special items.
Not allocated comprises income and expenses
incurred for ongoing support of the Group’s overall
operations and strategic development. The expenses
include costs of running central functions and
marketing, such as global sponsorships.
Off-invoice discounts arise from sales transactions
where the customer immediately receives a reduction
in the sales price. This also includes cash discounts
and incentives for early payments.
The non-beverage segment, comprising research and
real estate activities, is managed separately and
therefore shown separately instead of geographically
segmented.
Volume- and activity-related discounts is a broad
term covering incentives for customers to sustain
business with the Group over a longer time and may
be related to a current campaign or a sales target
measured in volumes or total value. Examples include
discounts paid as a lump sum, discounts for meeting
certain sales targets or progressive discounts offered
in step with increasing sales to a customer.
Other discounts include listing fees, i.e. fees for
certain listings on shelves, in coolers or in favourable
store locations, as specific promotions of this nature
are closely related to the volumes sold.
The geographical allocation of revenue and non-
current assets is based on the selling entities’ domicile
and comprises countries individually accounting for
more than 10% of the Group’s consolidated revenue
as well as the domicile country.
Decisions on restructuring, acquisition and divestment
of entities included in special items as well as on
financing (financial income and expenses) and tax
planning (income tax) are made based on information
for the Group as a whole and therefore not
segmented.
The segmentation of the Group’s assets and returns is
disclosed in section 2.1.
Reported figures
Reported figures are analysed by looking at the
impact of organic growth, net acquisitions and foreign
exchange effects.
The net acquisition effect is calculated as the effect of
acquisitions and divestments, including any share
obtained from an increase/decrease in ownership of
associates and joint ventures, for a 12-month period
from the acquisition/divestment date.
The foreign exchange effect is calculated as the
difference between the figures for the current
reporting period translated at the current exchange
rates and at the exchange rates applied in the
previous reporting period.
Organic growth is the remaining growth that is not
related to acquisitions, divestments or foreign
exchange effects.
SECTION 1.2
OPERATING
EXPENSES,
INVENTORIES AND
DEPOSIT LIABILITIES
1.2.1 COST OF SALES AND INVENTORIES
Cost of sales increased by 17% compared with
2020 and was affected by the organic increase
in volumes across all regions and higher input
costs. Cost of sales per hl increased by
approximately 7% compared with 2020.
Inventories increased by 17% compared with
2020, mainly impacted by an increase in raw
materials and finished goods, primarily in Asia
because of stocking prior to the Chinese New
Year and currency appreciation.
Inventories
DKK million
Raw materials
Work in progress
Finished goods
Total
2021
2,311
333
2,747
5,391
2020
2,072
295
2,246
4,613
Cost of sales
DKK million
Cost of materials
Direct staff costs
Amortisation and
depreciation
Indirect production
overheads
Purchased finished goods
and other costs
Total
2021
2020
20,328
17,830
1,386
1,297
2,948
2,704
4,288
4,062
6,357
4,287
35,307
30,180
Commodity price risks are, in particular,
associated with externally sourced input
materials, such as malt (barley), cans
(aluminium), paper, sugar and plastic (PET)
bottles. The management of commodity price
risks is coordinated centrally and aimed at
achieving stable and predictable prices in the
medium term.
As the underlying markets for the specified
categories vary, so does the way in which they
are hedged against price increases.
Hedging of raw material price risk
DKK million
2021
Aluminium
2020
Aluminium
Sensitivity assuming
100% efficiency
Time of
maturity
2022
Change
+20%
Change
+10%
Effect
on OCI
Tonnes
purchased
Average
price (DKK)
313
85,440
15,741
85,440
Effect
on OCI
Tonnes
purchased
Average
price (DKK)
2021
80
66,323
11,132
66,323
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
60
The most common form of hedging is fixed-
price purchase agreements with suppliers in
local currencies.
Other main commodities, such as PET (plastic)
and paper, are not hedged financially nor via
suppliers fixing prices.
For malt (barley) and aluminium, the two most
significant commodity exposures, Group policy
is to have a minimum of 70% hedged for a
given year no later than at the end of the third
quarter of the previous year, with a target
hedge ratio of 90% at the beginning of the year
in question.
For electricity and natural gas, used in
production of the Group’s own products, most
markets in Central & Eastern Europe and Asia
are regulated with no possibility to hedge
prices. In Western Europe, where most markets
allow forward hedging, the majority of the
Group’s exposure is hedged on a rolling basis.
A significant part of the Group’s malt (barley)
exposure for 2021 had therefore been hedged
through fixed-price purchase agreements
established in 2020. Likewise, the majority of
the exposure for 2022 was hedged in 2021.
In the Group’s long-term purchase agreements
for cans, the aluminium price is variable and
based on the global market price of aluminium
(London Metal Exchange, LME).
In 2021, the aluminium price risk was hedged
using derivative financial instruments or fixed
prices via the suppliers to the Group applying the
same hedge percentages as are applied for malt
(barley) purchases. The same has been done for
2022. The fair values of the derivative financial
instruments are specified in section 4.8.
For sugar, rolling forward hedges are used,
with suppliers fixing prices linked to official
indices, for example NY11. As for malt (barley)
and aluminium, the majority of the 2021 sugar
exposure had been hedged in 2020. Likewise,
the majority of the exposure for 2022 was
hedged in 2021.
ACCOUNTING ESTIMATES
AND JUDGEMENTS
At least once a year, management assesses whether
the standard cost of inventories approximates the
actual cost. During the year, the standard cost is
revised if it deviates by more than 5% from the actual
cost. Indirect production overheads are calculated on
the basis of relevant assumptions as to capacity
utilisation, production time and other factors.
The calculation of the net realisable value of
inventories is relevant to packaging materials, point-
of-sale materials and spare parts. The net realisable
value is normally not calculated for beer and soft
drinks due to their limited shelf-life, which means
that slow-moving goods must be scrapped instead.
ACCOUNTING
POLICIES
Cost of sales comprises cost of materials used in own-
produced finished goods, including malt (barley), hops,
glass, cans, other packaging materials, direct labour,
indirect production overheads and standard cost
variations. Further, it comprises purchased finished
goods that include cost of point-of-sale materials and
third-party products sold to customers.
Indirect production overheads comprise indirect
supplies, wages and salaries, amortisation of brands
and software, as well as maintenance and
depreciation of machinery, plant and equipment used
for production.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
61
SECTION 1.2 (CONTINUED)
OPERATING
EXPENSES,
INVENTORIES AND
DEPOSIT LIABILITIES
The cost of purchased finished goods, raw and
packaging materials and point-of-sale materials
includes the purchase cost and costs directly related
to bringing inventories to the relevant place of sale
and getting them ready for sale, for example
insurance, freight and duties.
Inventories are measured at the lower of standard cost
(own-produced finished goods) and weighted average
cost (other inventories), or net realisable value. The net
realisable value is the estimated selling price less costs
of completion and costs necessary to make the sale,
also taking into account marketability, obsolescence
and developments in expected selling price.
The cost of scrapped/impaired goods is expensed in
the function (line item) responsible for the loss, i.e.
losses during distribution are included in distribution
expenses, while scrapping of products due to sales
not meeting forecasts is included in sales expenses.
1.2.2 DEPOSITS ON RETURNABLE
PACKAGING MATERIALS
Deposits on returnable packaging materials
amounted to DKK 1,504m (2020: DKK
1,276m). The capitalised value of returnable
packaging materials was DKK 1,867m (2020:
DKK 1,791m).
The capitalised value of returnable packaging
materials exceeds the deposits because each of
the returnable packaging items circulates a
number of times in the market and some
markets have regulations that require the
deposit value to be set lower than the cost of
the returnable packaging materials.
ACCOUNTING ESTIMATES
AND JUDGEMENTS
Management assesses the local business model to
determine whether the Group has a legal or
constructive obligation to accept returns of packaging
materials from the market and the level of control. This
entails the Group considering, among other things, the
return rate and the annual circulation in the individual
markets. These factors are assessed annually.
Returnable packaging materials controlled by the
Group are capitalised as property, plant and equipment
and depreciated over the expected useful life.
The deposit on returnable packaging materials is
estimated based on movements during the year in
recognised liabilities, loss of returnable packaging
materials in the market, planned changes in
packaging types and historical information about
return rates.
ACCOUNTING
POLICIES
Returnable packaging materials that the Group
controls through a legal or constructive obligation are
capitalised as property, plant and equipment.
Returnable packaging materials are depreciated over
3-10 years. The accounting policies for property, plant
and equipment are further described in section 2.3.
The obligation to refund deposits on returnable
packaging materials is measured on the basis of
deposit price, an estimate of the number of bottles,
kegs, cans and crates in circulation, and expected
return rates.
1.2.3 SALES AND DISTRIBUTION
EXPENSES
Marketing expenses increased as a result of
higher marketing investments. Distribution
expenses per hl were flat but increased overall
due to acquisitions. Total marketing, sales and
distribution expenses increased by 9%.
Sales and distribution expenses
DKK million
Marketing expenses
Sales expenses
Distribution expenses
Total
2021
4,980
5,162
6,587
16,729
2020
4,390
5,101
5,882
15,373
ACCOUNTING
POLICIES
1.2.4 OTHER OPERATING
ACTIVITIES, NET
Other operating activities are secondary to the
principal activities of the Group and include
income and expenses relating to rental
properties, restaurants, on-trade loans,
research activities, and gains and losses on
disposal of intangible assets and property,
plant and equipment.
Other operating activities, net
DKK million
2021
2020
Gains and losses on disposal
of property, plant and
equipment and intangible
assets, net
On-trade loans, net
Real estate, net
Research centres, net
93
58
9
-95
28
93
53
-204
38
-123
85
-151
Marketing expenses consist of expenses for brand
marketing and trade marketing.
Other, net
Total
Brand marketing is an investment in the Group’s
brands and consists of brand-specific investments in
the development of communication vehicles, the use
of these to drive the sale of branded products, sales
campaigns and sponsorships.
Trade marketing is promotional activities directed
towards customers, such as the supply of point-of-
sale materials, promotional materials and trade
offers.
Sales expenses comprise costs relating to general
sales activities, write-downs for bad debt losses,
wages and salaries as well as depreciation and
impairment of sales equipment. Distribution expenses
comprise costs incurred in distributing goods, wages
and salaries, and depreciation and impairment of
distribution equipment.
ACCOUNTING
POLICIES
Gains and losses on disposal of intangible assets and
property, plant and equipment are determined as the
sales price less selling costs and the carrying amount
at the disposal date.
On-trade loans, net, comprise the effective interest on
the loans measured at amortised cost less impairment.
Expenses relating to research activities comprise
research in Denmark and France less funding received
from the Carlsberg Foundation for the operation of
the Carlsberg Research Laboratory and grants
received to fund research. The funding and grants are
recognised in the income statement in the same
period as the activities to which they relate. Product
development costs are included in cost of sales.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
62
significant earnings and cash flow as further
described in section 4.6.
Impact on operating profit
Developments in exchange rates between
DKK and the functional currencies had a
negative impact of 0.75% on operating profit
measured in DKK.
Entities in
The eurozone
China
Russia
Norway
United
Kingdom
Switzerland
Sweden
Laos
Functional
currency
Change in average FX
rate 2020 to 2021
EUR
CNY
RUB
NOK
GBP
CHF
SEK
LAK
-0.23%
2.60%
-6.50%
5.30%
3.60%
-1.30%
2.90%
-10.60%
SECTION 1.3
FOREIGN EXCHANGE
RISK RELATED TO
EARNINGS
The majority of the Group’s activities take place
outside Denmark and in currencies other than
DKK. Foreign exchange risk is therefore a
principal financial risk for the Group, and
exchange rate fluctuations can have a
significant impact on the income statement.
The risk from exposure to fluctuations in
EUR/DKK is considered to be limited due to
Denmark’s fixed exchange rate policy towards
EUR and is consequently not hedged.
REVENUE BY CURRENCY (%)
2021 (2020)
CNY 18% (17%)
EUR 17% (18%)
RUB 10% (11%)
DKK 8% (8%)
CHF 5% (5%)
LAK 3% (4%)
GBP 9% (5%)
NOK 6% (6%)
SEK 4% (4%)
Other 20% (22%)
TRANSACTION RISKS ON PURCHASES
AND SALES
The Group is exposed to transaction risks on
purchases and sales in currencies other than
the local functional currencies. The Group aims
to hedge 70-90% of future cash flows in
currencies other than the local functional
currency on a four-quarter rolling basis.
Western Europe
For the entities in Western Europe, a major
part of the purchases in foreign currencies is in
EUR. This also applies for markets with a
functional currency other than EUR.
Hedging of EUR against the local currencies
will effectively eliminate a significant part of
the currency risk in the entities’ operating profit
in local currency. At Group level, these hedges
are effectively a hedge of (parts of) the revenue
in the relevant currency and are accounted
for as cash flow hedges, cf. section 4.8. The
hedged amounts and the sensitivity analysis
regarding these hedges are shown in
section 4.6.4.
Asia
The transaction risk is considered to be less
significant due to lower sales and purchases in
currencies other than the local functional
currencies as well as the high correlation
between USD and most of the Asian currencies.
Furthermore, the currencies are expensive to
hedge and, in some cases, not possible to
hedge at all. As a consequence, the risk is not
hedged.
Central & Eastern Europe
Baltika Breweries and some of the other
markets in the region have expenses in both
USD and EUR, and appreciation of RUB and
other currencies vis-à-vis EUR and USD has a
positive impact on operating profit, while
depreciation has a negative effect. The Group
has chosen not to systematically hedge the
transaction risk in the region due to the
significant cost of hedging these currencies over
a longer period of time. For 2021 and 2022,
the Group has chosen to hedge a portion of
Baltika Breweries’ and Carlsberg Ukraine’s
expenses in USD and EUR. The volatility of the
currencies will continue to affect operating
profit measured in both DKK and local
currencies. Furthermore, some of the entities in
Central & Eastern Europe hold intercompany
deposits in EUR and USD. The revaluation of
these is recognised in financial items and not
designated as cash flow hedges.
TRANSLATION RISK
The Group is exposed to risk from translation
of foreign entities into the Group’s presentation
currency, DKK.
The single largest translation impact in respect
of operating profit in 2021 was LAK due to the
10.6% depreciation of the currency compared
with 2020. Looking into 2022, the largest
exposure in terms of operating profit and
currency volatility is CNY, while RUB remains
the single largest exposure on translation of
net investments in foreign entities.
The Group has chosen not to hedge the
exposure arising from translation of revenue or
earnings in foreign currencies. To reduce the
risk, the Group has raised debt denominated in
the currencies in which the Group generates
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
63
SECTION 1.4
CASH FLOW FROM
OPERATING
ACTIVITIES
The change in trade working capital amounted
to DKK 802m (2020: DKK 1,321m), mainly
due to strong cash management discipline and
higher trade payables.
from the change in other working capital
increased by DKK 617m (2020: decrease of
DKK 1,033m), impacted by VAT, accruals for
variable pay and provisions.
Average trade working capital to revenue for
the year was -18.4% (2020: -18.6%).
The change in on-trade loans amounted to
DKK 148m (2020: DKK 339m).
Other specifications of cash flow from operating activities
DKK million
Other non-cash items
Section
2021
2020
Share of profit after tax of associates and joint ventures
Gain on disposal of property, plant and equipment and intangible assets, net
5.5
2.3
Share-based payments
Transfer of long-term medical insurance obligation
Other items
Total
Trade working capital
Inventories
Trade receivables
Trade payables, duties payable and deposits on returnable packaging
materials
Total
Other working capital
Other receivables
Other payables
Retirement benefit obligations and other liabilities related to
operating profit before special items
Unrealised foreign exchange gains/losses
Total
On-trade loans
Loans provided
Repayments
Amortisation of on-trade loans
Total
-336
-93
82
-
-18
-315
-53
42
-199
-7
-365
-532
-648
-1,866
3,316
802
-282
1,107
-204
-4
617
-1
1,484
-162
1,321
111
-403
-601
-140
-1,033
-356
-464
340
164
148
353
450
339
Restructuring costs paid amounted to
DKK -372m (2020: DKK -577m), a large
part of which relates to termination benefits
to employees made redundant due to
optimisations and reorganisations across
the Group.
Net interest etc. paid amounted to DKK -920m
(2020: DKK -424m). The increase was largely
due to settlement of derivative financial
instruments.
Income tax paid amounted to DKK -1,977m
(2020: DKK -1,958m).
Cash flow from disposal of property, plant
and equipment and intangible assets was
DKK 274m (2020: DKK 222m).
Supplier finance arrangements A number of
the Group’s suppliers participate in supplier
finance arrangements, with a supply chain
finance provider and related financial
institutions acting as a funding partner. When
suppliers participate in these programmes, they
have the option of receiving early payment
from the funding partner of invoices sent
to Carlsberg.
The arrangement is exclusively between the
supplier and the supply chain finance provider
and separate to Carlsberg’s relationship with its
suppliers. Carlsberg’s liability to pay invoices is
unaffected by the supplier finance
arrangement, and whether or not the suppliers
opt for early payment, and the liability is
recognised in trade payables until the due date
of the invoice, which is in no case more than
180 days from the invoice date. Cessation of
the supplier finance arrangement would not
constitute a significant risk in terms of liquidity
because of the amounts involved and the
number of supply chain finance providers.
Sale of receivables Carlsberg has chosen to
sell some of its trade receivables in selected
Western European markets in non-recourse
factoring agreements to expedite cash
collection from groups of customers. Carlsberg
does not carry any credit risk on these
customers and has no continuing involvement
in these trade receivables, which have therefore
been derecognised.
The impact on average trade working capital
from the use of supplier finance arrangements
and factoring is limited, as the utilisation is
similar to previous years.
ACCOUNTING
POLICIES
Trade payables are recognised initially at fair value
and subsequently measured at cost. Trade payables
comprise purchase of goods and services, including
payables to supplier finance vendors, and
retrospective rebates to customers and are part of the
normal working capital cycle. The cash flow arising
from all trade payables is part of cash flow from
operating activities.
SECTION 1.5
TRADE RECEIVABLES
AND ON-TRADE
LOANS
The Group’s non-current receivables consist
mainly of on-trade loans that fall due more
than one year from the reporting date. Of the
total non-current receivables, DKK 160m
(2020: DKK 258m) falls due more than five
years from the reporting date.
The carrying amount of receivables
approximates their fair value. For on-trade
loans, the fair value is calculated as discounted
cash flows using the interest rate at the
reporting date.
ON-TRADE LOANS
Under certain circumstances, the Group grants
loans to on-trade customers in France, the UK,
Switzerland, Germany and Sweden. On-trade
loans are spread across a large number of
customers/debtors and consist of several types
of loan, including loans repaid in cash or
through reduced discounts and guarantees for
loans provided by third parties, cf. section 3.4.
The operating entities monitor and control
these loans in accordance with Group
guidelines.
The average effective interest rate on loans to
the on-trade was 3.2% (2020: 3.2%). The
interest income is recognised in other operating
activities.
Receivables included in the statement of financial position
DKK million
2021
Receivables from sales of goods and services
On-trade loans
Other receivables
Total receivables
2020
Receivables from sales of goods and services
On-trade loans
Other receivables
Operating receivables
Prepayment for acquisition
Total receivables
Non-
current
Current
Total
Receivables
Trade
receivables
Other
receivables
-
776
299
5,458
252
-
1,075
5,710
-
3,412
826
178
313
-
1,004
3,725
501
-
-
-
2,355
2,355
-
-
1,585
1,585
-
1,505
3,725
1,585
5,458
1,028
2,654
9,140
3,412
1,139
1,763
6,314
501
6,815
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
64
On-trade loans recognised in other operating
activities, net
DKK million
2021
2020
Interest and amortisation of
on-trade loans
Losses and write-downs on
on-trade loans
On-trade loans, net
49
9
58
50
-254
-204
The distribution of receivables broken down by
country is affected by market-specific changes
in payment patterns. For receivables from sale
of goods and services, the distribution is
furthermore impacted by the amounts of
receivables sold. The overall level of receivables
sold in non-recourse factoring schemes was
similar to the level in 2020.
OTHER RECEIVABLES
Other receivables primarily comprise VAT and
similar government receivables, interest
receivables and other financial receivables,
which are associated with low risk.
The relative share of receivables in the UK has
increased following the acquisition of Marston’s
brewing activities.
RECEIVABLES FROM SALES OF GOODS
AND SERVICES
(BROKEN DOWN BY COUNTRY)
ON-TRADE LOANS
(BROKEN DOWN BY COUNTRY)
2021 (2020)
2021 (2020)
UK 21% (10%)
Russia 13% (14%)
Germany 26%
(23%)
France 24%
(27%)
Finland 7% (0%)
Sweden 6% (10%)
Switzerland 23%
(24%)
UK 17%
(18%)
France 5% (6%)
Poland 5% (5%)
Sweden 10%
(8%)
Ukraine 4% (4%)
Other 39% (44%)
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
65
SECTION 1.5 (CONTINUED)
TRADE RECEIVABLES
AND ON-TRADE
LOANS
Total accumulated allowances for impairment
losses on trade loans were DKK 464m (2020:
DKK 499m).
The share of trade receivables that is past-due
decreased from 23% to 15%.
1.5.1 CREDIT RISK
In 2021, receivables not past due amounted to
81% (2020: 74%) of total gross receivables. The
past-due share of gross loans to on-trade
customers was 31% (2020: 51%).
The credit risk is being closely managed in the
markets and assessed in light of the changing
restrictions. The COVID-19 impact on the
global risk pattern is evaluated at both local
and Group level.
Throughout the year and continuing into 2022,
the COVID-19 pandemic continued to impact
many of our markets, and market volatility and
uncertainty remained high. In many markets
our customers were impacted by lockdowns,
full or partial closure of on-trade businesses,
restrictions on cultural and sporting activities,
social distancing and other government
restrictions in response to the COVID-19
pandemic.
The estimated impairment losses consider
the expected impact both from the continuing
restrictions and when government financial
support schemes and extended payment terms
come to an end with the reopening of markets.
The increased credit risk on both trade
receivables and on-trade loans seen across
markets is expected to continue into 2022.
Credit risk on receivables
DKK million
2021
Gross
receivables
Loss
allowance
Receivables,
net
DKK million
Weighted
average
loss rate
2020
Gross
receivables
Loss
allowance
Receivables,
net
Weighted
average
loss rate
Receivables from sales of goods and services
Receivables from sales of goods and services
Not past due
Overdue 1-30 days
Overdue 31-90 days
Overdue > 90 days
Receivables from sales of goods and services
On-trade loans
Not past due
Overdue 1-30 days
Overdue 31-90 days
Overdue > 90 days
On-trade loans
Other receivables
Not past due
Overdue 1-30 days
Overdue 31-90 days
Overdue > 90 days
Other receivables
Total
5,155
479
70
371
6,075
1,035
13
55
389
1,492
2,073
110
98
398
2,679
10,246
-143
-88
-49
-337
-617
-139
-
-22
-303
-464
-3
-
-5
-17
-25
-1,106
5,012
391
21
34
5,458
896
13
33
86
1,028
2,070
110
93
381
2,654
9,140
3%
Not past due
18%
70%
91%
Overdue 1-30 days
Overdue 31-90 days
Overdue > 90 days
Receivables from sales of goods and services
On-trade loans
13%
Not past due
-
Overdue 1-30 days
40%
78%
Overdue 31-90 days
Overdue > 90 days
On-trade loans
0%
-
5%
4%
Other receivables
Not past due
Overdue 1-30 days
Overdue 31-90 days
Overdue > 90 days
Other receivables
Total
3,178
349
178
406
4,111
797
14
31
796
1,638
1,595
12
53
419
2,079
7,828
-182
-87
-75
-355
-699
-101
-
-3
-395
-499
-3
-
-
-313
-316
-1,514
2,996
262
103
51
3,412
696
14
28
401
1,139
1,592
12
53
106
1,763
6,314
6%
25%
42%
87%
13%
-
10%
50%
0%
-
-
-75%
SECTION 1.5 (CONTINUED)
TRADE RECEIVABLES
AND ON-TRADE
LOANS
ACCOUNTING ESTIMATES
AND JUDGEMENTS
On-trade loan agreements are complex, cover several
aspects of the customer relationship and may vary
from agreement to agreement. Management
assesses the recognition and classification of income
and expenses for each agreement, including the
allocation of payments from the customer between
revenue, discounts, interest (other operating activities)
and repayment of the loan.
Management also assesses both individually and on a
portfolio basis whether developments in local
conditions for on-trade customers could impact the
expected credit losses.
Exposure to credit risk on receivables is managed
locally, and credit limits are set as considered
appropriate for the customer, taking into account the
current local market conditions.
The local entities assess the credit risk and adhere to
Group guidelines, which include setting credit limits,
encouraging cash payment, purchasing credit
insurance and holding collateral.
In assessing credit risk, management analyses the
need for impairment of trade receivables and on-
trade loans due to customers’ inability to pay. Many
customers are currently dependent on government
subsidies and support in the form of extended
payment terms. The increased credit risk is expected
to continue into 2022.
At year-end 2021, management continued to assess
the lifetime expected credit losses for both trade
receivables and on-trade loans in line with 2020.
Expected credit losses are assessed for portfolios of
receivables based on customer segments, historical
information on payment patterns, terms of payment,
concentration maturity, the impact of continuing
COVID-19 restrictions and the expected impact of
government schemes coming to an end when
markets reopen. The expected impact includes the
risk of insolvencies due to lack of liquidity when
extended government payment terms cease. The
portfolios are based on on-trade and off-trade
customers, and on-trade receivables and loans.
On-trade loans carry a higher risk than trade
receivables and are concentrated in a few markets.
Development in impairment losses on receivables
DKK million
2021
Impairment at 1 January
Impairment losses recognised
Realised impairment losses
Reversed impairment losses
Acquisition of entities, net
Foreign exchange adjustments
Impairment at 31 December
Receivables
from sales of
goods and
services
-699
-145
63
174
7
-17
-617
On-trade
loans
-499
-127
29
136
6
-9
-464
Other
receivables
-316
-24
1
328
-
-14
-25
2020
Total
-1,011
-663
13
154
-91
84
Total
-1,514
-296
93
638
13
-40
-1,106
-1,514
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
66
The local entities manage and control these loans in
accordance with Group guidelines.
The credit risk on on-trade loans can be reduced by
means of collateral and pledges of on-trade
movables (equipment in bars, cafés etc.). The fair
value of the pledged on-trade movables cannot be
estimated reliably but is assessed to be insignificant,
as they cannot readily be reused.
In certain markets, the Group enters into factoring
agreements on a non-recourse basis, which involves
selling trade receivables to a factor. Trade receivables
subject to factoring agreements are derecognised
once the criteria for derecognition have been met and
all substantial risk and rewards transferred. The
Group does not have any continuing involvement
once the receivables have been derecognised.
ACCOUNTING
POLICIES
Receivables are recognised initially at fair value and
subsequently measured at amortised cost less loss
allowance or impairment losses. Trade receivables
comprise sale of goods and services as well as short-
term on-trade loans to customers. Other receivables
comprise VAT receivables, loans to partners,
associates and joint ventures, interest receivables and
other financial receivables.
For on-trade loans, any difference between the
present value and the nominal amount at inception is
treated as a prepaid discount to the customer, and
the discount is recognised in the income statement in
accordance with the terms of the agreement.
The market interest rate is used as the discount rate,
corresponding to the money market rate based on
the maturity of the loan with the addition of a risk
premium. The effective interest on these loans is
recognised in other operating activities, net. The
amortisation of the difference between the discount
rate and the effective interest rate is included as a
discount in revenue.
The Group applies the simplified approach to measure
expected credit losses. This entails recognising a
lifetime expected loss allowance for all trade
receivables. Loss rates are determined based on
grouping of trade receivables sharing the same credit
risk characteristics and past-due days.
Regarding on-trade loans and loans to associates, a
loss allowance is recognised based on 12-month or
lifetime expected credit losses, depending on whether
a significant increase in credit risk has arisen since
initial recognition.
SECTION 2
ASSET BASE
AND RETURNS
126.4bn
TOTAL ASSETS (DKK)
Total assets increased by DKK 7.6bn due to
higher intangible assets, inventories, and trade
and other receivables.
Intangible assets amounted to DKK 68.5bn at
31 December 2021 (2020: DKK 66.1bn), mainly
due to the acquisition of Marston’s brewing
activities and Wernesgrüner as well as the
appreciation of the Russian and Chinese
currencies, partly offset by the impairment of
brands in Russia.
Property, plant and equipment totalled
DKK 26.6bn (2020: DKK 26.3bn), impacted by
currency movements and capital expenditure
offset by disposals and depreciation.
Current assets increased by DKK 3.9bn to DKK
22.9bn, mainly due to increases in receivables
and inventories of DKK 2.7bn, which primarily
related to higher sales and stocking in Asia
prior to the Chinese New Year. Other
receivables mainly increased due to fair value
adjustment linked to higher aluminium prices
and the reversal of the write-down of the loan
to our partner in Carlsberg South Asia Pte Ltd
("CSAPL"). Cash and cash equivalents
amounted to DKK 8.3bn (2020: DKK 8.1bn).
ASSET BASE (DKKbn)
4.4
3.8
92.4
- 4.4
- 1.1
95.1
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
67
4.2bn
CAPEX (DKK)
CapEx increased by DKK 625m (excluding the
Brooklyn brand rights in 2020). Asia and Central
& Eastern Europe were the main contributors,
with higher investments in sales CapEx, returnable
glass and can production capacity. CapEx to
amortisation and depreciation, excluding right-
of-use assets, increased to 100% (2020: 90%).
10.3%
ROIC
Return on invested capital (ROIC) increased
by 140bp to 10.3%, positively impacted by
higher profits and a lower effective tax rate.
ROIC excluding goodwill improved by 430bp
to 27.5%.
CAPEX* AND AMORTISATION/
DEPRECIATION (DKKbn)
RETURN ON INVESTED CAPITAL
(% 12-MONTH AVERAGE)
5.0
4.0
3.0
2.0
8.0%
7.0%
6.0%
5.0%
27
24
21
18
15
12
9
6
CapEx
Amortisation and depreciation
CapEx/revenue
ROIC
ROIC excl. goodwill
* Excluding the purchase of the Brooklyn brand rights in 2020.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
68
SECTION 2.1
SEGMENTATION OF
ASSETS AND
RETURNS
At year-end, invested capital was up by
DKK 2.1bn, primarily due to the appreciation of
the Russian rouble and the Chinese renminbi.
The acquisitions of Marston’s brewing activities
and the Brooklyn brand rights had a full-year
impact on average invested capital, whereas in
2020 they had only been included for two
months and six months respectively. The
acquisition of Wernesgrüner, completed at
1 January 2021, also had a full-year impact
on average invested capital.
The impact on total assets from fluctuations in
the Russian rouble was an increase of DKK
2.1bn (2020: decrease of DKK 7.5bn).
Non-current assets comprise intangible assets
and property, plant and equipment owned by
the segment/country, even if the income is
earned outside the segment/country that owns
the asset.
Furthermore, they include non-current financial
assets other than financial instruments and tax
assets.
Not allocated comprises supporting companies
without brewing activities and eliminations of
investments in subsidiaries, receivables and
loans.
Geographical allocation of non-current assets
ACCOUNTING ESTIMATES
AND JUDGEMENTS
The calculation of return on invested capital (ROIC)
uses operating profit before special items adjusted for
tax based on the effective tax rate, and invested
capital including assets held for sale and trade
receivables sold, and excludes contingent
considerations and income tax.
DKK million
Denmark
(Carlsberg A/S'
domicile)
Russia
China
Other countries
Total
2021
2020
4,122
19,185
15,876
61,112
100,295
4,260
18,509
14,320
59,459
96,548
ACCOUNTING
POLICIES
The Group’s assets and returns are segmented on the
basis of geographical regions in accordance with the
management reporting for the current year, cf.
section 1.1.
Invested capital
DKK million
DKK million
Total assets
Less
Tax assets
2021
2020
126,383
118,816
2021
Invested capital
Invested capital excl. goodwill
-1,922
-1,767
Investments in associates
Financial receivables,
hedging instruments and
receivables sold
1,247
1,904
Cash and cash equivalents
-8,344
-8,093
117,364
110,860
-20,642
-16,598
Acquisition of property, plant and equipment and
intangible assets
Amortisation and depreciation
Impairment losses, net
Return on invested capital (ROIC)
ROIC excl. goodwill
Assets included
Trade payables
Deposits on returnable
packaging materials
Provisions, excl.
restructurings
-1,504
-1,276
2020*
-3,210
-4,322
Invested capital
Other liabilities, excl. hedging
instruments
-8,372
-7,123
Investments in associates
Invested capital excl. goodwill
Liabilities offset
Invested capital
Goodwill
Invested capital excl.
goodwill
-33,728
-29,319
83,636
81,541
-52,484
-50,492
Acquisition of property, plant and equipment and
intangible assets
Amortisation and depreciation
Impairment losses, net
31,152
31,049
Return on invested capital (ROIC)
Invested capital, average
82,685
82,227
ROIC excl. goodwill
Western
Europe
35,582
15,317
2,271
1,340
1,796
17
9.2%
20.1%
35,746
16,142
2,273
1,258
1,712
44
8.7%
18.8%
Central &
Eastern
Europe
27,246
10,990
32
884
993
947
8.6%
20.7%
26,964
11,439
26
768
1,037
16
8.5%
19.8%
Asia
20,244
4,281
2,363
1,800
1,488
460
20.3%
153.4%
18,045
2,682
1,462
1,395
1,499
292
15.8%
88.8%
Not
allocated
Beverages,
total
-604
-604
5
191
102
-
-
-
6
6
3
965
78
5
-
-
82,468
29,984
4,671
4,215
4,379
1,424
10.4%
28.1%
80,761
30,269
3,764
4,386
4,326
357
9.0%
24.4%
Non-
beverage
1,168
1,168
501
8
17
-86
-
-
780
780
424
10
10
-
-
-
Carlsberg
Group,
total
83,636
31,152
5,172
4,223
4,396
1,338
10.3%
27.5%
81,541
31,049
4,188
4,396
4,336
357
8.9%
23.2%
* 2020 figures have been restated to reflect the new regional segmentation.
SECTION 2.2
IMPAIRMENT
2.2.1 RECOGNISED IMPAIRMENTS
In 2021 and 2020, the impairment tests of
goodwill and brands with indefinite useful life
were prepared at the reporting date.
In 2021, recognised impairment losses related
to the Baltika brand and other brands in Russia
of DKK 950m, land use rights in China of DKK
107m, returnable packaging in certain markets
in Asia of DKK 130m, other items of property,
plant and equipment of DKK 21m and
investments in associates in China of DKK
244m.
In 2021, the Group recognised reversal of
impairment losses of DKK 114m (2020: DKK
2m) in Denmark, China and Russia relating to
assets that had been brought back into
production or reclassified as held for sale.
In 2020, impairment losses of DKK 231m
relating to brands and DKK 124m relating to
property, plant and equipment were
recognised. The impairment loss on brands was
mainly related to the Angkor brand and was
due to a significant decline in volumes caused
by COVID-19 restrictions in the market.
Impairment of brands in Russia
Russia experienced a significant increase in
interest rates in the second half of 2021, as
well as in inflation, which negatively impacted
the costs of raw and packaging materials.
These increases are expected to continue in
2022. Russia is a highly price-competitive
market, which has a negative impact on profit
margins. The effect of these trends has been
incorporated into the impairment test, resulting
Impairment of brands and other non-current assets
DKK million
Intangible assets
Brands
Other intangible assets
Total
Property, plant and equipment
Plant, machinery and equipment
Reversal of impairment losses
Total
Investments in associates
Impairment of investment in associates
Total impairment losses, net
Of which recognised in special items, cf. section 3.1
2021
2020
950
107
1,057
151
-114
37
244
1,338
1,122
231
4
235
124
-2
122
-
357
307
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
69
in the recoverable amount of the Baltika brand
and other Russian brands being lower than
their carrying amount. The brands were
therefore written down by a total of DKK
950m, DKK 900m of which was allocated to
the Baltika brand.
The Baltika brand has been written down on
two previous occasions, in total by DKK
8,800m. The previous write-downs followed
detailed reviews of expected future growth
after prolonged challenging macroeconomic
conditions, changes in the market environment
such as PET downsizing and various changes in
consumer trends. These factors were also
incorporated into the recent impairment test.
Other impairments
In certain markets in Asia, the return systems
are not legally required but have been
developed as a result of market practice in the
beverage industry. The collection rates for
returnable packaging declined significantly in
2021 compared with previous years as a result
of COVID-19 restrictions, leading to the
recognition of impairment losses of DKK 130m
for lost returnable packaging.
In China, disputes relating to the management
of Tibet Lhasa Brewery resulted in significant
disturbances to the operation of the company,
which negatively impacted financial
performance. The investment was therefore
written down to its recoverable amount,
resulting in the recognition of an impairment
loss of DKK 244m. The disputes further meant
that the Group lost its significant influence in
the company, and the residual investment was
therefore reclassified to financial investments.
Impact of COVID-19
The COVID-19 pandemic and its impact on
volumes, earnings and cash flows indicate
possible impairment of non-current assets.
The Group has carefully assessed the expected
recovery from the pandemic in terms of both
volumes and earnings. The beverage industry
has proven resilient to the pandemic. To some
extent, volumes initially shifted from the on-
trade to the off-trade, then back to the on-
trade again in 2021 when restrictions were
eased, and earnings returned to approximately
the same level as before the pandemic.
At the end of the second year of the pandemic,
we again experienced an increase in restrictions
as the weather got colder and infection levels
rose. This will have a negative impact on, in
particular, the on-trade channel, which has
been included in the forecasts used for
impairment testing. We expect volumes and
earnings to recover to pre-pandemic levels
again. The expected timing and speed of the
recovery differ from market to market
depending on the extent of government
restrictions and on consumer behaviour.
In the assessment of impairment of non-
current assets, no additional indications of
impairment as a result of the COVID-19
pandemic, have been identified.
Significant amounts of goodwill and brands
Goodwill and brands with indefinite useful life
relating to the acquisitions of Baltika
Breweries, Kronenbourg, Chongqing Brewery
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
70
SECTION 2.2 (CONTINUED)
IMPAIRMENT
Group and the 40% non-controlling interest in
Carlsberg Breweries A/S each accounted for
10% or more of the total carrying amount of
goodwill and brands with an indefinite useful
life at the reporting date. Goodwill from these
acquisitions has been allocated to CGUs based
on the geographical segmentation.
The international brands acquired with the 40%
non-controlling interest in Carlsberg Breweries
A/S and the Baltika brand are individually
material and specified in section 2.2.3.
ACCOUNTING ESTIMATES
AND JUDGEMENTS
Identification of cash-generating units
The Group’s management structure reflects the
geographical segments, cf. section 1.1, and decisions
are made by the regional managements responsible
for performance, operating investments and growth
initiatives in their respective regions.
There is significant vertical integration of the
production, logistics and sales functions, supporting
and promoting optimisations across the Group or
within regions.
Assets, other than goodwill and brands with regional
and global presence, are allocated to individual cash-
generating units (CGUs), being the level at which the
assets generate largely independent cash inflows. As
the Group operates with local sales and production
organisations, the cash inflows are generated mostly
locally, and the CGUs are therefore usually identified
at country level.
Within 12 months from the date of acquisition, the
determination of CGU allocation is made, and cash
inflows are assessed in connection with the purchase
price allocation.
Goodwill
Goodwill does not generate largely independent cash
inflows on its own and is therefore allocated to the
Group’s geographical segments, which is the level at
which it is monitored for internal management
purposes.
At the time of acquisition of entities, goodwill is
allocated to a CGU, cf. section 5.2. The structure and
groups of CGUs are reassessed every year. The Group
gained control of Wernesgrüner Brewery in 2021 and
of Marston’s brewing activities in 2020. The goodwill
recognised on these acquisitions was allocated to the
Western Europe CGU.
Brands
Cash flows for brands are separately identifiable and
brands are therefore tested individually for
impairment. This test is performed in addition to the
test for impairment of goodwill.
The following brands are considered significant when
comparing their carrying amount with the total
carrying amount of brands with indefinite useful life:
• Baltika brand
• International brands
International brands is a group of brands recognised
in connection with the acquisition of the 40% non-
controlling interest in Carlsberg Breweries A/S and
allocated to Western Europe. The amount is not
allocated to individual brands.
Corporate assets
The Group has identified capitalised software relating
to the Group’s ERP systems as corporate assets, and
as such these are peripheral to the generation of cash
inflow. The Group’s ERP landscape is closely linked to
the internal management structure, and the identified
assets are therefore tested for impairment at the CGU
level to which goodwill is allocated.
Other non-current assets
Other non-current assets are tested for impairment
when indications of impairment exist.
For property, plant and equipment, management
performs an annual assessment of the assets’ future
application, for example in relation to changes in
production structure, restructurings or brewery
closures. Since 2020, the assessment has also
included the impact of the COVID-19 pandemic.
For investments in associates and joint ventures,
examples of indications of impairment are loss-
making activities or significant changes in the
business environment.
ACCOUNTING
POLICIES
Goodwill and brands with indefinite useful life are
subject to an annual impairment test, performed
initially before the end of the year of acquisition.
The test is performed at the level where cash flows
are considered to be generated: either at CGU level or
at the level of a group of CGUs. All assets are tested
if an event or circumstance indicates that the carrying
amount may not be recoverable. If an asset’s carrying
amount exceeds its recoverable amount, an
impairment loss is recognised. The recoverable
amount is the higher of the asset’s fair value less
costs of disposal and its value in use.
For all assets, the value in use is assessed based on
budget and target plan with reference to the expected
future net cash flows. The assessment is based on the
lowest CGU affected by the changes that indicate
impairment. The cash flow is discounted by a rate
adjusted for any risk specific to the asset, if relevant
to the applied calculation method.
Impairment losses on goodwill and brands, significant
losses on property, plant and equipment, investments
in associates and joint ventures, and losses arising on
significant restructurings of processes and structural
adjustments are recognised as special items. Minor
losses are recognised in the income statement in the
relevant line item.
Impairment of goodwill is not reversed. Impairment of
other assets is reversed only to the extent of changes
in the assumptions and estimates underlying the
impairment calculation. Impairment is only reversed
to the extent that the asset’s new carrying amount
does not exceed the carrying amount of the asset
after amortisation/depreciation had the asset not
been impaired.
2.2.2 IMPAIRMENT TEST OF GOODWILL
The carrying amount of goodwill
allocated to groups of CGUs
DKK million
Western Europe
Asia
Central & Eastern Europe
Total
2021
20,265
15,963
16,256
52,484
2020
19,604
15,363
15,525
50,492
Estimating expected cash flow involves
developing multiple probability-weighted
scenarios to reflect different outcomes in terms
of timing and amount. Measurement of the
forecast period growth rates reflects risk
adjustments made to calculate the expected
cash flows.
Key considerations in impairment tests
Goodwill
CGU-level of test
Geographical segment
Method to estimate recoverable amount Value in use
Brands
Individual brand
Value in use
Method to estimate present value of
future cash flows
Expected value approach: multiple
probability-weighted cash flows
Traditional approach: single most
likely future cash flows
Discount rate
Risk-free rate
Risk-adjusted rate
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
71
SECTION 2.2 (CONTINUED)
IMPAIRMENT
Key assumptions
2021
Western
Europe
Asia
Central &
Eastern
Europe
Forecast
cash flow
growth
Terminal
period
growth
Pre-tax
discount
rate
1%
-10%
0.0%
1.0%
1.7%
4.5%
-24%
3.5%
6.3%
The average cash flow growth in the forecast
period reflects the significant risk adjustments
included in the forecast specifically for the
impairment test. The risk adjustments consider
alternative scenarios to account for the
particular uncertainty related to the continued
impact on earnings and cash flow from the
COVID-19 pandemic, the time and speed of
the recovery, and the volatile macroeconomic
and competitive situation in Central & Eastern
Europe.
Potential upsides are not identified and
adjusted in the cash flows used for impairment
testing. Growth is projected in nominal terms
and therefore does not translate into cash flow
at the same growth rate in the Group’s
presentation currency, DKK.
NEW SEGMENTATION FOR 2021
The Group’s segmentation and regional split of
entities changed as of 1 January 2021, and the
allocation of CGUs changed accordingly, with
goodwill amounting to DKK 3,039m
reallocated from Western Europe to Central &
Eastern Europe. This change did not have any
impact on the conclusion of the impairment
test of goodwill.
presence in the region, both organically and
through acquisitions.
WESTERN EUROPE
The region primarily comprises mature beer
markets, and market volumes tend to be flat.
In recent years, the region has seen improving
beer category dynamics through innovations,
increased interest in craft & speciality beers and
alcohol-free brews, and an overall improved
category perception.
The region is generally characterised by well-
established retail structures and a strong
tradition of beer consumption. Consumption is
generally resilient, although the on-trade
channel tends to be impacted by a weak
macroeconomic environment. In the past two
years, the on-trade suffered as a result of
restrictions and lockdowns across markets due
to COVID-19. The COVID-19 situation in 2022
remains uncertain, but it is not expected to
have a significant long-term effect.
The Asian markets are very diverse but offer
prospects for volume and value growth,
underpinned by young populations,
urbanisation, rising disposable income levels,
growing economies and, in some markets,
relatively low per capita beer consumption.
However, as many Asian markets are emerging
markets, development is subject to volatility.
Both the on-trade and off-trade channels are
generally characterised by a strong traditional
outlet segment, but with the modern outlet
segment growing in most markets.
In 2020 and 2021, all markets in the region
were impacted by COVID-19 at different times
and to different extents. The impact from
COVID-19 in China was most profound in the
first quarter of 2020, since which the market
has seen only temporary and limited
restrictions, enabling our business to deliver
strong performance.
In 2022, the focus will be on mitigating the
significant cost inflation, in particular for raw
materials and packaging, but also other costs,
such as logistics and wages. Mitigating actions
include value management, channel and
product mix, price increases and continuous
cost focus as part of the Group’s Funding the
Journey culture.
The focus in the region remains profitable
revenue growth, driven by premiumisation and
volume growth. Activities include continued
investment in and expansion of our
international premium brands, in particular
Tuborg, 1664 Blanc, Carlsberg and Somersby,
and the strengthening and premiumisation of
our local power brands.
ASIA
The importance of Asia for the Group has
increased significantly over the past decade,
during which the Group has strengthened its
CENTRAL & EASTERN EUROPE
Central & Eastern Europe consists of the large
Russian and Ukrainian beer markets, a number
of smaller markets across southern and eastern
Europe and our export & licence business.
The competitive environment is generally
characterised by the presence of large global
players. In certain markets, such as Russia, a
large number of small, local players take up a
significant part of the beer market.
Due to the larger on-trade exposure, the
southern part of the region was more exposed
to COVID-19 in 2020 and 2021 than the
eastern part of the region, including Russia,
where the on-trade exposure is limited.
The competitive environment has been
challenging in recent years, particularly in
Russia, which has seen an increased focus on
volume. This has led to Carlsberg increasing its
promotional activities to drive volumes, leading
to a downward pressure on margins.
Management expects the current
macroeconomic situation and developments to
continue in the short term, with inflation
increasing compared with the levels in 2021,
driven by significant increases in cost of sales
and logistics. In the medium to long term,
interest rates are expected to decline and
stabilise at a level lower than currently
observed in the market, although still with
some volatility.
ACCOUNTING ESTIMATES
AND JUDGEMENTS
Goodwill
The value in use is the discounted value of the
expected future risk-adjusted cash flows. This
involves developing multiple probability-weighted
scenarios to reflect different outcomes in terms of
timing and amount.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
72
SECTION 2.2 (CONTINUED)
IMPAIRMENT
Key assumptions
The cash flow is based on the budget and target
plans for the next three years. Cash flows beyond the
three-year period are extrapolated using the terminal
period growth rate. The budget and plans for 2022-
2024 represents management’s best estimate of the
impact from the COVID-19 pandemic.
The probability weighting applied is based on past
experience and the uncertainty of the prepared
budget and target plans. Potential upsides and
downsides identified during the budget process and in
the daily business are reflected in the future cash flow
scenarios for each CGU.
The risk-adjusted cash flows are discounted using a
rate that reflects the risk-free interest rate for each
CGU. The interest rates used in the impairment tests
are based on observable market data. Please refer to
the description of discount rates in section 2.2.3.
The key assumptions on which management bases its
cash flow projections are:
• Volumes
• Sales prices
• Input costs
• Operating investments
• Terminal period growth
The assumptions are determined at CGU level and are
based on past experience, external sources of
information and industry-relevant observations for
each CGU. Local conditions, such as expected
developments in macroeconomic and market
conditions specific to the individual CGUs, are
considered. The assumptions are challenged and
verified by management at CGU and Group level.
nature, they are not taken into consideration when
estimating the terminal period growth rate.
Impact of COVID-19
The development in 2021 showed that the beverage
industry is generally resilient and confirmed the
expectation from 2020 when volumes and earnings
returned to levels close to pre-pandemic levels after
the introduction of vaccines and the lifting of
government restrictions. The decline in earnings
experienced in 2020 due to COVID-19 is therefore
not expected to continue in the long term.
However, to avoid overlooking any long-term impact,
additional risk adjustments have been made for the
development in the cost of raw and packaging
materials and operating investments.
Volumes
Projections are based on past experience, external
market data, planned commercial initiatives, such as
marketing campaigns and sponsorships, and the
expected impact on consumer demand and the level
of premiumisation. If relevant, the projections are
adjusted for the expected changes in the level of
premiumisation. No changes in market share are
assumed in the medium or long term.
Demographic expectations general to the industry,
such as the development in population, consumption
levels, generation-shift patterns, rate of urbanisation
and macroeconomic trends, are also considered in
medium- and long-term projections.
Events and circumstances can impact the timing of
volumes entering the market. These include excessive
stocking related to an increase in excise duties,
campaign activities, and the timing of national
holidays and festivals. Such short-term effects are
not material to volume projections and do not impact
the long-term projections.
Increases in excise duties are typically passed on to
the customers immediately or with a delay of no
more than a few months. Since the increase is a
pass-through cost and thereby compensated for by
price increases at the time of implementation, it does
not impact the long-term sales price growth and is
therefore not taken into consideration in the
projections unless circumstances specifically indicate
otherwise. No changes to duties in the short or
medium term are taken into consideration unless
there is a firm plan to introduce changes.
Input costs
Input costs in the budget and target plans are based
on past experience and on:
• Contracted raw and packaging materials
• Contracted services within sales, marketing,
production and logistics
• Planned commercial investments
• Cost optimisations not related to restructurings
• Expected inflation
In the long term, projections follow the level of
inflation unless long-term contracts are in place.
Operating investments
Projections are based on past experience of the level
of necessary maintenance of existing production
capacity, including replacement of parts. This also
includes scheduled production line overhauls and
improvements to existing equipment. Non-contracted
capacity increases and new equipment are not
included.
Terminal period growth
Growth rates are projected to be equal to or below
the expected rate of general inflation and assume no
nominal economic growth. The projected growth
rates and the applied discount rates are compared to
ensure a sensible correlation between the two.
2.2.3 IMPAIRMENT TEST OF BRANDS
Brands with indefinite useful life
DKK million
Baltika brand
International brands
Significant brands
2021
4,410
3,000
7,410
2020
4,876
3,000
7,876
In 2021, significant brands represented 50%
(2020: 55%) of the total carrying amount of
brands with indefinite useful life. The decrease
in the carrying amount of the Baltika brand
compared with 2020 is mainly due to the
impairment loss recognised in 2021, partly
offset by the appreciation of RUB.
Other brands comprise a total of 21 brands
(2020: 19 brands) that individually are not
material compared with the total carrying
amount.
ACCOUNTING ESTIMATES
AND JUDGEMENTS
Brands
The test for impairment of brands is performed using
the relief from royalty method and is based on the
expected future cash flows generated from the royalty
payments avoided for the individual brand for the next
20 years and projections for subsequent years.
The risk-free cash flows are discounted using a rate
reflecting the risk-free interest rate with the addition
The budget and target plan processes consider events
or circumstances that are relevant to reliably project
the short-term performance of each CGU. Examples
include significant campaign activities, changes in
excise duties etc., which may have a short-term
impact but are non-recurring. Given their short-term
Sales prices
The level of market premiumisation and the locally
available portfolio are key drivers in identifying price
points. When planning pricing structures, factors
including price elasticity, local competition and
inflation expectations can also impact the projection.
Key assumptions
2021
Baltika brand
International brands
Average
revenue
growth
4.8%
1.5%
Terminal
period growth
Pre-tax
discount rate
Post-tax
discount rate
4.0%
1.7%
12.5%
4.9%
10.9%
4.8%
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
73
SECTION 2.2 (CONTINUED)
IMPAIRMENT
of the risk premium associated with the individual
brand.
Key assumptions
The key assumptions on which management bases its
cash flow projection include the expected useful life,
revenue growth, a theoretical tax amortisation
benefit, the royalty rate and the discount rate.
Expected useful life
Management has assessed that the value of brands
with indefinite useful life can be maintained for an
indefinite period, as these are well-established brands
in their markets, having existed for decades or even
centuries. The beer industry is characterised as being
very stable with consistent consumer demand and a
predictable competitive environment, and is expected
to be profitable for the foreseeable future. Control of
the brands is legally established and enforceable
indefinitely.
In management’s opinion, the risk of the useful life of
these brands becoming finite is minimal because of
their individual market positions and because current
and planned marketing initiatives are expected to
sustain their useful life.
Revenue growth
At the time of acquisition of any individual brand, a
revenue growth curve is forecast based on a long-
term strategic view of the risk and opportunities
relevant to the brand. The curve is forecast for a 20-
year horizon. This horizon reliably reflects the lengthy
process of implementing brand strategies to support a
brand occupying its intended place in the Group’s
portfolio. The forecast period applied is comparable
with the common term of the majority of licence
agreements to which the Group is party.
In the local markets, the product portfolio usually
consists of local power brands and international
premium brands. When projecting revenue growth for
local brands, in addition to their commercial strength
– such as market share and segment position – the
forecast takes into consideration the demographics of
the primary markets, including expected
developments in population, consumption levels,
generation-shift patterns, rate of urbanisation, beer
market maturity, level of premiumisation,
circumstances generally limiting the growth
opportunities for alcoholic beverages etc.
For brands with global or regional presence,
enhanced investments in product development and
marketing are expected. The expected growth rate for
these brands is generally higher than for more
localised brands and is usually highest early in the
20-year period.
Depending on the nominal growth expectations for
the individual brand, the revenue growth in individual
years may be above, equal to or below the forecast
inflation level in the markets where the brand is
present.
When preparing budgets, consideration is given to
events or circumstances that are relevant to reliably
project the short-term performance of each brand.
Examples include significant campaign activities,
changes in excise duties etc., which may have a
short-term impact but are non-recurring and quickly
absorbed by the business. Since the impact is not
material to the long-term projections, it is not taken
into consideration when estimating the long-term
and terminal period growth rates. Please refer to the
description of the impact of increases in excise duties
in the description of sales prices in section 2.2.2.
In 2021, the drop in revenue experienced in 2020 due
to the COVID-19 pandemic was, as expected, largely
regained in most markets, following the introduction
of vaccines and the lifting of governmental
restrictions.
The risk of future revenue decline from infection levels
potentially increasing again has been carefully
considered. The beverage industry has generally
proved to be resilient, and the decline in revenue
experienced in 2020 is not expected to have a long-
term impact.
Revenue is expected to recover to pre-pandemic
levels in the medium and long term. The timing of the
recovery has been carefully considered, particularly
for brands with lower headroom to the carrying
amount.
Tax benefit
The theoretical tax benefit applied in the test uses tax
rates and amortisation periods based on current
legislation. The impairment test applies tax rates in
the range of 15-31% and amortisation periods of 5-
15 years.
Royalty rate
Royalties generated by a brand are based on the
Group’s total income from the brand and are earned
globally, i.e., the income is also earned outside the
CGU that owns the brand. If external licence
agreements for the brand already exist, the market
terms of such agreements are taken into
consideration when assessing the royalty rate that
the brand is expected to generate in a transaction
with independent parties. The royalty rate is based on
the actual market position of the individual brand in
the global, regional and local markets, and assumes
a 20-year horizon. This term is common to the
beverage industry when licensing brands.
For some brands, the share of the total beer market
profit exceeds the volume share to an extent that
creates significant market entry barriers for
competing brands and justifies a higher royalty rate.
In 2021, the royalty rate for one of the brands was
adjusted downwards from 13% to 11% due to
increased competition in the market and declining
margins.
Royalty rates
International, premium and
speciality beers
Strong regional and national brands
Local and mainstream brands
3.5-11.0%
3.0-5.0%
2.0-3.5%
Discount rates
The discount rate is a weighted average cost of
capital (WACC) that reflects the risk-free interest rate
with the addition of a risk premium relevant to each
brand.
The risk-free interest rates used in the impairment
tests are based on observed market data. For
countries where long-term risk-free interest rates are
not observable or valid due to specific national or
macroeconomic conditions, the interest rate is
estimated based on observations from other markets
and/or long-term expectations expressed by
international financial institutions considered reliable
by the Group.
The added credit risk premium (spread) for the risk-
free interest rate is fixed at market price or slightly
higher, reflecting the expected long-term market
price. The aggregate interest rate, including spread,
thereby reflects the long-term interest rate applicable
to the Group’s investments in the individual markets.
Interest rates applied in Central & Eastern Europe
In recent years, the macroeconomic situation has
deteriorated significantly in Eastern Europe, resulting
in interest rates and inflation increasing to a level
significantly higher than the Group’s long-term
expectations.
The Group continues to monitor market
developments and compare these with the
expectations of key international financial institutions
to determine if the observable data can be applied.
The use of expected future interest rates in previous
years in lieu of appropriate observable interest rates
did not impact the conclusion of the impairment test
because the relationship between discount rates and
growth rates (the real interest rate) was expected to
be constant. Expectations for the long-term real
interest rate remain a key assumption for the
impairment testing in general, and for CGUs with
exposure to the Russian market in particular.
The impairment test of the Baltika brand is sensitive
to changes in the real interest rate. Since no expected
future long-term real interest rate can be directly
observed, the estimate of a real interest rate is
subjective and associated with risk.
In 2021, the observable interest rate and inflation in
Russia increased to levels significantly higher than the
long-term expectations of key international financial
institutions. This high risk-free interest rate has been
SECTION 2.2 (CONTINUED)
IMPAIRMENT
applied in the impairment test for 2021 to discount
the forecast period cash flows.
To avoid applying an incorrect real interest rate in
perpetuity, the discount rate used to calculate the net
present value of the cash flows in the terminal period
has been adjusted to incorporate an interest rate that
is equal to the expected rate of inflation with the
addition of an expected long-term real interest rate
of 2.8%. The expected real interest rate was
estimated based on market observations from the
preceding five years.
Interest rates applied in Western Europe
Western Europe is experiencing very low interest
rates, in several countries even lower than inflation,
resulting in negative real interest rates. The Group
generally applies a growth rate in the terminal period
that is equal to or slightly lower than expected
inflation. Management does not expect assets and
CGUs subject to impairment testing to have a
negative real interest rate in perpetuity.
To avoid applying negative real interest rates in
perpetuity, the discount rate used to calculate net
present value of the cash flows in the terminal period
has been adjusted to incorporate an interest rate that
is at least equal to the expected rate of inflation, with
the addition of the expected long-term real interest
rate.
2.2.4 SENSITIVITY TESTS
Sensitivity tests have been performed to
determine the lowest forecast and terminal
period growth rates and/or highest discount
rates that can occur in the groups of CGUs and
brands with indefinite useful life without
leading to any impairment loss.
The risk-free interest rates observable for
Western Europe increased but remained low at
the end of 2021. The sensitivity tests calculate
the impact of higher interest rates and allow
for a double-digit percentage-point increase in
risk-free interest rates.
Due to a challenging macroeconomic situation
in some CGUs and groups of CGUs, the Group
performed additional sensitivity tests to ensure
that no potential impairment had been
overlooked. These additional sensitivity tests
did not identify any potential impairment.
GOODWILL
The test for impairment of goodwill did not
identify any CGUs or groups of CGUs to which
goodwill is allocated where a reasonably
possible negative change in a key assumption
would cause the carrying amount to exceed the
recoverable amount.
The goodwill allocated to Central & Eastern
Europe was primarily recognised when the
Group completed the step acquisition of the
remaining 50% of the Baltic Beverage Holding
Group from Scottish & Newcastle in 2008.
However, the impairment test includes 100% of
the cash flow generated by Central & Eastern
Europe, resulting in the recoverable amount
significantly exceeding the carrying amount.
BRANDS
Following the impairment losses recognised in
2021 and 2020, a reasonably possible negative
change in a key assumption would cause the
carrying amount of the brands that were
written down to exceed the recoverable
amount. The sensitivity to changes in the
assumptions is shown in the table below.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
74
Key assumptions
The key assumptions relevant to the
assessment of the recoverable amount are:
• Volume
• Price
• Discount rate
The assumptions for volume and pricing are
closely linked, which, together with the
presence of multiple sub-brands in various
geographies within each brand, makes
individual sensitivity testing on the basis of
these two assumptions highly impractical.
Instead, sensitivity testing is performed for the
overall revenue growth rate, in both the
forecast period and the terminal period.
The sensitivity test for the maximum decline in
growth rate in the forecast period assumes a
year-on-year decline in the nominal growth
rate, thereby estimating the accumulated effect
of a negative change for the full forecast
period.
The sensitivity tests were completed with all
other assumptions unchanged, as it is relevant
to assess the sensitivity to, for example, a
decline in the growth rate independently of
changes in the discount rate. This is because
the growth rate in itself might be impacted by
changes in brand strategy and other market
factors.
The sensitivity calculated also assumes a
straight-line impact despite the fact that
changes in market dynamics and adjustments
to these will in practice have different impacts
in the individual years and might not apply in
the long term.
Interest rates in Western Europe have been low
for several years and are currently lower than
inflation. An increase in the interest rates
without a corresponding change in inflation
would result in a lower recoverable amount for
brands and could potentially lead to
impairment. However, management considers
the risk of a significant write-down to be very
low.
Baltika brand
The Baltika brand was written down to its
recoverable amount at the end of 2021. As a
result, even a small negative change in the key
assumptions could lead to further impairment.
At 31 December 2021, the carrying amount of
the Baltika brand was DKK 4,410m (2020:
DKK 4,876m).
Sensitivity test
DKKbn
∆
Baltika brand
Average
forecast
growth rate
Terminal
period
growth rate
Risk-free
interest rate
-1 %-point
-1 %-point
+1 %-point
-0.5
-0.2
-0.6
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
75
Following the impairment, the carrying amount
of the brands amounts to DKK 646m (2020:
DKK 639m). Any increase in the risk-free
interest rate or decrease in the terminal growth
rate would therefore result in a minor
additional impairment.
Angkor brand
As the Angkor brand was written down to the
recoverable amount in 2020, a reasonably
possible negative change in the key
assumptions could lead to further impairment.
Following the impairment, the carrying amount
of the brand amounts to DKK 93m (2020: DKK
86m). Any increase in the risk-free interest rate
or decrease in the terminal growth rate would
therefore result in a minor additional
impairment.
SECTION 2.2 (CONTINUED)
IMPAIRMENT
Changes in the market dynamics and the
challenging competitive environment in Russia
could have a significant negative impact on the
recoverable amount. Macroeconomic recovery
could lead to further premiumisation or
localisation, which could drive consumers
towards international brands or local/regional
brands.
An increase in the real interest rate from the
current level (2.8%), either because of a higher
interest rate or lower inflation, could
significantly reduce the recoverable amount.
A 1 percentage point increase in the risk-free
interest rate would result in a reduction in the
recoverable amount of DKK 0.6bn, and a
1 percentage point decrease in the terminal
growth rate would result in a reduction in the
recoverable amount of DKK 0.2bn.
The combined effect of a 1 percentage point
negative change in the interest rate, the
terminal growth rate and the average growth
rate in the forecast period (year on year) would
result in a reduction in the recoverable amount
of DKK 1.1bn.
Other brands in Russia
Other brands in Russia were written down to
their recoverable amount at the end of 2021.
As a result, even a small negative change in the
key assumptions could lead to further
impairment.
SECTION 2.3
INTANGIBLE ASSETS
AND PROPERTY,
PLANT AND
EQUIPMENT
DKK million
2021
Cost
Cost at 1 January
Acquisition of entities
Additions, including right-of-use assets
Disposal and deconsolidation of entities
Disposals
Transfers
Foreign exchange adjustments etc.
Cost at 31 December
Disposal and deconsolidation of entities
Disposals
Amortisation and depreciation
Impairment losses
Reversal of impairment losses
Transfers
Foreign exchange adjustments etc.
Amortisation, depreciation and impairment losses at 31 December
Carrying amount at 31 December
Right-of-use assets included at 31 December
Amortisation and depreciation
Carrying amount at 31 December
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
76
Intangible assets
Property, plant and equipment
Asset base
Goodwill
Brands
Other
intangible
assets
Total
Land and
buildings
Plant and
machinery
Other
equipment,
fixtures and
fittings
Total
Total
52,064
24,056
214
-
-301
-
-
654
-
-
-2
-
2,250
1,473
54,227
26,181
-
-
-
-
-
-
171
1,743
52,484
-
-2
19
950
-
-
837
11,231
14,950
4,967
9
341
-20
-386
-
143
5,054
4,027
-7
-369
206
107
-
-
49
4,013
1,041
877
341
-321
-388
-
3,866
85,462
15,026
-7
-371
225
1,057
-
-
1,057
16,987
68,475
81,087
19,228
28,479
15,614
63,321
144,408
42
328
-102
-273
65
551
-51
1,970
-209
-674
-483
1,240
-182
2,021
-379
-191
4,319
-690
-1,975
-2,922
96
534
686
4,660
-1,011
-3,310
-322
6,191
151,302
52,048
-523
-3,045
4,396
1,208
-114
-174
2,383
56,179
95,123
-322
2,325
65,840
37,022
-516
-2,674
4,171
151
-114
-174
1,326
39,192
26,648
19,839
30,272
15,729
8,165
-40
-186
673
5
-86
-145
123
18,155
-147
-642
1,450
22
-4
-29
848
10,702
-329
-1,846
2,048
124
-24
-
355
8,509
11,330
19,653
10,619
11,030
4,699
-
-
-
-
-
-
-
-
174
887
6
11
205
420
385
1,318
385
1,318
Amortisation, depreciation and impairment losses
Amortisation, depreciation and impairment losses at 1 January
1,572
9,427
SECTION 2.3 (CONTINUED)
INTANGIBLE ASSETS
AND PROPERTY,
PLANT AND
EQUIPMENT
DKK million
2020
Cost
Cost at 1 January
Acquisition of entities
Additions, including right-of-use assets
Disposals
Transfers
Foreign exchange adjustments etc.
Cost at 31 December
Amortisation, depreciation and impairment losses
Amortisation, depreciation and impairment losses at 1 January
1,618
11,593
Disposals
Amortisation and depreciation
Impairment losses
Transfers
Foreign exchange adjustments etc.
Amortisation, depreciation and impairment losses at 31 December
Carrying amount at 31 December
Right-of-use assets included at 31 December
Amortisation and depreciation
Carrying amount at 31 December
-
-
-
-
-46
1,572
50,492
-
20
231
-
-2,417
9,427
14,629
-
-
-
-
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
77
Intangible assets
Property, plant and equipment
Asset base
Goodwill
Brands
Other
intangible
assets
Total
Land and
buildings
Plant and
machinery
Other
equipment,
fixtures and
fittings
Total
Total
27,548
4,967
54,748
1,812
-
-
-
-
804
-
-
-4,496
-4,296
52,064
24,056
-
245
-66
-6
-173
4,967
4,025
-42
167
4
-
-127
4,027
940
-
-
87,263
1,812
1,049
-66
-6
-8,965
81,087
17,236
-42
187
235
-
-2,590
15,026
66,061
18,978
30,595
15,760
65,333
152,596
634
224
-603
1,049
-1,054
19,228
8,258
-464
653
8
9
-299
8,165
11,063
258
1,781
-846
-1,222
-2,087
28,479
373
1,818
-1,392
195
-1,140
15,614
18,827
10,641
-815
1,448
84
10
-1,399
18,155
10,324
-1,253
2,048
30
1
-765
10,702
4,912
1,265
3,823
-2,841
22
-4,281
63,321
37,726
-2,532
4,149
122
20
3,077
4,872
-2,907
16
-13,246
144,408
54,962
-2,574
4,336
357
20
-2,463
-5,053
37,022
26,299
52,048
92,360
-
-
178
942
11
25
207
415
396
1,382
396
1,382
SECTION 2.3 (CONTINUED)
INTANGIBLE ASSETS
AND PROPERTY,
PLANT AND
EQUIPMENT
Property, plant and equipment under
construction amounted to DKK 1,193m (2020:
DKK 1,121m). Property, plant and equipment
under construction are recognised in plant and
machinery until completion.
Other equipment, fixtures and fittings include
transport, office and draught beer equipment,
coolers and returnable packaging materials.
Other intangible assets include software, land
use rights and beer delivery rights.
RIGHT-OF-USE ASSETS
The Group leases various properties and
warehouses, production equipment, cars and
trucks. Leases are negotiated on an individual
basis and contain a wide range of different
terms and conditions.
At 31 December 2021, the carrying amount of
right-of-use assets was DKK 1,318m. During
the year, additions amounted to DKK 437m
and depreciation to DKK 385m.
Lease expenses recognised in the income
statement, relating to short-term leases and
leases of low-value assets, amounted to
DKK 33m (2020 DKK 44m). Such contracts
comprise the lease of copy and printing
machines, coffee machines, small IT devices
and similar equipment.
For disclosures of the interest expenses, cash
flow and lease liabilities, please refer to
sections 4.1, 4.4.1 and 4.7.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
78
CAPITAL COMMITMENTS
The Group has entered into various capital
commitments that will not take effect until
after the reporting date and have therefore not
been recognised in the consolidated financial
statements. Capital commitments amounted to
DKK 132m (2020: DKK 41m).
ACCOUNTING ESTIMATES
AND JUDGEMENTS
Useful life and residual value of intangible
assets with finite useful life and property,
plant and equipment
Useful life and residual value are initially assessed
both in acquisitions and in business combinations.
Management assesses brands and property, plant
and equipment for changes in useful life. If an
indication of a reduction in the value or useful life
exists, such as changes in production structure,
restructuring and brewery closures, the asset is tested
for impairment. If necessary, the asset is written
down or the amortisation/depreciation period is
reassessed and, if necessary, adjusted in line with the
asset’s changed useful life. When changing the
amortisation or depreciation period due to a change
in the useful life, the effect on amortisation/
depreciation is recognised prospectively as a change
in accounting estimates.
Lease and service contracts
At inception of a contract, management assesses
whether the contract is or contains a lease.
Management considers the substance of any service
being rendered to classify the arrangement as either a
lease or a service contract. Particular importance is
attached to whether fulfilment of the contract
depends on the use of specific assets. The assessment
involves judgement of whether the Group obtains
substantially all the economic benefits from the use
of the specified asset and whether it has the right to
direct how and for what purpose the asset is used. If
these criteria are satisfied at the commencement
date, a right-of-use asset and a lease liability are
recognised in the statement of financial position.
In determining the lease term, management considers
all the facts and circumstances that create an
economic incentive to exercise an extension option or
not to exercise a termination option. Extension or
termination options are only included in the lease
term if the lease is reasonably certain to be extended
or not terminated. The term is reassessed if a
significant change in circumstances occurs. The
assessment of purchase options follows the same
principles as those applied for extension options.
The lease payment for cars and trucks often includes
costs of service and insurance. If these costs are not
objectively assessable, the Group estimates the costs
when separating the service component from the
lease.
Amortisation, depreciation and impairment losses
DKK million
Cost of sales
Sales and distribution expenses
Administrative expenses
Special items
Total
Intangible assets Property, plant and equipment
2021
158
64
110
950
1,282
2020
38
71
78
235
422
2021
2,790
1,242
248
-72
2020
2,666
1,249
284
72
Gain/loss on disposal of assets
DKK million
Gain on disposal of property, plant and equipment and intangible assets
Loss on disposal of property, plant and equipment and intangible assets
4,208
4,271
Total
2021
119
-26
93
2020
76
-23
53
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
79
SECTION 2.3 (CONTINUED)
INTANGIBLE ASSETS
AND PROPERTY,
PLANT AND
EQUIPMENT
ACCOUNTING
POLICIES
Cost
Intangible assets and property, plant and equipment
are initially recognised at cost and subsequently
measured at cost less accumulated amortisation or
depreciation and impairment losses.
Cost comprises the purchase price and costs directly
attributable to the acquisition until the date when the
asset is available for use. The cost of acquired brand
rights is accounted for using the accumulated cost
approach if the total consideration includes an earn-
out dependent on the brands’ future performance.
The cost of self-constructed assets comprises direct
and indirect costs of materials, components, sub-
suppliers, wages and salaries, and capitalised
borrowing costs on specific or general borrowings
attributable to the construction of the asset, and is
included in plant and machinery.
Research and development costs are recognised in
the income statement as incurred. Development costs
of intangible assets, for example software, are
recognised as other intangible assets if the costs are
expected to generate future economic benefits.
For assets acquired in business combinations,
including brands and property, plant and equipment,
cost at initial recognition is determined by estimating
the fair value of the individual assets in the purchase
price allocation.
Goodwill is only acquired in business combinations
and is measured in the purchase price allocation.
Goodwill is not amortised but is subject to an annual
impairment test, cf. section 2.2.
The expected useful life is as follows:
Brands with
finite useful life Normally 20 years
Software
Delivery rights
Normally 3-5 years. Group-wide
systems developed as an integrated
part of a major business development
programme: 5-7 years
Depending on contract; if no contract
term has been agreed, normally not
exceeding 5 years
Customer
agreements/
relationships
Depending on contract with the
customer; if no contract exists,
normally not exceeding 20 years
Buildings
Technical installations
Brewery equipment
Filling and bottling equipment
Technical installations in warehouses
On-trade and distribution equipment
Fixtures and fittings, other plant
and equipment
Returnable packaging materials
Hardware
Land
20-40 years
15 years
15 years
8-15 years
8 years
5 years
5-8 years
3-10 years
3-5 years
Not depreciated
Where individual components of an item of property,
plant and equipment have different useful lives, they
are accounted for as separate items.
Subsequent costs, for example in connection with
replacement of components of property, plant and
equipment, are recognised in the carrying amount of
the asset if it is probable that the costs will result in
future economic benefits for the Group. The replaced
components are derecognised from the statement of
financial position and recognised as an expense in the
income statement. Costs incurred for ordinary repairs
and maintenance are recognised in the income
statement as incurred.
Useful life, amortisation, depreciation and
impairment losses
Useful life and residual value are determined at the
acquisition date and reassessed annually. If the
residual value exceeds the carrying amount,
depreciation is discontinued.
Amortisation and depreciation are recognised on a
straight-line basis over the expected useful life of the
assets, taking into account any residual value. The
expected useful life and residual value are determined
based on past experience and expectations of the
future use of assets.
Depreciation is calculated on the basis of the cost less
the residual value and impairment losses.
Amortisation and depreciation are recognised as
cost of sales, sales and distribution expenses, and
administrative expenses depending on the use of
the asset.
Impairment
Impairment losses of a non-recurring nature are
recognised under special items.
Leases
At the commencement date, the Group recognises a
lease liability and a corresponding right-of-use asset
at the same amount, except for short-term leases of
12 months or less and leases of low-value assets.
A right-of-use asset is initially measured at cost,
which consists of the initial lease liability and initial
direct costs less any lease incentives received. The
Group has applied the practical expedient option
allowed under IFRS by using a portfolio approach for
the recognition of lease contracts related to assets of
the same nature and with similar lease terms, i.e. cars
and trucks.
Subsequently, the right-of-use asset is measured at
cost less depreciation and impairment losses and
adjusted for remeasurement of the lease liability. The
right-of-use asset is depreciated over the earlier of
the lease term or the useful life of the asset. The
impairment testing of right-of-use assets follows the
same principles as those applied for property, plant
and equipment, cf. section 2.2.
Right-of-use assets are recognised as property, plant
and equipment.
The Group has elected not to recognise right-of-use
assets and liabilities for leases with a term of 12
months or less and leases of low-value assets. Lease
payments related to such leases are recognised in the
income statement as an expense on a straight-line
basis over the lease term.
Government grants and other funding
Grants and funding received for the acquisition of
assets and development projects are recognised in the
statement of financial position by deducting the grant
from the carrying amount of the asset. The grant is
recognised in the income statement over the life of
the asset as a reduced depreciation charge.
SECTION 3
SPECIAL ITEMS, PROVISIONS
AND OTHER LIABILITIES
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
80
1,429m
SPECIAL ITEMS, INCOME
(DKK)
Impacted by reversal of provisions made in
purchase price allocations in previous years.
-1,682m
SPECIAL ITEMS, EXPENSES
(DKK)
Impacted by write-downs of the Baltika
brand and other brands in Russia, and
restructuring costs across the Group.
SECTION 3.1
SPECIAL ITEMS
SPECIAL ITEMS, INCOME
In 2021, the Group recognised reversal of
provisions made in purchase price allocations in
prior years in Asia (DKK 1,238m), reversal of a
restructuring provision in the UK (DKK 52m),
reversal of impairment losses in Denmark
(DKK 86m) and revaluation gain on retained
investment in Gorkha Brewery (DKK 38m).
The provisions recognised in purchase price
allocations mainly related to indirect taxes and
certain employee obligations, and were either
settled during the year or are no longer
expected to be realised.
In 2020, the Group recognised reversal of
provisions made in purchase price allocations in
prior years (DKK 586m) and a gain on disposal
of the last part of the former brewery site in
Hamburg, Germany (DKK 62m).
Special items
DKK million
Special items, income
2021
2020
Reversal of provisions made in purchase price allocations in prior years
1,238
586
Reversal of provisions made in prior years
Reversal of impairment losses
Gain on disposal of entities and assets
Revaluation gain on deconsolidation of Gorkha Brewery, cf. section 5.2
Disposal of property, plant and equipment previously impaired, including
adjustments to gains and reversal of provisions made in prior years
Income
Special items, expenses
Impairment of brands, cf. section 2.2
Impairment of investment of associates
Impairment of property, plant and equipment
Reset, other restructurings and provisions
Adjustment of contingent consideration
COVID-19, personal protective equipment and donations
Costs related to acquisition of entities, etc.
Expenses
Special items, net
52
86
15
38
-
1,429
-950
-244
-
-270
-129
-41
-48
-1,682
-253
-
-
62
-
52
700
-231
-
-74
-419
-29
-69
-125
-947
-247
SPECIAL ITEMS, EXPENSES
In 2021, write-downs were recognised of the
Baltika brand and other brands in Russia,
totalling DKK 950m, as a result of reduced
profit margins and increased interest rates.
In China, Tibet Lhasa Brewery was negatively
impacted by disturbances in the operation and
management of the company, resulting in the
recognition of an impairment loss of DKK
244m.
Fair value adjustments of the contingent
consideration for the acquisition of Marston’s
brewing activities, completed in 2020,
amounted to DKK 129m (2020: DKK 50m).
The consideration was settled in cash in
December 2021.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
81
SECTION 3.1 (CONTINUED)
SPECIAL ITEMS
During 2021 and 2020, the Group continued to
carry out various restructuring projects as part
of the ongoing focus on cost and efficiency
initiatives. The COVID-19 pandemic did not
have as severe a negative impact in 2021 as in
2020 due to reduced government impositions
in the form of lockdowns, travel restrictions,
limited social gatherings and social distancing.
Restructuring costs and costs of personal
protective equipment, donations etc. incurred
as a result of the response to the COVID-19
impact on the entire business therefore declined
in 2021.
In 2020 The Group was also impacted by
write-downs of a brand and brewing
equipment mainly in Cambodia, as a
consequence of COVID-19 restrictions in
the market.
ACCOUNTING ESTIMATES
AND JUDGEMENTS
ACCOUNTING
POLICIES
The use of special items entails management
judgement in the separation from ordinary items.
Management carefully considers individual items and
projects (including restructurings) in order to ensure
the correct distinction and split between operating
activities and significant income and expenses of a
special nature.
Management initially assesses the entire restructuring
project and recognises all present costs of the project.
The projects are assessed on an ongoing basis, with
additional costs possibly being incurred during the
lifetime of the project.
The estimate includes expenses related to termination
of employees, onerous contracts, break fees and
other obligations arising in connection with
restructurings. Management reassesses the useful life
and residual value of non-current assets used in an
entity undergoing restructuring.
Special items include significant income and expenses
of a special nature in terms of the Group’s revenue-
generating activities that cannot be attributed directly
to the Group’s ordinary operating activities.
Special items also include significant non-recurring
items, including termination benefits related to
retirement of members of the Executive Committee,
impairment of goodwill and brands, significant
provisions in relation to certain disputes and lawsuits,
gains and losses on the disposal of activities and
associates, revaluation of the shareholding in an
entity held immediately before a step acquisition or
cease of consolidation of that entity, and transaction
costs in a business combination.
Significant restructuring of processes and structural
adjustments are included in special items.
Special items are shown separately from the Group’s
ordinary operations to facilitate a better
understanding of the Group’s financial performance.
Impact of special items on operating profit
DKK million
2021
2020
If special items had been recognised in operating profit before special items,
they would have been included in the following line items:
Cost of sales
Sales and distribution expenses
Administrative expenses
Other operating income
Other operating expenses
Special items, net
-1,016
-46
-229
1,397
-359
-253
-111
-305
-307
668
-192
-247
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
82
SECTION 3.2
PROVISIONS
Restructuring provisions relate to termination
benefits to employees made redundant,
primarily as a result of a restructuring project
accounted for as special items.
The restructuring provision in 2021 of DKK
178m primarily relates to Reset for the future,
which was initiated in 2020. Other
restructurings mainly related to Kronenbourg,
Carlsberg Deutschland, Carlsberg Sverige and
certain local supply companies.
ACCOUNTING ESTIMATES
AND JUDGEMENTS
In connection with restructurings, management
assesses the timing of the costs to be incurred, which
influences the classification as current or non-current
liabilities.
Provision for onerous contracts is based on agreed
terms with the other party and expected fulfilment of
the contract, based on the current estimate of
volumes, use of raw materials etc.
Management assesses provisions, contingent assets
and liabilities, and the likely outcome of pending or
probable lawsuits etc. on an ongoing basis. The
outcome depends on future events, which are by
nature uncertain. In assessing the likely outcome of
lawsuits and tax disputes etc., management relies on
external legal advice and established precedents.
Onerous contracts primarily related to contract
brewing in Asia and are expected to be utilised
by 2028.
ACCOUNTING
POLICIES
Other provisions of DKK 2,754m related to
ongoing disputes and lawsuits, profit sharing in
France, provisions made in connection with
purchase price allocations (PPA provisions) and
employee obligations other than retirement
benefits.
Timing of settlement of ongoing disputes,
lawsuits and PPA provisions cannot be
determined, whereas the remaining liabilities
are expected to be settled in one to two years.
Total provisions have been impacted by
reversal of provisions made in purchase price
allocations in previous years in Asia, as
described in section 3.1, and reversal of legal
provisions, real estate and other contractual
obligations that did not materialise, in total
DKK 1,912m.
Provisions, including profit-sharing provisions, are
recognised when, as a result of events arising before
or at the reporting date, the Group has a legal or a
constructive obligation and it is probable that there
may be an outflow of economic benefits to settle the
obligation.
Provisions are discounted if the effect is material to
the measurement of the liability. The risk-free
interest rate is used as the discount rate.
Restructuring costs are recognised when a detailed,
formal restructuring plan has been announced to
those affected no later than at the reporting date. On
acquisition of entities, restructuring provisions in the
acquiree are only included in the opening balance
when the acquiree has a restructuring liability at the
acquisition date.
A provision for onerous contracts is recognised when
the benefits expected to be derived by the Group from
a contract are lower than the unavoidable costs of
meeting its obligations under the contract.
ACCOUNTING
POLICIES
Other liabilities include excise duties (specific taxes
imposed on sales of beer and soft drinks), VAT,
withholding tax, accrued interest, payroll, e.g.
salaries, overtime, vacation and bonus.
Other liabilities (current) are initially recognised at fair
value and subsequently at amortised cost.
SECTION 3.3
OTHER LIABILITIES
DKK million
2021
2020
Classified as
Non-current liabilities
Current liabilities
Total
Other liabilities by origin
Staff costs payable
Excise duties and VAT
payable
Other payables
Deferred income
Contingent consideration
449
12,677
5,196
7,414
13,126
12,610
3,118
1,938
2,933
2,200
621
4,254
2,641
2,041
700
5,290
Total
13,126
12,610
For further description of contingent
consideration cf. section 5.4.
DKK million
Provisions at 1 January 2021
Acquisition of entities
Additional provisions recognised
Used during the year
Reversal of unused provisions
Transfers
Discounting
Foreign exchange adjustments etc.
Provisions at 31 December 2021
Classified as
Non-current provisions
Current provisions
Total
Restructurings
274
-
151
-188
-67
-
-
8
178
28
150
178
Onerous
contracts
476
-
1
-35
-
-24
4
34
456
428
28
456
Other
3,846
22
793
-371
Total
4,596
22
945
-594
-1,749
-1,816
-8
16
205
2,754
1,990
764
2,754
-32
20
247
3,388
2,446
942
3,388
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
83
SECTION 3.4
CONTINGENT
LIABILITIES
The Group operates in very competitive markets
where consolidation is taking place within the
industry and among its customers and suppliers,
all of which in different ways influences its
business.
In the ordinary course of business, the Group is
party to certain lawsuits, disputes etc. of varying
content and scope, some of which are referred
to below. The resolution of these lawsuits,
disputes etc. is associated with uncertainty, as
they depend on relevant applicable proceedings,
such as negotiations between the parties
affected, government actions and court rulings.
In 2020, the German Supreme Court overruled
the Higher Regional Court of Düsseldorf, which
in 2019 had ruled in favour of Carlsberg
Deutschland in relation to the competition case
from 2014, in which the Federal Cartel Office in
Germany issued a decision and imposed a fine of
EUR 62m for alleged infringement of the
competition rules in 2007. The German Supreme
Court referred the competition case back to a
new Senate for full new proceedings, which are
currently ongoing.
In October 2021, the French competition
authority issued a Statement of Objection
against a large number of FMCG companies,
including three entities in the Group –
Kronenbourg SAS, Carlsberg Breweries A/S
and Carlsberg A/S – for alleged participation in
an anti-competitive agreement not to advertise
the non-use of bisphenol A (BPA), Carlsberg
does not agree with the French competition
authority and is currently preparing its defence
in the case, which is to be submitted in the first
quarter of 2022.
In October and November 2021, the Group's
associate Super Bock in Portugal received
decisions on the alleged anticompetitive practice
in two ongoing cases. In the first case the
Portuguese court of appeal confirmed the fine of
EUR 24m issued by the competition authority
and in the second case the Portuguese
competition authority imposed a fine of EUR
33m on Super Bock. Both decisions have been
appealed to the Supreme Court by Super Bock.
Since the formal notification by the court in
March 2021 about a private enforcement claim
of EUR 400m, filed by a consumer protection
association against Super Bock Group, for
compensation for Portuguese consumers for
alleged harm on account of Super Bock’s alleged
anticompetitive practices, there has been no
significant development in the case.
In September 2021, Carlsberg India received the
final decision from the Competition Commission
of India in the case relating to the dawn raid
conducted in 2018. The decision stated that
Carlsberg India had engaged in price
coordination (partly facilitated through a trade
association), supply restrictions and market
sharing, in breach of India's competition law. As
a result of the infringement, the Competition
Commission of India imposed a fine of approx.
INR 1.21bn (approx. DKK 96m) on Carlsberg
India. It was decided not to appeal the decision
and the fine was paid in December.
For some time, the Group has had serious
disagreements with its partner in Carlsberg
South Asia Pte Ltd ("CSAPL"), the parent
company holding 100% and 90% of the shares in
the businesses in India and Nepal respectively.
Several of the disagreements pertaining to the
Shareholders’ Agreement between Carlsberg and
its partner, including the partner’s right to
exercise the put option, have been referred to
arbitration in Singapore. The arbitration award is
expected in H1 2022.
Disputes always carry some inherent risk. The
arbitration could have various outcomes,
including either party being awarded a call
option to buy out the other shareholder. If the
tribunal were to find that Carlsberg has
materially breached the Shareholders’
Agreement, although this is not expected, the
partner could become entitled to a call option to
acquire the Group’s 67% shareholding in CSAPL.
From the time that such a call option were to
become exercisable, the Group would, for
accounting purposes, be required to cease
consolidation of CSAPL, including Carlsberg
India, and derecognise the investment in Gorkha
Brewery, Nepal. If such a call option were to be
awarded but not exercised, the Group would
resume consolidation when the option lapsed.
Conversely, if the award is in favour of the
Group, it could result in the acquisition of the
33% shareholding in CSAPL held by the partner.
A party being awarded a call option that is
subsequently exercised could lead to that party
taking possession of 100% of the shares in
CSAPL, resulting in the other party no longer
being involved in the business of CSAPL.
In addition to the ongoing disputes with our
partner in CSAPL regarding India and Nepal,
there is also a dispute with the local 10%
shareholder in Gorkha Brewery, a related party
to the Group’s 33% partner in CSAPL. Please
refer to section 5.2.
Although no final rulings have been made in the
ongoing cases, there is still significant risk
associated with these cases due to the inherent
uncertainty.
Management and the general counsel
continuously assess these risks and their likely
outcome. It is the opinion of management and
the general counsel that, apart from items
recognised in the statement of financial position,
the outcome of these lawsuits, disputes etc.
cannot be reliably estimated in terms of amount
or timing. The Group does not expect the
ongoing lawsuits and disputes to have a material
impact on the Group’s financial position, net
profit or cash flow, in excess of items recognised
in the statement of financial position.
GUARANTEES AND COMMITMENTS
The Group has issued guarantees for loans etc.
raised by third parties (non-consolidated
entities) of DKK 224m (2020: DKK 304m). No
guarantees have been issued for loans raised by
associates and joint ventures. Certain guarantees
etc. are issued in connection with disposal of
entities and activities, and in connection with
on-trade loans. Apart from items recognised in
the statement of financial position or disclosed in
the consolidated financial statements, these
guarantees etc. will not have a material effect
on the Group’s financial position. Capital
commitments, lease liabilities and service
agreements are described in section 2.3.
SECTION 4
FINANCING COSTS, CAPITAL
STRUCTURE AND EQUITY
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
84
19.2bn
NET INTEREST-BEARING DEBT
(DKK)
At 31 December 2021, gross financial debt
amounted to DKK 28.9bn (2020: DKK 30.3bn).
Net interest-bearing debt was DKK 19.2bn, a
decrease of DKK 2.1bn versus year-end 2020.
The liquidity position remained strong due to
the free cash flow of DKK 8.9bn and access to
a EUR 2bn credit facility, which was unutilised
at 31 December 2021.
The leverage ratio, measured as net interest-
bearing debt to EBITDA, was 1.24x at year-
end (2020: 1.51x).
CHANGES IN NET INTEREST-BEARING DEBT (DKKbn)
21.3
-13.3
3.6
0.3
-0.8
19.2
3.7
3.7
0.7
3.6bn
SHARE BUY-BACK (DKK)
During 2021, the Company repurchased shares
worth DKK 3.6bn under the quarterly share
buy-back programmes initiated in 2021.
48.8bn
EQUITY (DKK)
Equity amounted to DKK 48.8bn at
31 December 2021 (2020: DKK 43.4bn),
DKK 43.9bn of which was attributable to
shareholders in Carlsberg A/S and DKK 4.8bn
to non-controlling interests.
The change in equity of DKK 5.4bn was mainly
the result of consolidated profit of DKK 8.0bn,
foreign exchange gains on translation of DKK
3.3bn, the dividend payout of DKK 3.7bn and
the share buy-back of DKK 3.6bn.
The non-controlling interests were impacted by
the acquisition of 60% of Marston’s brewing
activities in the UK, the simultaneous disposal
of 40% of the Group's subsidiaries in the UK,
and the deconsolidation of the Group’s
Nepalese business cf. section 5.3.
-381m
NET FINANCIAL ITEMS (DKK)
Financial items, net, amounted to DKK -381m
against DKK -411m in 2020. Excluding
currency gains and fair value adjustments,
financial items, net, amounted to DKK -319m
(2020: DKK -550m), positively impacted by
reversal of impairments of financial assets in
previous years, partly offset by interests on tax
cases in certain markets.
LEVERAGE RATIO (NIBD/EBITDA)
1.6
1.4
1.2
1.0
2017
2018
2019
2020
2021
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
85
SECTION 4.1
FINANCIAL INCOME
AND EXPENSES
Interest income primarily relates to interest on
cash and cash equivalents measured at
amortised cost.
Foreign exchange gains, net, include fair value
adjustments of hedges and foreign exchange
losses. The fair value adjustment of hedges
not designated as hedging instruments
amounted to DKK -23m (2020: DKK -49m),
cf. section 4.8.
Foreign exchange losses amounted to
DKK -39m (2020: DKK 188m).
FINANCIAL ITEMS, NET (DKKm)
Of the net change in fair value of cash flow
hedges transferred to the income statement,
DKK 216m (2020: DKK -30m) has been
included in revenue and cost of sales and
DKK 4m (2020: DKK -2m) in other financial
items.
Reversal of impairment of financial assets
includes DKK 328m relating to a loan made to
the partner in CSAPL. Please refer to section
5.4 for a more detailed description.
-1,000
-800
-600
-400
-200
0
Financial items, net
Financial items, net, excl. fair value and FX.
Financial items recognised in the income statement
DKK million
Financial income
Interest income
Foreign exchange gains, net
Interest on plan assets, defined benefit plans
Reversal of impairments of financial assets
Other
Total
Financial expenses
Interest expenses
Capitalised financial expenses
Foreign exchange losses, net
Interest cost on obligations, defined benefit plans
Interest expenses, lease liabilities
Other
Total
Financial items, net, recognised in the income statement
Financial items excluding foreign exchange, net
2021
2020
101
-
99
363
19
582
-500
4
-62
-138
-13
-254
-963
-381
-319
81
139
114
5
34
373
-484
1
-
-160
-12
-129
-784
-411
-550
Financial items recognised in other comprehensive income
DKK million
2021
2020
Foreign exchange adjustments of foreign entities
Foreign currency translation of foreign entities
Recycling of cumulative translation differences of entities
disposed of, deconsolidated or discontinued from use of equity-method
Total
Fair value adjustments of hedging instruments
Change in fair value of effective portion of cash flow hedges
Change in fair value of cash flow hedges transferred to the income statement
Change in fair value of net investment hedges
Total
Financial items, net, recognised in other comprehensive income
3,124
-7,640
183
3,307
361
-220
-464
-323
2,984
-
-7,640
103
32
63
198
-7,442
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
86
SECTION 4.2
NET INTEREST-
BEARING DEBT
SECTION 4.3
CAPITAL
STRUCTURE
Of the gross financial debt at year-end, 79%
(2020: 97%) was non-current, i.e. with
maturity of more than one year.
Gross financial debt amounted to DKK 28.9bn
at 31 December 2021 (2020: DKK 30.3bn).
Non-current borrowings totalled DKK 22.7bn
(2020: DKK 29.3bn) and current borrowings
totalled DKK 6.2bn (2020: DKK 1.0bn). The
decrease in non-current borrowings is mainly
due to a EUR 750m EMTN bond, which
matures in November 2022 and is thus
classified as current borrowings. The Group
continuously assesses the maturity of its debt.
The difference of DKK 9.8bn between gross
financial debt and net interest-bearing debt
mainly comprised cash and cash equivalents
and on-trade loans.
Net interest-bearing debt
DKK million
Non-current borrowings
Current borrowings
Gross financial debt
Cash and cash equivalents
Net financial debt
Loans to associates,
interest-bearing portion
On-trade loans, net
Other receivables, net
2021
22,755
6,167
28,922
-8,344
20,578
-238
-578
-600
2020
29,291
959
30,250
-8,093
22,157
-209
-618
-67
Net interest-bearing debt
19,162
21,263
4.3.1 CAPITAL STRUCTURE
Management regularly assesses whether the
Group’s capital structure is in the interests of
the Group and its shareholders.
The overall objective is to ensure a continued
development and strengthening of the Group’s
capital structure that supports long-term
profitable growth and a solid increase in key
earnings and ratios. This includes assessment
of and decisions on the split of financing
between share capital and borrowings, which is
a long-term strategic decision to be made in
connection with significant investments and
other transactions.
Carlsberg A/S’ share capital is divided into two
classes (A shares and B shares). Combined
with the Carlsberg Foundation’s position as
majority shareholder (in terms of control),
management considers that this structure will
remain advantageous for all of the
shareholders, enabling and supporting the
long-term development of the Group.
The Group targets a leverage ratio below 2.0x.
At the end of 2021, the leverage ratio was
1.24x (2020: 1.51x). The Group currently uses
share buy-back programmes to return excess
cash to shareholders.
The share buy-back programmes are initiated
based on a cautious evaluation of the Group’s
funding flexibility and credit resources
available. The size and duration of each
programme depend on the expected organic
and inorganic investments needed to grow the
business and the Group’s intention to maintain
a leverage ratio below 2.0x.
Share capital
Class A shares
Class B shares
Total share capital
Shares of
DKK 20
Nominal
value,
DKK ’000
Shares of
DKK 20
Nominal
value,
DKK ’000
Shares of
DKK 20
Nominal
value,
DKK ’000
1 January 2020
33,699,252
673,985
118,857,554
2,377,151
152,556,806
3,051,136
Cancellation of
treasury shares in
2020
-
-
-4,400,000
-88,000
-4,400,000
-88,000
31 December 2020
33,699,252
673,985
114,457,554
2,289,151
148,156,806
2,963,136
Cancellation of
treasury shares
-
-
-2,900,000
-58,000
-2,900,000
-58,000
31 December 2021
33,699,252
673,985
111,557,554
2,231,151
145,256,806
2,905,136
A shares carry 20 votes per DKK 20 share. B shares carry two votes per DKK 20 share. A preferential right to an 8%
non-cumulative dividend is attached to B shares. Apart from votes and dividends, all shares rank equally.
The Group generally intends to cancel treasury
shares that are not used for hedging of
incentive programmes.
The Group is rated by Moody’s Investors
Service and Fitch Ratings. Management
assesses the risk of changes in the Group’s
investment-grade rating as an element in
strategic decisions on capital structure.
Identification and monitoring of risks that could
change the rating were carried out on an
ongoing basis throughout the year.
4.3.2 SHARE CAPITAL
At the Annual General Meeting on 15 March
2021, it was decided to reduce the share
capital of Carlsberg A/S by a nominal amount
of DKK 58,000,000 to a nominal amount of
DKK 2,905,136,120 by cancelling 2,900,000
of the B shares held by the Company, each
with a nominal value of DKK 20. The
cancellation was completed on 13 April 2021.
These shares had been repurchased as part of
the Company’s share buy-back programme.
At the Annual General Meeting on 14 March
2022, the Supervisory Board will recommend
that 3.4m treasury shares not used for the
hedging of the incentive programme be
cancelled.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
87
SECTION 4.3 (CONTINUED)
CAPITAL STRUCTURE
4.3.3 EQUITY
DIVIDENDS
The Group proposes a dividend of DKK 24.00
per share (2020: DKK 22.00 per share),
amounting to DKK 3,486m (2020: DKK
3,259m). The proposed dividend has
been included in retained earnings at 31
December 2021.
Dividends to be paid out in 2022 for 2021, net
of dividends on treasury shares held at 31
December 2021, will amount to DKK 3,405m
(paid out in 2021 for 2020: DKK 3,192m).
Dividends to non-controlling interests of DKK
51m were declared and reported as payable at
31 December 2020 and paid, in addition to
dividends of DKK 499m declared in 2021.
SHARE BUY-BACK AND TREASURY SHARES
On 5 February 2021, the Company announced
its intention to continue the share buy-back
programme. The 2021 programme has been
executed as quarterly programmes, and
3,355,625 B shares worth DKK 3.6bn have
been repurchased in 2021. Ending with the
fourth quarterly programme, which was
finalised on 28 January 2022, the Company
has repurchased a total of 3,715,779 B shares
at a total purchase price of DKK 4.0bn over a
12-month period.
According to the authorisation of the Annual
General Meeting, the Supervisory Board may,
in the period until 13 March 2023, allow the
Company to acquire treasury shares up to a
total holding of 10% of the nominal share
capital at a price quoted on Nasdaq
Copenhagen at the time of acquisition with a
deviation of up to 10%. The permitted holding
of treasury shares covers those acquired in
share buy-back programmes. The Company
holds no class A shares.
Transactions with shareholders
in Carlsberg A/S
DKK million
Dividends paid to
shareholders
Share buy-back
Total
2021
2020
-3,187
-3,600
-6,787
-3,093
-2,900
-5,993
Transactions with non-controlling interests
DKK million
Dividends paid to NCI
Consideration paid for
acquisition of NCI
Total
2021
-550
-
-550
2020
-796
-81
-877
ACCOUNTING
POLICIES
Proposed dividends
The proposed dividend is recognised as a liability at
the date when it is adopted at the Annual General
Meeting (declaration date).
Treasury shares
Cost of acquisition, consideration received and
treasury share dividends received are recognised
directly in equity as retained earnings. Capital
reductions from the cancellation of treasury shares
are deducted from the share capital at an amount
corresponding to the nominal value of the shares and
added to retained earnings.
Proceeds from the sale of treasury shares in
connection with the settlement of share-based
payments are recognised directly in equity.
EQUITY (DKKbn)
3.3
- 3.7
8.0
0.6
- 3.6
43.4
0.9
- 0.1
48.8
Treasury shares
Fair value,
DKKm
Shares of
DKK 20
Nominal
value, DKKm
Percentage of
share capital
1 January 2020
Acquisition of treasury shares
Cancellation of treasury shares
Used to settle share-based payments
31 December 2020
Acquisition of treasury shares
Cancellation of treasury shares
Used to settle share-based payments
4,532
4,560,395
3,290,522
-4,400,000
-395,742
2,979
3,055,175
3,355,625
-2,900,000
-146,282
31 December 2021
3,800
3,364,518
91.2
65.8
-88.0
-7.9
61.1
67.1
-58.0
-2.9
67.3
3.0%
2.4%
-3.0%
-0.3%
2.1%
2.3%
-2.0%
-0.1%
2.3%
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
88
statement, unless they are designated as cash
flow hedges.
SECTION 4.3 (CONTINUED)
CAPITAL STRUCTURE
4.3.4 OTHER COMPREHENSIVE INCOME
Other comprehensive income has mainly been
impacted by a positive foreign exchange
adjustment from the appreciation of RUB
and CNY.
4.3.5 FINANCIAL RISK MANAGEMENT
The Group’s activities mean it is exposed to a
variety of financial risks, including market risk
(foreign exchange risk, interest rate risk and
commodity risk), credit risk and liquidity risk.
These risks are described in the following
sections:
• Foreign exchange risk: sections 1.3 and 4.6
• Interest rate risk: section 4.5
• Commodity risk: section 1.2.1
• Credit risk: sections 1.5.1 and 4.4.2
• Funding and liquidity risk: section 4.7
The Group’s financial risks are managed by
Group Treasury in accordance with the
Financial Risk Management Policy approved by
the Supervisory Board as an integrated part of
the overall risk management process. The risk
management governance structure is described
in the Management review (pages 34-36).
To reduce exposure to these risks, the Group
enters into a variety of financial instruments
and generally seeks to apply hedge accounting
to reduce volatility in the income statement.
Debt instruments and deposits in foreign
currency reduce the overall risk but will not as
a general rule achieve the objective of reducing
volatility in specific items in the income
Other comprehensive income as recognised in the statement of changes in equity
DKK million
2021
Foreign exchange adjustments of foreign entities
Value adjustments of hedging instruments
Retirement benefit obligations
Share of other comprehensive income in
associates and joint ventures
Income tax
Total
2020
Foreign exchange adjustments of foreign entities
Value adjustments of hedging instruments
Retirement benefit obligations
Share of other comprehensive income in
associates and joint ventures
Income tax
Total
Currency
translation
3,253
-464
-
-
102
2,891
-7,330
63
-
-
-18
-7,285
Hedging
reserves
-
134
-
-
-18
116
-
132
-
-
-20
112
Retained
earnings
-
-
580
10
-5
585
-
-
-1
-4
-9
Non-
controlling
interests
Other
comprehensive
income
54
7
-2
-
24
83
3,307
-323
578
10
103
3,675
Total
3,253
-330
580
10
79
3,592
-7,330
-310
-7,640
195
-1
-4
-47
3
2
-
-17
-322
198
1
-4
-64
-7,509
-14
-7,187
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
89
SECTION 4.4
BORROWINGS
AND CASH
4.4.1 BORROWINGS
Non-current funding decreased by DKK
6.5bn, primarily due to a EUR 750m EMTN
bond, which matures in November 2022 and
is thus classified as current (2020: non-
current) and repayment of non-current bank
borrowing.
Gross financial debt
Changes in gross financial debt
DKK million
Gross financial debt at 1 January
Proceeds from issue of bonds
Instalments on and proceeds from borrowings, non-current
Instalments on and proceeds from borrowings, current
Instalments on lease liabilities
Other
External financing
Change in bank overdrafts
Increase in lease liabilities, net
Other, including foreign exchange adjustments and amortisation
2021
30,250
-
-1,001
-216
-405
11
-1,611
-135
275
143
2020
24,991
7,402
1,155
-3,264
-414
181
5,060
62
190
-53
Gross financial debt at 31 December
28,922
30,250
DKK million
2021
2020
ACCOUNTING
POLICIES
Non-current
Issued bonds
Bank borrowings
Lease liabilities
Other borrowings
Total
Current
Issued bonds
Bank borrowings
Lease liabilities
Other borrowings
Total
Total borrowings
Fair value
21,452
27,002
78
1,012
213
922
1,080
287
22,755
29,291
Borrowings
Borrowings are initially recognised at fair value less
transaction costs and subsequently measured at
amortised cost using the effective interest method.
Accordingly, the difference between the fair value less
transaction costs and the nominal value is recognised
under financial expenses over the term of the loan.
5,573
116
375
103
6,167
-
472
398
89
959
28,922
30,250
29,575
31,732
Lease liability
The lease liability is measured at the present value of
the remaining lease payments at the reporting date,
discounted using the incremental borrowing rate for
similar assets, taking into account the terms of the
leases. A remeasurement of the lease liability, for
example a change in the assessment of an option to
purchase, results in a corresponding adjustment of
the related right-of-use assets, cf. section 2.3.
An overview of issued bonds is provided in section 4.5.
Extension or termination options are included in the
lease term if the lease is reasonably certain to be
extended or not terminated. Consequently, all cash
outflows that are reasonably certain to impact the
future cash balances are recognised as lease liabilities
at initial recognition of lease contracts. The Group
reassesses the circumstances leading to it not
recognising extension or termination options on an
ongoing basis.
4.4.2 CASH
Cash and cash equivalents include short-term
marketable securities with a term of three
months or less at the acquisition date that are
subject to an insignificant risk of changes in
value. Short-term bank deposits amounted to
DKK 735m at 31 December 2021 (2020: DKK
353m). The average interest rate on these
deposits was 3.3% (2020: 2.7%).
Total cash at bank amounted to DKK 8,344m
in 2021 (2020: DKK 8,093m).
Cash and cash equivalents
DKK million
Cash and cash equivalents
Bank overdrafts
Cash and cash equivalents,
net
2021
8,344
-
2020
8,093
-135
8,344
7,958
ASSESSMENT OF CREDIT RISK
The Group is exposed to credit risk on cash and
cash equivalents (including fixed deposits),
investments and derivative financial
instruments with a positive fair value due to
uncertainty as to whether the counterparty will
be able to meet its contractual obligations as
they fall due.
The Group has established a credit policy under
which financial transactions may be entered
into only with financial institutions with a solid
credit rating, defined as BBB. Carlsberg only
enters into derivatives with relationship banks,
and the associated credit risk is mitigated to
some extent by entering into ISDA agreements,
partly because it is the same group of banks
extending loans to the Group.
Group Treasury manages and monitors the
Group’s gross credit exposure to banks and
operates with individual limits on banks, based
on rating and access to netting of assets and
liabilities. For some of the markets in which the
Group operates and holds cash, the financial
institutions do not have a BBB rating, in which
case an exemption is approved by Group
Treasury.
EXPOSURE TO CREDIT RISK
The carrying amount of DKK 8,344m (2020:
DKK 8,093m) represents the maximum credit
exposure related to cash and cash equivalents.
The credit risk on receivables is described in
section 1.5.1.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
90
SECTION 4.5
INTEREST RATE RISK
The Group’s exposure to interest rate risk is
considered limited. At the reporting date, 106%
of the net financial debt consisted of fixed-rate
borrowings with interest rates fixed for more
than one year (2020: 127%), and on a gross
basis 75% was at fixed interest rates (2020:
93%). As 123% of the Group’s net debt is in
EUR, and EUR accounts for the predominant
part of the fixed-rate borrowing, the interest
rate exposure primarily relates to the
development in the interest rates for EUR.
to have a duration between three and eight
years. At 31 December 2021, the duration was
4.8 years (2020: 5.6 years). Interest rate risk is
mainly managed using fixed-rate bonds.
SENSITIVITY ANALYSIS
It is estimated that a 1 percentage-point
interest rate increase would lead to a decrease
in interest expenses of DKK 11m (2020: DKK
60m). The impact relates to a relatively high
percentage of the gross debt being at fixed
interest rates and the high portion of cash. The
analysis assumes a parallel shift in the relevant
yield curves.
The interest rate risk is measured by the
duration of the net financial debt. The target is
If the market interest rate had been
1 percentage point higher at the reporting date,
it would have led to a financial gain of DKK
997m (2020: DKK 1,242m), and a similar loss
had the interest rate been 1 percentage point
lower. However, since all fixed-rate borrowings
are measured at amortised cost, there is no
impact on other comprehensive income or the
income statement.
The sensitivity analysis is based on the financial
instruments recognised at the reporting date.
The sensitivity analysis assumes a parallel shift
in interest rates and that all other variables
remain constant, in particular foreign exchange
rates and interest rate differentials between the
different currencies. The analysis was
performed on the same basis as for 2020. The
Group did not enter into any new interest rate
swaps in 2021 or 2020.
Net financial debt by currency
DKK million
2021
EUR
CNY
USD
Other
Total
2020
EUR
CNY
USD
Other
Total
Gross
financial debt
Net
financial debt
27,598
35
413
876
28,922
25,227
-2,777
42
-1,914
20,578
27,731
864
495
24,298
-1,058
119
1,160
-1,202
Fixed
21,515
-
194
9
21,718
27,084
826
268
-
30,250
22,157
28,178
Interest rate risk
DKK million
Gross
financial debt,
fixed %
Net financial
debt, fixed %1
2021
Issued bonds
EUR 750m maturing 15 November 2022
EUR 500m maturing 6 September 2023
EUR 1,000m maturing 28 May 2024
EUR 500m maturing 30 June 2027
EUR 400m maturing 1 July 2029
EUR 500m maturing 11 March 2030
Total issued bonds
Total issued bonds 2020
78%
0%
47%
1%
75%
98%
96%
54%
0%
93%
85%
0%
462%
0%
106%
111%
-78%
225%
-
127%
¹The percentage of net debt at fixed interests are above 100% in some currencies, as the total cash exceeds the
current debt. In some currencies the percentage of net debt at fixed interests is negative, as the total cash exceeds
the total debt.
Average
effective
interest
rate
Interest
rate
Fixed for
Carrying
amount
Interest
rate risk
Fixed
Fixed
Fixed
Fixed
Fixed
Fixed
2.7%
0.7%
2.6%
0.5%
1.0%
0.7%
1.6%
1.6%
< 1 year
1-2 years
5,573
3,708
Fair value
Fair value
2-3 years
7,411
Fair value
> 5 years
> 5 years
> 5 years
Fair value
Fair value
Fair value
3,694
2,945
3,694
27,025
27,002
Bank borrowings and other borrowings
Floating-rate
Fixed-rate
Total bank borrowings and other borrowings
Total bank borrowings and other borrowings 2020
Floating
Fixed
1.1%
0.9%
< 1 year
> 1 year
1,628
Cash flow
269
Fair value
1,897
3,248
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
91
SECTION 4.6
FOREIGN EXCHANGE
RISK RELATED TO
NET INVESTMENTS
AND FINANCING
ACTIVITIES
4.6.1 CURRENCY PROFILE OF
BORROWINGS
The Group is exposed to foreign exchange risk
on borrowings denominated in a currency other
than the functional currency of the local
entities reporting the debt, as well as the risk
that arises when net cash inflow is generated in
one currency and loans are denominated and
have to be repaid in another currency.
4.6.2 HEDGING OF NET INVESTMENTS
IN FOREIGN SUBSIDIARIES
The Group holds a number of investments in
foreign subsidiaries where the translation of net
assets to DKK is exposed to foreign exchange
risks. The Group hedges part of this foreign
exchange exposure by entering into forward
exchange contracts (FX forwards and NDF) and
designates these as net investment hedges.
This mainly applies to net investments in CHF,
CNY, MYR and NOK. The basis for hedging is
reviewed at least once a year, and the two
parameters, risk reduction and cost, are
balanced. In economic terms, having debt in
foreign currency or creating synthetic debt via
forward exchange contracts constitutes
hedging of the DKK value of future cash flows
arising from operating activities or specific
transactions.
The most significant net risk relates to foreign
exchange adjustment of net investments in
RUB. This is because of the size of the net
investments in RUB combined with the
currency’s high volatility.
Where the fair value adjustments of forward
exchange contracts do not exceed the fair
value adjustments of the investment, the
adjustments of the financial instruments are
recognised in other comprehensive income. All
forward exchange contracts mature during
2022. At 31 December 2021, all adjustments
of financial instruments have been recognised
in other comprehensive income. Fair value
adjustments of loans designated as strategic
intra-group loans have also been recognised in
other comprehensive income.
The fair value of derivatives used as
net investment hedges recognised at
31 December 2021 amounted to DKK -232m
(2020: DKK 84m). The closing balance in the
equity reserve for currency translation of
hedges of net investments amounted to
DKK -1,885m (2020: DKK -1,611m). Positive
fair values of derivatives are recognised as
other receivables and negative values as other
liabilities.
Currency profile of borrowings
Before and after derivative financial instruments
Net investment hedges
4.6.3 EXCHANGE RATE RISK ON CASH
AND BORROWINGS
The main principle for funding of subsidiaries is
that cash and borrowings should be
denominated in local currency or hedged to
local currency to avoid foreign exchange risk.
However, in some Group entities, net debt is
denominated in a currency other than the
functional currency of the local entity without
the foreign exchange risk being hedged. This
applies primarily to a few entities in Central &
Eastern Europe that hold cash and loans in
EUR and USD and in this way obtain proxy
hedging of the foreign exchange risk associated
with the purchase of goods in foreign currency
in these markets.
DKK million
2021
CHF
NOK
EUR
USD
CNY
Other
Total
Total 2020
Original
principal
Effect
of swap
After
swap
116
181
1,347
589
27,598
-6,285
413
35
579
28,922
30,250
1,541
1,921
887
-
-
1,463
770
21,313
1,954
1,956
1,466
28,922
30,250
CNY
MYR
HKD
CHF
NOK
SEK
Other
Total
Hedging of investment,
amount in local currency
Intra-group loans,
amount in local currency
Other comprehensive
income (DKK)
Average hedged rate
Fair value of derivatives
Fair value of derivatives
2021
2020
DKK million
2021
2020
2021
2020
2020
Asset
Liability
Asset
Liability
-2,407
-2,407
-292
-
-
-
-
-292
-
-263
-1,300
-
-175
-
-1,079
-1,077
-305
-1,300
-
3,000
-
3,000
-
2,717
3,773
-135
67
47
2021
-323
-28
-64
-80
62
-42
11
-464
2020
-29
24
53
6
2021
0.9611
1.5022
-
0.9176
1.5145
-
6.8305
6.9925
-105
0.7269
0.6874
86
28
63
-
-
-
-
-
-
-
-
-
-
4
4
-109
-15
-
-93
-19
-
-
56
8
-
40
-
-
-
-236
104
-
-
-
-
-19
-
-1
-20
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
92
SECTION 4.6 (CONTINUED)
FOREIGN EXCHANGE
RISK RELATED TO
NET INVESTMENTS
AND FINANCING
ACTIVITIES
4.6.4 IMPACT ON FINANCIAL
STATEMENTS AND SENSITIVITY
ANALYSIS
IMPACT ON INCOME STATEMENT
For the impact of currency on operating profit
and financial items, please refer to sections 1.3
and 4.1 respectively.
IMPACT ON STATEMENT
OF FINANCIAL POSITION
Fluctuations in foreign exchange rates will
affect the level of debt, as funding is obtained
in a number of currencies. In 2021, net
interest-bearing debt decreased by DKK 368m
(2020: increased by DKK 297m) due to
changes in foreign exchange rates.
SENSITIVITY ANALYSIS
An adverse development in the exchange rates
would, all other things being unchanged, have
had the hypothetical impact on the income
statement and other comprehensive income
(OCI) for 2021 illustrated in the tables. The
calculations have been made based on items
in the statement of financial position at
31 December 2021.
Income statement
The hypothetical impact ignores the fact that
the subsidiaries’ initial recognition of revenue,
cost and debt would be similarly exposed to
the exchange rate developments.
Other comprehensive income
Other comprehensive income is affected by
changes in the fair value of currency derivatives
designated as cash flow hedges of future
purchases.
Exchange rate sensitivity - other comprehensive income
2021
DKK million
NOK/DKK
SEK/DKK
PLN/DKK
CHF/DKK
RUB/DKK
USD/DKK
Other
Total
Average
hedged rate
Notional
amount
Change
Effect
on OCI
Average
hedged rate
0.7189
0.7284
1.6039
6.9171
0.0822
6.3627
N/A
-773
-603
-521
-449
-1,278
661
-240
5%
5%
5%
5%
10%
5%
5%
-39
-30
-26
-22
-128
33
-12
-224
0.6913
0.7078
1.6649
6.9217
0.0854
5.9934
N/A
Exchange rate sensitivity - income statement
2021
DKK million
EUR/GBP
EUR/NOK
EUR/RUB
EUR/CHF
EUR/UAH
Total
2021
USD/LAK
USD/KZT
USD/UAH
Total
EUR
receivable
550
172
9
140
-
USD
receivable
13
-
-
EUR
payable
-485
-769
-106
-222
-88
USD
payable
-98
-3
-1
EUR
cash
-934
318
68
232
218
USD
cash
150
101
89
Gross
exposure
Exposure,
net of hedging
-870
-278
-28
150
131
-870
-278
-28
150
131
Gross
exposure
Exposure,
net of hedging
65
98
89
65
98
89
Change
5%
5%
10%
5%
10%
Change
10%
10%
10%
Effect
on P/L
-43
-14
-3
7
13
-40
Effect
on P/L
6
10
9
25
2020
Effect
on OCI
-33
-33
-25
-23
-14
2
-15
-141
2020
Effect
on P/L
-14
-8
21
10
7
16
2020
Effect
on P/L
5
14
9
28
SECTION 4.6 (CONTINUED)
FOREIGN EXCHANGE
RISK RELATED TO
NET INVESTMENTS
AND FINANCING
ACTIVITIES
APPLIED EXCHANGE RATES
The average exchange rate was calculated
using the monthly exchange rates weighted
according to the phasing of the revenue per
currency throughout the year.
SECTION 4.7
FUNDING AND
LIQUIDITY RISK
Liquidity risk results from the Group’s potential
inability to meet the obligations associated
with its financial liabilities, for example
settlement of financial debt and paying
suppliers.
The Group's overall objective is to ensure
continuous access, at the right price, to the
financial resources needed for operations and
growth.
The aim is to ensure effective liquidity
management, which involves obtaining
sufficient committed credit facilities to ensure
adequate financial resources and, to some
extent, tapping a range of funding sources.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
93
DIVERSIFIED FUNDING SOURCES
The Group is diversifying its access to funding
to avoid relying on one single source of
funding.
The Group still has access to a committed EUR
2bn revolving credit facility (RCF) maturing in
2026 that is currently not being utilised. In
addition, the Group has committed cash pool
bank overdraft facilities to cover the day-to-
day liquidity needs and uncommitted access to
the Euro Commercial Paper (ECP) market,
which provides short-term funding.
FUNDING STRATEGY AND REACTION
TO COVID-19
Since March 2020 and the first COVID-19
lockdowns in Western Europe, the Group has
maintained an increased focus on liquidity and
a special effort has been made to improve cash
flow forecasting, including introducing frequent
short-term cash flow updates.
CREDIT RESOURCES AVAILABLE
The Group uses the term “credit resources
available” to determine the adequacy of access
to credit facilities.
At 31 December 2021, bonds accounted for
93% of the gross funding.
The credit resources available include cash and
unutilised credit facilities with more than 12
Committed credit facilities and credit resources available
DKK million
2021
Current
< 1 year
2020
Non-current
6.9656
1-2 years
0.9452
2-3 years
7.4539
3-4 years
8.3838
4-5 years
0.0007
> 5 years
Total
committed
loans and
credit
facilities
Utilised
portion of
credit
facilities
Unutilised
credit
facilities
2020
Unutilised
credit
facilities
7,316
7,316
6,167
6,167
1,149
1,149
1,186
1,186
4,198
7,599
82
14,936
10,814
4,198
7,599
82
62
-
-
-
-
-
-
14,874
14,879
10,814
-
-
Closing rate
Average rate
Total current committed loans and credit facilities
Applied exchange rates
DKK
Swiss franc (CHF)
Chinese yuan (CNY)
Euro (EUR)
Pound sterling (GBP)
Laotian kip (LAK)
Norwegian krone (NOK)
Polish zloty (PLN)
Russian rouble (RUB)
Swedish krona (SEK)
Ukrainian hryvnia (UAH)
2021
7.1760
1.0296
7.4365
8.8604
0.0006
0.7459
1.6180
0.0894
0.7260
0.2416
2020
6.8521
0.9284
7.4393
8.2378
0.0007
0.7053
1.6327
0.0820
0.7397
0.2142
2021
6.8777
0.9700
7.4369
8.6837
0.0006
0.7323
1.6310
0.0855
0.7330
0.2311
0.6958
1.6770
0.0915
0.7120
0.2438
Total non-current committed loans and credit facilities
37,629
22,755
14,874
14,879
Cash and cash equivalents
Current portion of utilised credit facilities
-
-
Credit resources available (total non-current
committed loans and credit facilities less net debt)
8,344
-6,167
8,093
-959
17,051
22,013
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
94
SECTION 4.7 (CONTINUED)
FUNDING AND
LIQUIDITY RISK
Credit resources available decreased by DKK
5.0bn compared with 2020, primarily due to
the EUR 750m EMTN bond maturing in
November 2022.
payments and excluding the impact of netting
agreements, and thus summarises the gross
liquidity risk.
The interest expense is the contractual cash
flows expected on the gross financial debt
existing at 31 December 2021.
months to maturity less utilised credit facilities
with less than 12 months to maturity and
uncommitted working capital facilities.
Net financial debt is used internally to monitor
the Group’s credit resources available. Net
financial debt is the Group’s net interest-
bearing debt, excluding interest-bearing assets
other than cash, as these assets are not
actively managed in relation to liquidity risk.
Net financial debt is shown in section 4.2.
At 31 December 2021, the Group had total
credit resources available of DKK 17,051m,
consisting of cash and cash equivalents of DKK
8,344m plus committed unutilised non-current
credit facilities of DKK 14,874m less utilisation
of current facilities of DKK 6,167m. Including
current credit facilities of DKK 1,149m, total
committed unutilised credit facilities amounted
to DKK 16,023m.
The credit resources available and the access to
unused committed credit facilities are
considered reasonable in light of the Group’s
current needs in terms of financial flexibility.
The Group uses cash pools for day-to-day
liquidity management in most of its entities in
Western Europe, as well as intra-group loans
to subsidiaries. Central & Eastern Europe and
Asia are less integrated in terms of cash pools,
and liquidity is managed via intra-group loans.
For some markets in Asia, intra-group loans
are not possible, and surplus liquidity will be
paid out in the form of dividends, which results
in a time lag between when the cash flow is
generated and when it becomes available for
repayment of Group debts. The most
significant cash balances related to this delay
are in China.
The risk implied by the values reflects the one-
sided scenario of cash outflows only. Trade
payables and other financial liabilities originate
from the financing of assets in ongoing
operations, such as property, plant and
equipment, and investments in working capital,
for example inventories and trade receivables.
The nominal amount/contractual cash flow of
gross financial debt totalled DKK 29,098m
(2020: DKK 30,426m), whereas the total
carrying amount was DKK 28,922m (2020:
DKK 30,250m). The difference between these
amounts arises at initial recognition and is
treated as a cost that is capitalised and
amortised over the duration of the borrowings.
The cash flow is estimated based on the
notional amount of the above-mentioned
borrowings and expected interest rates at
year-end 2021 and 2020. Interest on debt
recognised at year-end 2021 and 2020 for
which no contractual obligation exists (current
borrowing and cash pools) has been included
for a two-year period. The synthetic interest
on lease liabilities has also been included for a
two-year period. The interest applied to the
part of the debt where no contractual
obligation exists is 1.5% (2020: 2.5%). The
decrease is due to the lower CNY-denominated
borrowings at the end of the year and the
interest on these borrowings being higher than
the borrowings at the end of 2021.
Maturity of financial liabilities
DKK million
The table lists the contractual maturities of
financial liabilities, including estimated interest
2021
Contractual
cash flows
Maturity
< 1 year
Maturity
> 1 year
< 5 years
Maturity
> 5 years
Carrying
amount
Time to maturity for non-current borrowings
Derivative financial instruments
Derivative financial instruments, payables
428
428
-
-
315
DKK million
2021
Issued bonds
Bank borrowings
Lease liabilities
Other non-current borrowings
Total
Total 2020
1-2 years
2-3 years
3-4 years
4-5 years
> 5 years
Total
Non-derivative financial instruments
Gross financial debt
Interest expenses
3,708
7,411
68
322
100
4,198
6,730
4
87
97
7,599
3,959
-
5
76
1
82
-
1
60
1
62
10,333
21,452
Trade payables and other liabilities
-
467
14
78
1,012
213
Contingent liabilities
Contingent considerations
10,814
22,755
Financial liabilities
7,701
75
10,826
29,291
Financial liabilities 2020
12,013
10,903
28,922
29,098
1,134
6,182
424
22,146
22,146
224
4,254
224
3,818
562
-
-
436
148
-
-
-
57,284
33,222
13,011
11,051
55,690
19,881
24,682
11,127
N/A
22,146
224
4,254
-
-
-
Non-derivative financial instruments
56,856
32,794
13,011
11,051
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
95
SECTION 4.8
DERIVATIVE
FINANCIAL
INSTRUMENTS
The Group enters into various derivative
financial instruments to hedge foreign
exchange and commodity risks, cf. sections 1.2
and 1.3, and seeks to apply hedge accounting
when this is possible. Hedging of future, highly
probable forecast transactions is designated as
cash flow hedges.
The Group monitors the cash flow hedge
relationships twice a year to assess whether
the hedge is still effective.
Positive fair values of derivatives are recognised
as other receivables and negative values as
other payables.
As of 31 December 2021, the hedging reserve
within equity included DKK 843m in relation to
cash flow hedges for which hedge accounting is
no longer applied.
Fair value adjustments of derivative financial
instruments that are not designated either as
net investment hedges or as cash flow hedges
are recognised in financial income and
expenses.
The impact on other comprehensive income
and the fair value of derivatives classified as
cash flow hedges is presented in the cash flow
hedge table.
The impact on other comprehensive income
from other instruments relates to hedges of
Group entities’ exposure to changes in
aluminium prices.
The impact on other comprehensive income
from exchange rate instruments relates to
hedges of Group entities’ purchases and sales
in currencies other than their functional
currencies.
ACCOUNTING ESTIMATES
AND JUDGEMENTS
When entering into financial instruments,
management assesses whether the instrument is an
effective hedge of recognised assets and liabilities,
expected future cash flows or financial investments.
The effectiveness of recognised hedging instruments
is assessed at least twice a year.
Fair values of derivative financial instruments are
calculated on the basis of level 2 input consisting of
current market data and generally accepted valuation
methods. Internally calculated values are used, and
these are compared with external market quotes on a
quarterly basis. For currency and aluminium
derivatives, the calculation is as follows:
a) The forward market rate is compared with the
agreed rate on the derivatives, and the difference
in cash flow at the future point in time is
calculated.
b) The amounts are discounted to present value.
When entering into a contract, management assesses
whether the contract contains embedded derivatives
and whether they meet the criteria for separate
classification and recognition. The Group currently
does not have any embedded derivatives that meet
the criteria for separate classification and recognition.
Cash flow hedges
DKK million
2021
Exchange rate instruments
Other instruments
Total
2020
Exchange rate instruments
Other instruments
Total
Other
comprehen
sive income
-20
161
141
Other
comprehen
sive income
51
84
135
Fair value
receivables
Fair value
payables
Fair value,
net
13
240
253
-47
-
-47
-34
240
206
Expected
recognition
2022
-34
240
206
DKK million
2021
Exchange rate instruments
Ineffectiveness
Total
Fair value
receivables
Fair value
payables
Fair value,
net
2021
2020
13
60
73
-21
-
-21
-8
60
52
-8
60
Exchange rate instruments
Ineffectiveness
52
Total
Financial derivatives not designated as hedging instruments (economic hedges)
Income
statement
Fair value
receivables
Fair value
payables
Fair value,
net
-27
4
-23
-47
-2
-49
86
-
86
-
-
-
-32
-
-32
-78
-
-78
54
-
54
-78
-
-78
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
96
Derivatives designated as and qualifying for
recognition as a cash flow hedge of financial
investments are recognised in other comprehensive
income. On complete or partial disposal of the
financial investment, the portion of the hedging
instrument that is recognised in other comprehensive
income and relates to that financial investment is
recognised in the income statement when the gain or
loss on disposal is recognised.
Hedges of net investments in foreign subsidiaries,
associates and joint ventures are accounted for in the
same way as cash flow hedges.
SECTION 4.8 (CONTINUED)
DERIVATIVE
FINANCIAL
INSTRUMENTS
ACCOUNTING
POLICIES
Derivative financial instruments are initially
recognised at fair value on the trade date and
subsequently remeasured at their fair value at the
reporting date.
The accounting for subsequent changes in fair value
depends on whether the derivative is designated as
one of:
• Fair value hedges of the fair value of recognised
assets or liabilities
• Cash flow hedges of particular risks associated with
the cash flow from forecast transactions
• Net investment hedges of currency fluctuations in
subsidiaries, associates or joint ventures.
The fair values of derivative financial instruments are
presented in other receivables or payables, and
positive and negative values are offset only when the
Group has the right and the intention to settle several
financial instruments net.
Changes in the fair value of a fair value hedge and of
derivative financial instruments not designated in a
hedge relationship are recognised in financial income
or expenses in the income statement.
Changes in the effective portion of the fair value of
derivative financial instruments that are designated
and qualify as a cash flow hedge are recognised in
the hedging reserve within equity. When the hedged
transaction materialises, amounts previously
recognised in other comprehensive income are
transferred to the same item as the hedged item.
SECTION 5
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
97
ACQUISITIONS, DISPOSALS,
ASSOCIATES AND JOINT VENTURES
Wernes-
grüner
Acquired the German brewer Wernesgrüner
and expanded the production network
needed for the German business.
Marston’s
brewing
activities
Successfully integrated Carlsberg UK and
Marston’s brewing activities.
Gorkha
Brewery
Ceased consolidation in connection with
dispute with local partner, which is
currently unlawfully blocking the Group’s
exercise of its rights in Nepal.
SECTION 5.1
INVESTMENT MODEL
AND RISKS
brand owners usually provide recipes and/or
raw materials, while the Group has the
necessary production capabilities and
distribution platform.
MARKET ACCESS
In the beer industry, access to local markets is
highly dependent on establishing good
relationships with customers in the on- and
off-trade channels, national distributors, local
suppliers and relevant authorities governing the
beverage industry. Often, the most efficient
way of establishing such relations is by
acquiring a local brewer or engaging with a
local partner that already has the relevant
relationships.
INVESTMENT MODEL
Entering into a partnership can reduce the
financial exposure and mitigate the business
risks associated with entering new markets or
expanding the activities in an existing market.
The financial exposure, however, varies
depending on the structure of the partnership.
Business and financial success, and the related
risks, depend on the ability of the Group and
the local partner to forge a strong and aligned
cooperation.
When the Group expands its business to new
geographies, it often therefore does so in
collaboration with a local partner. Such a
partnership can take different legal forms and
impacts the consolidated financial statements
accordingly.
In some markets, the Group enters as a non-
controlling shareholder, providing a degree of
financing and contributing knowledge of the
beer industry. The Group thus leaves control
with the partner and recognises the investment
as an associate.
In addition to its activities in the beer industry,
the Group operates in the soft drinks industry,
an industry dominated by large global brand
owners. The Group is engaged in long-term
contractual partnerships to produce, distribute
and sell third-party soft drink brands. In
addition to granting the right to produce, the
Other investments are structured as joint
ventures, where the Group and the local
partner jointly make the operational decisions
and share strategic and tactical responsibility.
More commonly, the Group structures its
partnerships such that it exercises management
control, usually by way of majority of the
voting rights. These investments are fully
consolidated subsidiaries, which are just as
important as other types of partnership for
success in the local markets, but mean that the
Group has increased financial exposure.
Investments in businesses in which the Group
exercises management control often involve
put and/or call options or a similar structure.
IMPACT ON FINANCIAL STATEMENTS
Investments in associates and joint ventures are
consolidated in the financial statements using
the equity method. The accounting risks
associated with these entities are limited to
the investment made, the proportionate share
of the net profit and any specific additional
commitments to banks or other parties, as well
as specific guarantees or loans the Group
provides to the partnership.
In businesses where the Group exercises
management control, the consolidated
financials are impacted by full exposure to the
earnings and other financial risks. From an
accounting point of view, the Group treats any
put options held by partners in such entities as
if they had already been exercised by the
partner, i.e. anticipating that the acquisition will
occur. The accounting impact is that the non-
controlling interests are not recognised, and no
SECTION 5.1 (CONTINUED)
INVESTMENT MODEL
AND RISKS
negative impact on the underlying business and
the financial performance recognised in the
consolidated financial statements.
The Group is involved in many partnerships,
one being the 67% shareholding in Carlsberg
South Asia Pte Ltd. ("CSAPL"), Singapore,
which is the parent company of the Group’s
activities in India (100%) and Nepal (90%). The
company is jointly owned with a partner (33%).
According to the Shareholders’ Agreement, the
partner has a put option to sell its shares to
Carlsberg, in the put option window, which is
open until late 2023, although the Group
disputes the partners’ right to exercise the put
option. For the purpose of the consolidated
financial statements, the put option is
accounted for as if it had already been
exercised. CSAPL and its investments in India
and Nepal are therefore included in the
consolidated financial statements, with no
profits or equity attributed to the non-
controlling shareholder. Please refer to section
5.4 for a further description of the dispute with
the partner in CSAPL.
Partnerships in the soft drinks industry are
based on long-term contractual agreements,
and they come to an end when the contract
terminates. The termination of a significant
partnership with a global soft drink brand
owner would have a negative impact on the
Group’s financial performance.
part of net profits or equity is attributed to
them. Instead, the dividends received by the
partner from the business are classified as
financial expenses for the purpose of
accounting.
Common to all partnerships is the risk of
disagreement and, ultimately, dissolution.
Disagreements with partners on the operational
management and strategic directions of
partnerships may limit our ability to manage
the growth and risk profile of our business. The
Group continuously seeks to promote a fair and
mutually beneficial development of the
partnerships, which is crucial to be successful.
However, in certain partnerships the partners’
pursuit of goals and priorities that are different
from those of the Group might result in
disagreements, affecting operational and
financial performance. Different goals and
priorities of this kind can become more
pronounced in the period when a partner has
the right to exit the partnership.
A dissolution will initially impact the accounting
treatment of an investment. The accounting
treatment will depend on whether the Group or
its partner is exiting the business. In the long
term, however, the impact can be significant to
the operation of the local entity and the
collaboration with customers, distributors,
authorities etc. if the partner was instrumental
in managing these relationships. The risk of a
partnership dissolution may therefore have a
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
98
SECTION 5.2
ACQUISITIONS AND
DISPOSALS
ACQUISITION OF ENTITIES
Wernesgrüner Brewery
In January 2021, Carlsberg acquired 100% of
the German Wernesgrüner Brewery for a cash
consideration of DKK 511m.
The purpose of the acquisition was to
strengthen the Group’s presence in the beer
market in eastern Germany and to provide
additional brewing capacity for the existing
Carlsberg business in northern Germany. The
calculated goodwill represents staff
competences and synergies from expected
optimisations of supply chain and procurement,
the increase in market share and access to new
customers.
The purchase price allocation of the fair value
of identified assets, liabilities and contingent
liabilities was completed in 2021, resulting in
recognition of goodwill of DKK 267m.
DKK million
Consideration paid
Fair value of contingent consideration
Fair value of non-controlling shareholding in Carlsberg UK transferred to the seller
Foreign exchange translation difference
Total cost of acquisition
Acquired assets and liabilities
Goodwill
Brands and other intangibles assets
Property, plant and equipment
Inventories
Trade and other receivables
Assets held for sale
Cash and cash equivalents
Borrowings and lease liabilities
Provisions and retirement benefit obligations
Deferred tax liabilities
Trade payables
Other payables
Acquired assets and liabilities
Non-controlling interests
Acquired assets and liabilities attributable to shareholders in Carlsberg A/S
Wernesgrüner
Brewery
Marston's
brewing activities
511
1,868
-
-
-
511
267
123
193
21
16
-
14
-1
-17
-61
-15
-29
511
-
511
61
588
12
2,529
1,760
514
881
228
478
96
-
-212
-17
-111
-302
-273
3,042
-513
2,529
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
99
SECTION 5.2 (CONTINUED)
ACQUISITIONS
AND DISPOSALS
Marston’s brewing activities
In October 2020, Carlsberg UK and Marston’s
PLC injected their respective brewing activities
into a jointly owned company, Carlsberg
Marston’s Brewing Company Limited, with
Carlsberg as the controlling shareholder with a
60% shareholding.
The jointly owned company was formed to
strengthen the Group’s presence in the
important UK market through a stronger beer
portfolio. The calculated goodwill represents
staff competences and synergies from expected
optimisations of sales and distribution, supply
chain and procurement, possible product
innovations, the increase in market share and
access to new customers.
The total cost of the acquisition comprised the
cash consideration paid, a contingent
consideration and the fair value of the 40% of
Carlsberg UK businesses that were effectively
transferred to Marston’s PLC when the
Carlsberg entities were injected into the jointly
owned company. In 2021, net payments of
contingent consideration and settlement of
purchase price adjustments amounted to DKK
204m.
The purchase price allocation of the fair value
of identified assets, liabilities and contingent
liabilities was completed in 2021, resulting in
recognition of goodwill of DKK 1,760m. The
comparative figures have not been restated.
Other
In 2021, the Group completed a minor
acquisition of DKK 14m.
ACQUISITION OF BRAND RIGHTS
In 2020, the Group acquired the Brooklyn
brand rights in its markets for a purchase price
of DKK 804m. The brand rights are recognised
as an intangible asset.
DECONSOLIDATION OF ENTITIES
The local shareholder owning 10% of the shares
in Gorkha Brewery, Nepal, is a related party to
the Group’s 33% partner in CSAPL. In addition
to the ongoing disputes with our partner in
CSAPL regarding India and Nepal, there is also
a dispute with the local 10% shareholder in
Gorkha Brewery. Contrary to the Group’s legal
and contractual rights, the Group’s influence on
the business operations in Nepal is currently
being restricted through actions that hamper its
right of decision-making and insight into the
business. We are contesting these actions in
Nepal through the local courts and anticipate
that the operations and management of the
Nepalese business will eventually be
normalised in line with the Group’s legal and
contractual rights, cf. Section 3.4.
However, until its rights as majority
shareholder are re-established, the Group has
decided to cease full consolidation of the
Nepalese business. The assets, liabilities and
non-controlling interests of the company were
derecognised with effect from the end of 2021.
The investment was remeasured at fair value
and recognised as the cost of an investment in
an associate. The remeasurement to fair value
less cumulative foreign exchange differences
reclassified from equity to the income
statement amounted to DKK 38m and was
recognised in special items. The derecognition
did not have a material impact on the
consolidated statement of financial position.
CASH FLOW
Cash flow to acquire or dispose of
shareholdings in associates and when gaining
control of subsidiaries is included in financial
investments, while the cash flow on acquisition
of an additional shareholding in a subsidiary,
i.e. acquiring non-controlling interests, is
presented in financing activities.
Elements of cash consideration paid
and received
DKK million
Consideration paid for
acquisition of entities
Prepayment for acquisition
of entities not completed at
the reporting date
Consideration received for
disposal of entities
Cash and cash equivalents
acquired/disposed of
Acquisition and disposal of
entities, net
Consideration paid for
acquisition of associates
Consideration received for
disposal of associates
Acquisition and disposal of
associates, net
Consideration paid for
acquisition of non-
controlling interests
2021
2020
-228
-1,908
-
-501
21
-428
-
-
-635
-2,409
-52
-
-
8
-52
8
-
-81
Cash flow from acquisition of
shareholdings, total
-687
-2,482
ACCOUNTING ESTIMATES
AND JUDGEMENTS
Assessment of control
The classification of entities where Carlsberg controls
less than 100% of the voting rights is based on an
assessment of the contractual and operational
relationship between the parties. This includes
assessing the conditions in shareholder agreements,
contracts etc. Consideration is also given to the extent
to which each party can govern the financial and
operating policies of the entity, how the operation of
the entity is designed, and which party possesses the
relevant knowledge and competences to operate the
entity.
Another factor relevant to this assessment is the
extent to which each of the parties can direct the
activities and affect the returns, for example by
means of rights, reserved matters or casting votes.
Purchase price allocation procedures
For acquisitions of entities, the assets, liabilities and
contingent liabilities of the acquiree are recognised
using the acquisition method. The most significant
assets acquired generally comprise goodwill, brands,
property, plant and equipment, receivables and
inventories.
No active market exists for the majority of the
acquired assets and liabilities, in particular in respect
of acquired intangible assets. Accordingly,
management makes estimates of the fair value of
acquired assets, liabilities and contingent liabilities.
Depending on the nature of the item, the determined
fair value of an item may be associated with
uncertainty and possibly adjusted subsequently.
The unallocated purchase price (positive amount) is
recognised in the statement of financial position as
goodwill and allocated to the Group’s cash-
generating units.
Brands
The value of the brands acquired and their expected
useful life are assessed based on the individual
brand’s market position, expected long-term
developments in the relevant markets and
profitability.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
100
SECTION 5.2 (CONTINUED)
ACQUISITIONS
AND DISPOSALS
The estimated value includes all future cash flows
associated with the brand, including the related value
of customer relations etc.
Management determines the useful life based on the
brand’s relative local, regional and global market
strength, market share, and the current and planned
marketing efforts that are helping to maintain and
increase its value. When the value of a well-
established brand is expected to be maintained for an
indefinite period in the relevant markets, and these
markets are expected to be profitable for a long
period, the useful life of the brand is determined to be
indefinite.
Brands are measured using the relief from royalty
method, under which the expected future cash flows
are based on key assumptions about expected useful
life, royalty rate, growth rate and the theoretical tax
effect. A post-tax discount rate is used that reflects
the risk-free interest rate with the addition of a risk
premium associated with the particular brand. The
model and assumptions applied are consistent with
those used in impairment testing, and are described in
further detail in section 2.2.3.
Customer agreements and portfolios
The value of acquired customer agreements and
customer portfolios is assessed based on the local
market and trading conditions. For most entities,
there is a close relationship between brands and
sales. Consumer demand for beer and other
beverages drives sales, and therefore the value of a
brand is closely linked to consumer demand, while
there is no separate value attached to customers
(shops, bars etc.), as their choice of products is driven
by consumer demand. The relationship between
brands and customers is carefully considered so that
brands and customer agreements are not both
recognised on the basis of the same underlying
cash flows.
Property, plant and equipment
The fair value of land and buildings, and standard
production and office equipment is based, as far as
possible, on the fair value of assets of similar type
and condition that may be bought and sold in the
open market.
Wernesgrüner Brewery
Brands
The value of brands was estimated using the Group’s
principles described above. A brand with a fair value
of DKK 113m was recognised and classified as an
intangible asset with an indefinite useful life.
Property, plant and equipment for which there is no
reliable evidence of the fair value in the market (in
particular breweries, including production equipment)
are valued using the depreciated replacement
method.
This method is based on the replacement cost of a
similar asset with similar functionality and capacity.
The calculated replacement cost is then reduced to
reflect functional and physical obsolescence. The
expected synergies and the user-specific intentions
for the expected use of assets are not included in the
determination of the fair value.
Completed purchase price allocations
Management believes that the purchase prices for
Wernesgrüner Brewery and Marston’s brewing
activities, which are accounted for in the consolidated
financial statements, reflect the best estimate of the
total fair value of these businesses and the
proportionate value of identified assets, liabilities and
contingent liabilities of the non-controlling interests,
and accordingly the allocation of goodwill to
controlling interests, but not to non-controlling
interests.
The purchase price allocations of the identified assets,
liabilities and contingent liabilities were completed
within 12 months of the acquisitions. The main
revaluation adjustments related to the value of
brands, property, plant and equipment, and deferred
tax liabilities, which mainly related to brands.
Goodwill
Goodwill was allocated to the Western Europe CGU in
line with the allocation of the Group’s existing
German and UK business. The goodwill is not
deductible for tax purposes.
Property, plant and equipment
The fair value and expected useful life of the brewery
equipment and related buildings of the acquired
brewery were determined with assistance from
external engineering experts in the brewery industry
and resulted in a positive revaluation adjustment of
DKK 53m.
Financial impact of acquisition
Revenue and net profit included in the consolidated
financial statements since the acquisition at
1 January 2021 were DKK 156m and DKK 7m
respectively.
Marston’s brewing activities
Brands
The value of the brands was estimated using the
Group’s principles described above. Brands with a fair
value of DKK 514m were recognised and classified as
intangible assets with an indefinite useful life.
Property, plant and equipment
The fair value and expected useful life of the brewery
equipment and related buildings of the six acquired
breweries were determined with assistance from
external engineering experts in the brewery industry
and resulted in a negative revaluation adjustment of
DKK 209m. Draught equipment located with the on-
trade customers was as per contractual agreement to
be resold to a third-party service provider after the
acquisition, and the equipment was therefore
transferred to assets held for sale at the expected
sales price, resulting in a negative revaluation
adjustment of DKK 128m.
Trade loans and receivables
The fair value of the trade loans and receivables was
estimated in line with the Group’s principles for
assessment of credit risk and recognition of
impairment losses to reflect the amount that is
expected to be collected. The valuation took into
consideration losses in the on-trade segment due to
the restrictions and lockdowns during the pandemic.
Financial impact of acquisition
The impact on revenue and net profit for 2020 from
the acquisition in late October 2020 was not material.
The impact on the financials had it been consolidated
on 1 January 2020 is impracticable to obtain as the
acquired activities were not previously a separate
reporting entity.
ACCOUNTING
POLICIES
Acquisitions
The acquisition date is the date when the Group
effectively obtains control of an acquired subsidiary
or significant influence over an associate or a joint
venture.
The cost of a business combination comprises the fair
value of the consideration agreed upon, including the
fair value of any consideration contingent on future
events.
Goodwill and fair value adjustments in connection
with the acquisition of an entity are treated as assets
and liabilities belonging to the foreign entity and
translated into the foreign entity’s functional currency
at the exchange rate at the transaction date.
The acquired entities’ identifiable assets, liabilities and
contingent liabilities are measured at fair value at the
acquisition date.
Identifiable intangible assets are recognised if they
are separable or arise from a contractual right.
Deferred tax on revaluations is recognised.
The identifiable assets, liabilities and contingent
liabilities on initial recognition at the acquisition date
are subsequently adjusted up until 12 months after
the acquisition. The effect of the adjustments is
recognised in the opening balance of equity, and the
comparative figures are restated accordingly if the
amount is material.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
101
SECTION 5.2 (CONTINUED)
ACQUISITIONS
AND DISPOSALS
SECTION 5.3
NON-CONTROLLING
INTERESTS
Changes in estimates of contingent purchase
considerations are recognised in the income
statement under special items, unless they qualify for
recognition directly in equity.
Disposals and loss of control
Gains or losses on the disposal or liquidation of
subsidiaries, associates and joint ventures are
recognised as the difference between any sales price
and the carrying amount of net assets (including
goodwill) at the date of disposal or liquidation,
foreign exchange adjustments recognised in other
comprehensive income, and costs to sell or liquidation
expenses.
The shareholding retained after the loss of control of
subsidiaries is remeasured at fair value and accounted
for as the fair value on initial recognition of a
financial asset or the cost of an investment in an
associate or joint venture. Gains or losses on the loss
of control of subsidiaries are recognised as the
difference between the fair value of the retained
shareholding and the carrying amount of the
derecognised net assets (including goodwill) at the
date of loss of control and foreign exchange
adjustments recognised in other comprehensive
income.
DECONSOLIDATION OF GORKHA BREWERY
In 2021, the Group decided to cease full
consolidation of Gorkha Brewery, Nepal. The
assets, liabilities and non-controlling interests of
the company were derecognised with effect
from the end of 2021. The non-controlling
interests’ share of the net assets amounted to
DKK -101m.
MATERIAL ASSET RESTRUCTURING IN CHINA
In December 2020, Carlsberg and Chongqing
Brewery Co. completed an asset restructuring
and contributed their respective controlled
Chinese assets to Carlsberg Chongqing
Breweries Company.
Carlsberg Chongqing Breweries Company is
jointly owned by Chongqing Brewery Co. (51%)
and the Carlsberg Group (49%). The ownership
remains unchanged following the completion of
the restructuring, and the Group’s ownership of
the listed company Chongqing Brewery Co. is
also unchanged at 60%. The Group thereby
holds 79% of Carlsberg Chongqing Breweries
Company.
At completion, the Group’s ownership of the
assets it injected (previously 70-100% owned)
thereby declined to 56-79%, while the Group’s
ownership of the assets injected by Chongqing
Brewery Co. increased from 60% to 79%.
Effectively, the transactions thereby exchange
shareholdings of the injected entities between
the Group and the non-controlling shareholders
in Chongqing Brewery Co. The transaction was
accounted for as a transaction with non-
controlling interests and resulted in a net
increase in equity for non-controlling interests
and a corresponding decrease for shareholders
in Carlsberg A/S of DKK 553m.
MARSTON’S BREWING ACTIVITIES
In October 2020, Carlsberg UK and Marston’s
PLC injected their respective brewing activities
into a jointly owned company named Carlsberg
Marston’s Brewing Company Limited. The
transaction is further described in section 5.2.
Transactions with non-controlling interests
DKK million
2021
Change in ownership of non-controlling interests
Fair value adjustments of contingent consideration
Recognised in equity
Deconsolidation of Gorkha Brewery Ltd.
Disposal of 40% of Carlsberg UK to Marston's Group
Purchase price allocation adjustments allocated to the non-
controlling interest in Marston's brewing activities
Acquisition and deconsolidation of entities
2020
Change in ownership from asset restructuring in China
Transaction cost related to asset restructuring in China
Fair value adjustments of contingent consideration and other
transactions with non-controlling interests
Recognised in equity
Disposal of 40% of Carlsberg UK to Marston's
Non-controlling interest in Marston's brewing activities retained
by Marston's
Acquisition of entities
Carlsberg is the controlling shareholder in the
joint venture with a shareholding of 60%, having
transferred 40% of its businesses in the UK.
The fair value of the transferred shareholding is
part of the total consideration paid for the
brewing activities injected by Marston’s PLC. At
completion, the transferred shareholding
impacted the allocation of equity between
shareholders in Carlsberg A/S and non-
controlling interests by DKK 827m.
Changes in equity
Shareholders in
Carlsberg A/S
Non-controlling
interests
Total equity
16
941
957
-
-57
-
-57
-553
-51
3,748
3,144
-182
-
-182
-16
-
-16
-101
97
34
30
553
-26
87
614
730
479
1,209
-
941
941
-101
40
34
-27
-
-77
3,835
3,758
548
479
1,027
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
102
SECTION 5.4
CONTINGENT
CONSIDERATIONS
The carrying amount of contingent
considerations is determined in accordance with
the terms and conditions agreed with the
holders of the options.
capital obtained from an external provider
specialising in business valuations. The
recognised liability is measured as the average
of two valuations.
Contingent considerations relate to options
held by non-controlling interests in subsidiaries
to sell their shares to the Group and to deferred
payments in the acquisition of entities
contingent on market conditions.
At the end of the reporting period, the
contingent considerations primarily related to
put options on the shares in CSAPL, the parent
company holding 100% and 90% of the shares
in the businesses in India and Nepal
respectively, in Brewery Alivaria, Belarus, and
in minor craft breweries in Western and Central
& Eastern Europe.
In accordance with the Group’s accounting
policy, shares subject to put options are
consolidated as if the shares had already been
acquired. The ownership percentage at which
these subsidiaries are consolidated therefore
differs from the legal ownership interest
retained by the Group. Both the legal and the
consolidated ownership are stated in section
10.
Of the contingent considerations, DKK 0.4bn
(2020: DKK 5.2bn) is expected to fall due after
more than 12 months.
PUT OPTION FOR SHARES IN CARLSBERG
SOUTH ASIA PTE LTD (CSAPL)
To prepare the Group’s best estimate of the fair
value of the put option on the partner-owned
33% shareholding in CSAPL, a discounted cash
flow model with a 10-year forecast period is
applied with cash flows beyond the 10-year
period extrapolated using a terminal period
growth rate. The terminal growth rate is equal
to the future inflation forecasted by IMF with
the addition of a spread allowing for future
growth in excess of inflation. The cash flows
are estimated as the cash flows available to
the shareholders in the parent company after
deduction of withholding taxes on dividends
and royalties. The forecasted cash flows
consider current market conditions and
expectations of the future development of the
beer markets in India and Nepal, investment
requirements etc. The cash flows are
discounted by a weighted average cost of
Contingent considerations
DKK million
Contingent considerations at 1 January
Additions
Payments
Fair value adjustments
Contingent considerations at 31 December
2021
5,290
16
-247
-805
4,254
2020
9,023
61
-1
-3,793
5,290
Assumptions
Discount rate
Terminal period growth rate
Compound annual growth
rate in earnings after tax
India
11.4%
5.0%
Nepal
16.0%
6.4%
15.2%
12.2%
The fair value of the put option decreased by
DKK 1.0bn in 2021 due to the impact of
COVID-19 on the Indian and Nepalese
businesses, such as declining sales due to
lockdowns and other restrictions, the increasing
cost of raw and packaging materials, and
increasing interest rates. The magnitude of the
decline is dependent on the extent of
government actions and support, and the
expected time to return to pre-pandemic
market conditions and earnings.
Although the Group disputes the partner’s right
to exercise the put option, it is accounted for in
accordance with the Shareholders’ Agreement
until an arbitration award potentially results in
a change in accounting treatment. The put
option is therefore accounted for as if it were
exercisable at 31 December 2021 at the
discretion of the partner and has been
reclassified from non-current to current
liabilities. The put option window is open until
late 2023. Please refer to section 3.4 for a
further description of the dispute with the
partner.
The Group previously called in a loan made to
the partner in CSAPL, the loan having become
due and payable in full. In January 2022, the
Singapore court of appeal finally confirmed
that the loan with interest is repayable by the
partner to Carlsberg in full, totalling DKK
328m.
PAYMENT OF CONTINGENT CONSIDERATIONS
In 2021, the deferred contingent consideration
for the acquisition of Marston’s brewing
activities was settled in cash with Marston’s
PLC at DKK 247m. The fair value adjustments
since initial recognition were recognised in
special items, DKK 129m (2020: DKK 50m).
ACCOUNTING ESTIMATES
AND JUDGEMENTS
The fair value of contingent considerations linked to
put options is calculated on the basis of level 3 input
consisting of non-observable data, such as entity-
specific discount rates and industry-specific
expectations of price developments, and generally
accepted valuation methods, including discounted
cash flows and multiples.
Estimates are based on updated information since
initial recognition of the contingent consideration,
including new budgets and sales forecasts, discount
rates etc. The assumptions applied are in line with
those used in the impairment tests as described in
section 2.2 but reflecting the different models and
valuation techniques required. The fair values of other
contingent considerations are measured at the
expected future price of selected shares.
SECTION 5.4 (CONTINUED
CONTINGENT
CONSIDERATIONS
SECTION 5.5
ASSOCIATES AND
JOINT VENTURES
ACCOUNTING
POLICIES
On acquisition of non-controlling interests, i.e.
subsequent to the Group obtaining control, acquired
net assets are not measured at fair value. The
difference between the cost and the non-controlling
interests’ share of the total carrying amount, including
goodwill, is transferred from the non-controlling
interests’ share of equity to equity attributable to
shareholders in Carlsberg A/S. The amount deducted
cannot exceed the non-controlling interests’ share of
equity immediately before the transaction.
On disposal of shareholdings to non-controlling
interests, the difference between the sales price and
the share of the total carrying amount, including
goodwill acquired by the non-controlling interests, is
transferred from equity attributable to shareholders in
Carlsberg A/S to the non-controlling interests’ share
of equity.
Fair value adjustments of put options granted to non-
controlling interests are recognised directly in the
statement of changes in equity.
Other contingent considerations (earn-outs), which
are not linked to a future transfer of additional
shareholdings, are measured in accordance with the
terms of the contract with the seller. The revaluation
of such contingent considerations is recognised in
special items.
Investments in associates and joint ventures
include the businesses in Portugal (60%) and
Myanmar (58%), Gorkha Brewery (90%),
Carlsberg Byen in Denmark (25%) and four
associates in China (50%). The total investment
in these associates amounted to DKK 3,407m
at 31 December 2021 (2020: DKK 2,589m).
The Group’s ownership of Super Bock,
Portugal, is 60%. Nevertheless, Super Bock
remains an associate of the Group due to the
ownership structure. Please refer to section 10
for further details.
In 2021, disputes with the local non-controlling
shareholder prevented the Group from
exercising its rights as a controlling shareholder
in Gorkha Brewery, Nepal. The Group decided
to cease full consolidation of the company
from 31 December 2021 and it was therefore
reclassified as an associate and recognised at
fair value, DKK 1,188m, cf. section 5.2.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
103
ACCOUNTING
POLICIES
Investments in associates and joint ventures are
recognised according to the equity method, which
entails measurement at cost and adjustment for the
Group’s share of the profit or loss and other
comprehensive income of the associate after the date
of acquisition. The share of the result must be
calculated in accordance with the Group’s accounting
policies. The proportionate share of unrealised intra-
group profits and losses is eliminated. Investments in
associates and joint ventures with negative net asset
values are measured at DKK 0.
If the Group has a legal or constructive obligation to
cover a deficit in the associate or joint venture, the
deficit is recognised under provisions. Any amounts
owed by associates and joint ventures are written
down to the extent that the amount owed is deemed
irrecoverable.
financial investments. The disputes resulted in
significant disturbances to the operation of the
company, which negatively impacted the
financial performance. The investment was
therefore written down to its recoverable
amount, cf. section 2.2.
For associates in which the Group holds an
ownership interest of less than 20%, the Group
participates in the management of the
company and is therefore exercising significant
influence.
None of the associates and joint ventures are
material to the Group.
Fair value of investment in listed associates
DKK million
The Lion Brewery
Ceylon, Sri Lanka
2021
355
2020
382
Key figures for associates and joint ventures
Despite the legal 58% ownership share in
Myanmar Carlsberg, the entity is classified as
an associate due to the structure of the
agreement with the partner and the
environment in the country.
In 2021, disputes with the partner regarding
the management of Tibet Lhasa Brewery
meant that the Group lost its significant
influence in the company. The investment was
therefore reclassified from associates to other
DKK million
2021
Associates
Joint ventures
Total
2020
Associates
Joint ventures
Total
Carlsberg Group share
Profit
after tax
Other
comprehensive
income
Total
comprehensive
income
Investments in
associates and
joint ventures
336
-
336
315
-
315
10
-
10
-4
-
-4
346
-
346
311
-
311
5,173
-1
5,172
4,191
-3
4,188
SECTION 6
TAX
21.7%
TAX RATE
Tax rate is down from 24.7% in 2020,
mainly as a result of special items.
SECTION 6.1
INCOME TAX
The nominal weighted tax rate for the Group is
calculated as domestic tax rates applicable to
profits in the entities as a proportion of each
entity’s share of the Group’s profit before tax.
The Group’s total tax cost was DKK 51m
(2020: DKK 354m) higher than the Group’s
nominal weighted tax expense. The nominal
weighted tax expense was negatively impacted
by withholding taxes (particularly on
dividends), non-deductible expenses
(particularly marketing expenses and
intercompany charges) and positively impacted
by the non-taxable and non-deductible
transactions in special items, resulting in an
effective tax rate of 21.7% (2020: 24.7%).
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
104
ACCOUNTING
POLICIES
Income tax comprises current tax and changes in
deferred tax for the year, including changes as a
result of a change in the tax rate. The tax expense
relating to the profit/loss for the year is recognised
in the income statement, while the tax expense
relating to items recognised in other comprehensive
income is recognised in the statement of
comprehensive income.
If the Group obtains a tax deduction on computation
of the taxable income in Denmark or in foreign
jurisdictions as a result of share-based payment
programmes, the tax effect of the programmes is
recognised in tax on profit/loss for the year.
However, if the total tax deduction exceeds the total
expense, the tax benefit of the excess deduction is
recognised directly in equity.
Reconciliation of the effective tax rate for the year
Nominal weighted tax rate
Change in tax rate
Adjustments to tax for prior years
Non-capitalised tax assets and liabilities
The positive impact from special items
comprised primarily non-taxable reversal of
provisions made in prior years. Excluding
special items and tax hereon the effective tax
rate would be 23.5% (2020: 25.7%).
Non-taxable income
Non-deductible expenses
Tax incentives etc.
Special items
Withholding taxes
It is not possible to deduct all interest and fair
value adjustments arising in Denmark due to
thin capitalisation rules. Therefore, tax on such
adjustments fluctuates from year to year.
Other, including tax in associates and
joint ventures
Effective tax rate for the year
Effective tax rate for the year, excluding the
effect of non-taxable and non-deductible
transactions in special items
2021
%
DKK million
21.2
2,168
-0.1
-0.3
0.5
-0.7
3.4
-0.1
-2.4
1.3
-14
-34
55
-75
344
-13
-239
132
-1.1
21.7
-105
2,219
%
20.8
0.1
0.4
1.5
-0.7
1.6
-0.5
-
1.9
-0.4
24.7
2020
DKK million
1,879
9
40
138
-59
148
-45
-3
167
-41
2,233
23.5
-
25.7
-
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
105
SECTION 6.1 (CONTINUED)
INCOME TAX
Income tax expenses
DKK million
Income
statement
Other
comprehensive
income
Total
comprehensive
income
Income
statement
Other
comprehensive
income
Total
comprehensive
income
2021
2020
Tax for the year can be specified as follows
Current tax
Change in deferred tax and non-current tax payables during the year
Change in deferred tax as a result of change in tax rate
Adjustments to tax for prior years
Total
2,418
-151
-14
-34
2,219
-83
-20
-
-
-103
2,335
-171
-14
-34
2,116
2,024
160
9
40
2,233
22
42
-
-
64
2,046
202
9
40
2,297
SECTION 6.2
TAX ASSETS AND
LIABILITIES
Of the total deferred tax assets recognised,
DKK 43m (2020: DKK 201m) related to tax
loss carryforwards, the utilisation of which
depends on future positive taxable income
exceeding the realised deferred tax liabilities.
It is management’s opinion that these tax loss
carryforwards can be utilised.
Tax assets not recognised of DKK 1,373m
(2020: DKK 936m) primarily relates to tax
losses that are not expected to be utilised in
the foreseeable future. Of these, tax losses that
will not expire amounted to DKK 1,042m
(2020: DKK 581m). The remaining tax losses
of DKK 331m (2020: DKK 355m) will expire
within five years.
Tax recognised in other comprehensive income
DKK million
Foreign exchange adjustments
Hedging instruments
Retirement benefit obligations
Share of other comprehensive income in associates and joint ventures
Recognised
item
before tax
-3,307
323
-578
-10
Tax
income/
expense
-
-83
-20
-
2021
After tax
-3,307
240
-598
-10
Total
-3,572
-103
-3,675
7,445
Recognised
item
before tax
Tax
income/
expense
7,640
-198
-1
4
-
22
42
-
64
2020
After tax
7,640
-176
41
4
7,509
Deferred tax of DKK 39m (2020: DKK 41m)
was recognised in respect of the tax of 5%
payable on planned dividends from certain
entities in Central & Eastern Europe.
Planned distribution of reserves for other
subsidiaries will not trigger a significant tax
liability based on current tax legislation.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
106
SECTION 6.2 (CONTINUED)
TAX ASSETS AND
LIABILITIES
Changes in deferred tax and non-current tax
payables for the year amounted to DKK 151m
(2020: DKK 160m).
Non-current tax liabilities recognised in the
statement of financial position
DKK million
Deferred tax liabilities
Non-current tax payables
Non-current tax liabilities
at 31 December
2021
6,350
-
2020
4,779
1,486
6,350
6,265
ACCOUNTING ESTIMATES
AND JUDGEMENTS
The Group recognises deferred tax assets, including
the expected tax value of tax loss carryforwards, if
management assesses they can be offset against
positive taxable income in the foreseeable future. This
judgement is made annually and based on budgets
and business plans for the coming years, including
planned commercial initiatives.
Carlsberg operates in a large number of tax
jurisdictions where tax legislation is highly complex
and subject to interpretation. Management makes
judgements on uncertain tax positions to ensure
recognition and measurement of tax assets and
liabilities.
ACCOUNTING
POLICIES
Current tax payable and receivable are recognised in
the statement of financial position as tax computed
on the taxable income for the year, adjusted for tax
on the taxable income of prior years and for tax paid
on account respectively.
Deferred tax on all temporary differences between
the carrying amount and the tax base of assets and
liabilities is measured using the balance sheet liability
method. However, deferred tax is not recognised on
temporary differences relating to goodwill that is not
deductible for tax purposes or on office premises and
other items where temporary differences, apart from
business combinations, arise at the acquisition date
without affecting either profit/loss for the year or
taxable income.
deferred tax liabilities in the same legal tax entity and
jurisdiction.
Deferred tax assets and tax liabilities are offset if the
entity has a legally enforceable right to offset current
tax liabilities and tax assets or intends either to settle
current tax liabilities and tax assets or to realise the
assets and settle the liabilities simultaneously.
Deferred tax assets are recognised only to the extent
that it is probable that the assets will be utilised.
Where alternative tax rules can be applied to
determine the tax base, deferred tax is measured
based on the planned use of the asset or settlement
of the liability. Deferred tax is recognised on expected
dividend payments from subsidiaries, associates and
joint ventures in countries levying withholding tax on
distributions.
Deferred tax assets related to tax loss carryforwards
are recognised under other non-current assets at the
expected value of their utilisation, either as a set-off
against tax on future income or as a set-off against
Deferred tax is measured according to the tax rules at
the reporting date and at the tax rates applicable
when the deferred tax is expected to materialise as
current tax.
The change in deferred tax as a result of changes in
tax rates is recognised in the income statement.
Changes to deferred tax on items recognised in
other comprehensive income are, however,
recognised in other comprehensive income.
Changes to non-current tax assets and liabilities
DKK million
Tax assets and liabilities at 1 January, net
Adjustments to prior years
Acquisition of entities
Recognised in other comprehensive income
Recognised in the income statement, net
Change in tax rate
Foreign exchange adjustments
Tax assets and liabilities at 31 December, net
Recognised as follows
Tax liabilities
Tax assets
Tax assets and liabilities at 31 December, net
Provisions and retirement benefit obligations
2,395
1,932
Specification of deferred tax
DKK million
Intangible assets
Property, plant and equipment
Current assets
Fair value adjustments
Tax losses
Total before offset
Offset
2021
4,498
-34
172
-20
-151
-14
-23
2020
4,509
107
-
42
160
9
-329
4,428
4,498
Deferred tax assets and liabilities at 31 December
Expected to be used as follows
6,350
-1,922
4,428
6,265
Within one year
-1,767
After more than one year
4,498
Total
Deferred tax assets
Deferred tax liabilities
2021
519
220
453
2020
388
281
386
34
43
3,664
-1,742
1,922
35
201
3,223
-1,456
1,767
1,097
825
1,922
964
803
1,767
2021
3,451
1,635
19
2,942
45
-
8,092
-1,742
6,350
835
5,515
6,350
2020
3,280
1,583
25
1,337
10
-
6,235
-1,456
4,779
1,701
3,078
4,779
SECTION 7
STAFF COSTS AND
REMUNERATION
Pensions
Defined benefit obligations were affected
by the asset celling in Switzerland and
higher discount rates across all markets as
a result of the pandemic.
EMPLOYEES BY SEGMENT (%)
2021
(2020)
Western Europe 26% (22%)
Asia 36% (38%)
Central & Eastern Europe 36% (38%)
Other 2% (2%)
EMPLOYEES BY FUNCTION (%)
2021
(2020)
Production 32% (31%)
Sales & Distribution 58% (59%)
Administration 10% (10%)
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
107
SECTION 7.1
STAFF COSTS
Severance payments were lower due to fewer
redundancies than in 2020.
Staff costs increased in 2021, mainly due to
higher performance-related payouts because of
the good financial performance in 2021 and
cycling of reversal of retirement provisions in
China in 2020.
The average number of employees decreased in
2021 as the full-year effects of restructuring
projects initiated in 2020 were felt. This was
partly offset by the inclusion of Marston’s and
Wernesgrüner personnel.
Staff costs
DKK million
Salaries and other remuneration
Severance payments
Social security costs
Retirement benefit costs – defined contribution plans
Retirement benefit costs – defined benefit plans
Share-based payments
Other employee benefits
Total
Average number of employees
Staff costs are included in the following line items in the income statement
Cost of sales
Sales and distribution expenses
Administrative expenses
Other operating activities, net
Financial expenses (pensions)
Special items (restructurings)
Total
2021
8,531
81
1,287
335
188
82
93
10,597
39,375
2,896
5,500
2,020
118
42
21
2020
7,841
177
1,172
303
-19
66
91
9,631
40,010
2,672
5,087
1,902
68
-189
91
10,597
9,631
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
108
PERFORMANCE SHARES
The number of performance shares granted is
the maximum number of performance shares
that can vest. The number of shares
outstanding at the end of the period is the
number expected to vest, based on the extent
to which the vesting conditions are expected to
be met. The number of shares expected to vest
is revised on a regular basis.
In 2021, 178 employees (2020: 190
employees) across the Group were awarded
performance shares.
Vesting is subject to achievement of four KPIs:
total shareholder return, adjusted EPS
growth, organic revenue growth and growth in
ROIC. The average share price at vesting was
DKK 976 (2020: DKK 770). The average
contractual life at the end of 2021 was 1.2
years (2020: 1.2 years).
SECTION 7.3
SHARE-BASED
PAYMENTS
The Group has set up share-based incentive
programmes to attract, retain and motivate the
Group’s executive directors and other levels of
management personnel, and to align their
interests with those of the shareholders. There
is no share-based remuneration of the
Supervisory Board.
The Group has two types of share-based
payment: share options and performance
shares. Share options entitle the holder to
purchase class B shares in Carlsberg A/S at a
predetermined price after completing three
years of service. Share options are exercisable
for five years.
Entitlement to performance shares also
requires fulfilment of service in the vesting
period (3 years) but does not have any exercise
price. Instead, the shares are transferred to the
recipients based on achievement of the KPIs
attached to the shares.
SECTION 7.2
REMUNERATION
The remuneration of the Supervisory Board,
the executive directors and key management
personnel is described in detail in the
Remuneration Report.
The remuneration of key management
personnel increased in 2021, primarily because
of the impact of better performance on the
KPIs measured in both short- and long-term
incentive programmes and changes to the
composition of ExCom.
In 2021, the Supervisory Board received total
remuneration of DKK 10.05m (2020: DKK
9.86m), comprising fixed salary only.
All elements except for share-based payments
are classified as short-term employee benefits.
Share-based payments are classified as long-
term employee benefits.
Remuneration
DKK million
Fixed salary
Cash bonus
Other benefits
Severance payments
Remuneration settled in cash
Non-monetary benefits
Share-based payments
Remuneration, non-monetary and share-based
Total cash and non-cash
ACCOUNTING
POLICIES
Staff costs are recognised in the financial year in
which the employee renders the related service.
The cost of share-based payments, which is
expensed over the vesting period of the programme
according to the service conditions, is recognised in
staff costs and provisions or equity, depending on
how the programme is settled with the employees.
Key management personnel comprise the Executive
Committee, excluding the executive directors. Other
management personnel included in the share-based
payment schemes comprise vice presidents and other
key employees in central functions as well as the
management of significant subsidiaries.
Executive directors
Key management
personnel
2021
20.7
20.7
1.1
-
42.5
0.4
31.1
31.5
74.0
2020
20.7
9.3
1.1
-
31.1
0.4
26.0
26.4
57.5
2021
29.1
30.1
6.0
3.4
68.6
3.1
3.5
6.6
75.2
2020
29.7
12.4
8.5
8.3
58.9
1.1
10.5
11.6
70.5
SECTION 7.3 (CONTINUED)
SHARE-BASED
PAYMENTS
Share options
No share options have been granted since
2016. The outstanding options are all
exercisable at the end of the reporting period.
The average contractual life was 1.7 years
(2020: 2.8 years).
Performance shares
31 December 2019
Granted
Forfeited/adjusted
Exercised/settled
31 December 2020
Granted
Forfeited/adjusted/transferred
Exercised/settled
31 December 2021
Performance share disclosures
DKK million
Fair value at grant date
Cost of shares granted in the year
Total cost of performance shares
Cost not yet recognised
Fair value at 31 December
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
109
Share option disclosures
ACCOUNTING ESTIMATES
AND JUDGEMENTS
ACCOUNTING
POLICIES
DKK million
Fair value at 31 December
2021
70
2020
52
The volatility of performance shares is based on the
historical volatility of the price of Carlsberg A/S’ class
B shares over the previous three years. For share
options, the volatility is based on similar data over
the previous eight years.
The share price and the exercise price of share
options are calculated as the average price of
Carlsberg A/S’ class B shares on Nasdaq Copenhagen
during the first five trading days after publication of
Carlsberg A/S’ financial statements.
The risk-free interest rate is based on Danish
government bonds of the relevant maturity. The
expected life is based on exercise at the end of the
exercise period.
The fair value of granted performance shares is
estimated using a stochastic (quasi-Monte Carlo)
valuation model of market conditions and a Black-
Scholes call option-pricing model of other conditions,
taking into account the terms and conditions upon
which the performance shares were granted.
On initial recognition of performance shares, an
estimate is made of the number of awards expected
to vest and subsequently revised for any changes.
Accordingly, recognition is based on the number of
awards that ultimately vest.
Executive
directors
189,405
48,991
-28,919
Key
management
personnel
Other
management
personnel
Total
Key information
98,248
22,550
616,987
130,515
904,640
202,056
-16,970
-160,696
-206,585
-66,865
-49,277
-307,465
-423,607
142,612
50,805
-13,027
-44,212
136,178
54,551
15,800
-13,202
-17,022
279,341
126,068
-84,575
-85,048
476,504
192,673
-110,804
-146,282
Assumptions
Expected volatility
Risk-free interest rate
Expected dividend yield
Expected life, years
40,127
235,786
412,091
Fair value at measurement date
Performance shares
2021
2020
23.3%/23.7%
16.0%/21.0%
0.0%
0.0%
0.0/2.2%
0.0/3.0%
3.0
3.0
DKK 512-961
DKK 567-894
2021
110
34
82
147
454
Regular
2020
91
30
56
132
458
Share options
Fund &
Grow
2020
-
-
10
31 December 2019
7
-
31 December 2020
31 December 2021
Exercise price
Fixed,
weighted
average
518
518
518
Executive
directors
114,984
114,984
114,984
Other
management
personnel
-
-
-
Number
Total
114,984
114,984
114,984
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
110
2021
2020
Present
value of
obligation
Fair value
of plan
assets
Obligation,
net
Present
value of
obligation
Fair value
of plan
assets
Obligation,
net
Obligation at 1 January
13,588
10,654
2,934
13,771
10,472
3,299
associated with future developments in interest
rates, inflation, mortality and disability etc.
Obligation, net
The most significant plans are in the UK and
Switzerland, representing 50% and 38%
respectively (2020: 50% and 38%), while the
eurozone countries represented 5% (2020: 5%)
of the gross obligation at 31 December 2021.
The majority of the obligations are funded,
with assets placed in independent pension
funds, mainly in Switzerland and the UK. The
largest part of the plan assets are based on a
quoted market price. In some countries,
primarily Germany, Sweden and China, the
obligation is unfunded. The retirement benefit
obligations for these unfunded plans amounted
to DKK 1,562m (2020: DKK 1,589m) or 11%
(2020: 12%) of the gross obligation.
In 2021, the Group’s obligation, net, on defined
benefit plans decreased by DKK 589m
compared with 2020. The change was
primarily driven by the effect of the asset
ceiling in Switzerland, DKK 129m, and changes
in the acturial assumptions mainly due to
increased discount rates across all markets,
which decreased the gross obligation.
DKK million
Recognised in the income
statement
Current service cost
Past service cost
Net interest on the net defined
benefit obligation (asset)
Total
Remeasurements
Gain/loss from changes in
demographic assumptions
Gain/loss from changes in financial
assumptions
Asset ceiling
Total
Other changes
Contributions to plans
Benefits paid
Acquisition and disposal of entities,
net
Transfers
Foreign exchange adjustments etc.
Total
183
5
138
326
-
-
99
99
183
5
39
227
223
-242
160
141
-
-
114
114
-29
-
-29
51
-
-114
-
-143
564
-129
435
-678
129
-578
-
-685
-5
-
770
80
253
-596
-253
-89
-
-
661
318
-5
-
109
-238
-1,057
682
-
733
-
-608
-
-28
-421
734
-
734
182
-504
-
7
-351
-666
223
-242
46
27
51
-52
-
-1
-182
-104
-
-35
-70
-391
2,934
Obligation at 31 December
13,851
11,506
2,345
13,588
10,654
The total return on plan assets for the year amounted to DKK 663m (2020: DKK 848m).
SECTION 7.4
RETIREMENT
BENEFIT
OBLIGATIONS
AND SIMILAR
OBLIGATIONS
A number of employees are covered by
retirement benefit plans. The nature of the
plans varies depending on labour market
conditions in the individual countries. Benefits
are generally based on wages and salaries and
length of employment.
Retirement benefit obligations cover both
present and future retirees’ entitlement to
retirement benefits.
DEFINED CONTRIBUTION PLANS
A defined contribution plan is a post-
employment benefit plan under which the
Group pays contributions to a separate
independent company. The Group’s legal or
constructive obligation is limited to the
contributions.
64% (2020: 61%) of the Group’s retirement
benefit costs related to defined contribution
plans. In 2021, the expense recognised in
relation to these contributions was DKK 335m
(2020: DKK 303m).
DEFINED BENEFIT PLANS
A defined benefit plan guarantees employees a
certain level of pension benefits for life. The
pension is based on seniority and salary at the
time of retirement. The Group assumes the risk
SECTION 7.4 (CONTINUED)
RETIREMENT
BENEFIT
OBLIGATIONS
AND SIMILAR
OBLIGATIONS
The Group has a triennial valuation process to
agree on any future funding arrangements. The
most recent one was completed in 2020. The
Group expects to contribute DKK 80m (2020:
DKK 74m) to the plan assets in 2022, which is
in line with the agreed funding arrangement,
under which the Group will contribute DKK
496m up to 2026. Plan assets do not include
shares in the Group or properties used by
Group companies.
Amounts recognised in other comprehensive
income for 2021 totalled DKK -421m (2020:
DKK -429m), comprising a foreign exchange
adjustment of DKK -182m and a net actuarial
loss of DKK 603m.
The accumulated actuarial loss and foreign
exchange adjustment recognised at 31
December 2021 was DKK 2,865m (2020:
DKK 3,287m), with actuarial net losses of
DKK 3,152m (2020: DKK 3,733m).
Assumptions applied
In 2021, the discount rate used for the defined
benefit plans in Western Europe was
determined by reference to market yields on
corporate bonds. In the Asian countries, where
no deep market in high-quality corporate
bonds exists, the discount rate was determined
by reference to market yields on government
bonds.
The mortality tables used in Carlsberg UK are
S3PMA/S3PFA tables for post-retirement,
while the Swiss entities use BVG 2020 for
valuation of their retirement benefit
obligations.
Sensitivity analysis
The sensitivity analysis is based on a change in
one of the assumptions, while all other
assumptions remain constant. This is highly
unlikely, however, as a change in one
assumption would probably affect other
assumptions as well. When calculating the
obligation on the basis of a changed
assumption, the same method has been
applied as when calculating the defined benefit
obligation.
Expected maturity and duration
Defined benefit obligations are primarily
expected to mature after five years. The
expected duration of the obligations at year-
end 2021 was 17 years. The duration is
calculated using a weighted average of the
duration divided by the obligation.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
111
Breakdown of plan assets
Shares
Bonds and other securities
Real estate
Cash and cash equivalents
Total
Assumptions applied
2021
Discount rate
Growth in wages and salaries
2020
Discount rate
Growth in wages and salaries
Sensitivity analysis
DKK million
Discount rate
Growth in wages and salaries
Mortality
DKK
million
1,345
7,485
2,088
588
2021
%
12
65
18
5
DKK
million
992
7,578
1,914
170
11,506
100
10,654
2020
%
9
71
18
2
100
CHF
0.3%
1.0%
0.2%
1.0%
UK
EUR
1.8% 0.3 - 0.9%
2.5% 0.2 - 2.8%
Other
2.1%
2.6%
Weighted
average
1.2%
1.9%
1.6% 0.3 - 0.7%
2.1% 0.2 - 2.7%
1.8%
2.0%
0.6%
1.2%
+0.5%
-1,097
81
2021
-0.5%
1,251
-73
+0.5%
-1,514
74
+1 year
-1 year
+1 year
522
-520
452
2020
-0.5%
1,715
-67
-1 year
-378
Maturity of retirement benefit obligations
DKK million
2021
2020
< 1 year
1-5 years
> 5 years
731
611
2,921
10,199
2,313
10,664
Total
13,851
13,588
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
112
SECTION 7.4 (CONTINUED)
RETIREMENT
BENEFIT
OBLIGATIONS
AND SIMILAR
OBLIGATIONS
ACCOUNTING ESTIMATES
AND JUDGEMENTS
The value of the Group’s defined benefit plans is
based on valuations from external actuaries. The
valuation is based on a number of actuarial
assumptions, including discount rates, expected
growth in wages and salaries, mortality and
retirement benefits.
The present value of the net obligation is calculated
by using the projected unit credit method and
discounting the defined benefit plan by a discount
rate for each country. The discount rate is determined
by reference to market yields on high-quality
corporate bonds. Where high-quality corporate bonds
are not available, the market yields on government
bonds are used instead.
Mortality assumptions are based on the Group
entity’s best estimate of the mortality of plan
members during and after employment and include
expected changes in mortality. Due to the broad
range of entities comprising the retirement benefit
obligation, several different mortality tables are used
to calculate the future retirement benefit obligation.
ACCOUNTING
POLICIES
Contributions paid to a defined contribution plan are
recognised in the income statement in the period
during which services are rendered by employees.
Any contributions outstanding are recognised in the
statement of financial position as other liabilities.
The Group’s net obligation recognised in the
statement of financial position in respect of defined
benefit plans is the present value of the defined
benefit obligation at the reporting date less the fair
value of plan assets calculated by a qualified actuary.
The present value is determined separately for each
plan by discounting the estimated future benefits that
employees have earned in return for their service in
the current and prior years.
The costs of a defined benefit plan are recognised in
the income statement and include service costs, net
interest based on actuarial estimates and financial
expectations.
Service costs comprise current service cost and past
service cost. Current service cost is the increase in
the present value of the defined benefit obligation
resulting from employee services in the current
period. Past service cost is the change in the present
value of the obligation regarding employee services in
prior years that arises from a plan amendment or a
curtailment. Past service costs are recognised
immediately, provided employees have already
earned the changed benefits.
Realised gains and losses on curtailment or
settlement are recognised under staff costs.
Interest on retirement benefit obligations and the
interest on return on plan assets are recognised as
financial income or financial expenses.
Differences between the development in retirement
benefit assets and liabilities and realised amounts at
year-end are designated as actuarial gains or losses
and recognised in other comprehensive income. As
they will never be reclassified to the income
statement, they are included in retained earnings.
If a retirement benefit plan constitutes a net asset,
the asset is recognised only if it offsets future refunds
from the plan or will lead to reduced future payments
to the plan.
Realised gains and losses on the adjustment of
retirement benefit obligations as a result of
termination of a significant number of positions in
connection with restructurings are recognised under
special items.
SECTION 8
OTHER DISCLOSURE
REQUIREMENTS
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
113
6,943m
Profit attributable to shareholders in
Carlsberg A/S, adjusted for special items
after tax (DKK).
48.3
Earnings per share, adjusted for special
items after tax (DKK).
SECTION 8.1
EARNINGS PER
SHARE
During 2021, the Group repurchased a total of
3.4m B shares under the share buy-back
programme. The share buy-back programme
decreased the average number of shares by
2.3m. This increased adjusted earnings per
share by DKK 0.7. The adjustment for special
items after tax increased adjusted earnings per
share by DKK 0.7.
For all share-based incentive instruments, the
average market price of Carlsberg B shares
exceeded the exercise price and the fair value
at the grant date. As a result, diluted earnings
per share included all share-based incentive
instruments that could potentially dilute
earnings in the future.
Earnings per share
DKK
Earnings per share of DKK 20 (EPS)
Diluted earnings per share of DKK 20 (EPS-D)
Earnings per share, adjusted (EPS-A)
Average number of shares
1,000 shares
Average number of issued shares
Average number of treasury shares
Average number of shares
Average dilutive effect of share-based incentives
Diluted average number of shares
Profit attributable to shareholders
DKK million
Consolidated profit
Non-controlling interests
Profit attributable to shareholders in Carlsberg A/S (net profit)
Special items after tax
Profit attributable to shareholders in Carlsberg A/S, adjusted
2021
47.6
47.4
48.3
2020
41.3
41.1
43.6
146,067
-2,219
143,848
451
149,407
-3,303
146,104
646
144,299
146,750
8,009
-1,163
6,846
97
6,943
6,808
-778
6,030
333
6,363
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
114
SECTION 8.2
FEES TO AUDITORS
The following transactions took place between
the Carlsberg Foundation and the Group
in 2021:
Fees to auditors appointed by the
Annual General Meeting
DKK million
2021
2020
PwC, including network
firms
Statutory audit
Assurance engagements
Tax advisory
Other services
Total
23
1
2
2
28
21
1
2
2
26
Fees for services other than the statutory audit
of the financial statements provided by
PricewaterhouseCoopers Statsautoriseret
Revisionspartnerselskab, Denmark, amounted
to DKK 1m (2020: DKK 2m), including VAT
compliance, other assurance opinions and
agreed-upon procedures as well as accounting
advice.
SECTION 8.3
RELATED PARTIES
RELATED PARTIES EXERCISING CONTROL
The Carlsberg Foundation, H.C. Andersens
Boulevard 35, 1553 Copenhagen V, Denmark,
exercises control over Carlsberg A/S. The
Foundation holds 29.5% of the shares and
75.9% of the voting power in Carlsberg A/S,
excluding treasury shares.
The Carlsberg Foundation received a dividend
of DKK 22.00 per share from Carlsberg A/S,
the same as every other shareholder. The
dividend received amounted to DKK 964m.
Through its pro-rata participation in the share
buy-back programme, the Carlsberg
Foundation sold B shares to Carlsberg A/S at a
fair value of DKK 1,092m. The Foundation
thereby reduced its shareholding to 29.5% at
31 December 2021 (2020: 29.6%). The shares
were sold at the average weekly share buy-
back market prices.
FUNDING AND GRANTS
Carlsberg A/S received statutory grants and
further funding from the Carlsberg Foundation,
DKK 56m, for the basic research and
development activities at the Carlsberg
Research Laboratory (2020: DKK 53m). Of the
total grants, DKK 18m (2020: DKK 29m) was
deferred to be used for research projects in the
future.
In 2020, the Carlsberg Foundation contributed
a total amount of DKK 53m to support the
rebuilding of the Carlsberg Visitor Centre during
2021 and 2022. The purpose of the rebuild is
to better showcase Carlsberg’s rich history and
value creation.
OTHER ACTIVITIES
Visit Carlsberg A/S, 100% owned by Carlsberg
A/S, hosted and administered events at the
Carlsberg Academy, which is owned by the
Carlsberg Foundation, at a value of DKK 1m.
Furthermore, Visit Carlsberg A/S was paid DKK
0.4m for work to restore the Carlsberg
Academy before its reopening in 2021.
The Group’s delivery of beer and soft drinks to
the Carlsberg Foundation is charged at
ordinary listing price minus a discount. In 2021,
the deliveries amounted to DKK 0.2m (total
sales of goods) (2020: DKK 0.1m).
Carlsberg A/S leases parking spaces from the
Carlsberg Foundation to provide parking for
employees at the Research Laboratory and
Visit Carlsberg. Furthermore, Carlsberg
Breweries A/S leases storage facilities in the
researcher apartments. These lease
agreements are with subsidiaries of the
Foundation. The two annual lease payments
amount to DKK 0.2m and the leases are on
market terms.
It is estimated that the benefit for the Carlsberg
Group corresponds to the value of the other
activities provided to the Carlsberg Foundation,
which in turn corresponds to what each party
would have had to pay to have the same
deliverables provided by external parties.
OTHER RELATED PARTIES
Related parties also comprise Carlsberg A/S’
Supervisory Board and Executive Board, their
close family members and companies in which
these persons have significant influence. During
the year, there were no transactions between
these parties and the Group, except for
remuneration as disclosed in section 7 of the
consolidated financial statements.
The income statement and the statement of
financial position include the following
transactions
DKK million
2021
2020
Associates and joint ventures
Revenue
Cost of sales
Sales expenses
Interest income
Loans
Receivables
76
-817
-11
14
242
226
78
-756
-14
15
213
106
Trade payables and other
liabilities
-36
-10
SECTION 8.4
EVENTS AFTER THE
REPORTING PERIOD
Apart from the events recognised or disclosed
in the consolidated financial statements, no
events have occurred after the reporting period
of importance to the consolidated financial
statements.
SECTION 9
BASIS FOR
PREPARATION
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
115
SECTION 9.1
SIGNIFICANT
ACCOUNTING
ESTIMATES AND
JUDGEMENTS
In preparing the consolidated financial
statements, management makes various
accounting estimates and judgements that
form the basis of presentation, recognition and
measurement of the Group’s assets, liabilities,
income and expenses. The estimates and
judgements made are based on historical
experience and other factors that management
assesses to be reliable, but that, by nature, are
associated with uncertainty and unpredictability
and may therefore prove incomplete or
incorrect.
Areas involving significant estimates and judgements:
Receivables
Section 1
Impairment testing, useful life and residual value Section 2
Restructurings, provisions and contingencies
Section 3
Acquisitions and disposals, including contingent
considerations
Section 5
Tax assets and liabilities
Defined benefit obligations
Section 6
Section 7
SECTION 9.2
GENERAL
ACCOUNTING
POLICIES
The Group’s 2021 consolidated financial
statements have been prepared in accordance
with IFRS as adopted by the EU and further
requirements in the Danish Financial
Statements Act.
The consolidated financial statements are
presented in Danish kroner (DKK), which is the
Parent Company’s functional currency, and all
values are rounded to the nearest DKK million,
except when otherwise stated.
The accounting policies set out below have
been used consistently in respect of the
financial year and the comparative figures.
DEFINING MATERIALITY
Significant items are presented individually in
the financial statements as required by IAS 1.
Other items that are considered relevant to
stakeholders and necessary for an
understanding of the Group’s business model,
including research, real estate and geographical
diversity, are also presented individually in the
financial statements.
The consolidated financial statements are
prepared as a consolidation of the financial
statements of the Parent Company, Carlsberg
A/S, and its subsidiaries according to the
Group’s accounting policies.
Subsidiaries are all entities over which the
Group has control. The Group controls an
entity when the Group is exposed to, or has
rights to, variable returns from its involvement
with the entity and has the ability to affect
those returns through its power to direct the
activities of the entity.
Entities over which the Group exercises
significant influence, but which it does not
control, are considered associates. Significant
influence is generally obtained by direct or
indirect ownership or control of less than 50%
of the voting rights or participation in the
management of the company. The assessment
of whether Carlsberg A/S exercises control or
significant influence includes potential voting
rights exercisable at the reporting date. Entities
that by agreement are managed jointly with
one or more other parties are considered joint
ventures.
On consolidation, intra-group income and
expenses, shareholdings, balances and
dividends, and realised and unrealised gains are
eliminated. Unrealised gains on transactions
with associates and joint ventures are
eliminated in proportion to the Group’s
ownership share of the entity.
Unrealised losses are eliminated in the same
way as unrealised gains to the extent that
impairment has not taken place.
The accounting items of subsidiaries are
included in full in the consolidated financial
statements. Non-controlling interests’ share of
subsidiaries’ profit/loss for the year and of
equity are included in the Group’s profit/loss
and equity but are disclosed separately.
Entities acquired or established in the year are
recognised in the consolidated financial
statements from the date of acquisition or
formation. Entities disposed of or discontinued
are recognised in the consolidated income
statement until the date of disposal or
discontinuation. The comparative figures are
not restated.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
116
The Danish Finance Society does not
acknowledge use of special items and states
that adjustments of tax should be based on the
marginal tax rate. When calculating financial
measures, the Group uses operating profit
before special items as well as the effective tax
rate for measures adjusted for tax.
Other financial ratios are calculated in
accordance with the Danish Finance Society’s
online guidelines on the calculation of financial
ratios, “Recommendations and Financial
Ratios”, unless specifically stated.
SECTION 9.2 (CONTINUED)
GENERAL
ACCOUNTING
POLICIES
FOREIGN CURRENCY TRANSLATION
A functional currency is determined for each of
the reporting entities in the Group. The
functional currency is the primary currency
used for the reporting entity’s operations.
Transactions denominated in currencies other
than the functional currency are considered
transactions denominated in foreign currencies.
On initial recognition, transactions
denominated in foreign currencies are
translated to the functional currency at the
exchange rates at the transaction date. Foreign
exchange differences arising between the
exchange rates at the transaction date and at
the date of payment are recognised as financial
income or expenses.
Receivables, payables and other monetary
items denominated in foreign currencies are
translated at the exchange rates at the
reporting date. The difference between the
exchange rates at the reporting date and at the
date at which the receivable or payable arose
or the exchange rate in the latest consolidated
financial statements is recognised as financial
income or expenses.
On recognition of entities with a functional
currency other than the presentation currency,
the income statement and statement of cash
flows are translated at the exchange rates at
the transaction date, and the statement of
financial position items are translated at the
exchange rates at the reporting date. Foreign
exchange differences arising on translation of
the opening balance of equity, and of the
income statement on the reporting date, are
recognised in other comprehensive income and
attributed to a separate translation reserve in
equity. Foreign exchange differences arising on
the translation of the proportionate share of
associates and joint ventures are likewise
recognised in other comprehensive income.
Foreign exchange adjustment of balances with
entities that are considered part of the
investment in the entity is recognised in other
comprehensive income. Correspondingly,
foreign exchange gains and losses on the part
of loans and derivative financial instruments
that are designated as hedges of investments in
foreign entities, and that effectively hedge
against corresponding foreign exchange gains
and losses on the investment in the entity, are
also recognised in other comprehensive income
and attributed to a separate translation reserve
in equity.
When the gain or loss from a complete or
partial disposal of an entity is recognised, the
share of the cumulative exchange differences
recognised in other comprehensive income is
recognised in the income statement. The same
approach is adopted on repayment of balances
that constitute part of the net investment in the
entity.
INCOME STATEMENT
The presentation of the Group’s income
statement is based on the internal reporting
structure, as IFRS does not provide a specific
disclosure requirement.
Special items are not directly attributable to
ordinary operating activities and are shown
separately in order to facilitate a better
understanding of the Group’s financial
performance.
CASH FLOW
Cash flow is calculated using the indirect
method and is based on operating profit before
special items adjusted for depreciation,
amortisation and impairment losses. Cash flow
cannot be derived directly from the statement
of financial position and income statement.
FINANCIAL RATIOS AND NON-IFRS
FINANCIAL MEASURES
The Group uses certain additional financial
measures to provide management, investors
and investment analysts with additional
measures to evaluate and analyse the
Company’s results. These non-IFRS financial
measures are defined and calculated by the
Group and therefore may not be comparable
with other companies’ measures.
The non-IFRS financial measures disclosed in
the Annual Report are:
• Earnings per share, adjusted, and payout
ratio, adjusted
• Organic development
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
117
The annual report submitted to the Danish
Financial Supervisory Authority (the Officially
Appointed Mechanism) consists of the XHTML
document together with the technical files, all
of which are included in the ZIP file
Carlsberg-2021-12-31.zip.
Key definitions
XHTML (eXtensible HyperText Markup
Language) is a text-based language used to
structure and mark up content such as text,
images and hyperlinks in documents that are
displayed in a web browser.
iXBRL tags (or Inline XBRL tags) are hidden
metainformation embedded in the source code
of an XHTML document that enables the
conversion of XHTML-formatted information
into a machine-readable XBRL data record
using appropriate software.
A financial reporting taxonomy is an electronic
dictionary of business reporting elements used
to report business data. A taxonomy element is
an element defined in a taxonomy that is used
for the machine-readable labelling of
information in an XBRL data record.
SECTION 9.2 (CONTINUED)
GENERAL
ACCOUNTING
POLICIES
9.2.1 REPORTING UNDER THE ESEF
REGULATION
The Commission Delegated Regulation (EU)
2019/815 on the European Single Electronic
Format (ESEF Regulation) has introduced a
single electronic reporting format for the
annual financial reports of issuers with
securities listed on the EU-regulated markets.
The combination of XHTML format and iXBRL
tags enables the annual financial reports to be
read by both humans and machines, thus
enhancing accessibility, analysis and
comparability of the information included in the
annual financial reports.
The Group’s iXBRL tags have been prepared in
accordance with the ESEF taxonomy, which is
included in the ESEF Regulation and has been
developed based on the IFRS taxonomy
published by the IFRS Foundation.
The line items in the consolidated financial
statements are tagged to elements in the ESEF
taxonomy. For financial line items that are not
directly defined in the ESEF taxonomy, an
extension to the taxonomy has been created.
Extensions are anchored to elements in the
ESEF taxonomy, except for extensions that are
subtotals.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
118
SECTION 9.2 (CONTINUED)
GENERAL
ACCOUNTING
POLICIES
Glossary and calculation of key figures and financial ratios disclosed in the Annual Report
STOCK MARKET RATIOS (CONTINUED)
FINANCIAL RATIOS
Gross margin
EBITDA margin1
Gross profit as a percentage of revenue.
Operating profit before depreciation, amortisation and impairment losses as a
percentage of revenue.
Payout ratio, adjusted
Proposed dividend for the year on number of shares at year-end as a percentage
of consolidated profit, adjusted for special items after tax1, excluding non-
controlling interests.
Payout ratio
Proposed dividend for the year as a percentage of consolidated profit, excluding
non-controlling interests.
Operating margin
Operating profit before special items1 as a percentage of revenue.
Market capitalisation
Number of shares at year-end multiplied by the share price.
Return on invested capital (ROIC)
Operating profit before special items1 adjusted for tax as a percentage of
average invested capital2 calculated as a 12-month rolling average (MAT).
Average number of issued shares Number of issued shares as an average for the year.
Return on invested capital excluding
goodwill (ROIC excl. goodwill)
Operating profit before special items1 adjusted for tax as a percentage of
average invested capital2 excluding goodwill calculated as a 12-month rolling
average (MAT).
Effective tax rate1
Income tax as a percentage of profit before tax.
Equity ratio
Equity attributable to shareholders in Carlsberg A/S at year-end as a
percentage of total assets at year-end.
NIBD/equity ratio1
Net interest-bearing debt3 at year-end divided by total equity at year-end.
NIBD/EBITDA1
Net interest-bearing debt3 divided by operating profit before depreciation,
amortisation and impairment losses.
Interest cover1
Operating profit before special items divided by interest expenses, net.
STOCK MARKET RATIOS
Earnings per share (EPS)
Earnings per share, diluted (EPS-D)
Consolidated profit for the year, excluding non-controlling interests, divided by
the average number of shares.
Consolidated profit for the year, excluding non-controlling interests, divided by
the average number of shares, fully diluted for share options and performance
shares in the money.
Average number of shares
Number of issued shares, excluding treasury shares, as an average for the year.
Number of shares at year-end
Total number of issued shares, excluding treasury shares, at year-end.
GLOSSARY
EBITDA1
Expression used for operating profit before depreciation, amortisation and
impairment losses.
Leverage ratio1
Expression used for NIBD/EBITDA.
NCI
OCI
Off-trade
On-trade
Abbreviation for non-controlling interests.
Abbreviation for other comprehensive income.
Expression used for sale of beverages for consumption off the premises (e.g.
retailers).
Expression used for sale of beverages for consumption on the premises (e.g.
restaurants, hotels and bars).
Operating profit
Expression used for operating profit before special items1.
Organic development1
Measure of growth excluding the impact of acquisitions, divestments and foreign
exchange from year-on-year comparisons.
Earnings per share, adjusted (EPS-A)
Consolidated profit for the year adjusted for special items after tax1, excluding
non-controlling interests, divided by the average number of shares.
Volumes1
The Group’s sale of beverages in consolidated entities and sale of the Group’s
products under licence agreements.
Free cash flow per share (FCFPS)1
Free cash flow4 divided by the average number of shares, fully diluted for
share options and performance shares in the money.
1 This key figure, ratio or elements thereof are not defined or deviate from the definitions of the Danish Finance Society.
2 The calculation of invested capital is specified in section 2.1.
3 The calculation of net-interest bearing debt is specified in section 4.2.
4 The calculation of free cash flow is specified in the statement of cash flows.
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
119
SECTION 9.3
CHANGES IN
ACCOUNTING
POLICIES
CHANGED ACCOUNTING POLICIES
AND CLASSIFICATION IN THE ANNUAL
REPORT 2021
The Annual Report 2021 has been prepared
using the same accounting policies for
recognition and measurement as those applied
to the consolidated financial statements for
2020, except for the following Amendments
that were adopted as of 1 January 2021:
• Amendments to IFRS 9, IAS 39, IFRS 7,
IFRS 4 and IFRS 16 “Interest rate benchmark
reform – Phase 2”
• Amendments to IFRS 4 “Insurance Contracts
– deferral of IFRS 9”
• Amendments to IFRS 16 “Leases”: COVID-
19-Related Rent Concessions beyond
30 June 2021
These Amendments had no impact on the
Group’s accounting policies, as they cover areas
that are not material and/or relevant for the
Group or do not change the accounting policies
applied in 2021.
SECTION 9.4
NEW LEGISLATION
NEW AND AMENDED IFRS STANDARDS
The following Amendments to IFRS became
effective as of 1 January 2022:
NEW AND AMENDED IFRS STANDARDS
AND INTERPRETATIONS NOT YET
ADOPTED BY THE EU
The following Amendments, which will become
effective in future years, have been issued but
not yet adopted by the EU:
• Amendment to IAS 16 “Property, Plant and
Equipment”
• Amendment to IAS 37 “Provisions, Contingent
Liabilities and Contingent Assets”
• Amendments to IFRS 3 “Business
Combinations”
• Annual Improvements to IFRS Standards
2018-2020 (IFRS 1, IFRS 9 and IFRS 16)
The implemented Amendments are not
expected to have any significant impact on the
financials or the Group’s accounting policies, as
they cover areas that are not material and/or
relevant for the Group or do not change the
accounting policies applied in 2021.
• Amendment to IAS 1 “Presentation of
Financial Statements: Classification of
Liabilities as Current or Non-current and
Classification of Current or Non-current –
Deferral of Effective Date”
• Amendment to IAS 1 “Presentation of
Financial Statements and IFRS Practice
Statement 2: Disclosure of Accounting
policies”
• Amendments to IAS 8 “Accounting policies,
Changes in Accounting Estimates and Errors:
Definition of Accounting Estimates”
• Amendments to IAS 12 “Income Taxes:
Deferred Tax related to Assets and Liabilities
arising from a Single Transaction”
• IFRS 17 “Insurance Contracts” and
amendments to IFRS 17: “Initial Applications
of IFRS 17” and IFRS 9: “Comparative
Information”
The new Standard is not mandatory for the
financial reporting for 2021. The Group expects
to adopt the new Standard when it becomes
mandatory.
Consolidated financial statements
SECTION 10
GROUP
COMPANIES
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
120
This section lists the subsidiaries, associates and joint ventures in the Group. Parent direct
ownership shows the legal ownership held by the immediate holding company in the Group.
Cross-holdings held by fully owned companies in the Group are aggregated. Consolidated
ownership shows the share of the result of the entity that is attributed to the shareholders of
Carlsberg A/S in the consolidated financial statements.
Place of
incorporation Note
Number of
subsidiaries
Parent
direct
ownership
Consolidated
ownership
Western Europe
Place of
incorporation Note
Number of
subsidiaries
Parent
direct
ownership
Consolidated
ownership
Carlsberg Breweries A/S
Denmark
3
100%
100%
Carlsberg Deutschland GmbH
Western Europe
Carlsberg Danmark A/S
Carlsberg Supply Company Danmark A/S
Carlsberg Sweden Holding 2 AB
Carlsberg Sverige AB
Carlsberg Supply Company Sverige AB
Ringnes Norge AS
Ringnes AS
Ringnes Brygghus AS
Solo AS
Ringnes Supply Company AS
Ringnes Farris Eiendom AS
Ringnes Imsdal Eiendom AS
Ringnes Administrasjon Eiendom AS
Ringnes Gjelleråsen Eiendom AS
Oy Sinebrychoff Ab
Sinebrychoff Supply Company Oy
Carlsberg Deutschland Holding GmbH
Holzmarkt Brewing Company GmbH
Carlsberg Deutschland Logistik GmbH
Tuborg Deutschland GmbH
Denmark
Denmark
Sweden
Sweden
Sweden
Norway
Norway
Norway
Norway
Norway
Norway
Norway
Norway
Norway
Finland
Finland
Germany
Germany
Germany
Germany
1
100%
100%
100%
100%
100%
100%
100%
100%
91%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
91%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Duckstein GmbH
Holzmarkt Beteiligungsgesellschaft mbH
Holsten-Brauerei AG
Germany
Germany
Germany
Germany
Carlsberg Supply Company Deutschland GmbH
Germany
Wernesgrüner Brauerei GmbH
Carlsberg Supply Company Polska SA
Carlsberg Polska Sp. z o.o.
Carlsberg UK Holdings Limited
Carlsberg Marston's Brewing Company Limited
Marston's Beer Company Limited
Carlsberg UK Limited
Carlsberg Supply Company UK Limited
LF Brewery Holdings Limited
Emeraude S.A.S.
Kronenbourg S.A.S.
Kronenbourg Supply Company S.A.S.
Kronenbourg Breweries Canada Inc.
Fondation Kronenbourg
S.A.S. Onyx
Feldschlösschen Getränke Holding AG
Feldschlösschen Getränke AG
Schlossgarten Gastronomie AG
Germany
Poland
Poland
UK
UK
UK
UK
UK
UK
France
France
France
Canada
France
France
Switzerland
Switzerland
Switzerland
6
3
1
1
7
1
2
100%
100%
100%
100%
100%
100%
100%
100%
100%
60%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
60%
60%
60%
60%
60%
100%
100%
100%
100%
100%
100%
100%
100%
100%
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
121
Place of
incorporation Note
Number of
subsidiaries
Parent
direct
ownership
Consolidated
ownership
Asia
Place of
incorporation Note
Number of
subsidiaries
Parent
direct
ownership
Consolidated
ownership
Western Europe
SB Swiss Beverage AG
Feldschlösschen Supply Company AG
Carlsberg Supply Company AG
Nya Carnegiebryggeriet AB
E.C. Dahls Bryggeri AS
HK Yau Limited
Monster the Cat GmbH
Grimbergen Abbey Brewery
Zatecky Pivovar spol. S.r.o.
Asia
Carlsberg Supply Company Asia Ltd
Carlsberg Asia Pte Ltd
Carlsberg Brewery Hong Kong Ltd
Switzerland
Switzerland
Switzerland
Sweden
Norway
Hong Kong
Switzerland
Belgium
Czechia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Place of
incorporation Note
Number of
subsidiaries
Parent
direct
ownership
Consolidated
ownership
Hong Kong
Singapore
Hong Kong
A
B
Guangzhou Carlsberg Consultancy and
Management Services Co. Ltd
Chongqing Brewery Co., Ltd
Carlsberg Chongqing Breweries Company
Limited
Kunming Huashi Brewery Company
Limited
Carlsberg (China) Breweries and
Trading Company Limited
Carlsberg Brewery (Guangdong) Ltd
Xinjiang Wusu Breweries Co., Ltd
China
China
China
China
China
China
China
Ningxia Xixia Jianiang Brewery Limited China
Carlsberg Beer Enterprise Management
(Chongqing) Company Limited
Carlsberg Brewery (Anhui)
Company Ltd
Carlsberg Tianmuhu Brewery
(Jiangsu) Company Ltd
Lao Brewery Co. Ltd
China
China
China
Laos
100%
100%
100%
100%
60%
7
51%
4
100%
100%
99%
100%
70%
100%
75%
100%
61%
100%
100%
100%
100%
60%
79%
79%
79%
79%
79%
56%
79%
60%
79%
61%
Carlsberg Brewery Malaysia Berhad
Carlsberg Marketing Sdn BHD
Euro Distributors Sdn BHD
Carlsberg Singapore Pte Ltd
Maybev Pte Ltd
Carlsberg South Asia Pte Ltd
South Asian Breweries Pte. Ltd
Carlsberg India Pvt. Ltd
Gorkha Brewery Pvt. Ltd
G.B. Marketing Pvt Ltd
Carlsberg Vietnam Trading Co. Ltd
Carlsberg Vietnam Breweries Ltd
Paduak Holding Pte. Ltd
Caretech Limited
Cambrew Limited
Cambrew Properties Ltd
Angkor Beverage Co Ltd
CB Distribution Co., Ltd
A
C
D
D
D
D, E, F
D, F
Malaysia
Malaysia
Malaysia
Singapore
Singapore
Singapore
Singapore
India
Nepal
Nepal
Vietnam
Vietnam
Singapore
Hong Kong
Cambodia
Cambodia
Cambodia
Thailand
51%
100%
100%
100%
51%
67%
100%
100%
90%
100%
100%
100%
100%
100%
100%
100%
100%
100%
51%
51%
51%
51%
26%
100%
100%
100%
90%
90%
100%
100%
100%
100%
100%
100%
100%
100%
2
A Listed company.
B Carlsberg Chongqing Breweries Company Limited is owned by Chongqing Brewery Co., Ltd (51%) and Guangzhou
Carlsberg Consultancy and Management Services Co Ltd (49%), resulting in a consolidated ownership of 79%.
C Maybev Pte Ltd is owned by Carlsberg Singapore Pte Ltd (51%), which is owned by Carlsberg Brewery Malaysia
Berhad (51%), resulting in a consolidated ownership of 26%.
D The Group owns 67% of Carlsberg South Asia Pte Ltd, which is the holding company of South Asian Breweries Pte.
Ltd, Carlsberg India Pvt. Ltd and Gorkha Brewery Pvt. Ltd (Nepal). The consolidation percentage of Carlsberg South
Asia Pte Ltd is 100% due to a written put option.
E The Group has the legal and contractual rights of a majority shareholder in Gorkha Brewery Pvt. Ltd, but does not
consolidate the company and its subsidiary for accounting purposes, cf. section 5.2.
F Company not audited by PwC.
Place of
incorporation Note
Number of
subsidiaries
Parent
direct
ownership
Consolidated
ownership
G
G
H
G
G
H
G
Russia
Azerbaijan
Azerbaijan
Russia
Russia
Kazakhstan
Sweden
Ukraine
Sweden
Serbia
Bosnia and
Herzegovina
Montenegro
Croatia
Bulgaria
Belarus
Italy
Italy
Italy
Greece
Greece
Hungary
Estonia
Latvia
Lithuania
Canada
Canada
USA
3
1
100%
100%
91%
100%
75%
100%
100%
100%
100%
100%
100%
100%
100%
100%
78%
100%
100%
100%
100%
100%
100%
100%
100%
99%
100%
100%
100%
100%
100%
91%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
89%
100%
100%
100%
100%
100%
100%
100%
100%
99%
100%
100%
100%
Place of
incorporation Note
Number of
subsidiaries
Parent
direct
ownership
Consolidated
ownership
CARLSBERG GROUP ANNUAL REPORT 2021 CONSOLIDATED FINANCIAL STATEMENTS
122
Place of
incorporation Note
Number of
subsidiaries
Denmark
Denmark
Denmark
I
Place of
incorporation Note
Number of
subsidiaries
Parent
direct
ownership
Consolidated
ownership
100%
100%
100%
100%
100%
100%
Parent
direct
ownership
Consolidated
ownership
Non-beverage
Ejendomsaktieselskabet Tuborg Nord C
Carlsberg Ejendomme Holding A/S
Boliginteressentskabet Tuborg
Associates and joint ventures
Carlsberg Byen P/S
Shangri-la Beverages AG
Sinergie Proattive Srl
Viacer S.G.P.S., Lda
Super Bock Group, S.G.P.S., S.A.
Denmark
Switzerland
Italy
Portugal
Portugal
F
J
J
F
Serviced Dispense Equipment (Holdings) Limited
UK
Nuuk Imeq A/S
Chongqing Jiawei Beer Co. Ltd
Greenland
China
Lanzhou Huanghe Jianiang Brewery Company
Limited
China
Qinghai Huanghe Jianiang Brewery Company Ltd China
Jiuquan West Brewery Company Limited
China
Tianshui Huanghe Jianiang Brewery Company Ltd China
Capital Brewing Company Ltd
Lion Brewery (Ceylon) PLC
Hong Kong
Sri Lanka
A, F, K
Hanoi Beer Alcohol and Beverage Joint Stock
Corporation
Carlsberg Distributors Taiwan Limited
NCC Crowns Private Limited
Bottlers Nepal Limited
Myanmar Carlsberg Co. Ltd
F
Vietnam
Taiwan
India
Nepal
Myanmar
F
88
13
2
4
1
1
1
25%
35%
36%
29%
56%
33%
32%
33%
50%
50%
50%
50%
49%
25%
17%
50%
33%
22%
58%
25%
35%
36%
29%
60%
20%
32%
26%
50%
50%
50%
50%
49%
13%
17%
50%
33%
20%
58%
G Company owned by Carlsberg Sverige AB.
H Consolidated ownership is higher than the legal ownership due to written put options.
I A separate annual report is not prepared.
J Viacer S.G.P.S (Viacer) is the controlling shareholder of Super Bock Group, S.G.P.S. (Super Bock) with a 56%
shareholding, with Carlsberg Breweries A/S owning the remaining 44%. In addition, Carlsberg Breweries A/S has a
direct ownership in Viacer of 29% without exercising control. Therefore, both Viacer and Super Bock are considered
associates of the Group. The Group's direct and indirect ownership of Super Bock totals 60%.
K Lion Brewery (Ceylon) PLC is owned by Carlsberg Brewery Malaysia Berhad (25%). Carlsberg owns 51% of Carlsberg
Brewery Malaysia Berhad, resulting in 13% of the result being attributed to the shareholders in Carlsberg A/S.
Central & Eastern Europe
Baltika Breweries LLC
Carlsberg Azerbaijan LLC
Baku Piva JSC
Hoppy Union LLC
Konix Brewery LLC
Carlsberg Kazakhstan Ltd
Baltic Beverages Invest AB
PJSC Carlsberg Ukraine
Baltic Beverages Holding AB
Carlsberg Serbia Ltd
Carlsberg BH d.o.o.
Carlsberg Montenegro d.o.o.
Carlsberg Croatia d.o.o.
Carlsberg Bulgaria AD
OJSC Brewery Alivaria
Carlsberg Italia S.p.A.
Carlsberg Horeca Srl
T&C Italia Srl
Olympic Brewery SA
Hellenic Beverage Company SA
Carlsberg Hungary Kft.
Saku Ölletehase AS
Aldaris JSC
Svyturys-Utenos Alus UAB
CTDD Beer Imports Ltd
Carlsberg Canada Inc.
Carlsberg USA Inc.
Not allocated
Carlsberg Finans A/S
Carlsberg International A/S
Visit Carlsberg A/S
Carlsberg Invest A/S
Denmark
Denmark
Denmark
Denmark
Carlsberg Integrated Information Technology A/S Denmark
Carlsberg Insurance A/S
Carlsberg Central Office A/S
Carlsberg Shared Services Sp. z o.o.
Denmark
Denmark
Poland
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Parent Company financial statements
PARENT COMPANY FINANCIAL STATEMENTS
CARLSBERG GROUP ANNUAL REPORT 2021 PARENT COMPANY FINANCIAL STATEMENTS
123
PARENT COMPANY FINANCIAL
STATEMENTS
Income statement ................................ 124
Statement of comprehensive
income ...................................................... 124
Statement of financial position ...... 125
Statement of changes in equity ..... 126
Statement of cash flows ................... 126
Notes ......................................................... 127
SECTION 1
SUBSIDIARIES AND RELATED PARTIES
Investments in subsidiaries ....................... 127
1.1
1.2 Related parties ............................................. 127
SECTION 2
CAPITAL STRUCTURE
2.1 Financial items ............................................. 128
2.2 Net interest-bearing debt ......................... 128
2.3 Share capital ................................................. 129
SECTION 3
STAFF COSTS AND REMUNERATION
3.1 Staff costs and remuneration .................. 130
3.2 Retirement benefit obligations ................ 130
SECTION 4
OTHER DISCLOSURE REQUIREMENTS
4.1 Other operating activities, net ................. 131
4.2 Cash flow ....................................................... 131
4.3 Provisions ....................................................... 131
4.4 Special items ................................................. 131
4.5 Asset base and leases ............................... 131
4.6 Fees to auditors ........................................... 131
4.7 Tax ................................................................... 132
4.8 Contingent liabilities and other
commitments ............................................... 133
4.9 Events after the reporting period ........... 133
SECTION 5
GENERAL ACCOUNTING POLICIES
5
General accounting policies ..................... 133
CARLSBERG GROUP ANNUAL REPORT 2021 PARENT COMPANY FINANCIAL STATEMENTS
124
INCOME STATEMENT
STATEMENT OF COMPREHENSIVE INCOME
DKK million
Administrative expenses
Other operating activities, net
Operating profit before special items
Special items
Financial income
Financial expenses
Profit before tax
Income tax
Profit for the year
Attributable to
Dividend to shareholders
Reserves
Profit for the year
Section
4.1
4.4
2.1
2.1
4.7
2021
-86
1
-85
80
3,264
-6
3,253
-30
3,223
3,486
-263
3,223
2020
-42
-4
-46
-2
3,211
-14
3,149
11
3,160
3,259
-99
3,160
DKK million
Profit for the year
Other comprehensive income
Retirement benefit obligations
Items that will not be reclassified to the income statement
Other comprehensive income
Total comprehensive income
Section
2021
3,223
2020
3,160
3.2
1
1
1
-1
-1
-1
3,224
3,159
CARLSBERG GROUP ANNUAL REPORT 2021 PARENT COMPANY FINANCIAL STATEMENTS
125
STATEMENT OF FINANCIAL POSITION
DKK million
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Investments in subsidiaries
Receivables
Tax assets
Total non-current assets
Current assets
Receivables
Tax receivables
Other receivables
Total current assets
Assets held for sale
Total assets
Section
31 Dec. 2021
31 Dec. 2020
DKK million
Section
31 Dec. 2021
31 Dec. 2020
4.5
4.5
1.1
4.7
1.2
1.2
4.5
EQUITY AND LIABILITIES
Equity
2
163
3
Share capital
218
Retained earnings
34,426
38,733
Total equity
324
-
324
93
Non-current liabilities
34,915
39,371
Retirement benefit obligations
55
25
630
710
275
9
371
655
Deferred tax liabilities
Provisions
Total non-current liabilities
Current liabilities
Borrowings
Trade payables
129
35,754
-
Provisions
40,026
Other liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
2.3
3.2
4.7
4.3
1.2
4.3
2,905
32,189
35,094
2,963
35,589
38,552
26
21
5
52
407
34
47
120
608
660
35,754
30
-
13
43
1,263
39
39
90
1,431
1,474
40,026
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CASH FLOWS
CARLSBERG GROUP ANNUAL REPORT 2021 PARENT COMPANY FINANCIAL STATEMENTS
126
DKK million
2021
Equity at 1 January
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Cancellation of treasury shares
Share-based payments
Share-based payments to employees in
subsidiaries
Share buy-back
Dividends paid to shareholders
Total changes in equity
Equity at 31 December
2020
Equity at 1 January
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Cancellation of treasury shares
Share-based payments
Share-based payments to employees in
subsidiaries
Share buy-back
Dividends paid to shareholders
Total changes in equity
Equity at 31 December
Section
Shareholders in Carlsberg A/S
DKK million
Share capital
2,963
-
-
-58
-
-
-
-
-58
2,905
Retained
earnings
35,589
3,223
1
3,224
58
14
91
-3,600
-3,187
-3,400
32,189
Operating profit before special items
Total equity
Depreciation and amortisation
38,552
Operating profit before depreciation and amortisation
3,223
Other non-cash items
1
Change in working capital
3,224
Restructuring costs paid
-
14
91
-3,600
-3,187
-3,458
35,094
Interest etc. received
Interest etc. paid
Income tax paid
Cash flow from operating activities
Acquisition of property, plant and equipment and intangible assets
Disposal of property, plant and equipment and intangible assets
Total operational investments
Disposal of securities
Dividends from subsidiaries and joint ventures
3,051
37,974
41,025
-
-
-88
-
-
-
-
-88
2,963
3,160
-1
3,159
88
8
353
-2,900
-3,093
-2,385
35,589
3,160
-1
3,159
-
8
Capital reductions in subsidiaries
Total financial investments
Other investments in real estate
Total other activities
Cash flow from investing activities
Free cash flow
Shareholders in Carlsberg A/S
353
External financing
-2,900
-3,093
-2,473
38,552
Cash flow from financing activities
Net cash flow
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
3.1
2.3
2.3
3.1
2.3
2.3
Section
4.4
1.2
1.2
2.3
2.2
2021
-85
18
-67
15
376
-
1
-6
67
386
-6
3
-3
-
3,260
4,000
7,260
-2
-2
7,255
7,641
-6,787
-854
-7,641
-
-
-
2020
-46
10
-36
-
88
-2
2
-13
28
67
-10
1
-9
5
3,204
2,500
5,709
-
-
5,700
5,767
-5,993
226
-5,767
-
-
-
SECTION 1
SUBSIDIARIES AND
RELATED PARTIES
CARLSBERG GROUP ANNUAL REPORT 2021 PARENT COMPANY FINANCIAL STATEMENTS
127
SECTION 1.1
INVESTMENTS IN
SUBSIDIARIES
The carrying amount includes goodwill of
DKK 11,206m (2020: DKK 11,206m) on
acquisition of subsidiaries.
Share-based payments to employees in
subsidiaries comprise exercised as well as
outstanding share-based incentive instruments.
Investments in subsidiaries
DKK million
2021
2020
Cost
Cost at 1 January
38,733
40,353
Disposals
-
-
Capital reduction
-4,000
-2,500
Share-based payments
to employees, net
Cost at 31 December
Carrying amount at
31 December
-307
34,426
880
38,733
34,426
38,733
Please see section 10 in the consolidated financial
statements for a list of companies in the Carlsberg Group.
ACCOUNTING ESTIMATES
AND JUDGEMENTS
Indications of impairment of investments in
subsidiaries are assessed annually by management.
Impairment tests are conducted in the same way as
for goodwill in the Group, cf. section 2.2 in the
consolidated financial statements.
It is management’s assessment that no indications of
impairment existed at year-end 2021. Impairment
tests have therefore not been carried out for
subsidiaries.
ACCOUNTING
POLICIES
Dividends on investments in subsidiaries are
recognised in the income statement of the Parent
Company in the financial year in which the dividend is
declared.
Investments in subsidiaries are measured at the lower
of cost and recoverable amount.
Share-based payments granted to employees of the
Company’s subsidiaries and the recharge of losses to
the subsidiaries in connection with the employees’
exercise of share-based awards are recognised as
contributions to and reductions of the investment in
the subsidiaries respectively.
SECTION 1.2
RELATED PARTIES
The Group delivered beer and soft drinks to the
Carlsberg Foundation.
The Carlsberg Foundation, H.C. Andersens
Boulevard 35, 1553 Copenhagen V, Denmark,
exercises control over Carlsberg A/S. The
Foundation holds 29.5% of the shares and
75.9% of the voting power in Carlsberg A/S,
excluding treasury shares.
The following transactions took place between
the Carlsberg Foundation and the Carlsberg
Group in 2021:
• The Carlsberg Foundation received a dividend
from Carlsberg A/S and participated pro rata
in the Carlsberg A/S share buy-back.
• Carlsberg A/S received statutory funding and
grants for research and development.
• Visit Carlsberg A/S, 100% owned by Carlsberg
A/S, hosted and administered events at the
Carlsberg Academy, which is owned by the
Carlsberg Foundation.
• Carlsberg A/S leased parking spaces from the
Carlsberg Foundation.
• Carlsberg Breweries leased storage facilities in
the researcher apartments.
These transactions are described in further
detail in section 8.3 of the consolidated
financial statements.
It is estimated that the benefit for the Carlsberg
Group corresponds to the value of the services
provided to the Carlsberg Foundation, which in
turn corresponds to what each party would
have had to pay to have the same deliverables
provided by external parties.
OTHER RELATED PARTIES
Related parties also comprise Carlsberg A/S’
Supervisory Board and Executive Board, their
close family members and companies in which
these persons have significant influence. During
the year, there were no transactions between
these parties and the Group, except for
remuneration as disclosed in section 3.
CARLSBERG GROUP ANNUAL REPORT 2021 PARENT COMPANY FINANCIAL STATEMENTS
128
SECTION 2
CAPITAL
STRUCTURE
SECTION 1.2 (CONTINUED)
RELATED PARTIES
SECTION 2.1
FINANCIAL ITEMS
No losses on loans to or receivables from
subsidiaries or joint ventures were recognised or
provided for in either 2021 or 2020.
Interest income relates to interest from loans to
subsidiaries, whereas interest expenses relate
to interest on borrowings.
SECTION 2.2
NET INTEREST-
BEARING DEBT
Transactions with subsidiaries
Financial items recognised
in the income statement
Net interest-bearing debt
2021
2020
DKK million
DKK million
2021
2020
Current borrowings
DKK million
Other operating
activities, net
Interest income
Interest expenses
Dividends received
Capital reduction
Loans
Receivables
Borrowings
Trade payables
Other payables
47
1
-1
3,260
-4,000
321
55
-407
-7
-6
40
2
-11
3,204
-2,500
321
275
Financial income
Interest income
Dividends from
subsidiaries
Gain on disposal of
financial assets
-1,263
Other
-17
Total
1
The fair value of receivables and borrowings in
subsidiaries corresponds to the carrying
amount in all material respects.
Financial expenses
Interest expenses
Other
Total
Gross interest-bearing debt
Receivables
1
2
Loans to subsidiaries
Net interest-bearing debt
3,260
3,204
-
3
5
-
3,264
3,211
-1
-5
-6
-11
-3
-14
Changes in net interest-bearing debt
Net interest-bearing debt at 1 January
Cash flow from operating activities, excluding interest-bearing part
Cash flow from investing activities
Share buy-back
Dividends to shareholders
Other
Total change
Net interest-bearing debt at 31 December
2021
407
407
-
-321
86
940
-386
-7,255
3,600
3,187
-
-854
86
2020
1,263
1,263
-2
-321
940
711
-67
-5,700
2,900
3,093
3
229
940
Financial items, net
3,258
3,197
No financial items were recognised in other
comprehensive income. The average effective
interest rate on loans to subsidiaries was 0.01%
(2020: 0.6%) and on loans from subsidiaries
0.03% (2020: 0.4%).
CARLSBERG GROUP ANNUAL REPORT 2021 PARENT COMPANY FINANCIAL STATEMENTS
129
SHARE BUY-BACK AND TREASURY SHARES
On 5 February 2021, the Company announced
its intention to continue the share buy-back
programme. The 2021 programme has been
executed as quarterly programmes, and
3,355,625 B shares worth DKK 3.6bn have
been repurchased in 2021. Ending with the
fourth quarterly programme, which was
finalised on 28 January 2022, the Company
has repurchased a total of 3,715,779 B shares
at a total purchase price of DKK 4.0bn over a
12-month period.
According to the authorisation of the Annual
General Meeting, the Supervisory Board may,
in the period until 13 March 2023, allow the
Company to acquire treasury shares up to a
total holding of 10% of the nominal share
capital at a price quoted on Nasdaq
Copenhagen at the time of acquisition with a
deviation of up to 10%. The permitted holding
of treasury shares covers those acquired in
share buy-back programmes. The Company
holds no class A shares.
Transactions with shareholders
in Carlsberg A/S
Dividends to
shareholders
Acquisition of
treasury shares
Total
2021
2020
-3,187
-3,093
-3,600
-6,787
-2,900
-5,993
In the 2021 financial year, the Company
acquired class B treasury shares of a nominal
amount of DKK 67m (2020: DKK 66m) at an
average price of DKK 1,073 (2020: DKK 882).
Class B treasury shares are acquired and
disposed of as part of the share buy-back
programme and to facilitate settlement of the
share-based incentive programmes.
At 31 December 2021, the fair value of
treasury shares amounted to DKK 3,800m
(2020: DKK 2,979m). The holdings of treasury
shares are specified in section 4.3 in the
consolidated financial statements.
DIVIDENDS
The proposed dividend of DKK 24.00 per share
(2020: DKK 22.00 per share), amounting to
DKK 3,486m (2020: DKK 3,259m), has
been included in retained earnings at
31 December 2021.
Dividends to be paid out in 2022 for 2021,
net of dividends on treasury shares held at
31 December 2021, will amount to
DKK 3,405m. Dividends paid out in 2021 for
2020, net of dividends on treasury shares,
amounted to DKK 3,187m (paid out in 2020
for 2019: DKK 3,093m). Dividends paid out to
shareholders in Carlsberg A/S do not impact
taxable income in Carlsberg A/S.
SECTION 2.3
SHARE CAPITAL
SHARE CAPITAL
At the Annual General Meeting on 15 March
2021, it was decided to reduce the share
capital of Carlsberg A/S by a nominal amount
of DKK 58,000,000 to a nominal amount of
DKK 2,905,136,120 by cancelling 2,900,000
of the B shares held by the Company, each
with a nominal value of DKK 20. The
cancellation was completed on 13 April 2021.
These shares had been repurchased as part of
the Company’s share buy-back programme.
At the Annual General Meeting on 14 March
2022, the Supervisory Board will recommend
that 3.4m treasury shares not used for the
hedging of the incentive programme will be
cancelled.
Share capital
Class A shares
Class B shares
Total share capital
Shares of
DKK 20
Nominal
value,
DKK ’000
Shares of
DKK 20
Nominal
value,
DKK ’000
Shares of
DKK 20
Nominal
value,
DKK ’000
1 January 2020
33,699,252
673,985
118,857,554
2,377,151
152,556,806
3,051,136
Cancellation of
treasury shares
31 December
2020
Cancellation of
treasury shares
31 December
2021
-
-
-4,400,000
-88,000
-4,400,000
-88,000
33,699,252
673,985
114,457,554
2,289,151
148,156,806
2,963,136
-
-
-2,900,000
-58,000
-2,900,000
-58,000
33,699,252
673,985
111,557,554
2,231,151
145,256,806
2,905,136
A shares carry 20 votes per DKK 20 share. B shares carry two votes per DKK 20 share. A preferential right to an 8% non-
cumulative dividend is attached to B shares. Apart from votes and dividends, all shares rank equally.
SECTION 3
STAFF COSTS AND
REMUNERATION
CARLSBERG GROUP ANNUAL REPORT 2021 PARENT COMPANY FINANCIAL STATEMENTS
130
SECTION 3.1
STAFF COSTS AND
REMUNERATION
The remuneration of the Supervisory Board,
the executive directors and key management
personnel is described in detail in the
Remuneration Report.
In 2021, the Supervisory Board received
total remuneration of DKK 10.05m (2020:
DKK 9.86m), comprising fixed salary only.
SHARE-BASED INCENTIVE PROGRAMMES
The executive directors in the Parent Company
are the same as for the Carlsberg Group.
Staff costs and remuneration
DKK million
Salaries and other remuneration
Retirement benefit costs - defined contribution plans
Share-based payments
Total
Please refer to section 7.3 in the consolidated
financial statements for share-based incentive
programmes for the executive directors.
fair value of share-based incentives, which is
expensed over the vesting period of the programme
according to the service conditions, is recognised in
staff costs and offset directly against equity.
PERFORMANCE SHARES
Besides the executive directors, one employee
in the Parent Company participates in the
Group’s performance share programmes as
described in section 7.3 in the consolidated
financial statements. Refunds etc. between
Carlsberg A/S and its subsidiaries are
recognised directly in equity.
ACCOUNTING
POLICIES
Staff costs are recognised in the financial year in
which the employee renders the related service. The
The fair value of share-based incentives granted to
employees in subsidiaries is recognised as
investments in subsidiaries and offset directly against
equity.
The difference between the purchase price and the
selling price for the exercise of share-based incentives
is settled between Carlsberg A/S and the individual
subsidiary and offset directly against investments in
subsidiaries.
The difference between the fair value of the Parent
Company’s equity instruments and the exercise price
of outstanding share-based incentives is recognised
as a receivable and offset directly against investments
in subsidiaries.
Share-based incentives granted to the Parent
Company’s own employees are recognised and
measured in accordance with the accounting policies
used by the Group.
Staff costs are included in the following items in the income statement
Administrative expenses
Other operating activities, net
Total staff costs recognised by the Parent Company
Staff costs recognised by other Group companies
Total
The Company had an average of 97 (2020: 95) full-time employees during the year.
2021
110
5
42
157
46
59
105
52
157
2020
99
5
26
130
29
63
92
38
130
SECTION 3.2
RETIREMENT
BENEFIT
OBLIGATIONS
Retirement benefit obligations and similar
obligations comprise payments to retired
directors that are not covered by an insurance
company. The plan is unfunded.
Total obligations amounted to DKK 26m
(2020: DKK 30m) and include actuarial losses
of DKK -1m (2020: DKK 1m) and benefits paid
in the year of DKK 3m (2020: DKK 4m).
Of the expected payment obligation, DKK 3m
is due within one year, DKK 13m between 1
and 5 years and DKK 10m after more than five
years from the reporting date.
The underlying actuarial assumptions are
based on local economic and labour market
conditions. The discount rate was 0.5% (2020:
0.5%). The rate of increase in future retirement
benefit obligations was 0% (2020: 0%).
During the year, DKK 0m (2020: DKK 0m)
was recognised in the income statement and
DKK 1m (2020: DKK -1m) in other
comprehensive income.
SECTION 4
OTHER DISCLOSURE
REQUIREMENTS
CARLSBERG GROUP ANNUAL REPORT 2021 PARENT COMPANY FINANCIAL STATEMENTS
131
SECTION 4.1
OTHER OPERATING
ACTIVITIES, NET
Other operating activities are secondary to the
principal activities of the Group and include
income and expenses relating to rental
properties and research activities.
Other operating activities, net
DKK million
Real estate, net
Research activities,
including the Carlsberg
Research Laboratory, net
Other, net
Total
2021
-9
11
-1
1
2020
9
-13
-
-4
Research expenses are partially financed
through funding received from the Carlsberg
Foundation for the operation of the Carlsberg
Research Laboratory and other grants.
ACCOUNTING
POLICIES
The funding and grants are recognised in the income
statement in the same period as the activities to
which they relate.
SECTION 4.2
CASH FLOW
and DKK 1m (2020: DKK 0m) falls due after
more than five years from the end of the
reporting period.
Change in working capital consists of
receivables of DKK 0m (2020: DKK 20m),
trade payables and other liabilities of
DKK 379m (2020: DKK 102m) and retirement
benefit obligations and other provisions of
DKK -3m (2020: DKK -34m).
Other activities cover real estate activities.
SECTION 4.3
PROVISIONS
Provisions primarily comprise warranty
provisions regarding real estate disposed of
and provisions for ongoing disputes.
At 31 December 2021, provisions amounted to
DKK 52m (2020: DKK 52m). Provisions
amounting to DKK 3m (2020: DKK 10m) were
utilised during the year. In 2021, unutilised
provisions of DKK 1m (2020: DKK 20m) were
reversed.
Of total provisions, DKK 47m (2020: DKK
39m) falls due within one year, DKK 4m
(2020: DKK 13m) between one and five years
SECTION 4.4
SPECIAL ITEMS
Special items of DKK 80m (2020: DKK -2m)
mainly comprise reversal of impairment of land
and buildings reclassified as assets held for sale
at the end of the reporting period, cf. section
4.5 below.
SECTION 4.5
ASSET BASE AND
LEASES
The carrying amount of intangible assets was
DKK 2m (2020: DKK 3m), and the carrying
amount of property, plant and equipment was
DKK 163m (2020: DKK 218m). Property, plant
and equipment comprised land and buildings of
DKK 127m (2020: DKK 180m) and plant and
machinery of DKK 36m (2020: DKK 38m).
After the end of the reporting period (1
February 2022), the company completed the
disposal of land and buildings with a carrying
amount of DKK 129m classified as held for
sale.
Depreciation and amortisation of DKK 18m
(2020: DKK 10m) were included in
administrative expenses.
All lease contracts in Carlsberg A/S were
related to short-term leases and leases of low-
value assets. The lease expenses recognised in
the income statement amounted to DKK 1m
(2020: DKK 1m). Such contracts comprise the
lease of copy and printing machines, coffee
machines, small IT devices and similar
equipment.
SECTION 4.6
FEES TO AUDITORS
Fees to auditors appointed by the Annual
General Meeting
DKK million
Statutory audit
Assurance engagements
Tax advisory
Other services
Total
2021
0.3
-
-
-
0.3
2020
0.3
-
-
-
0.3
CARLSBERG GROUP ANNUAL REPORT 2021 PARENT COMPANY FINANCIAL STATEMENTS
132
Reconciliation of tax for the year
ACCOUNTING
POLICIES
SECTION 4.7
TAX
Deferred tax assets amounted to DKK 13m
(2020: DKK 103m) and comprised provisions
and retirement benefit obligations of DKK 13m
(2020: DKK 13m), and tax losses etc. of DKK
0m (2020: DKK 59m).
The utilisation of tax loss carryforwards
depends on future positive taxable income
exceeding the realised deferred tax liabilities.
Unrecognised, non-expiring tax losses
amounted to DKK 210m (2020: DKK 0m).
Deferred tax liabilities amounted to DKK 34m
(2020: DKK 10m) and comprised tax on
property, plant and equipment of DKK 34m
(2020: DKK -31m), and tax provisions of
DKK 0m (2020: DKK 10m).
Deferred tax, net amounted to a liability of
DKK 21m (2020: asset of DKK 93m).
The net change in deferred tax assets of
DKK 114m comprised tax recognised in total
comprehensive income of DKK 217m (2020:
DKK 11m), change in tax provision of
DKK -10m (2020: DKK 0m) and a joint
taxation contribution of DKK -93m (2020:
DKK -29m).
The total tax for the year recognised in the
income statement comprised an expense of
DKK 30m (2020: income of DKK -11m). Of
the deferred tax assets, DKK 13m (2020: DKK
5m) is expected to be used within one year.
DKK million
Calculated tax on profit
Adjustments to tax for
prior years
Non-deductible
expenses
Tax-free dividend and
tax-exempt items
Tax for the year
2021
716
5
27
-718
30
2020
693
-1
3
-706
-11
ACCOUNTING ESTIMATES
AND JUDGEMENTS
The administration company, Carlsberg A/S,
has unlimited and joint legal responsibility with
the other Danish companies under the joint
taxation scheme for withholding taxes on
dividends, interest and royalties.
Carlsberg A/S recognises deferred tax assets,
including the tax base of tax loss carryforwards, if
management assesses that these tax assets can be
offset against positive taxable income in the
foreseeable future. This judgement is made annually
and based on budgets and business plans for the
coming years.
Carlsberg A/S is the administration company and
subject to the Danish rules on mandatory joint
taxation of the Carlsberg Group’s Danish companies.
Carlsberg A/S accordingly pays all income taxes to
the tax authorities under the joint taxation scheme.
Danish subsidiaries are included in the joint taxation
from the date when they are included in the
consolidated financial statements and up to the date
when they are excluded from the consolidation. The
jointly taxed Danish companies are taxed under the
on-account tax scheme.
On payment of joint taxation contributions, the
current Danish income tax is allocated between the
Danish jointly taxed companies in proportion to their
taxable income. Companies with tax losses receive
joint taxation contributions from other companies
that have used the tax losses to reduce their own
taxable profit (full absorption).
Tax on profit/loss for the year comprises profit/loss
from real estate partnerships (joint ventures), as these
are not individually taxed but included in the taxable
income of the partners. In addition, tax on profit/loss
and deferred tax are calculated and recognised as
described in section 6 in the consolidated financial
statements.
SECTION 5
CARLSBERG GROUP ANNUAL REPORT 2021 PARENT COMPANY FINANCIAL STATEMENTS
133
GENERAL
ACCOUNTING POLICIES
SECTION 4.8
CONTINGENT
LIABILITIES
AND OTHER
COMMITMENTS
Carlsberg A/S has issued guarantees to
subsidiaries for pension obligations of
DKK 342m (2020: DKK 350m).
Carlsberg A/S is jointly registered for Danish
VAT and excise duties with Carlsberg
Breweries, Carlsberg Danmark, Carlsberg
Supply Company Danmark and various other
Danish subsidiaries, and is jointly and severally
liable for payment of VAT and excise duties.
Carlsberg A/S is party to certain lawsuits,
disputes etc. of various scopes. In
management’s opinion, apart from items
recognised in the statement of financial
position or disclosed in the financial
statements, the outcome of these lawsuits,
disputes etc. will not have a material negative
effect on the Company’s financial position.
SECTION 4.9
EVENTS AFTER THE
REPORTING PERIOD
Apart from the events recognised or disclosed
in the financial statements, no events have
occurred after the reporting date of importance
to the financial statements.
The 2021 financial statements of Carlsberg
A/S have been prepared in accordance with
International Financial Reporting Standards
(IFRS) as adopted by the EU and further
requirements in the Danish Financial
Statements Act.
The financial statements are presented in
Danish kroner (DKK), which is the presentation
currency.
The accounting policies for the Parent
Company are the same as for the Group, cf.
section 9 in the consolidated financial
statements and the individual sections.
SIGNIFICANT ACCOUNTING ESTIMATES
AND JUDGEMENTS
In preparing Carlsberg A/S’ financial
statements, management makes various
accounting estimates and judgements that
form the basis of presentation, recognition and
measurement of the Company’s assets and
liabilities.
The estimates and judgements made are based
on historical experience and other factors that
management assesses to be reliable, but that
by their very nature are associated with
uncertainty and unpredictability. These
estimates and judgements may therefore prove
incomplete or incorrect, and unexpected events
or circumstances may arise.
The significant accounting estimates and
judgements made and accounting policies
specific to the Parent Company are presented
in the explanatory notes.
Financial statements
REPORTS
MANAGEMENT
STATEMENT
The Supervisory Board and the Executive
Board have today discussed and approved the
Annual Report of the Carlsberg Group and the
Parent Company for 2021.
The Annual Report has been prepared in
accordance with International Financial
Reporting Standards as adopted by the EU and
further requirements in the Danish Financial
Statements Act.
In our opinion, the consolidated financial
statements and the Parent Company’s financial
statements give a true and fair view of the
Carlsberg Group’s and the Parent Company’s
assets, liabilities and financial position at
31 December 2021 and of the results of the
Carlsberg Group’s and the Parent Company’s
operations and cash flows for the financial
year 2021.
Further, in our opinion the Management review
includes a fair review of the development in the
Carlsberg Group’s and the Parent Company’s
operations and financial matters, of the result
for the year, and of the Carlsberg Group’s and
the Parent Company’s financial position, as
well as describing the significant risks and
uncertainties affecting the Carlsberg Group and
the Parent Company.
In our opinion, the Annual Report of the
Carlsberg Group and the Parent Company for
the financial year 1 January to 31 December
2021, identified as Carlsberg-2021-12-31.zip,
has been prepared, in all material respects, in
compliance with the ESEF Regulation.
We recommend that the Annual General
Meeting approve the Annual Report.
Copenhagen, 4 February 2022
CARLSBERG GROUP ANNUAL REPORT 2021 FINANCIAL STATEMENTS
134
Executive Board of Carlsberg A/S
Cees ’t Hart
President & CEO
Heine Dalsgaard
CFO
Supervisory Board of Carlsberg A/S
Flemming Besenbacher
Chair
Henrik Poulsen
Deputy Chair
Hans Andersen
Carl Bache
Magdi Batato
Lars Fruergaard Jørgensen
Lilian Fossum Biner
Richard Burrows
Eva Vilstrup Decker
Finn Lok
Erik Lund
Søren-Peter Fuchs Olesen
Peter Petersen
Majken Schultz
Lars Stemmerik
REPORTS
INDEPENDENT
AUDITOR’S REPORTS
What we have audited
The Consolidated Financial Statements and
Parent Company Financial Statements of
Carlsberg A/S for the financial year 1 January
to 31 December 2021 comprise income
statement and statement of comprehensive
income, statement of financial position,
statement of changes in equity, statement of
cash flows and notes, including summary of
significant accounting policies for the Group as
well as for the Parent Company. Collectively
referred to as the “Financial Statements”.
TO THE SHAREHOLDERS OF
CARLSBERG A/S
REPORT ON THE AUDIT OF THE
FINANCIAL STATEMENTS
OUR OPINION
In our opinion, the Consolidated Financial
Statements and the Parent Company Financial
Statements (pp 51 - 134) give a true and fair
view of the Group’s and the Parent Company’s
financial position at 31 December 2021 and of
the results of the Group’s and the Parent
Company’s operations and cash flows for the
financial year 1 January to 31 December 2021
in accordance with International Financial
Reporting Standards as adopted by the EU and
further requirements in the Danish Financial
Statements Act.
Our opinion is consistent with our Auditor’s
Long-form Report to the Audit Committee and
the Board of Directors.
CARLSBERG GROUP ANNUAL REPORT 2021 FINANCIAL STATEMENTS
135
Appointment
We were first appointed auditors of Carlsberg
A/S on 30 March 2017 for the financial year
2017. We have been reappointed annually by
shareholder resolution for a total period of
uninterrupted engagement of five years
including the financial year 2021.
KEY AUDIT MATTERS
Key audit matters are those matters that, in
our professional judgement, were of most
significance in our audit of the Financial
Statements for 2021. These matters were
addressed in the context of our audit of the
Financial Statements as a whole, and in
forming our opinion thereon, and we do not
provide a separate opinion on these matters.
BASIS FOR OPINION
We conducted our audit in accordance with
International Standards on Auditing (ISAs) and
the additional requirements applicable in
Denmark. Our responsibilities under those
standards and requirements are further
described in the Auditor’s responsibilities for
the audit of the Financial Statements section
of our report.
We believe that the audit evidence we have
obtained is sufficient and appropriate to provide
a basis for our opinion.
Independence
We are independent of the Group in
accordance with the International Ethics
Standards Board for Accountants’ International
Code of Ethics for Professional Accountants
(IESBA Code) and the additional ethical
requirements applicable in Denmark. We have
also fulfilled our other ethical responsibilities in
accordance with these requirements and the
IESBA Code.
To the best of our knowledge and belief,
prohibited non-audit services referred to in
Article 5(1) of Regulation (EU) No 537/2014
were not provided.
Key audit matter
Revenue recognition
Recognition of revenue is complex
due to the variety of different
revenue streams, ranging from sales
of goods, royalty income and sales
of by-products recognised when all
significant risks and rewards have
been transferred to the customer or
in terms of the licence agreement.
Furthermore, the various discounts
and locally imposed duties and fees
in regard to revenue recognition are
complex and introduce an inherent
risk to the revenue recognition
process.
We focused on this area, as there is
a risk of non-compliance with
accounting standards due to
complexity originating from
different customer behaviours,
structures, market conditions and
terms in the various countries.
Revenue recognition and accounting
treatment are described in section
1.1 “Segmentation of operations –
Accounting estimates and
judgements” in the Consolidated
Financial Statements.
How our audit addressed the key audit matter
Key audit matter
How our audit addressed the key audit matter
Recoverability of the carrying amount of goodwill and brands
CARLSBERG GROUP ANNUAL REPORT 2021 FINANCIAL STATEMENTS
136
Our audit procedures included considering the appropriateness of the revenue
recognition accounting policies and assessing compliance with the accounting
standards.
We tested the relevant controls, including applicable information systems and
Management’s monitoring of controls used to ensure the completeness,
accuracy and timing of revenue recognised.
We discussed the judgements related to the recognition, and classification of
revenue with Management. Further, we performed substantive procedures
regarding invoicing, significant contracts, significant transaction streams
(including discounts), locally imposed duties, fees and cut-off at year-end in
order to assess the accounting treatment and principles applied.
We applied data analysis in our testing of revenue transactions in order to
identify transactions outside the ordinary transaction flow, including journal
entry testing.
Finally, we assessed the adequacy of disclosures relating to the revenue
recognition.
Our audit procedures included considering the appropriateness of the
accounting policies for assessing the recoverability of the carrying amount of
goodwill and brands and assessing compliance with the accounting standards.
In addressing the risks, we considered the appropriateness of Management’s
defined CGUs within the business. We evaluated whether there were factors
requiring Management to change their definition. We examined the
methodology used by Management to assess the carrying amount of goodwill
and brands assigned to CGUs, and the process for identifying CGUs that require
impairment testing to determine compliance with IFRS.
We walked through and tested relevant controls related to assessing the
carrying amount of goodwill and brands.
We performed detailed testing for the assets where an impairment review was
required or indications of impairment were identified. For those assets, we
analysed the reasonableness of significant assumptions in relation to the
ongoing operation of the assets.
We corroborated estimates of future cash flows and challenged whether they
are reasonable and supported by the most recent approved Management
budgets, including expected future performance of the CGUs, and challenged
whether these are appropriate in light of future macroeconomic expectations in
the markets.
We evaluated the assumptions used by Management, including assessment of
price and volume forecasts, discount rates and long-term growth rates, and
tested the mathematical accuracy of the relevant value-in-use models
prepared by Management. We made use of our internal valuation specialists in
the audit. Further, we assessed the appropriateness of disclosures, including
sensitivity analyses prepared for the significant assumptions.
The principal risks are in relation to
Management’s assessment of the
future timing and amount of cash
flows that are used to project the
recoverability of the carrying
amount of goodwill and brands.
There are specific risks related to
macroeconomic conditions and
volatile earnings caused by volume
decline, intensified competition
and changed regulations in key
markets – conditions that could also
result in Management deciding to
change brand strategy to drive
business performance.
Bearing in mind the generally long-
lived nature of the assets, the
significant assumptions are
Management’s view of prices,
volumes, discount rates, growth
rates, royalty rates, expected useful
life, costs, and future free cash
flows as well as the judgement in
defining cash-generating units
(CGUs).
We focused on this, as there is a
high level of subjectivity exercised
by Management in estimating
future cash flows and the models
used are complex.
The key assumptions and
accounting treatment are described
in section 2.2 “Impairment” in the
Consolidated Financial Statements.
.
CARLSBERG GROUP ANNUAL REPORT 2021 FINANCIAL STATEMENTS
137
STATEMENT ON THE MANAGEMENT REVIEW
Management is responsible for Management’s
Review, pages 3-49.
Our opinion on the Financial Statements does
not cover Management’s Review, and we do
not express any form of assurance conclusion
thereon.
In connection with our audit of the Financial
Statements, our responsibility is to read
Management’s Review and, in doing so,
consider whether Management’s Review is
materially inconsistent with the Financial
Statements or our knowledge obtained in the
audit, or otherwise appears to be materially
misstated.
Moreover, we considered whether
Management’s Review includes the disclosures
required by the Danish Financial Statements
Act.
Based on the work we have performed, in our
view, Management’s Review is in accordance
with the Consolidated Financial Statements
and the Parent Company Financial Statements
and has been prepared in accordance with the
requirements of the Danish Financial
Statements Act. We did not identify any
material misstatement in Management’s
Review.
MANAGEMENT’S RESPONSIBILITIES FOR THE
FINANCIAL STATEMENTS
Management is responsible for the preparation
of consolidated financial statements and parent
company financial statements that give a true
and fair view in accordance with International
Financial Reporting Standards as adopted by
the EU and further requirements in the Danish
Financial Statements Act, and for such internal
control as Management determines is
necessary to enable the preparation of financial
statements that are free from material
misstatement, whether due to fraud or error.
In preparing the Financial Statements,
Management is responsible for assessing the
Group’s and the Parent Company’s ability to
continue as a going concern, disclosing, as
applicable, matters related to going concern
and using the going concern basis of
accounting unless Management either intends
to liquidate the Group or the Parent Company
or to cease operations, or has no realistic
alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT
OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable
assurance about whether the Financial
Statements as a whole are free from material
misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs
and the additional requirements applicable in
Denmark will always detect a material
misstatement when it exists. Misstatements
can arise from fraud or error and are
considered material if, individually or in the
aggregate, they could reasonably be expected
to influence the economic decisions of users
taken on the basis of these Financial
Statements.
As part of an audit in accordance with ISAs and
the additional requirements applicable in
Denmark, we exercise professional judgement
and maintain professional scepticism
throughout the audit. We also:
• Identify and assess the risks of material
misstatement of the Financial Statements,
whether due to fraud or error, design and
perform audit procedures responsive to those
risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a
material misstatement resulting from fraud is
higher than for one resulting from error, as
fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or
the override of internal control.
• Obtain an understanding of internal control
relevant to the audit in order to design audit
procedures that are appropriate in the
circumstances, but not for the purpose of
expressing an opinion on the effectiveness of
the Group’s and the Parent Company’s
internal control.
• Evaluate the appropriateness of accounting
policies used and the reasonableness of
accounting estimates and related disclosures
made by Management.
• Conclude on the appropriateness of
Management’s use of the going concern basis
of accounting and based on the audit
evidence obtained, whether a material
uncertainty exists related to events or
conditions that may cast significant doubt on
the Group’s and the Parent Company’s ability
to continue as a going concern. If we
conclude that a material uncertainty exists,
we are required to draw attention in our
auditor’s report to the related disclosures in
the Financial Statements or, if such
disclosures are inadequate, to modify our
opinion. Our conclusions are based on the
audit evidence obtained up to the date of our
auditor’s report. However, future events or
conditions may cause the Group or the Parent
Company to cease to continue as a going
concern.
• Evaluate the overall presentation, structure
and content of the Financial Statements,
including the disclosures, and whether the
Financial Statements represent the underlying
transactions and events in a manner that
gives a true and fair view.
• Obtain sufficient appropriate audit evidence
regarding the financial information of the
entities or business activities within the Group
to express an opinion on the Consolidated
Financial Statements. We are responsible for
the direction, supervision and performance of
the group audit. We remain solely responsible
for our audit opinion.
We communicate with those charged with
governance regarding, among other matters,
the planned scope and timing of the audit and
significant audit findings, including any
significant deficiencies in internal control that
we identify during our audit.
We also provide those charged with
governance with a statement that we have
complied with relevant ethical requirements
regarding independence, and to communicate
with them all relationships and other matters
that may reasonably be thought to bear on our
independence and, where applicable, actions
taken to eliminate threats or safeguards
applied.
From the matters communicated with those
charged with governance, we determine those
matters that were of most significance in the
audit of the Financial Statements of the current
period and are therefore the key audit matters.
We describe these matters in our auditor’s
report unless law or regulation precludes public
disclosure about the matter or when, in
extremely rare circumstances, we determine
that a matter should not be communicated in
our report because the adverse consequences
of doing so would reasonably be expected to
outweigh the public interest benefits of such
communication.
REPORT ON COMPLIANCE WITH
THE ESEF REGULATION
As part of our audit of the Financial Statements
we performed procedures to express an opinion
on whether the annual report of Carlsberg A/S
for the financial year 1 January to 31
December 2021 with the filename Carlsberg-
2021-12-31.zip is prepared, in all material
respects, in compliance with the Commission
Delegated Regulation (EU) 2019/815 on the
European Single Electronic Format (ESEF
Regulation) which includes requirements
related to the preparation of the annual report
in XHTML format and iXBRL tagging of the
Consolidated Financial Statements.
Management is responsible for preparing an
annual report that complies with the ESEF
Regulation. This responsibility includes:
• The preparing of the annual report in XHTML
format;
• The selection and application of appropriate
iXBRL tags, including extensions to the ESEF
taxonomy and the anchoring thereof to
elements in the taxonomy, for all financial
information required to be tagged using
judgement where necessary;
CARLSBERG GROUP ANNUAL REPORT 2021 FINANCIAL STATEMENTS
138
• Ensuring consistency between iXBRL-tagged
data and the Consolidated Financial
Statements presented in human-readable
format; and
• For such internal control as Management
determines necessary to enable the
preparation of an annual report that is
compliant with the ESEF Regulation.
Our responsibility is to obtain reasonable
assurance on whether the annual report is
prepared, in all material respects, in compliance
with the ESEF Regulation based on the
evidence we have obtained, and to issue a
report that includes our opinion. The nature,
timing and extent of procedures selected
depend on the auditor’s judgement, including
the assessment of the risks of material
departures from the requirements set out in the
ESEF Regulation, whether due to fraud or
error. The procedures include:
• Testing whether the annual report is prepared
in XHTML format;
• Obtaining an understanding of the company’s
iXBRL tagging process and of internal control
over the tagging process;
• Evaluating the completeness of the iXBRL
tagging of the Consolidated Financial
Statements;
• Evaluating the appropriateness of the
company’s use of iXBRL elements selected
from the ESEF taxonomy and the creation of
extension elements where no suitable
element in the ESEF taxonomy has been
identified;
• Evaluating the use of anchoring of extension
elements to elements in the ESEF taxonomy;
and
• Reconciling the iXBRL-tagged data with the
audited Consolidated Financial Statements.
In our opinion, the annual report of Carlsberg
A/S for the financial year 1 January to
31 December 2021 with the file name
Carlsberg-2021-12-31.zip is prepared, in all
material respects, in compliance with the ESEF
Regulation.
Hellerup, 4 February 2022
PricewaterhouseCoopers
Statsautoriseret Revisionspartnerselskab
CVR No 3377 1231
Mogens Nørgaard Mogensen
State Authorised Public Accountant
mne21404
Michael Groth Hansen
State Authorised Public Accountant
mne33228
CARLSBERG GROUP ANNUAL REPORT 2021 FINANCIAL STATEMENTS
139
Carlsberg A/S
1 J. C. Jacobsens Gade
1799 Copenhagen V
Denmark
Phone +45 3327 3300
www.carlsberggroup.com
CVR No. 61056416
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