Annual Report • Aug 3, 2011
Annual Report
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Annual report 2010/2011
"We want Harboe to be an attractive business, striking the optimum balance between growth opportunities and risks. The foundation is our customers' demand for high-quality products, but we also wish to drive growth through innovation."
Bernhard Griese CEO
| Strong development in the business | 4 |
|---|---|
| The financial year for the group in outline | 7 |
| Outlook 2011/12 | 7 |
| Financial highlights | 8 |
| Management's review | 11 |
| Management's statement | 42 |
| Independent auditor's report | 44 |
| Members of the Board of Directors | 46 |
| Income statement for 2010/11 | 51 |
| Statement of comprehensive income for 2010/11 | 52 |
| Balance sheet as at 30 April 2011 | 53 |
| Cash flow statement for 2010/11 | 55 |
| Statement of changes in equity | 56 |
| Notes overview | 57 |
| Income statement for 2010/11 | 105 |
| Statement of comprehensive income for 2010/11 | 106 |
| Balance sheet as at 30 April 2011 | 107 |
| Cash flow statement for 2010/11 | 109 |
| Statement of changes in equity for 2010/11 | 110 |
| Notes overview | 111 |
| Company information | 142 |
"Our managers and employees are the ones that create results in Harboe. Harboe's strong focus on further developing competencies and nurturing our corporate culture is therefore essential to the future value creation."
A goal of stable and long-term value creation is the driving force behind all decision-making at Harboe. It is therefore a pleasure to look back on the past year and find that our decisions and strategic initiatives have created the positive results we wanted. Our core business developed satisfactorily with increasing revenue and solid underlying operations. And despite very intensive competition in all our core markets, we have maintained our market position, a position that is created through strong customer relations and our ability to deliver the quality, quantity and new innovative products our customers demand. Our earnings during the year were helped by more stable prices of our primary raw materials, enabling us to deliver again this year a significantly improved operating profit compared to last year. However, we are well aware that the sensitivity to fluctuations in our input costs continues to be one of the most significant risk factors in the business. Indeed, the outlook for our earnings margins for the coming year is also affected by the fact that we are now seeing a trend for increasing prices of raw materials. This makes the continued development in our two other strategic focus areas – our export activities and malt extract activities – all the more important. And the business results for the past year show that we are on the right track.
The export business is now marketing Harboe's products in more than 70 markets worldwide, and the activities continue to grow. The export markets hold an attractive potential, because demand is growing in the regions that Harboe is focusing on. This applies to both beer and soft drinks and not least the markets for non-alcoholic beverages in the Middle East and Central Asia which are growing rapidly. At the same time, we are extensively marketing our products under our own brands with higher earnings margins than in the core business. These activities are therefore increasingly contributing positively to results. During the year, we have further strengthened the sales organisation for the export activities in line with a targeted growth strategy which is to gradually increase the activities' relative share of the group's overall business.
Our second important focus area is the malt extract activities which in several ways hold an interesting growth potential. We have a solid platform for selling traditional malt extract to customers in the food industry, which continues to grow and develop positively. Furthermore, our focused development activities have resulted in a new unique clear malt extract, which has a wide range of applications within drinks production. The product was developed and tested in close collaboration with a number of large international drinks manufacturers, which are showing considerable interest in the product. In the past year, this has resulted in new strategic collaboration agreements and substantial orders. We have allocated additional resources to these activities during the year, and both the continued development activities and sales efforts are showing continuous positive results. We will therefore maintain our strong focus on this area in future, and we expect to see ever increasing revenue and earnings within this area in the coming years.
Naturally, the positive results for the year are also the result of a significant contribution from our well-run and efficient production which has supplied all the volume and quality our customers demand. Our three breweries form the backbone of our company, and we will continue to strengthen and optimise them as the group continues to grow.
Harboe has continuously assessed the continued strategic potential of its foodstuff sector, which is experiencing fierce competition and heavy price pressure. Based on this assessment, we made the final decision to sell the activities. We have rented out the production facilities so in future this part of the business is to be considered a rental business. In return, we will devote all our attention to the continued development of the brewery sector.
The coming year will see considerable challenges with higher raw material prices and continued intensive competition. But the potential for continued value creation is attractive, and our company is strong and healthy, not least due to Harboe's strong corporate culture and competent employees. We also focused on strengthening and further developing our employees to meet the high demands by the international markets. And with the exceptional support, dedication and constant will to create positive results that our managers and employees show every day, I am confident that Harboe will show important progress in the coming year.
Bernhard Griese CEO
| 2010/11 | 2009/10 | 2008/09 | 2007/08 | 2006/07 | |
|---|---|---|---|---|---|
| DKK m DKK |
m DKK | m DKK | m DKK | m | |
| Key figures | |||||
| Earnings | |||||
| Gross revenue | 1,821.3 | 1,804.0 | 1,806.4 | 1,607.4 | 1,649.4 |
| Taxes on beer and soft drinks | (263.5) | (279.3) | (261.8) | (236.5) | (266.6) |
| Revenue | 1,557.8 | 1,524.7 | 1,544.6 | 1,370.9 | 1,382.8 |
| Operating profit (EBIT) | 87.0 | 64.3 | 40.9 | 21.6 | 88.3 |
| Net financials | (5.9) | (6.2) | (5.8) | (5.3) | (2.8) |
| Profit before tax | 81.1 | 58.1 | 35.1 | 16.3 | 85.5 |
| Net profit for the year | 60.7 | 43.0 | 25.6 | 20.1 | 56.5 |
| Balance sheet | |||||
| Total assets | 1,685.5 | 1,645.6 | 1,606.4 | 1,199.3 | 1,214.9 |
| Equity | 753.4 | 730.3 | 664.5 | 696.9 | 685.8 |
| Net interest-bearing debt | 140.6 | 152.3 | 119.6 | 80.0 | 46.1 |
| Investments etc. | |||||
| Investments in intangible assets1 | 5.7 | 8.2 | 3.0 | 6.1 | 0.0 |
| Investments in property, plant and equipment2 | 141.8 | 166.0 | 115.9 | 180.3 | 73.5 |
| Depreciation, amortisation, impairment losses | |||||
| and write-downs | 130.7 | 124.6 | 121.9 | 109.0 | 103.0 |
| Cash flows | |||||
| Cash flows from operating activities | 192.2 | 94.2 | 148.6 | 56.9 | 86.6 |
| Cash flows from investing activities | (148.4) | (152.7) | (438.9) | (97.5) | (111.0) |
| Cash flows from financing activities | (63.8) | 22.9 | 259.2 | (9.6) | (44.6) |
| Change in cash and cash equivalents | (20.0) | (35.7) | (31.1) | (50.2) | (69.0) |
1 Excluding plant under construction.
2 Excluding spare parts and plant under construction.
3 The financial highlights have been prepared in accordance with the 'Recommendations and Financial Ratios 2010' issued by the Danish Society of Financial Analysts, cf. the description in note 1.
| 2010/11 | 2009/10 | 2008/09 | 2007/08 | 2006/07 | |
|---|---|---|---|---|---|
| DKK m DKK |
m DKK | m DKK | m DKK | m | |
| Ratios in % | |||||
| Profit margin | 5.6 | 4.3 | 2.6 | 1.6 | 6.4 |
| Solvency ratio | 44.7 | 44.4 | 41.4 | 58.2 | 56.4 |
| EBITDA margin | 14.0 | 12.4 | 10.5 | 9.5 | 13.8 |
| Gearing | 18.7 | 20.9 | 18.0 | 11.5 | 6.7 |
| Acid test ratio | 85.5 | 91.4 | 95.5 | 99.0 | 92.3 |
| Return on invested capital (ROIC) | 10.2 | 8.2 | 6.2 | 2.0 | 8.1 |
| Share-related ratios | |||||
| Earnings per share of DKK 10, DKK (EPS) | 10.6 | 7.3 | 4.4 | 3.4 | 9.5 |
| Cash flow per share of DKK 10, DKK (CFPS) | 33.7 | 16.1 | 25.5 | 9.6 | 14.6 |
| Equity value per share of DKK 10, DKK | 125.6 | 123.8 | 114.0 | 117.1 | 115.3 |
| Share price, year-end | 127.0 | 112.0 | 112.0 | 137.0 | 218.2 |
| Price/earnings | 12.0 | 15.4 | 25.4 | 40.4 | 23.0 |
| Dividend per DKK 10 share, DKK | 1.5 | 1.5 | 1.5 | 1.5 | 1.5 |
| Employees | |||||
| Average number of full-time employees | 572 | 543 | 520 | 483 | 486 |
Harboes Bryggeri A/S is listed on the stock exchange and is the parent of the Harboe group.
The group's core business, constituting more than 87.5% of the total gross revenue of the group, is the production and sale of beer, soft drinks, malt beverages and malt wort products.
The Harboefarm A/S foodstuff company and its sale of centrally packaged fresh and processed meat for the retail sector contributes the remaining 12.5% of revenue.
Consolidated revenue totalled DKK 1,558 million in 2010/10 against DKK 1,525 million the year before, corresponding to an increase of 2.2%.
Revenue in the brewery sector increased by 2.9% to DKK 1,321 million, while revenue in the foodstuff sector fell by 1.7% at DKK 237.1 million.
Developments are described in further detail under the different sectors.
EBITDA totalled DKK 217.6 million.
Operating profit (EBIT) amounted to DKK 87.0 million against DKK 64.3 million last year, up DKK 22.7 million or 35.3%.
Depreciation and amortisation of intangible assets and property, plant and equipment are included in the operating profit with DKK 130.7 million against DKK 124.6 million the year before.
Profit before tax was DKK 81.1 million against DKK 58.1 million the year before, up 39.6%.
The profit before tax is in line with the outlook of a profit in the range of DKK 75-85 million announced in the annual report for Q1 2010/11 and which was reiterated in connection with the interim report for Q3.
Net profit for 2010/10 amounted to DKK 60.7 million compared to DKK 43.0 million the year before.
As at 30 April 2011, equity amounted to DKK 753.4 million against DKK 730.3 million the year before.
Equity is affected by the results for the period, foreign currency translation adjustments in respect of foreign subsidiaries, acquisition of treasury shares and adjustments of the reserve for adjustment to fair value of financial assets available for sale as well as the distribution of dividend.
Total investments for the year were DKK 147.5 million, of which DKK 141.8 million concerned property, plant and equipment. The investments concern continued expansions of the malt extract production, including capacity-increasing investments. Moreover, major investments have been made in expanding the capacity of Harboes Bryggeri's wastewater treatment plant and in environmental optimisation. As part of the group's continued expansion plans, additional land in conjunction with the group's production units in Denmark and Germany was also purchased.
The purpose of the group's investment strategy is to ensure continued expansion of the group's position in both new and existing main markets. Furthermore, the investments are to contribute to optimising the group's utilisation of resources and ensure that the streamlining of the group's production facilities has a positive effect on the consumption of resources and emissions in relation to the development in production volume.
Cash flows from operations amounted to DKK 192.2 million in 2010/11 against DKK 94.2 million the year before. Trade receivables were down DKK 2.8 million, while trade payables were up DKK 28.5 million. Traditionally, Harboe has a lot of funds tied up in inventories at the end of the financial year in preparation for the summer high season. Inventories increased by DKK 16.0 million.
Harboe is continuously working to strengthen cash flows, including maintaining a strong focus on managing inventories, trade receivables and trade payables. Harboe will continue its strategic focus on strengthening cash flows from operations in the coming year as well.
Cash flows from investing activities totalled DKK 148.4 million, and cash flows from financing activities amounted to DKK 63.8 million. The negative cash flow from financing activities covers repayment of mortgage debt and purchase of treasury shares. Purchase of treasury shares amounted to DKK 33.3 million.
Free cash flow – changes in cash and cash equivalents – amounted to DKK 20.0 million against DKK -35.7 million the year before.
The group's cash resources, which are composed of cash and credit facilities granted but not yet activated, amounted to DKK 45.7 million as at 30 April 2011.
Added to this comes the holding of 350,585 treasury shares amounting to DKK 44.5 million stated at share market value as at 30 April 2011.
Moreover, the fair value of the portfolio of bonds is added, amounting to DKK 281.8 million as at 30 April 2011.
The portfolio of bonds represents strategic cash resources established with a view to guaranteeing the necessary manoeuvrability for Harboe to make interesting acquisitions, engage in strategic partnerships and realise similar investments underpinning the group's strategy. Due to market conditions, using this facility to repay other debt has not been an attractive option.
As at 30 April 2011, the group's net interest-bearing debt amounted to DKK 462.2 million against DKK 474.6 million the year before.
Adjusted for the portfolio of bonds of DKK 281.8 million, the group's net interest-bearing debt amounted to DKK 140.6 million as at 30 April 2011 against DKK 152.3 million the year before.
Harboe has begun the shutdown of its foodstuff sector. The foodstuff sector continues to lease the company's farms until 2017 and has on 1 June 2011 concluded additional lease agreements for the production and warehouse facilities at the factory in Skælskør, Denmark.
In line with the group's strategy, Harboe will continue to focus on providing customers with a high level of quality and reliable deliveries of the group's core products.
Harboe's continued growth and earnings must be secured through continued intense focus on innovation and the targeted pursuit of the product development strategy laid down.
A strengthened organisation within important areas will ensure that more new and interesting markets and market segments can contribute positively to Harboe's continued growth.
Harboe expects the brewery sector to continue to develop positively in 2011/12, and the investments which have been made in innovation, product development and capacity expansions over the past years will contribute to strengthening growth in both volume and revenue.
More marketing and the development of malt extract are expected to contribute positively to growing an attractive segment of customers within the drinks industry and continue the positive trend. The malt extract activities are expected to contribute increasingly to the group's revenue and results in the coming year.
Furthermore, it is expected that the continued expansion of the export activities will also contribute positively to both revenue and earnings.
The prices of the most important raw materials, which stabilised at a more normal level, are rising again. Competition in the main markets is expected to remain intensive, which will limit the possibilities of adding increased raw material costs to the selling prices, thereby putting earnings margins under pressure.
The shutdown of the foodstuff sector and the disposal of the production equipment at the beginning of the financial year will reduce the group's revenue, while the impact on results will be limited.
For the continuing part of the business, Harboe expects to realise its goal of a revenue growth of 5%, but the increased input prices are expected to reduce the profit margin achieved in 2010/11.
Overall, the outlook is for a consolidated profit before depreciation and amortisation, financial items and tax (EBITDA) in the range of DKK 160- 170 million and a profit before tax in the range of DKK 70-80 million.
The outlook for the results for the year as a whole is positively affected by DKK 25-30 million from a changed estimate of depreciation of property, plant and equipment and cessation of depreciation of production equipment in Harboefarm A/S.
Cash flows from operating activities are expected to be in the range of DKK 150-170 million. Harboe is continuously working to strengthen cash flows from operating activities, which will remain a focus area in the coming year.
Investments planned for FY 2011/12 are in the region of DKK 50-70 million. Following the past years' major investments in new technology and production facilities, the investments planned for the rest of the coming financial year will primarily focus on ongoing maintenance and efficiency improvements.
"We want Harboe to be an attractive business, striking the perfect balance between growth opportunities and risks. Our customers' demand for high-quality products is the basis of our business, but we also want to drive growth through innovation."
Harboe produces and markets beer, soft drinks, malt drinks and malt wort products for the main markets in Denmark, Germany, Sweden, Norway and the Baltic States. Furthermore, the company's activities are supplemented by increasing exports, and the group's beer and soft drinks are sold in more than 70 countries in Europe, the Middle East, Africa, USA and Asia. The malt extract activities add another 20 countries to this figure. Exports account for approx. 70% of the group's sales.
Total beer sales have been declining in Europe in recent years, whereas sales of soft drinks continue to rise. The increased focus on diet and health in recent years has led to positive increases in sales of sugar-free soft drinks in particular. Developments in sales of soft drinks are also driven by continued product development within this segment, including energy and sports drinks, advancing in the market.
In many markets outside Europe, sales of beer, soft drinks, malt drinks and malt wort products are increasing. In the Middle East and Central Asia, particularly the market for non-alcoholic beverages continues to grow, and growth in the segment is stimulated by continuous product development. The economic growth across the Asian and African countries also contributes to increasing consumption within all Harboe's product categories.
Sales of Harboe's core products are primarily sold to the retail sector and have historically focused on the private-label segment. Private-label products are products which are marketed under individual brands tailored to the individual supermarket chains.
To ensure the continued creation of value, Harboe continues to focus on maintaining a high volume of the company's core products and on protecting its well-established position for these products in the existing main markets. Harboe will drive developments in these main markets and provide customers with a high level of quality, flexibility, reliable deliveries and an attractive product programme in tune with the times.
At the same time, Harboe strives to ensure optimum utilisation of the group's production capacity and competencies through strategic collaboration agreements with other drinks manufacturers on contract manufacturing, packaging and product development within product segments that do not cannibalise on Harboe's own business.
The export markets hold an attractive potential with growing demand and more nuanced competition that allows us to achieve higher earnings margins than in the core business within a number of segments. Harboe pursues a diversified growth strategy based on regional demand patterns and market opportunities as far as product range and packaging types and sales and distribution models are concerned. The products are extensively marketed under the company's own brands supplemented by private-label products whenever commercially attractive. The activities are expected to increasingly contribute to the group's revenue and EBITDA over the coming years.
Over a period of several years, Harboe has established a solid platform for the sales of traditional malt extract to customers in the food industry, primarily in Europe. The business is developing particularly positively and still holds an attractive growth potential in the region, which the group wants to exploit through a further expansion of the sales organisation. Harboe also invests continuously in development activities, which can strengthen the business' continued development and competitiveness.
A concrete result of these activities is a clear malt extract which has a wide range of applications within drinks production, which is a new and highly interesting segment. The clear malt extract adds a natural flavour and sweetness to the beverage combined with a number of positive nutritional properties in the form of proteins and vitamins. Compared with competing products, the clear malt extract has been processed even further and can thus eliminate several steps in the usual manufacturing process at the drinks manufacturer.
Harboe's clear malt extract thus has a unique and attractive marketing profile vis-à-vis large drinks manufacturers, which show considerable interest in the product. In the past year, this has resulted in new strategic collaboration agreements and orders. The area continues to hold considerable potential which Harboe wants to make the most of. Further marketing of the clear malt extract will thus be a central element in the strategic development for the coming years.
The clear malt extract will also form part of the further development of Harboe's own products, including the non-alcoholic malt drinks marketed by the group in a growing number of export markets.
Efficient and flexible production facilities capable of supplying high quality and handling the expected growth in volume are a prerequisite for maintaining the group's market position within the core area, while at the same time realising an ambitious growth strategy. In addition to common maintenance and constant streamlining, Harboe will continuously assess the need for investments in new production capacity and technology.
Harboe expects the intensive competition to continue within the group's core areas. At the same time, regular fluctuations in prices of Harboe's core raw materials will continue to be a risk factor and limit the opportunities for permanently raising the earnings margin for this part of the business. However, it is expected that the continued realisation of the group's growth strategy will contribute to overall more robust earnings – both relatively and in absolute terms.
Harboe aims to achieve annual revenue growth of 5-10% and a long-term profit margin of more than 6-8%. This is to contribute to maintaining a return on the invested capital of an attractive 8-10%. Furthermore, Harboe will continually focus on maintaining a strong cash flow from the group's operations.
The group's objectives as regards its capital structure have been determined based on a desire to maintain a high level of financial resources at all times. This will enable the investments in continued organic growth and value creation which are necessary for the group to be at the forefront of market trends and customer requirements.
Furthermore, the group aims for its financial resources to be made up of its own funds and for them to be flexible enough to allow for growth through acquisitions or participation in large partnerships. At the same time, the group aims to ensure long-term value creation for its shareholders by gradually strengthening the company's market value in step with the planned development of the group's activities. The aim is for this to be supplemented by continuous returns through the continued distribution of dividend or share buy-back programmes.
"Intensive competition and continued consolidation make our core markets challenging. But we also find that high quality, flexibility and proactive business development make a difference in our customer relations."
Harboe's core business is the production and marketing of a wide range of beer, soft drinks and other selected drinks products in selected main markets in northern Europe, including Denmark, Norway, Sweden, the Baltic States and Germany, and the Danish-German border area which constitutes a special segment.
Harboe's strategy is to focus on maintaining a high volume of the company's core products and protecting its well-established position for these products in the existing main markets. Harboe will drive developments in these main markets and provide customers with a high level of quality, flexibility, reliable deliveries and an attractive product programme in tune with the times.
In the main markets, Harboe primarily sells its products to the retail sector, which has seen ongoing consolidation in recent years, especially among the discount chains. Ongoing consolidation has also taken place among Harboe's competitors, which has further increased competition in these markets.
Harboe's core products are primarily aimed at the private-label segment, which is mainly marketed by the discount chains. In most of Europe, this segment is increasing its relative share of the traditional beer and soft drinks market in relation to the more expensive branded products in the same categories.
The products in the private-label segment are marketed at discount prices, and competition is fierce in all markets.
As a supplement to the private-label segment, Harboe is marketing a range of specialty products under its own brands, including the specialty products from Skælskør Bryghus and GourmetBryggeriet. GourmetBryggeriet was acquired in FY 2009/10, and the activities are now fully integrated into the group with positive results from purchasing and sales synergies and continued product development within the segment.
Competitors are both local and regional players, and the private-label segment is regularly also challenged by branded products which are periodically marketed at discount prices.
In the European markets, total beer sales have been falling in the past ten years, and this trend continued in the past financial year. However, sales of soft drinks continued to grow and particularly the sugar-free segment continues to develop positively and constitutes an ever-increasing part of the total soft drink market. Developments in sales of soft drinks are also driven by continued product development within this segment, including energy and sports drinks, advancing in the market.
In the past year, Harboe's core business developed positively with increasing revenue, and the group's market position was maintained in all markets. The development is driven by high quality and reliable deliveries combined with continued product and packaging innovation in close cooperation with key customers.
Furthermore, Harboe's flexible utilisation of capacity has made it possible to further expand its collaboration on contract manufacturing for a number of partners where focus also has been on contributing Harboe's expertise and production to the joint development of new products and unique packaging types that strengthen the marketing and sales of the products.
In the coming year, focus will be on strengthening and maintaining the company's close collaboration with customers, continued focus on high quality and reliable deliveries and targeted development activities that match the customers' needs.
Harboe exports a wide range of products to more than 70 markets outside the group's core markets, which are concentrated in the region bordering the Baltic Sea. Geographically, the activities are directed at eight regions worldwide: Scandinavia, rest of Europe, Africa, the Middle East, Asia, Caribbean/South America, North America/Canada and Oceania (Australia and New Zealand).
The business focuses on four product categories: Beer, malt drinks, energy drinks and non-alcoholic malt drinks. Furthermore, several other of the group's products, including soft drinks, ice tea, ginger drinks etc., are marketed in selected markets.
The export markets are characterised by growing demand for beer and soft drinks, and the activities have delivered double-digit growth rates in recent years. By pursuing a targeted regional product and distribution strategy, Harboe seeks to meet the individual demand patterns in the best possible way. The recent years' general economic growth in both Africa and Asia has created a basis for a growing consumption of beverages. In African countries, there is a large and culturally based demand for malt drinks, but the rest of Harboe's product range has also seen highly positive growth. Similar consumption and development patterns are seen in the Caribbean/South American markets. Non-alcoholic beverages are particularly popular in the Middle East, and Harboe's non-alcoholic malt drinks are aimed at a broad segment of consumers comprising both children and adults. The products' nutritional properties due to their protein and vitamin content also meets a clear trend in demand in these markets. The more established and mature markets in Europe, North America/Canada and Oceania are characterised by more moderate demand, but with room for niche players that can offer targeted products and packaging types to complement the traditional market.
The growth in Harboe's export markets is primarily driven by targeted sales of products under own brands. Within the beer category, it is especially the brands Bear Beer, Darguner and Harboe that are being marketed and receive positive recognition in the dedicated markets. However, the brand strategy is also supplemented by private-label products whenever commercially appropriate and whenever it may help to further boost sales in the individual market.
The malt drinks are mainly marketed under Harboe's own brand Hypermalt, which has a strong position in several markets. This segment is also supplemented by private-label products in collaboration with local partners that can offer reliable and long-term sales. The non-alcoholic malt drinks are also marketed under the Cheers brand in selected markets. Within energy drinks, particularly the brands X-ray and Hustler play a key role in the company's marketing campaigns, supplemented by private-label products. Other products are also marketed under Harboe's own brand, which includes the range of soft drinks, ginger drinks etc.
The marketing of Harboe's export portfolio is carried out in close collaboration with key national and regional distributors worldwide. Collaboration agreements have been concluded directly with major retail customers in selected markets, and the group has additionally entered into partnerships with several large drinks manufacturers concerning the production and distribution of selected products in the export markets.
In recent years, Harboe has built up a solid network of partners in the distribution area which have extensive knowledge of the local markets and specific demand. This network is continuously being expanded, and dedicated efforts are going into developing mutually value creating partnership models with strategic sales, marketing and systematic follow-up goals. As the markets develop, Harboe will assess the need for establishing local sales offices. A sales office in China was thus established in 2011.
Harboe's export activities are developing particularly positively with double-digit growth rates in sold volumes. The successful positioning of Harboe's own brands in the export markets combined with a product and packaging offering that to a large extent meets local and regional demand patterns mean that the earnings margins of these activities can be maintained at an attractive level.
In line with the group strategy of creating continued growth and increased earnings, Harboe will further develop the export activities in the coming years through further expansion of the sales organisation and targeted marketing campaigns with special focus on the attractive growth markets in the Middle East and Asia.
"We are seeing a strong and ever increasing demand for natural raw materials that can make a difference for our food. Our product development within malt extract meets this trend, while at the same time helping customers to achieve ever more efficient production processes."
Harboe's malt extract activities are based on two business areas: The traditional malt extract for the food industry and activities involving new variations of malt extract for the drinks industry.
For more than 60 years, the traditional malt extract has been marketed as an ingredient for the food industry in a number of targeted products. The malt extract is used as a natural alternative to sugars, flavourings and colourings used in the production of many different foods and beverages, including bread, cereal, chocolate, malt beer and other malt-based beverages. In addition to the natural colourings and sweeteners, malt extract has a number of good properties in terms of nutrition and quality, and the attractive product profile is an important asset when marketing the product to selected production industries, including in particular bakeries and other food producers.
The range of products within the traditional malt extract is sold to customers in the food industry with primary focus on the European market. In recent years, the business has developed particularly positively with strong growth in sales. Sales are driven by rising demand and a general recognition of Harboe's products in an industry where food safety and quality are paramount. This is further supported by Harboe's continued product development within the category, which includes development of new variants based on other grain types than the traditional barley, among other things. The group has thus launched a new rye-based malt extract, and another oatmeal-based product variation is in the pipeline.
The market for quality products within the traditional malt extract holds an attractive growth potential in the region which the group wants to utilise through a continued focused strengthening of the product portfolio and further expansion of the sales organisation.
Using the group's extensive competencies within malt extract, Harboe has in recent years invested in the improvement of process equipment and intensified the development activities in order to strengthen the business' continued development and competitiveness.
The development activities have been driven by Harboe's own development department and has involved groups of researchers from both Denmark and abroad.
Specifically, these activities have resulted in a clear malt extract with new and interesting applications within drinks production. Compared to traditional products, the clear malt extract is a further processed, stable and easily water-soluble component that can be used directly and more efficiently in the production of a range of beverages, including beverages where the colour of the malt is unwanted. The malt extract can thus be used for the production of beer, soft drinks and non-alcoholic beverages.
Harboe's clear malt extract has been introduced to several major international customers in the drinks industry that are showing considerable interest in the product, and test productions have been carried out at a number of customers in the development phase. In the past year, this has resulted in several new strategic collaboration agreements and orders. Harboe has obtained international pre-approval of the product patent and is now in the process of obtaining local patent approvals in the individual markets. These patent approvals are expected to be obtained in the course of the coming financial year.
The primary geographical focus of the sales and marketing activities within the clear malt extract is the Middle East and Central Asia where particularly the non-alcoholic beverage segment is booming. At the same time, the market potential is supported by a growing focus on health and nutrition in several countries, particularly in the Middle Eastern region. In the first phase, the product is marketed in 10 selected markets where focus is on large national and regional drinks manufacturers. The sales organisation has been further expanded in the past year, and the product was presented at large international food fairs. As the group's malt extract activities have grown, the production facilities in Skælskør have been expanded, and the overall capacity has been doubled many times over in the past three years.
The clear malt extract will also form part of the further development of Harboe's own products, including the non-alcoholic malt beverages marketed by the group in a growing number of export markets.
In terms of development, Harboe is still working on new innovative product variations, including a sweet malt extract which shows promising results. Harboe therefore expects to continue its development activities in the coming year, and continued launches of new products with targeted marketing campaigns and sales efforts in the dedicated markets are also expected. The business area is expected to contribute positively to increased revenue and earnings for the group in the coming years.
"Efficient production facilities are the backbone of our business, and we make continuous investments in technology to remain at the forefront of developments. We believe that increased capacity should also be driven by better efficiency. This makes good economic sense."
In 2010/11, a total of 5.94 million hectolitres of beer, soft drinks and malt wort products were produced at the group's three breweries. This corresponds to an increase of 4.6% compared to the year before and reflects the positive development in the group's sales and the ongoing investments in the continued strengthening of capacity. The capacity utilisation was high due to excellent flexibility and continued collaboration with several customers concerning contract manufacturing.
An additional DKK 137 million was invested in the brewery sector in 2010/11.
Among other things, the investments were directed at further expanding capacity within the production of malt extract in support of the strategic development activities within this area. The investment ensures that Harboe has the capacity necessary to meet the growing demand for the entire range of malt extract products expected in the coming years.
Harboe will undertake a considerable expansion of the group's wastewater treatment plant in Skælskør, ensuring more effective environmental environmental protection while at the same time meeting the coming years' enhanced production volumes.
In addition to investing in new production facilities, the group's units have made a number of further investments aimed at improving efficiency and environmental profiles. In 2008, Harboe invested in a CO2 capture system in the German production unit, which proved very successful, and in 2010 a similar investment was made in the production unit in Skælskør. The systems capture and reuse CO2 emissions generated in the production process, and the money saved have paid for the investments in less than two years.
In the past five years, Harboe has invested DKK 678 million in the expan-
sion and strengthening of the brewery sector's production facilities. The investments have proved decisive in the competition for large-volume contracts in the group's main markets, and they are creating a very solid foundation for realising the group's strategy and for further value creation in both the core business and within the strategic development areas.
Harboe will also in future assess the need for further investments in efficiency and capacity.
"We believe that a strong sense of community is based on each employee's personal responsibility and ambition. We try to motivate our employees and create the best possible framework for this."
For more than 125 years, Harboe has based its business on fundamental values such as responsibility, cooperation, quality and performance. These values form the basis for Harboe's management philosophy and are at the same time pillars of the group's strong corporate culture. As Harboe has continued its expansion, it has been an important strategic priority to maintain and pursue these values across national borders and organisational units.
Harboe's organisational strategy is based on the group's focus on ensuring a safe and increasingly efficient production of quality products combined with dynamic innovation that enables Harboe to create new growth and attractive value. It is therefore vital that Harboe is able to recruit managers and employees with the right qualifications for production units as well as development functions, sales and marketing etc. Harboe seeks to offer competitive pay and employment conditions as well as ongoing training and continued improvement of employee skills. The objective is to retain talented employees and ensure a high degree of employee satisfaction.
During the year, Harboe strengthened its organisation with new competencies in a number of areas, particularly the development activities within malt extract and as part of the continued expansion of the sales organisation for international activities.
The development of the group's employees and continued strengthening and updating of competencies are a major strategic focus area at all levels of the group, and many activities in this respect were held during the financial year. Aimed at the group's approx. 15 key managers, Harboe set up Harboe Business Academy in the financial year in collaboration with academic and technical experts from universities and food institutes in Denmark and Germany, and internal management training was also conducted in Estonia. The ambition is to ensure that the group's strategic management is based on a strengthened, shared reference framework. Initially, a two-year training course has been introduced which, considering the group's commercial challenges, focuses on relevant problems and solutions within business management.
The operational part of the group also implemented a number of training activities during the year. In order to ensure efficient and close follow-up on the quality and efficiency of the individual production processes, Harboe set up a team leader training programme a few years back, which also admitted new students this year. The programme yielded highly positive results in operations, and the increased responsibility is also a strong motivator in the individual team leader's continued development.
Concurrently with these activities, Harboe offers specialised internal and external courses and competency development programmes for managers and employees.
As part of the competency development of each employee, Harboe conducts annual performance interviews which follow up on goals and results, and performance plans are defined for the coming year. The performance interviews also provide an opportunity to follow up on employee satisfaction, which is largely supported by a strong corporate culture. In the coming year, work will go into establishing an interdisciplinary system for development and follow-up on employee satisfaction in the group.
Harboe has a low staff turnover rate, and the seniority of both production staff and specialists ensures continuity and retains the valuable knowledge accumulated in the company. At the same time, it is extremely satisfactory that the number of employees with very few or no days off sick is extremely high.
"There is a natural link between corporate governance and social responsibility. Fundamentally, we believe that all strategic decisions made in the company should strike a healthy balance between ambitions, values and risks."
It is a central element in Harboe's strategy that the group's continued growth and development should be sustainable. Effective utilisation of resources and positive relations to the company's stakeholders are essential to Harboe's future value creation. Harboe's work on responsibility is rooted in a policy based on a commercial prioritisation based on value optimisation and risk mitigation.
The group has decided to focus on the following four focus areas within
corporate social responsibility: climate and environment, employees and occupational health and safety, quality and health and community relations.
As a member of the Danish Brewers' Association, Harboe supports the industry's responsibility initiatives and participates in the ongoing reporting within the industry's focus areas.
Harboe's objective is to minimise the resources used in the production process as much as possible compared to the overall production volume and thereby reduce the environmental impact of the company's activities.
Harboe's production facilities are optimised at regular intervals to ensure an up-to-date, efficient and flexible production process. All investments in new production technology, optimisations of existing production facilities and all product and packaging development take into account resource use and general environmental impact.
All the group's units are certified according to international quality and environmental standards.
Harboe prepares green accounts for its production unit in Skælskør containing information about raw material, water and energy consumption as well as emissions, wastewater discharge and waste disposal.
Investments were also made in the past financial year to maintain and optimise the group's production facilities, including the installation of a new steam boiler in Skælskør, which has significantly reduced energy consumption. The experience gathered from last year's investments in a new evaporation plant and CO2 capture system is also positive. CO2 is now systematically captured and reused in Denmark and Germany, and the energy savings can pay for the investment in the plants in just two years.
The logistics area also saw investments in optimisation measures. Based on an overall analysis of inventory management, several changes were made to the warehouse facilities' infrastructures during the financial year, which led to improved efficiency and significant reductions in internal warehouse transport.
In the past year, the energy ambassadors appointed at the production unit in Skælskør have considered how operations and maintenance in production can be optimised. This proved to be a success, and many ideas for improvements and streamlining of processes and energy consumption were gathered and executed during the year.
In the coming year, the group expects to implement an Enterprise Resource Planning (ERP) system in all the group's production units. The system will be the starting point for Harboe's efforts to control and monitor quality standards, dividend percentages, energy consumption etc. across group units and will form the basis for forward-looking, specific objectives and reporting with a view to further optimisation of production.
Harboe wants to be an attractive workplace that is able to attract, retain and develop the talents necessary to ensure the continued development of the group.
Harboe's corporate culture is based on responsibility, cooperation, quality and results. Employees at Harboe are offered competitive pay and employment conditions in accordance with applicable collective agreements, good practice and international standards in the area. Furthermore, the employees are offered ongoing training to ensure continued improvement of employee skills.
The health and well-being of its employees is important to Harboe. In addition to an attractive canteen option, the group offers its employees personal advice and activities relating to weight loss, smoking cessation etc.
Harboe is dedicated to ensuring a safe working environment that seeks to prevent absence due to illness and injury. Harboe is constantly investing in training and development activities to ensure that its employees are optimally geared to carrying out their duties in a safe and efficient manner. Further training programmes for employees were also completed this year.
In line with the group's strategy, preparations have been made for the health and safety certification of the production unit in Skælskør. The final certification is expected to take place during Q1 2011/12. Several processes were optimised in connection with the certification, and in future the certification will enable a more structured, ongoing follow-up in this area.
In the coming year, efforts will go into achieving the goal that all the group's units must obtain health and safety certification.
As an international drinks manufacturer and supplier to food companies worldwide, product quality and safety is paramount. Harboe will meet the highest food safety standards by using raw materials that ensure a high and uniform quality throughout the entire value chain – from raw material to the finished product.
Harboe's requirements as to the quality of the raw materials purchased from suppliers follow this ambition and are evaluated systematically.
Investments in quality improvements and optimisation of production facilities are made to ensure that Harboe meets new requirements and expectations for quality and hygiene at all times. All the group's production units are certified in accordance with international quality standards, and systematic follow-up and control are carried out.
The market is seeing a growing consumer demand for healthier products. Harboe continues to focus intensively on innovation in order to meet this demand.
Finally, Harboe supports the industry's standards for responsible marketing of alcohol and the information activities carried out under the auspices of the Danish Brewers' Association.
Harboe will continue to focus on quality and health in the coming year as well. In this context, the implementation of the ERP system is expected to contribute to optimised control of the quality standards, and the further development activities within malt extract and other areas, are essential to meeting the demand for more natural and nutritious products.
It is an integral part of Harboe's management philosophy and fundamental values that the company has a good and constructive relationship with its stakeholders, based on professionalism, open dialogue and mutual respect. The group's business ethical policies regulate its relations to business partners.
Harboe's relations to its suppliers and other partners are also based on agreements and contracts being drafted in accordance with international standards, and the group has developed a number of standard requirements regarding quality, reliable deliveries and responsibility which are incorporated into the supplier agreements. Harboe's suppliers are primarily EU-based partners where agreements follow applicable EU standards for compliance with human rights in the value chain, prevention of corruption etc.
Harboe is strongly rooted in the local community, and being aware of the responsibility that naturally comes from being an integral part of the communities in which the company operates is a key element of the group's values. In recent years, Harboe has thus supported many relevant local sports activities, cultural events and charities.
In the coming year, Harboe will work on further strengthening and expanding the professional and mutually value creating collaboration with suppliers and other partners. The process will focus particularly on the continued internationalisation of the business and the relations established in new markets where regulation and practice deviate from EU standards.
Brewery sector – key figures5 :
| 2010/11 | 2009/10 | 2008/09 | 2007/08 | 2006/07 | |
|---|---|---|---|---|---|
| Volume (million hectolitres) DKK | m DKK | m DKK | m DKK | m DKK | m |
| Beer, soft drinks and malt wort products | 5.94 | 5.68 | 5.72 | 5.30 | 5.70 |
| Earnings | |||||
| Gross revenue | 1,584.1 | 1,563.0 | 1,581.3 | 1,373.8 | 1,455.8 |
| Taxes on beer and soft drinks | (263.5) | (279.3) | (261.8) | (236.5) | (266.6) |
| Revenue | 1,320.6 | 1,283.6 | 1,319.5 | 1,137.3 | 1,189.2 |
| Operating profit (EBIT) | 82.0 | 58.3 | 36.1 | 20.5 | 88.5 |
| Profit before tax | 76.9 | 56.8 | 30.4 | 15.9 | 86.6 |
| Tax on profit for the year | (19.4) | (13.9) | (8.7) | 4.8 | (29.3) |
| Net profit/(loss) for the year | (57.5) | 42.9 | 21.7 | 20.7 | 57.3 |
| Balance sheet | |||||
| Total assets | 1,567.4 | 1,515.0 | 1,472.3 | 1,062.6 | 1,052.5 |
| Equity | 633.8 | 613.8 | 547.5 | 584.5 | 572.8 |
| Non-current liabilities | 354.6 | 388.4 | 422.1 | 102.9 | 112.5 |
| Current liabilities | 578.9 | 512.8 | 502.7 | 375.2 | 367.2 |
| Investments etc. | |||||
| Investments in intangible assets6 | 5.7 | 8.2 | 3.0 | 6.1 | 0 |
| Investments in property, plant and equipment7 | 130.5 | 157.8 | 115.9 | 175.7 | 72.6 |
| Depreciation and amortisation | 114.1 | 114.9 | 110.1 | 97.7 | 90.7 |
| Cash flows | |||||
| Cash flows from operating activities | 167.4 | 80.0 | 126.4 | 66.0 | 66.5 |
| Cash flows from investing activities | (141.3) | (141.2) | (442.6) | (92.3) | (110.8) |
| Cash flows from financing activities | (58.2) | 29.0 | (265.1) | (4.0) | (39.1) |
| Change in cash and cash equivalents | (32.1) | (32.2) | (51.0) | (30.3) | (83.4) |
| Ratios in % | |||||
| Profit margin | 6.2 | 4.5 | 2.7 | 1.8 | 7.4 |
| Solvency ratio | 40.4 | 40.5 | 37.2 | 55.0 | 54.4 |
| EBITDA margin | 14.9 | 13.5 | 11.1 | 10.4 | 15.1 |
| Acid test ratio | 82,3 | 85.8 | 91.1 | 93.6 | 85.7 |
| Return on invested capital | 12.6 | 9.2 | 6.5 | 2.3 | 10.3 |
| Employees | |||||
| Number of employees | 542 | 514 | 492 | 457 | 467 |
5 The financial highlights have been prepared in accordance with the 'Recommendations and Financial Ratios 2010' issued by the Danish Society of Financial Analysts, cf. the description in note 1.
6 Excluding plant under construction.
7 Excluding spare parts and plant under construction
Total sales of beer and soft drinks, including malt beverages and malt wort products, totalled 5.94 million hectolitres in FY 2010/11 against 5.68 million hectolitres last year, up 4.6%.
Revenue amounted to DKK 1,320 million in FY 2010/11.
The increase in revenue is based on a continued positive development in the group's main markets where high quality and reliable deliveries combined with ongoing product innovation contributed to maintaining the group's market position in times of intense competition. Furthermore, Harboe's flexible utilisation of capacity has made it possible to further expand its collaboration on contract manufacturing for a number of partners where focus also has been on contributing Harboe's expertise and production to the joint development of new products and unique packaging types that strengthen the marketing and sales of the products.
Positive results with increased sales and the conclusion of additional strategic collaboration agreements with international drinks manufacturers have also been achieved within the strategic development area malt extract. Harboe's clear malt extract can be used to manufacture a range of drinks products, including non-alcoholic beverages for large growth markets in the Middle East and Asia, and Harboe is working with several partners on the production and further development of the product. The new agreements are part of a targeted effort to expand and strengthen relations with customers in the drinks industry, for example by participating in international food shows where clear malt extract has attracted widespread interest and recognition. The natural and processed product properties are important sales parameters in an international market which focuses heavily on food safety and nutrition.
The export markets also continued the positive development in the period. While the drinks markets in Europe have been declining for several years, demand continues to grow in many markets in Asia, the Middle East, Africa and South America. Harboe markets a wide range of products aimed at meeting the demand in the individual regions where particularly the Middle Eastern market for non-alcoholic beverages is growing rapidly. Harboe's products are currently being marketed in more than 90 countries worldwide via central retail distributors and partners, and the sales organisation was further strengthened in the period.
The expansion and streamlining of production capacity at the group's production facilities in Denmark have been completed, and the unit has been put into service. The same applies to the expansion of the company's own wastewater treatment plant, which has been implemented to ensure more effective environmental protection and cater for the increasing production volumes expected in the coming years.
Profit before depreciation, amortisation, net financials and tax (EBITDA) was DKK 196.1 million. This corresponds to an increase of 13.2% relative to the same period last year and an EBITDA margin of 14.9%. This development is primarily attributable to increasing sales combined with the fact that the prices of the group's primary raw materials in the current financial year have been maintained at satisfactory levels through contracts.
The brewery sector's operating profit (EBIT) amounted to DKK 82.0 million in 2010/11. This represents an increase of 40.7% relative to the same period last year. The increasing sales and good product mix combined with continued stable raw material costs contributed to the positive developments.
Investments of DKK 135.9 million were implemented in the financial year, which is slightly more than the DKK 100-120 million originally announced. The increased investment level is primarily attributable to a difference in timing of ongoing investments around the beginning and end of the financial year. The purpose of the group's investment strategy is to ensure continued expansion of the group's position in both new and existing main markets.
Furthermore, the investments are to contribute to optimising the group's utilisation of resources and ensure that the streamlining of the group's production facilities has a positive effect on the consumption of resources and emissions in relation to the development in production volume.
Profit before tax was DKK 76.9 million against DKK 56.8 million last year, up DKK 20.1 million or 35.4%.
In FY 2010/11, the brewery sector employed 542 people against 514 the year before.
Foodstuff sector – key figures8 :
| 2010/11 | 2009/10 | 2008/09 | 2007/08 | 2006/07 | |
|---|---|---|---|---|---|
| DKK m DKK |
m DKK | m DKK | m DKK | m | |
| Earnings | |||||
| Revenue | 237.1 | 241.1 | 225.2 | 233.6 | 193.7 |
| Operating profit/(loss) (EBIT) | 5.0 | 6.1 | 4.8 | 1.0 | (0.1) |
| Profit/(loss) before tax | 4.2 | 1.4 | 4.7 | 0.4 | (1.3) |
| Tax on profit/(loss) for the year | (1.1) | (1.2) | (0.9) | (1.0) | 0.5 |
| Net profit/(loss) for the year | 3.2 | 0.2 | 3.9 | (0.6) | (0.8) |
| Balance sheet | |||||
| Non-current assets | 85.4 | 94.0 | 96.3 | 109.0 | 113.5 |
| Current assets | 71.7 | 56.0 | 58.1 | 38.4 | 59.2 |
| Equity | 119.6 | 116.4 | 116.3 | 112.4 | 113.0 |
| Non-current liabilities | 0 | 4.7 | 10.8 | 16.4 | 21.8 |
| Current liabilities | 37.6 | 28.9 | 27.3 | 18.6 | 37.9 |
| Balance sheet total | 157.2 | 150.0 | 154.4 | 147.4 | 172.7 |
| Cash flows | |||||
| Cash flows from operating activities | 24.8 | 14.2 | 22.2 | (9.0) | 20.1 |
| Cash flows from investing activities | (7.2) | (11.5) | 3.6 | (5.2) | (0.2) |
| Cash flows from financing activities | (5.5) | (6.2) | (5.9) | (5.6) | (5.6) |
| Change in cash and cash equivalents | 12.1 | (3.5) | 19.9 | (19.8) | 14.4 |
| Employees | |||||
| Number of employees | 30 | 29 | 28 | 26 | 19 |
8 The financial highlights have been prepared in accordance with the 'Recommendations and Financial Ratios 2010' issued by the Danish Society of Financial Analysts, cf. the description in note 1.
9 Excluding plant under construction
Harboefarm A/S's revenue was DKK 237.1 million in 2010/11 compared with DKK 241.1 million the year before.
Operating profit amounted to DKK 5.0 million compared with DKK 6.1 million the year before.
A profit before tax of DKK 4.2 million was realised for 2010/11 against a loss of DKK 1.4 million last year.
Harboe has decided to initiate a shutdown of its foodstuff sector as from the end of the 2010/11 financial year. Harboe has assessed the continued strategic potential of its foodstuff company, which is experiencing fierce competition and heavy price pressure. As a result of this assessment, Harboe has decided to focus solely on its main activities in the brewery sector where the future potential is more attractive.
As at 30 May 2011, Harboefarm permanently discontinued its production, and all employees were dismissed as at this date.
The foodstuff company continues to lease the company's farms until 2017, and a lease agreement for the company's production and warehouse facilities was concluded as at 1 June 2011.
In future, the company will thus be considered a rental business and will form part of the overall reporting for the group.
| Q1 Q 2009/10 DKK '000 DKK |
2 Q 2009/10 '000 DKK |
3 Q 2009/10 '000 DKK |
4 Q 2009/10 '000 DKK |
1 Q 2010/11 '000 DKK __ _ __ _ __ ______ |
2 Q 2010/11 '000 DKK |
3 Q 2010/11 '000 DKK |
4 2010/11 '000 |
|
|---|---|---|---|---|---|---|---|---|
| Revenue | ||||||||
| Brewery sector | 366,321 | 302,681 | 311,308 | 303,323 | 392,984 | 317,343 | 291,845 | 318,481 |
| Foodstuff sector | 47,508 | 58,303 | 65,371 | 69,912 | 56,915 __ _ __ _ __ ______ |
63,019 | 56,873 | 60,314 |
| Group | 413,829 | 360,984 | 376,679 | 373,235 | 449,899 __ _ __ _ __ ______ |
380,362 | 348,718 | 378,795 |
| Operating profit/(loss) | ||||||||
| Brewery sector | 21,084 | 11,437 | 3,405 | 22,324 | 35,076 | 22,120 | 7,809 | 17,004 |
| Foodstuff sector | (714) | 1,064 | 2,275 | 3,965 | 1,988 __ _ __ _ __ ______ |
1,110 | 1,474 | 378 |
| Group | 20,370 | 12,501 | 5,680 | 26,289 | 37,064 __ _ __ _ __ ______ |
23,230 | 9,283 | 17,382 |
| Net financials | ||||||||
| Brewery sector | 520 | (1,166) | (722) | (121) | (634) | (1,537) | (3,144) | 183 |
| Foodstuff sector | (354) | (326) | (215) | (380) | (333) | (663) | (929) | 1,209 |
| Profit/(loss) in associates | 0 | 0 | 0 | (3,458) | 0 __ _ __ _ __ ______ |
0 | 0 | 0 |
| Group | 166 | (1,493) | (937) | (3,959) | 967 __ _ __ _ __ ______ |
(2,200) | (4,073) | 1,392 |
| Profit/(loss) before tax | ||||||||
| Brewery sector | 21,604 | 10,271 | 2,683 | 22,203 | 34,442 | 21,217 | 6,202 | 15,016 |
| Foodstuff sector | (1,068) | 738 | 2,060 | (371) | 1,655 __ _ __ _ __ ______ |
780 | 1,208 | 591 |
| Group | 20,536 | 11,009 | 4,743 | 21,832 | 36,097 __ _ __ _ __ ______ |
21,997 | 7,410 | 15,607 |
| Net profit/(loss) for the year | ||||||||
| Brewery sector | 16,606 | 7,616 | 1,611 | 17,047 | 25,813 | 15,920 | 4,495 | 11,479 |
| Foodstuff sector | (701) | 454 | 1,545 | (1,149) | 1,241 __ _ __ _ __ ______ |
585 | 906 | 423 |
| Group | 15,905 | 8,070 | 3,156 | 15,898 | 27,054 __ _ __ _ __ ______ |
16,505 | 5,401 | 11,902 |
"Committed and personal management helps maintain the company's values. At Harboe, we combine our daily hands-on management with professional reporting and control systems in accordance with international standards."
Harboe's Board of Directors places considerable emphasis on ensuring that the fundamental values which have been created and developed by the Harboe family-owned business through five generations are combined in the best possible way with efficient and dynamic business management, the primary objective being to create value for the company's shareholders, employees and customers. The Board of Directors and the Board of Executives are working hard to ensure that the management and control systems of the group are efficient and in line with relevant standards.
The major part of Harboe's management is thus carried out in accordance with the recommendations on corporate governance issued by NASDAQ OMX København A/S. Below follows an outline of Harboe's corporate governance based on the main recommendations.
Harboe places considerable emphasis on the company's shareholders being able to monitor the company's development. The company's website provides easy access to current and detailed information about the company's strategy, business and results. The group's management maintains an active dialogue with the share market, holding a number of meetings with potential and existing investors and analysts in the course of the year. Presentations from these meetings are made available on the company website.
Harboe's Board of Directors assesses the group's capital structure at appropriate intervals, accounting for their assessment in the strategy section of the annual report.
The company's general meeting is called in accordance with the company's Articles of Association subject to at least three weeks' notice, the notice being accompanied by the full agenda. Until further notice, the general meeting is held with physical attendance. The group's annual report is published on the Harboe website and is also available in a print version. All documents concerning the company's general meeting are available on the company website. In connection with the general meeting, Harboe draws up powers of attorney which allow the shareholders to consider each item on the agenda. The members of the Board of Directors and the Board of Executives participate in the general meeting.
Harboe has not been targeted by public takeover bids, but the Board of Directors would find it natural to allow the shareholders to assess any bid received at a general meeting.
It is an integral part of Harboe's management philosophy and fundamental values that the company has a good and constructive relationship with its stakeholders, based on open dialogue and mutual respect. The company's primary stakeholders and the relations with them are considered at appropriate intervals by the Board of Directors. Harboe has laid down a policy for the relations with the company's investors, which is included in the shareholder information section of the annual report.
Harboe has also laid down a corporate social responsibility policy and reports on developments in the prioritised focus areas in the annual report. As a member of the Danish Brewers' Association, the company participates in the continuous reporting and development of industry standards for corporate social responsibility.
Harboe has adopted a policy for the company's communication with the outside world, and the management has drawn up procedures for the publication of essential information. The company publishes all announcements in both Danish and English, and the announcements are made available on the Harboe website. Harboe publishes quarterly reports.
Once a year, the Board of Directors of Harboe lays down and updates the company's strategy. The Board of Directors follows up on the strategic initiatives and the realisation of the targets set at appropriate intervals and assesses the company's management competencies and financial resources with a view to ensuring a strong business development, both in the short term and in the long term.
Following the annual general meeting, the Board of Directors defines its most important tasks in connection with the company's strategic management and financial controls for the coming year.
At present, no deputy chairman has been appointed, but the Board of Directors considers the need at appropriate intervals and in step with developments in the company's strategic challenges.
The role of the Chairman of the Board of Directors is regulated by the company's rules of procedure, and in practice the Chairman, in performing his managerial duties, emphasises the involvement of the individual members based on their experience and competencies. The Chairman of the Board of Directors is not involved in the day-to-day management of the company.
The members of the Board of Directors and their individual competencies and other memberships of boards of executives, boards of directors, supervisory boards etc. are described in more detail in the annual report. The
shareholders receive a description of the candidates standing and their competencies prior to the general meeting. In the process of identifying new candidates for the Board of Directors, emphasis is placed on adding relevant competencies within strategic management, product development and sales to Harboe's management. At the same time, the Board of Directors finds it important that the Board be composed such that its members match each other in the best possible way in terms of experience, age, gender etc. in order to ensure a competent and versatile contribution to Harboe's management.
New members are given a thorough introduction to the company's business and strategy, and the board members' needs for further professional and competency development are assessed by the Board of Directors at regular intervals.
The size of the Board of Directors is such that it can work and function efficiently.
More than half of the members of the Board of Directors elected by the general meeting are independent. The annual report specifies which members of the Board of Directors are deemed to be independent.
According to the company's Articles of Association, there may be up to three staff representatives on the Board of Directors. The staff representatives are elected among the employees of the group's Danish entity for a term of four years at a time, and the rules governing such elections are laid down in accordance with the collaboration agreement between the Danish Confederation of Trade Unions (LO) and the Confederation of Danish Industry (Dansk Industri).
The members of the Board of Directors meet for scheduled meetings and also as and when required by pressing strategic considerations or decisions demanding the involvement of the Board of Directors or the clarification of its views. In 2010/11, five board meetings and a strategy seminar were held.
The Board of Directors emphasises and assesses on an ongoing basis whether the individual members' other tasks and responsibilities prevent the members from performing their duties on the Board of Directors of Harboe in a satisfactory way.
The members of the Board of Directors, their individual competencies, other directorships and executive positions held as well as the number of shares they own in the company and any changes in these shareholdings in the course of the year appear from the annual report.
No upper age limit has been defined for members of the Board of Directors as this has not yet been a relevant issue. The age of the individual members of the Board of Directors' appears from the annual report.
Members of the Board of Directors are elected for a term of four years, and at least one member is up for election every year The Board of Directors believes that a term of service of four years contributes positively to ensuring continuity in the company's management and that the shareholders' influence on the composition of the Board of Directors is ensured by an annual election. The time of each individual board member joining the Board of Directors and of the possible re-election of the member is stated in the annual report.
The Board of Directors has not set up a management committee, but assesses the need for this at regular intervals. An audit committee has been set up by the Board of Directors. The composition of the committee is described in more detail in the sections on risks and management. The Board of Directors believes that the audit committee is competent to perform the financial reporting and supervisory tasks defined for the committee.
The Board of Directors has not established a formal evaluation procedure for the Board of Directors and the Board of Executives. The Chairman of the Board of Directors ensures that meetings are characterised by constructive dialogue and that individual members contribute in line with their competencies. Furthermore, the Board of Directors regularly assesses the work and results of the management in connection with the ongoing financial and business reporting.
Harboe's Board of Directors emphasises that the company should offer competitive terms of employment to the members of the Board of Executives and the rest of the management and regularly assesses elements which can help motivate and retain skilled and performance-oriented managers. The Board of Directors has, for the time being, decided not to introduce share-related incentive schemes. The group's key managers are covered by a performance-related bonus programme. In addition, Harboe offers a number of special elements to key managers, such as accommodation and other staff benefits which make it attractive to be employed by Harboe, even though the company is located far away from the large urban centres. All Harboe employees are part of the company's pension scheme. The remuneration policy is described in detail in the Chairman of the Board of Director's report and approved at the annual general meeting.
The remuneration paid to the Board of Executives and the Board of Directors is specified in the annual report. Termination benefits for managers constitute a maximum of two years' remuneration.
The remuneration to the Board of Directors is based on a fixed fee and does not comprise any share options.
The remuneration to the Board of Directors is approved at the general meeting for the financial year in question.
Harboe's annual report is presented in accordance with statutory requirements according to IFRS and on the assumption that the company is a going concern.
The annual report and the ongoing financial reporting also describe a number of non-financial factors, including employees, the environment and other issues influencing the company's development.
Harboe analyses and considers the business and financial risks affecting the company's development and results at regular intervals and at least one a year. The Board of Executives reports to the Board of Directors on developments in the main risk areas on an ongoing basis.
The Board of Directors will consider whether a whistle-blower scheme should be established.
Harboe's risk management and internal controls are described in more detail in the relevant section of the annual report.
The Board of Directors and the audit committee of Harboe have an ongoing dialogue with the company auditors. Every year, the audit committee submits a proposal for an audit engagement letter and for the auditors' remuneration to the Board of Directors. The audit committee meets with the auditors in connection with the presentation of the annual report. The auditors also participate in the board meeting at which the annual report is considered.
| Recommendations | Comments by Harboe |
|---|---|
| It is recommended that the company set an age limit for members of the Board of Directors. |
No upper age limit has been defined for members of the Board of Directors as this has not yet been a relevant issue. The age of the individual members appears from the annual report. |
| It is recommended that members of the Board of Directors elected by the general meeting be up for election every year at the annual general meeting. |
For the time being, the term of service is four years, and, normally, one board member is up for election every year. The Board of Directors believes that this ensures the continuity of the work of the Board of Directors which Harboe finds very valuable. |
| It is recommended that the Board of Directors set up a nomination com mittee. |
In the coming year, the Board of Directors of Harboe will consider the need for setting up a nomination committee. |
| It is recommended that the Board of Directors set up a remuneration committee. | In the coming year, the Board of Directors of Harboe will consider the need for setting up a nomination committee. |
| It is recommended that the Board of Directors establish an evaluation pro cedure under which the contributions and results of the Board of Directors as a whole and the individual members are evaluated. |
The Board of Directors has not established a formal evaluation procedure, but the chairman of the Board of Directors ensures that meetings are char acterised by constructive dialogue and that individual members contribute in line with their competencies. Furthermore, the Board of Directors regu larly assesses the work and results of the management in connection with the ongoing financial and business reporting. |
"Our business is affected by risks everywhere in the value chain. We are therefore working systematically on monitoring, analysing and following up on risks at all levels in the group. The framework is laid down by the Board of Directors and the Board of Executives, but everyone has a responsibility."
Harboe is constantly analysing and considering the business and financial risks affecting the company's development and results. The Board of Directors and the Board of Executives are generally responsible for the risk assessment, risk management and internal controls of the group in connection with the financial reporting. The Board of Directors of Harboe has set up an audit committee consisting of the externally elected, independent members of the Board of Directors. The audit committee is responsible for laying down policies and procedures and for the continuous monitoring of the internal control systems. The annual tasks and areas of responsibility of the committee have been defined in close collaboration with the company's external auditors. Prior to the adoption of the annual report, the committee considers the reporting with the company's external auditors and subsequently reports to the Board of Directors on accounting policies, significant accounting estimates, transactions with related parties, uncertainties and risks.
The framework for the ongoing risk assessment is laid down by the Board of Directors. A standardised programme with minimum requirements for documentation and follow-up has been established with a view to reducing recorded reporting risks. Reporting and follow-up for the individual units form part of the reporting to the Board of Directors. The ongoing monitoring and controls are carried out both in the individual units of specialised control functions and at group level.
Below follows an outline of the most important risks to which Harboe is exposed in its business activities. The list is not exhaustive, nor are the risks listed in any order of priority:
Harboe's production of beverages is exposed to a risk of errors or accidents happening which may affect the quality of the end product. This can result in losses because products must be rejected or recalled from the market, which, in the long term, may undermine consumer confidence in the group's products. To minimise the risk of this happening, Harboe is very focused on the quality assurance of its production processes. Consequently, all the group's production facilities are certified in accordance with international quality standards and apply established operating and maintenance procedures. At the same time, Harboe invests in quality improvements and optimisation of its production facilities on an ongoing basis with a view to complying with new requirements and living up to expectations for quality and hygiene at all times.
It is decisive that the quality of the raw materials which Harboe uses for its products meets the highest food safety standards. At the same time, Harboe is dependent on the raw materials being delivered on time and in the agreed quantities. The majority of Harboe's subsuppliers are based in the EU. The collaboration with suppliers is often based on long-term relations and agreements which are adjusted and renegotiated for one to two years at a time. Harboe evaluates the quality and reliability of deliveries of its suppliers at regular intervals, and, for all primary raw materials, Harboe has two suppliers to ensure the highest possible reliability of delivery.
In all the group's main markets, the beer and soft drinks segments are characterised by intense competition, leading to a constant pressure on prices. Harboe is therefore very sensitive to market fluctuations in the prices of raw materials and consumables, as increasing production costs cannot simply be added to the sales prices. This is true, in particular, of the group's core products. To counter such fluctuations as much as possible, Harboe is systematically seeking to conclude long-term contracts with subsuppliers and regularly analyses the scope for additional streamlining of production. Moreover, Harboe focuses on strengthening sales of its own international brand products in the export markets and developing sales of new malt extract products, which offer high earnings margins and less sensitivity.
Harboe's beer and soft drinks are, to a varying extent, subject to sales taxes in the group's markets, and marked changes in these taxes may affect Harboe's earnings and, ultimately, the sales of the group's products. Consequently, it is assessed regularly how the brewery sector can counter this risk in the best possible way through diversification of the group's product strategy and development activities.
Sales of beer and soft drinks are characterised by seasonal and weatherdependent fluctuations. The summer is normally the high season when demand is very high, but a cold and wet summer can change this picture considerably and thus affect the group's operating profit. Fluctuations in demand entail a strong demand for flexible capacity utilisation. The group is constantly seeking to optimise this through additional streamlining and investments in expanding capacity.
Harboe's sales are to a large extent effected through agreements with major retail-sector customers. Harboe's revenue is thus dependent on these agreements being renewed, and the company is therefore focusing on cultivating and further developing its collaboration with customers and on ensuring that product offerings, prices and capacity are in line with customer demand and expectations at all times, based on fundamental principles of competition. All deliveries entail a debtor risk, which increases concurrently with the continued internationalisation of the group and the establishment of new customer relations. Harboe seeks to safeguard the company against bad debts through ongoing assessment of the need to take out credit insurance and open letters of credit where appropriate and possible.
The successful introduction of new products is an important precondition for Harboe's continued growth. It is therefore decisive that the market comes to accept the new products and that the products meet or can help drive demand in the markets. Harboe's product development strategy is therefore based on a close and ongoing dialogue with customers, detailed market analyses combined with the targeted exploitation of new production technologies and innovative product design.
Harboe's solid capital structure limits the risk associated with the developments in market interest rates. At the end of the financial year, the company's net interest-bearing debt amounted to DKK 140.6 million.
As Harboe's sales and purchases in foreign currencies in respect of most of the group's activities are still denominated in EUR, currency risks for the group are considered limited. Harboe will in future assess the need for currency hedging in step with the development in the group's activities.
The financial risks to which Harboe is exposed are described in more detail in the notes to the consolidated financial statements, which also include sensitivity analyses in connection with such financial risks.
"The viable strategy and its consistent implementation ensure long-term value creation. This is our basic principle, and we are working hard to meet our shareholder's expectations."
With its IR policy, Harboes Bryggeri A/S wants to ensure a high level of information to the shareholders and other stakeholders.
Harboe aims to communicate actively and openly with a view to providing a basis for the pricing of the company's share which best reflects the value of the company and its future earnings potential.
Harboe's IR activities are constantly being developed, and communication centres on the company's quarterly reports and the annual report in Danish and English, presentations and meetings with stakeholders as well as the company website at www.harboes.dk.
Harboe communicates its shareholder information electronically via the InvestorPortal, which offers shareholders quick and easy access to relevant information about the company.
Moreover, Harboes Bryggeri A/S has held a number of meetings with investors and analysts in Denmark. The management will also in future allocate resources to such activities with a view to maintaining an active dialogue with existing and potential investors.
Harboes Bryggeri A/S does not comment on results or developments for a period of four weeks leading up to the publication of financial statements.
Shareholders, analysts and other interested parties are welcome to contact Harboe's IR contact, and the company is always pleased to receive suggestions as to the further development of its investor relations.
Ruth Schade, CFO Tel.: +45 58 16 88 88 Email: [email protected]
At the end of the financial year, Harboes Bryggeri A/S had 5,356 registered shareholders. The registered shareholders represent DKK 54.8 million of the total share capital, corresponding to 91.3%.
As at 30 April 2011, the following shareholders have registered a shareholding exceeding 5% of the share capital in accordance with Section 29 of the Danish Securities Trading Act (Værdipapirhandelsloven):
Kirsten and Bernhard Griese Spegerborgvej 4, 4230 Skælskør, Denmark Equity investment: 13.1%, voting share: 52.1%
Lønmodtagernes Dyrtidsfond Vendersgade 28, 1363 Copenhagen K., Denmark Equity investment: 20%, voting share: 10.2%
J.P. Morgan Chase Bank 60 Victoria Embankment GB-London EC4Y 0JP Equity investment: 6.13%, voting share: 3.1%
As at 30 April 2011, members of the Board of Directors and the Board of Executives held a total of 815,259 shares. Of these, 786,820 shares were owned by the Board of Executives.
Members of the Board of Directors and the Board of Executives and the company's executive officers are registered as insiders, and their trading in the company's shares must be reported. According to Harboe's internal rules, insiders can only trade in the company's shares for a period of six weeks after the publication of financial statements.
At the extraordinary general meeting held on 5 November 2010, the Board of Directors was authorised to acquire treasury shares with a nominal value of up to 50% of the share capital at a price corresponding to the listed price plus/minus 10%. This authorisation is valid until the company's annual general meeting in 2015.
During the financial year, Harboe has acquired 285,640 Class B shares at a total market value of DKK 33.3 million. As at 30 April 2011, the company had a holding of 350,585 Class B shares.
Harboes Bryggeri A/S has a share capital of DKK 60,000,000 corresponding to 6,000,000 shares of DKK 10 each. The share capital is divided into 640,000 Class A shares with a combined nominal value of DKK 6,400,000 and 5,360,000 Class B shares with a combined nominal value of DKK 53,600,000.
In connection with votes at the company's general meetings, each Class A share of DKK 10 carries ten votes, while each Class B share of DKK 10 carries one vote.
Only the company's Class B shares are listed on NASDAQ OMX Copenhagen. Trading for the period amounted to DKK 242.1 million, corresponding to average trading per day of DKK 1.0 million.
The Harboe share went up 13.4% in the course of the year, closing at a price of 127 against a price of 112 at the end of the last financial year. The price development should be seen in light of the development in the small cap index, which fell by 8.8%.
It is part of Harboe's business model and strategy that contracts with customers are, as a general rule, long-term. In certain of these contracts, it is a standard provision that the contract can be terminated at shorter notice if the control of the company should change. Moreover, agreements with banks concerning borrowing facilities typically contain provisions to the effect that the agreements can be terminated in case of a takeover of the company. However, Harboe does not view these risks as being critical.
Termination benefits for a maximum of two years' remuneration have been agreed for key management employees in the event of dismissal in connection with a change in the control in the company.
The Board of Directors recommends to the annual general meeting on 24 August 2011 that a dividend be paid in the amount of DKK 1.50 per share, corresponding to a total of DKK 9.0 million.
Harboes Bryggeri A/S expects to publish financial statements as follows:
Interim report, Q1 2011/127 September 2011 Interim report, H1 2011/1212 December 2011 Interim report, Q3 2011/1227 March 2012
Company announcements issued in the period 1 May 2010 to 30 April 2011:
| 11 May 2010 | Financial calendar |
|---|---|
| 2 June 2010 | Purchase of treasury shares |
| 29 June 2010 | Annual Report 2009/10 |
| 30 June 2010 | Reporting in accordance with Section 28a of the Danish Securities Trading Act |
| 5 July 2010 | Reporting in accordance with Section 28a of the Danish Securities Trading Act |
| 5 July 2010 | Reporting in accordance with Section 28a of the Danish Securities Trading Act |
| 29 July 2010 | Purchase of treasury shares |
| 3 August 2010 | Notice of annual general meeting |
| 9 August 2010 | Reporting in accordance with Section 28a of the Danish Securities Trading Act |
| 10 August 2010 | Annual Report 2009/10 |
| 25 August 2010 | Minutes of annual general meeting |
| 6 September 2010 | Notice of extraordinary general meeting |
| 7 September 2010 | Quarterly report |
| 28 September 2010 | Minutes of extraordinary general meeting |
| 11 October 2010 | Notice of extraordinary general meeting |
| 5 November 2010 | Minutes of extraordinary general meeting |
| 14 December 2010 | Interim report |
| 8 March 2011 | Quarterly report |
Today, the Board of Directors and Board of Executives have reviewed and approved the annual report of Harboes Bryggeri A/S for the financial year 1 May 2010 - 30 April 2011.
The annual report has been prepared in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies.
We believe that the consolidated financial statements and the financial statements give a true and fair view of the group's and the company's assets and liabilities and financial position as at 30 April 2011 as well as of the results of their operations and cash flows for the financial year 1 May 2010 to 30 April 2011.
We believe that the management's statement gives a fair review of the development in the group's and the company's activities and financial affairs, their results for the year and the company's financial position and the general financial position for the companies comprised by the consolidated financial statements as well as a description of the most important risks and uncertainty factors to which the group and the company are exposed.
The annual report is submitted for adoption by the annual general meeting.
Skælskør, 28 June 2011
Bernhard Griese CEO
| Anders Nielsen Chairman |
Bernhard Griese | Preben K. Krage |
|---|---|---|
| Mette Kirstine Agger | Thøger Thøgersen | Carl Erik Kjærsgaard |
Jens Bjarne Jensen *
* Staff representative
We have audited the consolidated financial statements and financial statements of Harboes Bryggeri A/S for the financial year 1 May 2010 to 30 April 2011, which comprise the income statement, statement of comprehensive income, balance sheet, statement of changes in equity, cash flow statement and notes, including accounting policies applied, for the group and the company, respectively. The consolidated financial statements and financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies.
The Board of Directors and Board of Executives are responsible for the preparation and fair presentation of the consolidated financial statements and financial statements in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of consolidated financial statements and financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable under the circumstances.
Our responsibility is to express an opinion on the consolidated financial statements and financial statements based on our audit. We conducted our audit in accordance with Danish auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance that the consolidated financial statements and financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements and financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risk of material misstatement in the consolidated financial statements and financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the enterprise's preparation and fair presentation of the consolidated financial statements and financial statements in order to design audit procedures that are appropriate under the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the enterprise's internal control. An audit also includes evaluating the appropriateness of accounting policies applied and the reasonableness of accounting estimates made by the Board of Directors and Board of Executives, as well as evaluating the overall presentation of the consolidated financial statements and financial statements.
We believe that the audit evidence obtained is sufficient and appropriate to provide a basis for our opinion.
Our audit did not give rise to any qualifications.
In our opinion, the consolidated financial statements and financial statements give a true and fair view of the group's and the company's assets and liabilities and financial position as at 30 April 2011 as well as of the results of their activities and cash flows for the financial year 1 May 2010 to 30 April 2011 in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for listed companies.
The management is responsible for preparing a management's review that includes a fair review in accordance with Danish disclosure requirements for listed companies.
Our audit did not include the management's review, but we have read the management's review in accordance with the Danish Financial Statements Act (Årsregnskabsloven). We have not performed any services other than the audit of the consolidated financial statements and financial statements.
Against this background, we believe that the information contained in the management's review is in accordance with the consolidated financial statements and financial statements.
Slagelse, 28 June 2011
Statsautoriseret Revisionsaktieselskab
Jens Jørgen Simonsen Freddi Nielsen
State-Authorised Public Accountant State-Authorised Public Accountant
Member of the audit committee. Independent member of the Board of Directors since 2008. Term of service expires in 2012.
Mette Kirstine Agger is a qualified biologist from the University of Copenhagen and holds an MBA. Since 1996, Mette has held several executive positions and directorships in a number of biotech companies. In 2000, Mette Kirstine Agger cofounded 7TM Pharma. Mette Kirstine Agger's considerable and combined technical and business experience constitutes a valuable strategic contribution to the continued development of Harboe's products and production technology.
Lifecycle Pharma A/S Klifo A/S (Chairman) EpiTherapeutics ApS Institutrådet, Statens Serum Institut DBV Pharmaceuticals S.A.
| 2010/11 | 2009/10 |
|---|---|
| 400 shares | 400 shares |
Lawyer, Chairman (1950)
Chairman of the audit committee. Independent member of the Board of Directors since 2001. Re-elected in 2005 and 2009. Term of service expires in 2013.
Anders Nielsen is a qualified lawyer (H) and has been a partner with Lett Advokatfirma since 2006. In the course of his career, Anders Nielsen has gained solid experience within business and company law, including negotiations and preparation of contracts in connection with the acquisition and divestment of enterprises. As the Chairman of Harboe's Board of Directors, Anders Nielsen also draws on his experience from his directorships in other companies.
Privathospitalet Sorana A/S (Chairman) Sorana Invest A/S (Chairman) Danfrugt Invest A/S (Chairman) Budde Schou A/S (Chairman) Budde Schou Int. A/S (Chairman) Harboefarm A/S (Chairman) Skælskør Bryghus A/S Copenhagen Designbyg A/S (Chairman) Ejendomsselskabet Holger Danskes Vej ApS (Chairman) Holger Danskes Vej Holding ApS
Holger D. Invest ApS Advokatanpartsselskabet Troelsen & Nielsen Trijac Invest ApS Trijac Holding ApS
2010/11 2009/10 18,270 shares 1,270 shares
Member of the Board of Directors since 1968. Re-elected in 2010. Term of service expires in 2014.
Bernhard Griese is a qualified electrical engineer, and, prior to being employed with Harboes Bryggeri, he was in charge of the construction of a number of major projects, including a power plant in Jamaica. Bernhard Griese joined Harboes Bryggeri in 1973, where he came into contact with all parts of the company during the following years. He was appointed manager in 1981 and CEO in 1984. Bernhard Griese's broad production and management experience combined with strong innovative and entrepreneurial skills make him a valuable asset to the group.
GourmetBryggeriet A/S Copenhagen Designbyg A/S FCS 2008 A/S Danfrugt Invest A/S Visbjerggården A/S (Chairman) Keldernæs A/S (Chairman) Lundegård A/S (Chairman) Buskysminde A/S (Chairman) Rugbjerggård A/S (Chairman) Danfrugt Skælskør A/S (Chairman) Bernd Griese Holding ApS Vejrmøllegården ApS
Harboes Bryggeri A/S Danfrugt Invest A/S Copenhagen Designbyg A/S Vejrmøllegården II af 1. oktober 2005 ApS Bernd Griese Holding ApS Agrar Niendorf GmbH, Tyskland
2010/11 2009/10 786,820 shares 786,820 shares
Member of the audit committee. Independent member of the Board of Directors since 2008. Term of service expires in 2012.
Since 1985, Carl Erik Kjærsgaard has primarily worked in the advertising industry, and, since 1996, he has worked for the Grey Group, first as CEO of Grey Worldwide in Copenhagen and later as CEO of Grey Global Group's activities in Denmark. In 2004, he became responsible for Grey Nordic and was appointed member of Grey Global Group's Executive Committee. Carl Erik Kjærsgaard's extensive marketing experience and talent constitute a valuable contribution to the implementation of Harboe's marketing strategy and continued strategic growth.
Future Lab Business A/S (Chairman) Mannov Holding A/S (Chairman) WPP Holding Denmark A/S Trunk Images A/S (Chairman) Cohn & Wolfe A/S (Chairman) Computer Camp A/S Future Lab Business Consulting A/S Møller & Rothe A/S Future Lab Business Group A/S Happy Kebab Danmark A/S Happy Kebab Holding A/S Anycopy ApS (Chairman) Anymax ApS (Chairman)
K.G.M. Data distribution AB, Sverige Carl Erik Kjærsgaard Consulting ApS
| 2010/11 | 2009/10 |
|---|---|
| 1,410 shares | 500 shares |
Krage, Mads O. CEO (1944)
Member of the audit committee. Independent member of the Board of Directors since 2007. Term of service expires in 2011.
Mads O. Krage has long-term experience within the retail sector, e.g. as CEO of the retail chain Netto from 1980 to 2005, during which time the company implemented an ambitious growth strategy. Mads O. Krage provides valuable insight into the retail sector's development, terms and expectations for its suppliers – also seen from an international/European perspective. The Board of Directors also benefits from Mads O. Krage's vast experience within the strategic development of markets, sales and marketing.
IMERCO A/S IMERCO Holding A/S F.A. Thiele A/S Thiele Partner A/S Hans Just A/S Danish Crown Incorporated A/S Toms Gruppen A/S Holdingselskabet af 17. december 2004 A/S Plast Team A/S Holberg Fenger Holding A/S K/S Kristensen Partners I (Chairman) Investeringsforeningen LD Invest (Chairman) Fair Trade Mærket Danmark Fonden (Chairman) Tulip Food Company P/S
2010/11 2009/10 7,499 shares 7,499 shares
Member of the audit committee. Independent member of the Board of Directors since 2008. Term of service expires in 2012.
Thøger Thøgersen holds an MSc in Business Administration (marketing/finance) and has, in the course of his career, worked with many different aspects of the retail sector, including, among others, in Dansk Supermarked, Netto and later on Magasin du Nord/Illum, where he headed the purchasing department for seven years. Since 2009, Thøger Thøgersen has held the position of CEO in Active Sportswear International A/S. Given his extensive sales knowledge and experience, Thøger Thøgersen makes a competent contribution to Harboe's continued strategic development.
Active Sportswear International Holding A/S Active Sportswear International A/S H2O Sportswear A/S Forza Active Sportswear International A/S Holmsland Klit Golf A/S
| 2010/11 | 2009/10 |
|---|---|
| 800 shares | 800 shares |
Staff representative (1955)
Member of the Board of Directors since 1997. Re-elected in 2008. Term of service expires in 2012.
2010/11 2009/10 60 shares 60 shares
Harboe's audit committee was set up in 2009. During the past financial year, the committee held two meetings at which the committee's responsibilities and future work were defined and initiated. The committee's work and areas of responsibility are described in more detail in the section on risks in the annual report.
| GROUP DKK '000 |
NOTE | 2010/11 | 2009/10 |
|---|---|---|---|
| Gross revenue Taxes on beer and soft drinks |
1,821,269 (263,495) |
1,804,047 (279,320) |
|
| Revenue | 1,557,774 | 1,524,727 | |
| Production costs | 6 | (1,241,064) | (1,247,451) |
| Gross profit | 316,710 | 277,276 | |
| Other operating income Distribution costs Administrative expenses Other operating expenses |
8 | 18,281 (183,359) (51,572) (13,101) |
18,394 (175,022) (46,037) (10,269) |
| Operating profit (EBIT) | 86,959 | 64,342 | |
| Income from investments in associates Financial income Financial expenses |
9 10 11 |
0 4,981 (10,829) |
(3,458) 11,180 (13,944) |
| Profit before tax | 81,111 | 58,120 | |
| Tax on profit/(loss) for the year Adjustment of tax regarding previous years |
12 12 |
(20,413) (45) |
(15,247) 156 |
| Net profit for the year | 60,653 | 43,029 | |
| Distribution of net profit for the year Shareholders of parent Minority interests |
60,635 18 |
43,028 1 |
|
| 60,653 | 43,029 | ||
| Earnings per share and diluted earnings per share (DKK per share of DKK 10) | 13 | 10.6 | 7.3 |
| NOTE | 2010/11 | 2009/10 |
|---|---|---|
| 60,653 | 43,029 | |
| 12 | 487 4,748 263 838 (1,989) |
(443) (3,247) 0 165 5,607 |
| 4,347 | 2,082 | |
| 65,000 | 45,111 | |
| 64,982 18 |
45,110 1 45,111 |
|
| 65,000 |
| GROUP DKK '000 |
NOTE | 2011 | 2010 |
|---|---|---|---|
| Goodwill Development projects Rights Software Intangible assets under construction |
3,573 433 5,719 7,920 5,764 |
3,573 1,572 5,707 4,881 688 |
|
| Intangible assets | 15 | 23,409 | 16,421 |
| Land and buildings Plant and machinery Other plant, fixtures and fittings, tools and equipment Spare parts for own machinery Property, plant and equipment under construction |
337,159 456,073 38,665 3,993 36,083 |
331,848 447,405 41,206 3,887 33,247 |
|
| Property, plant and equipment | 16 | 871,973 | 857,593 |
| Financial assets available for sale Deposits, leases |
17 | 285,782 2,303 |
283,738 2,234 |
| Financial assets | 288,085 | 285,972 | |
| Deferred tax assets | 26 | 886 | 1,299 |
| Non-current assets | 1,184,353 | 1,161,285 | |
| Inventories | 18 | 138,250 | 122,211 |
| Trade receivables Other receivables Deferred income |
19 20 |
301,676 10,306 7,977 |
304,155 3,964 7,219 |
| Receivables | 319,959 | 315,338 | |
| Cash | 22 | 39,913 | 43,774 |
| Assets held for sale | 21 | 2,992 | 2,992 |
| Current assets | 501,114 | 484,315 | |
| Assets | 1,685,467 | 1,645,600 |
| GROUP | 2011 | 2010 | |
|---|---|---|---|
| DKK '000 | NOTE | ||
| Share capital | 23 | 60,000 | 60,000 |
| Share premium | 51,000 | 51,000 | |
| Other reserves | 25 | (15,689) | (20,036) |
| Retained earnings | 657,918 | 639,095 | |
| Equity owned by shareholders of parent | 753,229 | 730,059 | |
| Equity owned by minority interests | 209 | 191 | |
| Equity | 753,438 | 730,250 | |
| Mortgage debt | 28 | 253,402 | 290,920 |
| Deferred tax liabilities | 26 | 37,861 | 33,555 |
| Deferred income | 54,832 | 61,088 | |
| Non-current liabilities | 346,095 | 385,563 | |
| Mortgage debt | 28 | 36,656 | 26,377 |
| Other credit institutions | 29 | 169,124 | 154,340 |
| Trade payables | 30 | 216,388 | 187,556 |
| Repurchase obligation, returnable packaging | 27 | 27,958 | 33,350 |
| Other payables | 31 | 102,641 | 100,526 |
| Deferred income | 9,579 | 8,279 | |
| Income tax | 20,609 | 16,372 | |
| Current liabilities | 582,955 | 526,800 | |
| Liabilities in respect of assets held for sale | 21 | 2,979 | 2,987 |
| Liabilities | 932,029 | 915,350 | |
| Equity and liabilities | 1,685,467 | 1,645,600 |
| GROUP DKK '000 |
NOTE | 2010/11 | 2009/10 |
|---|---|---|---|
| Operating profit (EBIT) Depreciation, amortisation, impairment losses and write-downs etc. Grants recognised as income Changes in net working capital |
34 | 86,959 130,183 (12,657) 1,103 |
64,342 125,719 (13,188) (73,485) |
| Cash flows from primary operating activities | 205,588 | 103,388 | |
| Financial income received Financial expenses paid Income tax paid |
4,888 (10 .007) (8,256) |
11,559 (15,036) (5,729) |
|
| Cash flows from operating activities | 192,213 | 94,182 | |
| Purchase of intangible assets Purchase of property, plant and equipment Sale of property, plant and equipment Acquisition of enterprises Changes in financial assets |
37 | (10,788) (142,865) 2,653 0 2,590 |
(3,262) (160,954) 1,560 2,163 7,809 |
| Cash flows from investing activities | (148,410) | (152,684) | |
| Dividend paid to shareholders of parent Repayment of mortgage debt Raising of mortgage debt Investment grant received Purchase of treasury shares |
(8,474) (31,669) 2,126 7,579 (33,338) |
(8,840) (8,662) 388 39,964 0 |
|
| Cash flows from financing activities | (63,776) | 22,850 | |
| Change in cash and cash equivalents | (19,973) | (35,652) | |
| Cash and cash equivalents as at 1 May Translation adjustment, beginning of year |
(109,382) 144 |
(73,324) (406) |
|
| Cash and cash equivalents as at 30 April | 35 | (129,211) | (109,382) |
| Share capital | Share premium | Other reserves | Retained earnings | Equity owned by shareholders of parent |
Equity owned by minority interests |
Total equity | ||
|---|---|---|---|---|---|---|---|---|
| Equity as at 1 May 2009 | 60,000 | 51,000 | (18,886) | 572,159 | 664,273 | 190 | 664,463 | |
| Changes in equity 2009/10 Net profit for the year Other comprehensive income after tax for the financial year |
0 0 |
0 0 |
0 2,082 |
43,028 0 |
43,028 2,082 |
1 0 |
43,029 2,082 |
|
| Comprehensive income for the financial year | 0 | 0 | 2,082 | 43,028 | 45,110 | 1 | 45,111 | |
| Reserve for net revaluation according to the equity method Distributed dividend, cf. note 14 Dividend from treasury shares Sale of treasury shares |
0 0 0 0 |
0 0 0 0 |
(3,232) 0 0 0 |
(3,232) (9,000) 160 29,516 |
0 (9,000) 160 29,516 |
0 0 0 0 |
0 (9,000) 160 29,516 |
|
| Total changes in equity | 0 | 0 | (1,150) | 66,936 | 65,786 | 1 | 65,787 | |
| Equity as at 30 April 2010 | 60,000 | 51,000 | (20,036) | 639,095 | 730,059 | 191 | 730,250 | |
| Equity as at 1 May 2010 | 60,000 | 51,000 | (20,036) | 639,095 | 730,059 | 191 | 730,250 | |
| Changes in equity 2010/11 Net profit for the year Other comprehensive income after tax for the financial year |
0 0 |
0 0 |
0 4,347 |
60,635 0 |
60,635 4,347 |
18 0 |
60,653 4,347 |
|
| Comprehensive income for the financial year | 0 | 0 | 4,347 | 60,635 | 64,982 | 18 | 65,000 | |
| Distributed dividend, cf. note 14 Dividend from treasury shares Purchase of treasury shares |
0 0 0 |
0 0 0 |
0 0 0 |
(9,000) 526 (33,338) |
(9,000) 526 (33,338) |
0 0 0 |
(9,000) 526 (33,338) |
|
| Total changes in equity | 0 | 0 | 4,347 | 18,823 | 23,170 | 18 | 23,188 | |
| Equity as at 30 April 2011 | 60,000 | 51,000 | (15,689) | 657,918 | 753,229 | 209 | 753,438 |
The 2010/11 consolidated financial statements and financial statements of Harboes Bryggeri A/S are presented in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for the annual reports of Class D companies (listed), cf. the IFRS Executive Order issued in accordance with the Danish Financial Statements Act (Årsregnskabsloven). Harboes Bryggeri A/S is a public limited company domiciled in Denmark.
Furthermore, the consolidated financial statements and the financial statements comply with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).
The consolidated financial statements and the financial statements are presented in Danish kroner (DKK), which is regarded as the main currency of the group's activities and the functional currency of the parent.
The consolidated financial statements and the financial statements have been prepared on the basis of historic cost, except for derivative financial instruments and financial assets classified as available for sale which are measured at fair value. Accounting policies are described in further detail below.
The 2010/11 consolidated financial statements and financial statements have been prepared in accordance with the new and revised standards (IFRS/IAS) and new interpretations (IFRIC) that apply to financial years starting on 1 January 2010 or later. The standards and interpretations that are relevant to Harboes Bryggeri A/S are:
IAS 24, Related Party Disclosures IFRS 3, Business Combinations (2008) IFRS 9, Financial Instruments: Classification and Measurement
Minor changes of various standards and interpretations due to annual IASB improvements (May 2010).
The implementation of the new and revised standards and interpretations in the 2010/11 annual report did not result in any changes in the accounting policies.
IFRS 3, Business Combinations (2008), became effective as from financial years beginning on 1 July 2009 or later and means that the group, as from the 2010/11 financial year, must recognise acquisition costs and changes in conditional acquisition costs directly in the income statement. The standard may also result in a change in accounting policies in respect of the recognition of goodwill related to the minority interests' share of acquired enterprises and in respect of the gradual acquisition of enterprises and partial disposals of investments in subsidiaries.
At the time of publication of this annual report, the following new or revised standards and interpretations have not yet become effective and have thus not been incorporated in the annual report:
IFRS 9, Financial Instruments: Classification and Measurement
IFRS 10-12, IAS 27 and 28: Accounting treatment of consolidation, joint ventures etc. (consolidation project). The standards will become effective for financial years beginning on 1 January 2013 or later. The standards have not yet been adopted for implementation in the EU.
Minor changes of various standards and interpretations due to annual IASB improvements (May 2010) are not expected to have any material impact.
The management estimates that the implementation of new and revised standards and interpretations which have not yet become effective will not have any significant impact on the consolidated financial statements and the financial statements for the coming financial years.
The consolidated financial statements comprise Harboes Bryggeri A/S (the parent) and the enterprises (subsidiaries) in which the parent has a controlling interest. Control is achieved when the parent, directly or indirectly, holds more than 50% of the voting rights or in any other way can or does exercise a controlling influence.
Enterprises in which the parent, directly or indirectly, holds between 20 and 50% of the voting rights and exercises a significant, but not controlling, influence, are considered to be associates.
The consolidated financial statements are prepared on the basis of financial statements of Harboes Bryggeri A/S and its subsidiaries. The consolidated financial statements are prepared by adding items of a similar nature. The financial statements used for the consolidation are prepared in accordance with the accounting policies of the group.
The consolidation involves the elimination of intercompany income and expenses, intercompany balances, dividends as well as profits and losses on transactions between the consolidated enterprises.
The items of the subsidiaries are recognised wholly in the consolidated financial statements. The minority interests' proportionate share of the profit or loss forms part of the consolidated net profit or loss for the year and a separate part of the consolidated equity.
Newly acquired or newly formed enterprises are recognised in the consoli-
dated financial statements from the date of acquisition and the date of formation, respectively. The date of acquisition is the date on which the buyer actually takes control of the enterprise. Enterprises divested or wound up are recognised in the consolidated income statement up until the date of divestment or winding-up. The date of divestment is the date on which control of the enterprise actually passes to a third party.
The acquisition method is used in connection with the acquisition of new enterprises after which the newly acquired enterprises' identifiable assets, liabilities and contingent liabilities are measured at fair value at the date of acquisition. Non-current assets which are acquired with the intention of selling them are, however, measured at fair value less expected selling costs. The restructuring costs are recognised in the pre-acquisition balance sheet only if they constitute an obligation to the enterprise acquired. The tax effect of the revaluations has been taken into account.
The cost of an enterprise consists of the fair value of the consideration paid plus the costs that are directly attributable to the acquisition of the enterprise. If the final determination of the fee is conditional upon one or more future events, these adjustments are recognised in the cost only if the event in question is likely to occur and the effect on the cost can be measured reliably.
Positive differences (goodwill) between the cost of the acquired enterprise and the fair value of the assets, liabilities and contingent liabilities taken over are recognised as an asset under intangible assets and tested at least once a year for impairment. If the carrying amount of the asset exceeds its recoverable amount, impairment is made to the lower recoverable amount.
If there are negative differences (negative goodwill), the calculated fair values and the calculated cost of the enterprise are revalued. If the fair value of the assets, liabilities and contingent liabilities taken over continues to exceed the cost after the revaluation, the difference is recognised as income in the income statement.
Profit or loss from the divestment or winding-up of subsidiaries is calculated as the difference between the selling price or settlement price and the carrying amount of the net assets at the time of divestment or winding-up, including goodwill, accumulated foreign currency translation adjustments recognised directly in other comprehensive income and estimated divestment or winding-up costs. The selling price is measured at the fair value of the fee received.
On initial recognition, transactions in currencies other than the group's functional currency are translated at the exchange rate applicable at the date of transaction. Receivables, liabilities or other monetary items denominated in foreign currencies that have not been settled at the balance sheet date, are translated at the exchange rate at the balance sheet date. Exchange rate differences arising between the exchange rate at the date of transaction and the exchange rate at the date of payment and the balance sheet date, respectively, are recognised in the income statement as net financials. Property, plant and equipment, inventories and other non-monetary assets purchased in foreign currencies and measured on the basis of historic cost are translated at the exchange rate applicable at the date of transaction. Non-monetary items which are reassessed at fair value are translated using the exchange rate applicable at the time of reassessment.
When recognising enterprises that prepare their financial statements in a functional currency other than Danish kroner (DKK) in the consolidated financial statements, the income statements are translated at average exchange rates unless these deviate significantly from the actual exchange rates at the time of the transactions. In the latter case, the actual exchange rates are used. Balance sheet items are translated using the exchange rates applicable at the balance sheet date.
Exchange rate differences arising from the translation of foreign enterprises' balance sheet items at the beginning of the year using the exchange rates applicable at the balance sheet date and the translation of income statements from average exchange rates to the exchange rates applicable at the balance sheet date are recognised directly in other comprehensive income. Similarly, exchange rate differences, which have occurred as a result of changes made directly in the foreign enterprise's equity, are also recognised directly in other comprehensive income.
Translation adjustments of receivables from or payables to subsidiaries which are considered part of the parent's overall investment in the subsidiary in question are recognised directly in other comprehensive income.
Tax for the year, which is made up of current tax for the year and changes in deferred tax, is recognised in the income statement with the portion attributable to the net profit or loss for the year, and directly in equity or in other comprehensive income with the portion attributable to amounts recognised directly in equity and in other comprehensive income, respectively. Foreign currency translation adjustments of deferred tax are recognised as part of the adjustments of deferred tax for the year.
Current tax liabilities and current tax receivable are recognised in the balance sheet as tax calculated on the basis of the taxable income for the year, adjusted for tax paid on account.
The tax rates and rules in force on the balance sheet date are used to calculate the current tax for the year.
Deferred tax is recognised according to the balance sheet liability method of all temporary differences between the carrying amount and tax base of assets and liabilities, except for deferred tax on temporary differences arising from either the first recognition of goodwill or from the first recognition of a transaction, which is not a business combination, and where the temporary difference established at the time of the first recognition neither affects the net profit or loss nor the taxable income.
Deferred tax on temporary differences associated with investments in subsidiaries and associates is recognised unless the parent is able to check when the deferred tax is realised, and it is likely that the deferred tax will not materialise as current tax within a foreseeable future.
Deferred tax is calculated on the basis of the planned use of the individual asset and the settlement of the individual liability, respectively.
Deferred tax is measured by using the tax rates and rules applying in the countries concerned which – based on passed or actually passed legislation on the balance sheet date – are expected to be in force when the deferred tax is expected to materialise as current tax. Changes in deferred tax due to changes in tax rates or rules are recognised in the income statement unless the deferred tax can be attributed to items that have previously been recognised in other comprehensive income. In the latter case, the changes are also recognised in other comprehensive income.
Deferred tax assets, including the tax base of tax losses to be carried forward, are recognised in the balance sheet at the expected realisable value of the asset, either by offsetting against deferred tax liabilities or as net tax assets for offsetting against future positive taxable incomes. At each balance sheet date, it is reassessed whether it is probable that enough taxable income will be generated in future to utilise the deferred tax asset.
The parent is taxed jointly with all the Danish subsidiaries. The current Danish income tax is allocated among the jointly taxed Danish enterprises in proportion to their taxable incomes.
On initial recognition, derivative financial instruments are measured at fair value at the settlement date.
Subsequently, derivative financial instruments are measured at fair value at the balance sheet date. Positive and negative fair values of derivative financial instruments are included in other receivables and other payables, respectively. Changes in the fair value of derivative financial instruments classified as and complying with the requirements for efficient hedging of future transactions are recognised in other comprehensive income. The inefficient part is recognised immediately in the income statement. When the hedged transactions are carried out, the accumulated changes are recognised as part of the cost of the transactions in question.
Revenue from the sale of finished products and goods for resale is recognised in the income statement on delivery and when risk has passed to the buyer.
Revenue is measured at the fair value of the received or receivable fee. If any interest-free credit has been agreed for payment of the receivable fee that exceeds the usual credit period, the fair value of the fee is calculated by discounting future payments. The difference between the fair value and the nominal value of the fee is recognised as financial income in the income statement using the effective interest rate method.
Revenue is calculated exclusive of VAT, taxes on beer and soft drinks etc. levied on behalf of a third party.
Production costs comprise costs incurred to generate revenue. In production costs, trading companies recognise the cost of sales, while production companies recognise the costs of raw materials, consumables, production staff, maintenance, depreciation and impairment losses on the property, plant and equipment used in the production process as well as returnable packaging and adjustments of the obligation to repurchase own packaging.
Production costs also include costs pertaining to research and development projects which do not meet the criteria for recognition in the balance sheet.
Distribution costs represent costs incurred for the distribution of goods sold and for marketing campaigns, including pay for sales and distribution staff, advertising expenses and depreciation and impairment losses on the property, plant and equipment used in the distribution process.
Administrative expenses include expenses incurred to manage and administer the group, including administrative staff costs, management costs and office expenses as well as depreciation and impairment losses on the property, plant and equipment used to administer the group.
Other operating income and expenses include income and expenses of a secondary nature in relation to the group's main activities, including grants for plants and rental income as well as gains and losses from the sale of non-current assets (property, plant and equipment) if the selling price of the assets exceeds the original cost.
Government grants are recognised when there is reasonable assurance that the conditions for receiving the grant have been met and that the grant will be received.
Grants for covering costs incurred are recognised in the income statement proportionately over the periods in which the associated costs are recognised in the income statement. The grants are recognised under the item Other operating income.
Government grants which are linked to an asset are recognised as deferred income under non-current and current liabilities, respectively, and amortised over the amortisation period.
Net financials include interest income and interest expenses, realised and unrealised capital gains and losses on securities, liabilities and transactions in foreign currencies, amortisation premiums/deductions on mortgage debt etc., as well as supplementary payments and allowances under the Danish On-Account Tax Prepayment Scheme (Acontoskatteordningen).
Interest income and interest expenses are accrued on the basis of the principal and the effective interest rate. The effective interest rate is the discount rate that is to be used to discount expected future payments which are linked to the financial asset or the financial liability to make sure that their current values correspond to the carrying amount of the asset and the liability, respectively.
Dividend from investments is recognised when a conclusive right to the dividend has been obtained. This will typically be at the time of the general meeting's approval of the distribution from the company in question. However, in the consolidated financial statements this does not apply to investments in associates, which are measured according to the equity method, cf. below.
On initial recognition, goodwill is recognised and measured at cost as described under 'Business combinations'.
On the recognition of goodwill, the goodwill amount is distributed on the independent cash-generating units of the group. The identification of cash-generating units follows the management structure, internal financial management and reporting of the group.
Goodwill is not amortised, but is tested at least once a year for impairment.
Immaterial rights acquired in the form of software are measured at cost less
accumulated amortisation and impairment losses. Software is amortised on a straight-line basis over the expected useful life, which is usually 3-5 years.
Development projects in respect of clearly defined and identifiable products and processes are recognised as intangible assets if it is probable that future economic benefits will flow to the group and the development costs can be measured reliably.
Other development costs are recognised as costs in the income statement as incurred.
On initial recognition, development projects are recognised at cost. The cost of development projects comprise costs which are directly attributable to the development projects and which are necessary to complete the project, calculated from the time when the development project meets the criteria for recognition as an asset for the first time.
Completed development projects are amortised on a straight-line basis over the expected useful life, which is usually 3-5 years. For development projects protected by intellectual property rights, the maximum amortisation period equals the remaining term of the rights in question.
Development projects are impaired to a lower recoverable amount, if any, cf. the section on impairment below. Development projects in progress are tested for impairment at least once a year.
Intangible assets with indefinable useful lives, including rights, are not amortised but tested at least once a year for impairment. If the carrying amount of the assets exceeds their recoverable amount, impairment is made to the lower recoverable amount.
Land and buildings, plant and machinery together with other plant, fixtures and fittings, tools and equipment and spare parts for own machinery are measured at cost less accumulated depreciation and impairment losses. Land is not depreciated.
Cost comprises the acquisition price, costs directly related to the acquisition and costs of preparing the asset up until such time as the asset is ready for use. For own-manufactured assets, the cost includes costs which can be related directly to the production of the asset, including materials, components, subsuppliers and wages.
Interest expenses which have arisen in connection with the construction of asset are recognised in the cost of the asset. Other borrowing costs are recognised in the income statement.
If the acquisition or use of the asset obliges the group to incur costs for the demolition or re-establishment of the asset, the estimated costs for such demolition or re-establishment are recognised as a provision and a part of the cost of the asset in question, respectively. If the obligation occurred in connection with the production of inventories, the obligation is recognised as a part of the cost of the goods in question, cf. below.
The cost of the asset less the residual value constitutes the basis of depreciation. The residual value is the expected amount that could be obtained by selling the asset today less selling costs if the asset had already reached the age and the condition that is to be expected at the end of its useful life. The cost of a total asset is divided into smaller components, which are depreciated separately if they have different useful lives.
Depreciation is according to the straight-line method on the basis of the following assessment of the expected useful lives of the assets:
| Buildings . | 10-50 years |
|---|---|
| Plant and machinery | 5-25 years |
| Other plant, fixtures and fittings, tools and equipment . | 3-15 years |
| Returnable packaging . | 3-8 years |
Depreciation methods, useful lives and residual values are reassessed on an annual basis.
Property, plant and equipment are impaired to the lower of recoverable amount and carrying amount, cf. below.
The carrying amounts of intangible assets and property, plant and equipment with definable useful lives and investments in subsidiaries and associates are reviewed at the balance sheet date to determine whether there are any indications of impairment. If this is the case, the recoverable amount of the asset is assessed to determine the need for impairment, if any, and the extent of such impairment.
For intangible assets with indefinable useful lives, the recoverable amount is calculated once a year regardless of whether there are indications of impairment.
If the asset does not generate cash flows independently of other assets, the recoverable amount of the smallest cash-generating unit that the asset is part of is assessed.
The recoverable amount is calculated as the higher of the fair value of the asset and the cash-generating unit less selling costs and the value in use. When the value in use is calculated, estimated future cash flows are discounted to present value by using a discount rate which reflects both current market assessments of the time value of money and the special risks that are linked to the asset or the cash-generating unit, and for which there have been no adjustments in estimated future cash flows.
If the recoverable amount of the asset or the cash-generating unit is estimated to be lower than the carrying amount, the carrying amount is impaired to the recoverable amount. For cash-generating units, the impairment is distributed so that goodwill is impaired first, then any remaining need for impairment is distributed on the other assets in the unit, the individual asset, however, not being impaired to a value which is lower than its fair value less estimated selling costs.
Impairment is recognised in the income statement. Upon any subsequent reversals of impairment due to changed preconditions for the determined recoverable amount, the carrying amount of the asset or the cash-generating unit is increased to a corrected estimate of the recoverable amount, the maximum being, however, the carrying amount which the asset or the cash-generating unit would have had if there had been no impairment.
Investments in subsidiaries and associates are measured at cost in the financial statements of the parent.
If the cost exceeds the recoverable amount of the investments, it is impaired to the lower amount. If more dividend is distributed than has been earned overall by the enterprise since the acquisition, this is considered to be an indication of impairment, cf. the section on impairment above.
Investments in associates are recognised and measured in the consolidated financial statements according to the equity method. This means that the investments are measured at the proportionate share of the enterprise's determined equity value, calculated according to the group's accounting policies, deducting and adding proportionate intercompany profits and losses.
The proportionate share of the enterprise's net profit or loss and elimination of unrealised proportionate internal profits and losses are recognised in the income statement. The proportionate share of all transactions and events which are recognised directly in the equity of the associate is recognised in the group's equity.
Investments in associates with a negative equity value are measured at DKK 0. Receivables and other non-current financial assets which are considered to be part of the total investment in the associate are impaired by any remaining negative equity value. Trade receivables and other receivables are impaired only if they are deemed to be uncollectible.
A provision to cover the remaining negative equity value is recognised only
if the group has a legal or an actual obligation to fulfil the particular enterprise's obligations.
The acquisition method is used for making investments in associates.
Inventories are measured at the lower of cost applying the FIFO method and net realisable value.
The cost of goods for resale, raw materials and consumables comprises the acquisition price plus landing costs. The cost of manufactured goods and work in progress includes costs of raw materials, consumables and direct labour costs as well as fixed and variable production overheads. This includes costs for the demolition or re-establishment of property, plant and equipment if such costs have occurred due to the production of goods.
Variable production overheads include indirect materials and pay and are distributed on the basis of precalculations for the produced goods. Fixed production overheads include costs for maintaining and depreciating machinery, factory buildings and equipment used in the production process and general costs for factory administration and management. Fixed production costs are distributed on the basis of the normal capacity of the production facilities.
The net realisable value of inventories is calculated as the estimated selling price less completion costs and costs incurred to execute sales.
On initial recognition, receivables are measured at fair value and subsequently at amortised cost, which usually corresponds to the nominal value less writedowns for expected bad debts. Write-downs are made on an individual level.
Prepayments recognised under assets comprise costs incurred in respect of the coming financial year. Deferred income is measured at cost.
Securities recognised under non-current assets comprise listed securities and equity interests available for sale in enterprises that are not subsidiaries or associates.
On initial recognition, securities are measured at fair value on the trading day plus costs directly attributable to the purchase. Securities are subsequently measured at fair value at the balance sheet date, and any changes in the fair value are recognised in other comprehensive income. When the securities are sold or settled, the accumulated fair value adjustments are recognised in the income statement.
The fair value is determined at the share price of listed securities and at an estimated fair value determined on the basis of market information.
Non-current assets and groups of assets held for sale are presented separately in the balance sheet as current assets. Liabilities directly related to the assets in question are presented as current liabilities in the balance sheet.
Non-current assets held for sale are not depreciated, but impaired to the lower of fair value less expected selling costs and the carrying amount.
Dividend is recognised as a payable at the time of adoption by the general meeting.
Acquisition and selling prices of treasury shares and dividend obtained from them are recognised directly in equity under retained earnings.
The group has entered into defined contribution plan agreements with a significant part of the employees of the group. Except for a pension plan created for a single employee, which is insignificant in relation to the group's total obligations, the group has not entered into any defined benefit plans.
For defined contribution plans, the group pays regular, fixed contributions to independent pension providers and the like. The contributions are recognised in the income statement in the period in which the employees have performed the work entitling them to the pension contribution. Payments due are recognised in the balance sheet as liabilities.
Provisions are recognised when the group has a legal or actual obligation as a result of events occurring in the financial year or previous years, and when it is likely that the fulfilment of this obligation will impact the company's financial resources.
Provisions are measured as the best possible estimate of the costs required to settle the obligation at the balance sheet date. Provisions expected to fall due more than one year after the balance sheet date are measured at present value.
The obligation to repurchase own packaging in circulation is measured at the deposit price on the basis of the estimated volume of circulating bottles, cans, crates and trays and is recognised as a repurchase obligation under current liabilities.
Mortgage debt is measured at cost at the time of borrowing, corresponding to the fair value of the proceeds received less transaction costs incurred. Subsequently, mortgage debt is measured at amortised cost. This means that the difference between the proceeds at the time of borrowing and the amount to be repaid is recognised in the income statement over the term of the loan as a financial expense using the effective interest rate method.
Lease payments in respect of operating leases are recognised according to the straight-line method in the income statement over the term of the lease.
On initial recognition, other financial liabilities, including bank debt and trade payables, are measured at fair value less transaction costs incurred. Subsequently, such liabilities are measured at amortised cost using the effective interest rate method. Accordingly, the difference between the proceeds and the nominal value is recognised as a financial expense in the income statement over the term of the loan.
Deferred income recognised under liabilities comprises income received in respect of subsequent financial years as well as asset-related government grants. Deferred income is measured at cost.
The cash flow statement is presented using the indirect method, showing cash flows from operating, investing and financing activities as well as cash and cash equivalents at the beginning and end of the financial year.
Cash flows from operating activities are determined as the operating profit or loss, adjusted for non-cash operating items and changes in working capital less the income tax paid in the financial year which is attributable to the operating activities.
Cash flows from investing activities comprise payments in connection with the acquisition and divestment of enterprises and financial assets as well as the purchase, development, improvement and sale etc. of intangible assets and property, plant and equipment. Furthermore, cash flows from assets held under finance leases are recognised in the form of lease payments.
Cash flows from financing activities comprise changes in the share capital of the parent and costs incidental thereto as well as the raising and repayment of loans, repayment of interest-bearing debt, purchase of treasury shares and distribution of dividend.
Cash flows denominated in currencies other than the functional currency are recognised in the cash flow statement by applying average exchange rates unless such rates deviate materially from the actual exchange rates applicable at the time of transaction. In the latter case, the exchange rates applicable at the individual dates are used.
Cash and cash equivalents comprise cash and short-term securities involving insignificant price risks less any overdraft facilities and intercompany balances which are an integrated part of the cash management.
Segment information is stated for business segments and geographical markets. The segment information complies with the risks, accounting policies and internal financial management of the group.
Segment income and expenses as well as segment assets and liabilities comprise the items which are directly attributable to the individual segment, and the items which may reliably be distributed on the individual segments.
Non-current assets in the segments comprise assets which are used directly in the operation of the individual segment, including intangible assets and property, plant and equipment as well as investments in associates.
Current assets in the segments comprise assets which are directly related to the operation of the individual segment, including inventories, trade receivables, other receivables, prepayments and cash.
Liabilities related to the segments comprise liabilities arising from the operation of the individual segment, including trade payables, provisions and other payables.
The financial highlights have been defined and calculated in accordance with the 'Recommendations and Ratios 2005' issued by the Danish Society of Financial Analysts (Den Danske Finansanalytikerforening), the specific definitions being:
| Investments: | The year's additions of intangible assets and property, plant and equipment, excl. property, plant and equipment under |
|---|---|
| construction and spare parts | |
| Gross margin: | Gross profit/loss in per cent of revenue |
| Profit margin: | Operating profit/loss (EBIT) in per cent of revenue |
| EBITDA margin: | Earnings before interest, tax, depreciation and amortisation in per cent of revenue |
| Return on net assets: | Operating profit/loss (EBIT) in per cent of average operating assets |
| Operating assets: | Balance sheet total at the end of the year less financial assets and cash |
| Return on invested capital: | Operating profit/loss (EBIT) less tax thereon in per cent of average invested capital (equity + minority interests + |
| net interest-bearing debt + provisions - financial assets) | |
| Interest-bearing debt: | Net interest-bearing liabilities less interest-bearing assets, including cash and cash equivalents. |
| Interest-bearing debt, net: | Mortgage debt and debt to credit institutions less cash and cash equivalents |
| Return on equity: | Net profit/loss for the year in per cent of average equity |
| Solvency ratio: | Equity at the end of the year in per cent of the balance sheet total at the end of the year |
| Financial gearing: | Net interest-bearing debt at the end of the year in per cent of equity at the end of the year |
| Earnings per share (EPS): | Net profit/loss for the year in relation to the average number of shares |
| Cash flow per share: | Cash flows from operating activities in relation to the average number of shares |
| Price/earnings ratio: | Share price at the end of the year in relation to earnings per share |
| Current ratio: | Current assets in per cent of current liabilities |
The ratios have been calculated on the basis of the net profit/loss for the year along with the balance sheet total and equity at the end of the year.
The calculation of earnings per share and diluted earnings per share is specified in note 13.
Many items cannot be reliably measured, but can only be estimated. Such estimates include assessments made on the basis of the most recent information available at the time of presenting the financial statements. It may be necessary to change previously made estimates due to changes in the circumstances on which the estimate was based, or due to additional information, additional experience or subsequent events.
In connection with the application of the accounting policies described in note 1, the management has made a number of accounting estimates on the recognition and measurement of certain assets and liabilities. The recognition and measurement of assets and liabilities often depend on future events involving a certain amount of uncertainty. In this context, a course of events or the like reflecting the management's assessment of the most probable course of events must be assumed. In the 2010/11 annual report, special attention should be drawn to assumptions and uncertainties which are associated with accounting estimates on impairment tests of property, plant and equipment and financial assets, specification of repurchase obligation concerning returnable packaging, assessment of the value of the assets and liabilities taken over in connection with the acquisition of an enterprise as well as an assessment of contingent liabilities as they have had a considerable impact on the assets and liabilities recognised in the annual report and may require that corrections be made in subsequent financial years provided that the anticipated events do not occur as expected.
As indicated in respect of property, plant and equipment in note 1, Accounting policies, the estimated useful lives of the group's property, plant and equipment are reviewed at the end of each financial year. During the financial year, the company's management has assessed that the useful life of certain types of plant must be extended.
In the coming years, the reassessed useful lives will reduce the group's production costs in the form of reduced depreciation by DKK 25-30 million, provided that the assets are held until the end of their useful lives.
As regards management and reporting, the group is divided into two business segments. This is regarded as the primary segmentation of the group.
The activities of the two business segments comprise:
| Brewery sector: | Production and sale of beer, soft drinks, malt |
|---|---|
| beverages and malt wort products | |
| Foodstuff sector: | Processing and sale of foodstuffs |
| Brewery sector 2010/11 | Foodstuff sector 2010/11 | Elimination 2010/11 | Group 2010/11 | Brewery sector 2009/10 | Foodstuff sector 2009/10 | Elimination 2009/10 | Group 2009/10 | ||
|---|---|---|---|---|---|---|---|---|---|
| Income statement Gross revenue |
1,584,148 | 237,121 | 0 | 1,821,269 | 1,562,953 | 241,094 | 0 | 1,804,047 | |
| Taxes on beer and soft drinks | (263,495) | 0 | 0 | (263,496) | (279,320) | 0 | 0 | (279,320) | |
| Revenue | 1,320653 | 237,121 | 0 | 1,557,774 | 1,283,633 | 241,094 | 0 1,524,727 | ||
| Operating profit (EBIT) Share of profit/(loss) in associates Financial income Financial expenses |
82,009 0 4,981 (10,113) |
4,950 0 474 (1,190) |
0 0 (474)1 4741 |
86,959 0 4,981 (10,829) |
58,250 0 11,159 (12,648) |
6,092 (3,458) 34 (1,309) |
0 0 (13)1 131 |
64,342 (3,458) 11,180 13,944 |
|
| Profit before tax | 76,877 | 4,234 | 0 | 81,111 | 56,761 | 1,359 | 0 | 58,120 | |
| Tax on profit for the year | (19,379) | (1,079) | 0 | (20,458) | (13,881) | (1,210) | 0 | (15,091) | |
| Net profit for the year | 57,498 | 3,155 | 0 | 60,653 | 42,880 | 149 | 0 | 43,029 | |
| Other comprehensive income | 4,347 | 0 | 0 | 4,347 | 2,082 | 0 | 0 | 2,082 | |
| Total comprehensive income | 61,845 | 3,155 | 0 | 65,000 | 44,962 | 149 | 0 | 45,111 | |
| Balance sheet Segment assets, non-current Segment assets, current |
1,107,434 459,917 |
85,429 71,738 |
(8,510)2 (30,541)3 |
1,184,353 501,114 |
1,074,843 440,182 |
93,979 56,038 |
(7,537)2 (11,905)3 |
1,161,285 484,315 |
|
| Assets | 1,567,351 | 157,167 | (39,051) | 1,685,467 | 1,515,025 | 150,017 | (19,442) 1,645,600 | ||
| Segment liabilities, non-current Segment liabilities, current |
354,605 578,898 |
0 37,577 |
(8,510)2 (30,541)3 |
346,095 585,934 |
388,382 512,828 |
4,718 28,864 |
(7,537)2 (11,905)3 |
385,563 529,787 |
|
| Liabilities | 933,503 | 37,577 | (39,051) | 932,029 | 901,210 | 33,582 | (19,442) | 915,350 | |
| 1) Elimination of intercompany interest, intercompany balances. 2) Reclassification, deferred tax asset, foodstuff sector. Reclassification between non-current segment assets and non-current segment liabilities for offsetting against the group's total deferred tax liability. 3) Elimination of intercompany balances between the brewery and foodstuff sectors as well as reclassification of income tax in the foodstuff sector. |
| Group DKK '000 |
||||||||
|---|---|---|---|---|---|---|---|---|
| Brewery business 2010/11 | Foodstuff sector 2010/11 | Elimination 2010/11 | Group 2010/11 | Brewery business 2009/10 | Foodstuff sector 2009/10 | Elimination 2009/10 | Group 2009/10 | |
| Investments etc. | ||||||||
| Additions of intangible assets | 5,727 | 0 | 0 | 5,727 | 3,267 | 0 | 0 | 3,267 |
| Additions of property, plant and equipment | 130,137 | 11,693 | 0 | 141,830 | 150,403 | 13,547 | 0 | 163,950 |
| Acquisition of enterprises | 0 | 0 | 0 | 0 | (2,163) | 0 | 0 | (2,163) |
| Depreciation and amortisation (incl. profit/loss) | 113,550 | 16,633 | 0 | 130,183 | 116,256 | 9,436 | 0 | 125,692 |
| Cash flows | ||||||||
| Cash flows from primary operating activities | 167,405 | 24,808 | 0 | 192,213 | 79,975 | 14,207 | 0 | 94,182 |
| Cash flows from investing activities | (141,301) | (7,109) | 0 | (148,410) | (141,163) | (11,521) | 0 | (152,684) |
| Cash flows from financing activities | (58,180) | (5,596) | 0 | (63,776) | 29,016 | (6,166) | 0 | 22,850 |
| Change in cash and cash equivalents | (32,076) | 12,103 | 0 | (19,973) | (32,172) | (3,480) | 0 | (35,652) |
| Reference is made to pages 2-33 of the management's review for a presentation of the five-year overview of the segments and comments on the develop ments in the financial year. |
The group's activities are mainly distributed on Denmark, Germany and other geographical areas.
The group's revenue from external customers and the distribution of non-current assets on these geographical areas are specified below, where revenue is distributed on the basis of the domicile of the customers, and non-current assets are distributed on the basis of the physical location and legal affiliation, respectively.
| Revenue from external customers |
Non-current assets | |||
|---|---|---|---|---|
| DKK '000 | 2010/11 | 2009/10 | 2010/11 | 2009/10 |
| Denmark | 648,630 | 641,224 | 499,869 | 460,240 |
| Germany | 553,023 | 557,026 | 373,070 | 389,043 |
| Other geographical areas | 356,121 | 326,477 | 22,443 | 24,731 |
| 1,557,774 | 1,524,727 | 895,382 | 874,014 |
Out of the group's total revenue, sales to a single customer account for more than 10% of revenue.
| GROUP DKK '000 |
2010/11 | 2009/10 |
|---|---|---|
| Cost of sales | 1,057,160 | 1,067,398 |
| Write-down of inventories | 114 | 0 |
| Research and development costs, cf. note 5 | 401 | 871 |
| Depreciation, amortisation, impairment losses and write-downs, cf. note 7 | 113,881 | 106,373 |
| Other production costs | 69,508 | 72,809 |
| 1,241,064 | 1,247,451 |
| Research and development costs incurred | 3,970 | 871 |
|---|---|---|
| Development costs recognised as intangible assets, note 15 | (3,569) | 0 |
| 401 | 871 |
| GROUP DKK '000 |
2010/11 | 2009/10 |
|---|---|---|
| Remuneration to the Board of Directors | 895 | 620 |
| Wages and salaries | 172,187 | 155,676 |
| Defined contribution plans | 9,958 | 9,518 |
| Other social security costs | 20,162 | 16,879 |
| Other staff costs | 8,083 | 8,287 |
| Refunds from public authorities | (1,458) | (1,171) |
| 209,827 | 189,809 | |
| Staff costs comprise: | ||
| Production costs | 136,439 | 131,308 |
| Distribution costs | 41,404 | 33,636 |
| Administrative expenses | 28,415 | 24,865 |
| Included in cost of development projects | 3,569 | 0 |
| 209,827 | 189,809 | |
| Average number of employees | 572 | 543 |
| Other | ke y |
|||||
|---|---|---|---|---|---|---|
| Board | of Director s |
Board | of Execut ives |
staff member | s | |
| 2010/11 | 2009/10 | 2010/11 | 2009/10 | 2010/11 | 2009/10 | |
| DKK '000 | DKK '000 | DKK '000 | DKK '000 | DKK '000 | DKK '000 | |
| Remuneration paid to members of the management | ||||||
| Remuneration to the Board of Directors | 895 | 620 | 0 | 0 | 0 | 0 |
| Wages and salaries etc. | 0 | 0 | 5,992 | 3,864 | 14,121 | 11,771 |
| Pension | 0 | 0 | 240 | 238 | 662 | 690 |
| 895 | 620 | 6,232 | 4,102 | 14,783 | 12,461 |
The group's key staff are covered by a performance-related bonus programme. Termination benefits for managers constitute a maximum of two years' remuneration. The programmes are unchanged relative to last year.
The group has entered into defined contribution plan agreements with a significant part of the employees of the group. For defined contribution plans, the employer pays regular contributions to an independent pension provider, pension fund etc., but does not assume any risk in respect of future developments in interest rates, inflation, mortality, disablement etc. as concerns the amount to be disbursed to the employee when the time comes.
Except for one pension plan concerning one employee, the group has not entered into any defined benefit plan agreements. The pension obligation, against which insurance has been taken out, has been recognised on a gross basis at DKK 913k under other receivables and at DKK 1,794k under payables, respectively, in the balance sheet.
| GROUP DKK '000 |
2010/11 | 2009/10 |
|---|---|---|
| Intangible assets | 3,869 | 2,186 |
| Buildings Plant and machinery |
24,110 86,896 |
19,208 86,646 |
| Other plant, fixtures and fittings, tools and equipment Assets held for sale |
15,765 0 |
16,303 250 |
| Profit/(loss) from the sale of property, plant and equipment | (452) | 1,126 |
| 130,188 | 125,719 | |
| Depreciation, amortisation, impairment losses and write-downs comprise: | ||
| Production costs | 113,882 | 106,368 |
| Distribution costs | 7,917 | 11,256 |
| Administrative expenses | 4,941 | 4,882 |
| Other operating income | 0 | (51) |
| Other operating expenses | 3,448 | 3,264 |
| 130,188 | 125,719 |
| GROUP DKK '000 |
2010/11 | 2009/10 |
|---|---|---|
| Government grants Rental income |
12,657 5,624 |
13,188 5,206 |
| 18,281 | 18,394 |
| Loss from the divestment of equity investments | 0 | (3,458) |
|---|---|---|
| 0 | (3,458) |
| GROUP DKK '000 |
2010/11 | 2009/10 |
|---|---|---|
| Interest on bank deposits etc. | 4,286 | 8,559 |
| Interest income from financial assets not measured at fair value via the net profit/(loss) for the year | 4,286 | 8,559 |
| Dividend from financial assets available for sale Adjustment to fair value of liabilities in respect of assets held for sale Net foreign exchange gains and losses |
127 8 560 |
97 0 2,524 |
| 4,981 | 11,180 |
| Interest on mortgage debt Interest on bank debt etc. |
5,275 5,554 |
7,714 6,230 |
|---|---|---|
| Financial expenses of financial liabilities not measured at fair value via the net profit/(loss) for the year | 10,829 | 13,944 |
| Of which included in the cost of property, plant and equipment | 0 | 0 |
| 10,829 | 13,944 |
| GROUP DKK '000 |
2010/11 | 2009/10 |
|---|---|---|
| Current tax Change in deferred tax |
17,651 2,762 |
13,852 1,395 |
| 20,413 | 15,247 | |
| Adjustment of deferred tax, previous years Adjustment of current tax, previous years |
45 0 |
485 (641) |
| 45 | (156) | |
| 20,458 | 15,091 |
The current income tax for the financial year for the Danish consolidated enterprises has been calculated on the basis of a tax rate of 25% (2009/10: 25%). For foreign consolidated enterprises, the tax rate applicable to the country in question has been used.
| 2010/11 | 2010/11 | 2009/10 | 2009/10 | |
|---|---|---|---|---|
| DKK '000 | % | DKK '000 | % | |
| Profit before tax | 81,111 | 58,120 | ||
| Calculated tax thereon Non-deductible income and expenses Effect of differences in the tax rates of foreign subsidiaries Effect of adjustments, previous years Share of profit/(loss) in associates |
20,278 420 (285) 45 0 |
25.0 0.5 (0.3) 0.0 0.0 |
14,530 682 (829) (156) 864 |
25.0 1.2 (1.4) (0.3) 1.5 |
| 20,458 | 15,091 | |||
| Effective tax rate | 25.2 | 26.0 | ||
| Tax on income and expenses recognised under other income can be specified as follows: Change in current tax on adjustment to fair value of financial instruments entered into for hedging future cash flows Change in deferred tax on adjustment to fair value of financial assets available for sale |
(210) (1,779) |
(40) 5,647 |
||
| (1,989) | 5,607 | |||
| Tax on other income Adjustment to fair value etc. of financial assets available for sale Adjustment to fair value etc. of financial instruments entered into for hedging future cash flows |
(1,779) (210) |
5,647 (40) |
||
| (1,989) | 5,607 |
| GROUP DKK '000 |
2010/11 | 2009/10 |
|---|---|---|
| Earnings per share and diluted earnings per share (DKK per share of DKK 10) The basis of calculation of earnings per share and diluted earnings per share is as follows: |
10.6 | 7.3 |
| Profit distributed to the shareholders of the parent used in connection with the calculation of earnings per share |
60,635 | 43,028 |
| 2010/11 No. of share s of DKK 10 o |
2009/10 No. of share s f DKK 10 |
|
| Average number of shares Average number of treasury shares |
6,000,000 (299,381) |
6,000,000 (100,597) |
| Number of shares used to calculate earnings per share (no.) | 5,700,619 | 5,899,403 |
| Average dilution effect of outstanding pre-emption rights etc. (no.) | 0 | 0 |
On 24 August 2010, the company distributed ordinary dividend of DKK 9,000k to its shareholders, corresponding to DKK 1.50 per DKK 10 share. (2009/10: DKK 9,000k, corresponding to DKK 1.50 per DKK 10 share).
For FY 2010/11, the Board of Directors recommends to the annual general meeting that dividend in the amount of DKK 1.50 per share be paid, corresponding to a total of DKK 9,000k.
Goodwill which has occurred in connection with the acquisition of an enterprise is distributed at the date of acquisition to the cash-generating units which are expected to obtain economic benefits from the business combination.
Goodwill is tested for impairment at least once a year or more often if indications of impairment exist. The annual impairment test is carried out on 30 April.
No amortisation of goodwill has been made as at 30 April 2011.
Rights which have an indefinable useful life and therefore cannot be amortised are recognised as at 30 April 2011 by 5,719k (2010: DKK 5,707).
The recoverable amount is calculated on the basis of calculations of the value in use. The most material uncertainty in this context is connected with the determination of the discount rates and growth rates as well as the expected changes in selling prices and production costs in the budget and terminal periods.
The discount rates determined reflect market assessments of the time value of money, expressed through a risk-free interest rate and the specific risks associated with the individual cash-generating units.
Estimated changes in selling prices and production costs in the budget and terminal periods are based on historical experience and expectations for future market changes.
Development projects and software are considered to have definable useful lives, over which the assets are amortised, cf. the description of accounting policies in note 1.
Intangible Development assets under Goodwill project Rights Software construction Cost as at 1 May 2010 3,573 3,628 5,707 6,514 688 Foreign currency translation adjustment 0 0 12 0 0 Transferred from property, plant and equipment 0 0 0 483 0 Additions 0 0 0 5,727 5,695 Disposals 0 0 0 0 (619) Cost as at 30 April 2011 3,573 3,628 5,719 12,724 5,764 Amortisation and impairment losses as at 1 May 2010 0 2,056 0 1,641 0 Foreign currency translation adjustment 0 0 0 0 0 Amortisation for the year 0 1,139 0 3,163 0 Reversal in connection with disposals 0 0 0 0 0 Amortisation and impairment losses as at 30 April 2011 0 3,195 0 4,804 0 Carrying amount as at 30 April 2011 3,573 433 5,719 7,920 5,764 Cost as at 1 May 2009 0 3,088 5,712 1,598 2,068 Foreign currency translation adjustment 0 0 (5) 0 0 Addition in connection with acquisition of enterprise3,573 0 0 386 0 Additions 0 540 0 4,107 688 Disposals 0 0 0 0 (2,068) Cost as at 30 April 2010 3,573 3,628 5,707 6,091 688 Amortisation and impairment losses as at 1 May 2009 0 814 0 266 0 Foreign currency translation adjustment 0 0 0 0 0 Amortisation for the year 0 1,242 0 944 0 Reversal in connection with disposals 0 0 0 0 0 Amortisation and impairment losses as at 30 April 2010 0 2,056 0 1,210 0 Carrying amount as at 30 April 2010 3,573 1,572 5,707 4,881 688
DKK '000
| Land and p buildings |
O lant and machinery |
ther Sp Plant ect. |
are parts for own machinery |
Plants under con struction |
|
|---|---|---|---|---|---|
| Cost as at 1 May 2010 | 608,944 | 1,299,769 | 189,620 | 3,887 | 33,247 |
| Foreign currency translation adjustment | 413 | 1,252 | 90 | 0 | 8 |
| Transferred to intangible assets | 0 | 0 | (483) | 0 | 0 |
| Additions | 30,216 | 97,306 | 14,309 | 375 | 31,531 |
| Disposals | (1,429) | (28,086) | (5,160) | (269) | (28,703) |
| Cost as at 30 April 2011 | 638,143 | 1,370,240 | 198,376 | 3,993 | 36,083 |
| Depreciation and impairment losses as at 1 May 2010 | 277,094 | 852,198 | 148,580 | 0 | 0 |
| Foreign currency translation adjustment | 106 | 730 | 76 | 0 | 0 |
| Depreciation for the year | 20,118 | 84,184 | 15,323 | 0 | 0 |
| Impairment losses for the year 1 | 4,000 | 2,695 | 0 | 0 | 0 |
| Reversal in connection with disposals | (334) | (25,640) | (4,268) | 0 | 0 |
| Depreciation and impairment losses as at 30 April 2011 | 300,984 | 914,167 | 159,711 | 0 | 0 |
| Carrying amount as at 30 April 2011 | 337,159 | 456,073 | 38,665 | 3,993 | 36,083 |
| Cost as at 1 May 2009 | 574,899 | 1,175,003 | 175,841 | 4,210 | 35,338 |
| Foreign currency translation adjustment | (156) | (449) | (37) | 0 | (23) |
| Addition in connection with acquisition of enterprises | 6,021 | 7,797 | 4,076 | 0 | 0 |
| Additions | 25,747 | 120,994 | 19,277 | 490 | 32,163 |
| Disposals | 0 | (7,469) | (11,462) | (813) | (34,231) |
| Cost as at 30 April 2010 | 606,511 | 1,295,876 | 187,695 | 3,887 | 33,247 |
| Depreciation and impairment losses as at 1 May 2009 | 255,493 | 769,014 | 139,595 | 0 | 0 |
| Foreign currency translation adjustment | (38) | (262) | (32) | 0 | 0 |
| Depreciation for the year | 19,208 | 86,646 | 16,303 | 0 | 0 |
| Reversal in connection with disposals | 0 | (6,927) | (9,377) | 0 | 0 |
| Depreciation and impairment losses as at 30 April 2010 | 274,663 | 848,471 | 146,489 | 0 | 0 |
| Carrying amount as at 30 April 2010 | 331,848 | 447,405 | 41,206 | 3,887 | 33,247 |
1 In connection with the assessment of the continued strategic potential of the foodstuff company Harboefarm A/S, the carrying amounts of buildings and plant have also been reassessed. This reassessment resulted in impairment of a total of DKK 6.7 million as described above.
The recoverable amounts are determined on the basis of the value in use of the assets based on future letting of buildings and calculated using the calculated net cash flows on the basis of budgets approved by the management and an estimated market-specific discount rate of 7%.
| GROUP DKK '000 |
2011 | 2010 |
|---|---|---|
| Cost as at 1 May Foreign currency translation adjustments Additions Disposals |
308,306 0 1,130 (4,097) |
310,087 (16) 855 (2,620) |
| Cost as at 30 April | 305,339 | 308,306 |
| Revaluation and impairment losses as at 1 May Foreign currency translation adjustments Adjustments for the year |
(24,568) 0 5,011 |
(21,319) (2) (3,247) |
| Revaluation and impairment losses as at 30 April | (19,557) | (24,568) |
| Carrying amount as at 30 April | 285,782 | 283,738 |
| Financial assets available for sale comprise: Listed shares Listed bonds Unlisted shares |
157 281,797 3,828 |
185 278,502 5,051 |
| 285,782 | 283,738 |
Financial assets available for sale are measured at fair value at the balance sheet date.
| Raw materials, intermediates and non-returnable packaging | 76,488 | 62,772 |
|---|---|---|
| Finished goods and goods for resale | 61,762 | 59,439 |
| 138,250 | 122,211 |
| GROUP DKK '000 |
2011 | 2010 |
|---|---|---|
| Trade receivables | 301,676 | 304,155 |
| Write-downs for expected bad debts | 1,585 | 1,235 |
| Provisions account as at 1 May | 1,235 | 1,147 |
| Foreign currency translation adjustment | 0 | 138 |
| Addition in connection with acquisition of enterprise | 0 | 200 |
| Ascertained losses and payments received concerning claims previously written off for the year | 165 | 446 |
| Reversed write-downs | 0 | (150) |
| Write-downs for bad debts for the year | 185 | (546) |
| 1,585 | 1,235 | |
| Write-downs for the year recognised in the income statement | 350 | 296 |
Direct write-downs of receivables are made if the value, based on an individual assessment of the individual debtor's ability to pay, is reduced, e.g. as a result of a suspension of payments etc. Write-downs are made at the calculated net realisable value.
All major overdue receivables have been written off as at the balance sheet date.
| Other receivables | 10,306 | 3,964 |
|---|---|---|
| 10,306 | 3,964 |
Other receivables are not associated with any special credit risks and like last year, no write-downs of these are included. None of the receivables are overdue.
The Board of Directors of Harboes Bryggeri A/S has decided to sell one of its residential properties. The property is expected to sell within 12 months. Proceeds from the sale are expected to correspond to the carrying amount of assets and liabilities.
| GROUP DKK '000 |
2010/11 | 2009/10 |
|---|---|---|
| Property, plant and equipment Impairment losses for the year |
2,992 0 |
3,242 (250) |
| Assets held for sale | 2,992 | 2,992 |
| Payables in respect of assets held for sale | (2,979) | (2,987) |
| Net assets held for sale | 13 | 5 |
| Cash and bank deposits | 39,913 | 43,774 |
|---|---|---|
Please refer to note 35 for further information on the group's undrawn credit facilities.
The share capital amounts to DKK 60,000k, distributed on DKK 6,400k of Class A shares and DKK 53,600k of Class B shares. Each Class A share of DKK 10 carries 10 votes, and each Class B share of DKK 10 carries 1 vote.
The Class B shares are listed on NASDAQ OMX Copenhagen.
The past four years have not seen any movements in the share capital.
| S | hare | of | ||||
|---|---|---|---|---|---|---|
| 2011 | 2010 | Nominal value | share capital | |||
| No. of share s |
No. of share s |
2011 | 2010 | 2011 | 2010 | |
| of DKK 10 o | f DKK 10 | DKK '000 | DKK '000 | % | % | |
| Treasury shares as at 1 May | 64,945 | 292,312 | 650 | 2,923 | 1.1 | 4.9 |
| Purchase of treasury shares | 285,640 | 0 | 2,856 | 0 | 4.7 | 0.0 |
| Sale of treasury shares | 0 | (227,367) | 0 | (2,274) | 0.0 | (3.8) |
| Treasury shares as at 30 April | 350,585 | 64,945 | 3,506 | 649 | 5.8 | 1.1 |
Harboes Bryggeri A/S holds treasury Class B shares which have been purchased to ensure optimal investment of cash funds. According to a decision made by the general meeting on 5 November 2011, the company can acquire up to 50% of the share capital until the company's annual general meeting in 2015.
In 2010/11, the company acquired treasury shares at a nominal value of 2,856k at an average price of 116.71, corresponding to DKK 33.3 million (2009/10: no purchase)
In 2010/11, the company has not sold any treasury shares (2009/10: sold treasury shares at a nominal value of DKK 2,274k, corresponding to DKK 29.5 million in connection with the acquisition of an enterprise).
| GROUP DKK '000 |
2010/11 | 2009/10 | |||
|---|---|---|---|---|---|
| Reserve for foreign currency translation adjustments Reserve for adjustment to fair value of financial assets available for sale Reserve for value adjustment of hedging instruments |
16 (15,705) 0 |
(471) (18,937) (628) |
|||
| (15,689) | (20,036) | ||||
| Reserve for net revaluation according to the equity method |
Reserve for foreign currency transla- tion adjustment |
Reserve for value adjustment of hedg- ing instruments |
Reserve for value adjustment of financial assets available for sale |
Total | |
| Other reserves as at 1 May 2010 Foreign currency translation adjustment regarding foreign enterprises Adjustment to fair value of financial instruments entered into for hedging |
0 | (471) 487 |
(628) 0 |
(18,937) 0 |
(20,036) 487 |
| future cash flows, reversals on repayment Adjustment to fair value of financial assets available for sale Adjustment to fair value of financial assets available for sale, |
0 0 |
0 0 |
838 0 |
0 4,748 |
838 4,748 |
| recirculation to income statement in connection with disposal Tax on income and expenses recognised in other comprehensive income |
0 0 |
0 0 |
0 (210) |
263 (1,779) |
263 (1,989) |
| Other reserves as at 30 April 2011 | 16 | 0 | (15,705) | (15,689) | |
| Other reserves as at 1 May 2009 Foreign currency translation adjustment regarding foreign enterprises Adjustment to fair value of financial instruments entered into for hedging future cash flows Reserve for net revaluation according to the equity method Adjustment to fair value of financial assets available for sale Tax on income and expenses recognised directly in equity |
3,232 0 0 (3,232) 0 0 |
(28) (443) 0 0 0 0 |
(753) 0 165 0 0 (40) |
(21,337) 0 0 0 (3,247) 5,647 |
(18,886) (443) 165 (3,232) (3,247) 5,607 |
| Other reserves as at 30 April 2010 | 0 | (471) | (628) | (18,937) | (20,036) |
GROUP DKK '000
| Deferred assets |
Deferred tax liabilities |
|
|---|---|---|
| Deferred tax liabilities and tax assets as at 1 May 2010 | 1,299 | 33,555 |
| Change in deferred tax recognised in the income statement | (424) | 2,144 |
| Change in deferred tax recognised in other comprehensive income | 0 | 1,873 |
| Change in deferred tax offset against tax receivable | 11 | 289 |
| Deferred tax liabilities and tax assets as at 30 April 2011 | 886 | 37,861 |
| Deferred tax liabilities and tax assets as at 1 May 2009 | 1,575 | 39,580 |
| Foreign currency translation adjustment | 152 | (8) |
| Change in deferred tax recognised in the income statement | (428) | (975) |
| Change in deferred tax recognised in other comprehensive income | 0 | 5,647 |
| Change in deferred tax offset against current tax | 0 | 1,337 |
| Deferred tax liabilities and tax assets as at 30 April 2010 | 1,299 | 33,555 |
| 2011 | 2010 | |
| Deferred tax is recognised in the balance sheet as follows: | ||
| Deferred tax assets | (886) | (1,299) |
| Deferred tax liabilities | 37,861 | 33,555 |
| Deferred tax liabilities and tax assets as at 30 April | 36,975 | 32,256 |
|---|---|---|
Distribution of distributable reserves in AS Viru Õlu, Haljala, Estonia will trigger an unprovided tax of 608 324
| Recogn ised |
|||||
|---|---|---|---|---|---|
| Recogn ised |
in ot her com- |
Transferred | |||
| in the income pre | hensive to | current | |||
| 1 May | state ment In |
come | TAX | 30 apr il |
|
| Non-current assets | 36,362 | 2,000 | 0 | (95) | 38,267 |
| Current assets | (4,078) | 668 | 1,873 | 0 | (1,537) |
| Current liabilities | 129 | (122) | 0 | 0 | 7 |
| Tax losses carried forward | 1,142 | (18) | 0 | 0 | 1,124 |
| Temporary differences | 33,555 | 2,528 | 1,873 | (95) | 37,861 |
| Tax losses carried forward | (1,299) | 424 | 0 | (11) | (886) |
| Unutilised tax losses | (1,299) | 424 | 0 | (11) | (886) |
| Deferred tax liabilities 2011 | 32,256 | 2,952 | 1,873 | (106) | 36,975 |
| Non-current assets | 37,017 | (655) | 0 | 0 | 36,362 |
| Current assets | 3,131 | (1,508) | (5,647) | (54) | (4,078) |
| Current liabilities | (488) | 617 | 0 | 0 | 129 |
| Tax losses carried forward | (80) | 2,998 | 0 | (1,776) | 1,142 |
| Temporary differences | 39,580 | 1,452 | (5,647) | (1,830) | 33,555 |
| Tax losses carried forward | (1,575) | 428 | 0 | (152) | (1,299) |
| Unutilised tax losses | (1,575) | 428 | 0 | (152) | (1,299) |
| Deferred tax liabilities 2010 | 38,005 | 1,880 | (5,647) | (1,982) | 32,256 |
| GROUP DKK '000 |
2011 | 2010 |
|---|---|---|
| Repurchase obligation as at 1 May Applied and reversed during the financial year, net |
33,350 (5,392) |
35,637 (2,287) |
| Repurchase obligation as at 30 April | 27,958 | 33,350 |
| Provisions are recognised in the balance sheet as follows: Current liabilities Non-current liabilities |
27,958 0 |
33,350 0 |
| 27,958 | 33,350 |
The repurchase obligation has been adjusted on the basis of the net sale of returnable packaging for the year less an estimated wastage in the volume of returnable packaging in circulation.
| GROUP DKK '000 |
2011 | 2010 |
|---|---|---|
| 290,058 | 317,297 |
|---|---|
| 36,656 | 26,377 |
| 132,356 | 135,638 |
| 121,046 | 155,282 |
| 290,058 | 317,297 |
| 36,656 | 26,377 |
| 253,402 | 290,920 |
| 317,297 | |
| 290,058 |
| Effective A | mor - |
||||||
|---|---|---|---|---|---|---|---|
| intere st t |
ised | Nominal F | air | ||||
| F | ixed / |
rate | cost | alue | value | ||
| Curren cy |
Expiry | floating | % | DKK '000 | DKK '000 | DKK '000 | |
| Mortgage debt | DKK | 2012 | Floating | 4.5 | 4,717 | 6,595 | 6,701 |
| Mortgage debt | DKK | 2028 | Floating | 2.3-2.5 | 2,509 | 2,694 | 2,602 |
| Mortgage debt | DKK | 2038 | Floating | 1.7-1.8 | 2,708 | 2,708 | 2,647 |
| Mortgage debt | DKK | 2019 | Floating | 1.1-1.4 | 216,199 | 216,199 | 205,713 |
| Mortgage debt | DKK | 2029 | Floating | 1.1-1.4 | 63,925 | 63,925 | 60,825 |
| 30.04.2011 | 290,058 | 292,121 | 278,488 | ||||
| Mortgage debt | DKK | 2012 | Floating | 4.5 | 10,697 | 12,937 | 13,308 |
| Mortgage debt | DKK | 2028 | Floating | 3.0-3.5 | 2,645 | 2,744 | 2,730 |
| Mortgage debt | DKK | 2019 | Floating | 2.3-2.4 | 237,533 | 237,533 | 220,549 |
| Mortgage debt | DKK | 2029 | Floating | 2.3-2.4 | 66,442 | 66,442 | 61,673 |
| 30 April 2010 | 317,297 | 319,656 | 298,260 |
The fair value has been determined at the present value of expected future instalments and interest payments using the current market rate as the discount rate.
| GROUP DKK '000 |
2011 | 2010 |
|---|---|---|
| Loans | 169,124 | 154,340 |
| Mortgage debt falls due as follows: On demand within one year from the balance sheet date Between two and five years from the balance sheet date After five years from the balance sheet date |
169,124 0 0 |
154,340 0 0 |
| 169,124 | 154,340 | |
| Other credit institutions are recognised in the balance sheet as follows: Current liabilities Non-current liabilities |
169,124 0 |
154,340 0 |
| 169,124 | 154,340 |
| Effective A | mor - |
||||||
|---|---|---|---|---|---|---|---|
| intere st t |
ised | Nominal F | air | ||||
| F | ixed / |
rate | cost | alue | value | ||
| Curren cy |
Expiry | floating | % | DKK '000 | DKK '000 | DKK '000 | |
| Overdraft facility | DKK | 2012 | Floating | 2.4-2.7 | 787 | 787 | 787 |
| Overdraft facility | DKK | 2012 | Floating | 2.4-2.7 | 20,648 | 20,648 | 20,648 |
| Overdraft facility | EUR | 2012 | Floating | 2.2-2.8 | 147,689 | 147,689 | 147,689 |
| 30.04,2011 | 169,124 | 169,124 | 169,124 | ||||
| Loans | EUR | 2010 | Fixed | 6.7 | 1,183 | 1,183 | 1,171 |
| Overdraft facility | DKK | 2011 | Floating | 2.5-4.5 | 3,010 | 3,010 | 3,010 |
| Overdraft facility | EUR | 2011 | Floating | 2.5-3.0 | 47,304 | 47,304 | 47,304 |
| Overdraft facility | EUR | 2011 | Fixed | 3.8 | 100,000 | 100,000 | 100,000 |
| Overdraft facility | SEK | 2011 | Floating | 1.75-2.25 | 2,843 | 2,843 | 2,843 |
| 30 April 2010 | 154,340 | 154,340 | 154,328 |
The fair value has been determined at the present value of expected future instalments and interest payments using the current market rate as the discount rate.
| GROUP DKK '000 |
2011 | 2010 |
|---|---|---|
| Trade payables | 216,388 | 187,556 |
| 216,388 | 187,556 |
The carrying amount corresponds to the fair value of the liabilities.
| Wages and salaries, holiday pay, income tax deducted at source, social contributions etc. payable | 9,619 | 8,855 |
|---|---|---|
| Holiday pay obligations etc. | 6,065 | 9,373 |
| VAT and taxes payable | 34,547 | 30,838 |
| Other costs payable | 52,410 | 50,622 |
| Derivative financial instruments, cf. note 38 | 0 | 838 |
| 102,641 | 100,526 |
Holiday pay obligations etc. cover obligations to pay wages and salaries during holidays, which employees, as at the balance sheet date, have earned a right to take in the following financial year.
The carrying amount of payables concerning wages and salaries, income tax deducted at source, social contributions, holiday pay etc., derivative financial instruments, VAT and taxes as well as other costs payable corresponds to the fair value of such liabilities.
| GROUP DKK '000 |
2011 | 2010 |
|---|---|---|
For the years 2007-2017, operating leases concerning the lease of properties, machinery and other plant have been entered into. The leases have been concluded for a minimum of 3-10 years with fixed lease payments to be indexed annually. The leases are interminable in the period stated, after which they may be renewed for periods of five years.
| Minimum lease payments recognised in the income statement | 10,728 | 10,215 |
|---|---|---|
| The minimum lease payments comprise: | ||
| Production | 3,331 | 3,227 |
| Distribution | 783 | 330 |
| Administration | 450 | 606 |
| Other operating expenses | 6,164 | 6,052 |
| 10,728 | 10,215 | |
| The total future minimum lease payments for interminable leases fall due for payment as follows: | ||
| Within one year from the balance sheet date | 7,921 | 9,759 |
| Between two and five years from the balance sheet date | 22,038 | 27,603 |
| After five years from the balance sheet date | 2,816 | 9,192 |
| 32,775 | 46,554 |
The group has entered into leases in respect of land and buildings. The leases have been entered into with companies having Bernhard Griese, CEO, and his close relatives as main shareholders. The leases (registered on the individual properties) are interminable until 2017 on the part of the lessor and the lessee. The annual rent amounts to DKK 6,623k (2009/10: DKK 6,319k). The total future minimum lease payments in the period of interminability amount to DKK 30,389k. The amount is contained in the figures above.
Effective from 1 May 2007, the group has concluded an agreement on the sublease of buildings for a period of ten years. The agreement is interminable on the part of both parties for the term of the lease.
The total future minimum lease payments for interminable subleases fall due as follows:
| Within one year from the balance sheet date Between two and five years from the balance sheet date |
5,530 22,120 |
5,108 20,432 |
|---|---|---|
| After five years from the balance sheet date | 5,530 | 15,324 |
| 33,180 | 40,864 |
| GROUP DKK '000 |
2011 | 2010 |
|---|---|---|
Mortgage debt has been secured by way of a mortgage over properties with associated plant and machinery (mortgaged fixtures and fittings (tilbehørspant)) as well as listed mortgage credit bonds.
| Carrying amount of mortgaged properties | 212,010 | 212,046 |
|---|---|---|
| Carrying amount of pledged mortgage credit bonds | 281,797 | 278,502 |
Mortgage deed registered to the mortgagor with a nominal value of DKK 750k over Danish properties is kept in own depository.
As security for bank debt, a mortgage deed with a nominal value of EUR 16,362k or DKK 122,021k over foreign properties and production facilities has been deposited.
| Carrying amount of mortgaged properties and production facilities | 430,773 | 380,145 |
|---|---|---|
| ------------------------------------------------------------------- | --------- | --------- |
Government grants received have been used to purchase property, plant and equipment. Some grants are subject to certain conditions being fulfilled, and repayment of the grants may be requested within a period of five years if the assets are disposed of or production is discontinued. No current repayment obligation exists.
No pending court cases etc. exist which are deemed by the management to have a serious negative impact on the financial standing of the parent and the group apart from what has already been disclosed in the annual report.
| GROUP DKK '000 |
2011 | 2010 |
|---|---|---|
| Change in inventories | (16,016) | 1,797 |
| Change in trade receivables | 2,773 | (30,080) |
| Change in other receivables | (6,735) | 6,255 |
| Change in trade payables etc. | 28,547 | (20,885) |
| Change in other payables | (7,466) | (30,572) |
| (1,103) | (73,485) |
| Cash and bank deposits | 39,913 | 43,775 |
|---|---|---|
| Overdraft facilities | (169,124) | (153,157) |
| (129,211) | (109,382) |
The carrying amount of cash and cash equivalents corresponds to the fair value of such cash and cash equivalents. The group has undrawn credit facilities totalling DKK 5.9 million as at 30 April 2011 (2009/10: DKK 21.8 million).
| GROUP DKK '000 |
2010/11 | 2009/10 | |
|---|---|---|---|
| Deloitte Statutory audit Other assurance engagements Tax advice Other services |
1,527 105 7 508 |
1,301 50 36 391 |
|
| 2,147 | 1,778 | ||
| Other Statutory audit Other assurance engagements Tax advice Other services |
373 228 63 283 |
355 0 0 357 |
|
| 947 | 712 |
In 2009/10, the group acquired the following enterprises:
| A A |
cqui- o sition |
cquired A wner ship intere st |
cquired A vot ing share pr |
cqui- sition ice |
|
|---|---|---|---|---|---|
| Name | Primary activity d | ate | % | % | DKK'000 |
| GourmetBryggeriet A/S Roskilde, Denmark |
Production and sale of speciality beer |
1 June 2009 | 100 | 100 | 32,462 |
| 32,462 |
| fair value at the |
|||
|---|---|---|---|
| C | arr ying - Ad amount o |
justment f value |
acquisition date |
| Non-current assets Current assets Current liabilities |
18,293 19,822 (5,830) |
624 (1,617) (880) |
18,917 18,205 (6,710) |
| Net assets acquired | 32,285 | (1,873) | 30,412 |
| Goodwill | 3,573 | ||
| Total sum | 33,985 | ||
| Sum payment in the form of shares in Harboes Bryggeri A/S | (29,516) | ||
| Cash sum | 4,469 | ||
| Cash acquired | (6,632) | ||
| Cash flow effect, net | (2,163) |
The group has incurred acquisition costs of DKK 1,523k, which are included in the acquisition price.
For further information, please refer to the annual report for the financial year 2009/2010.
| GROUP DKK '000 |
2011 | 2010 |
|---|---|---|
| Categories of financial instruments | ||
| Trade receivables Other receivables Cash |
301,676 10,306 39,913 |
304,155 3,964 43,774 |
| Loans and receivables | 351,895 | 351,893 |
| Financial assets available for sale | 285,782 | 283,738 |
| Derivative financial instruments entered into for hedging future cash flows | 0 | 838 |
| Financial liabilities used as hedging instruments | 0 | 838 |
| Mortgage debt Other credit institutions Trade payables Repurchase obligation, returnable packaging Other payables Financial liabilities in respect of assets held for sale |
290,058 169,124 216,388 27,958 102,641 2,979 |
317,297 154,340 187,556 33,350 100,395 2,987 |
| Financial liabilities measured at amortised cost | 809,148 | 795,925 |
Due to its operations, investments and financing, the group is exposed to a number of financial risks, including market risks (currency, interest rate and raw material risks), credit risks and liquidity risks.
The financial risks of the group are managed centrally. The general framework for the financial risk management is defined in the group's financial policy. The financial policy comprises the group's currency policy, investment policy, financing policy and policy on credit risks in relation to financial counterparties and includes a description of approved financial instruments and risk frameworks.
It is group policy not to engage in active financial risk speculation. The financial management of the group is thus only aimed at managing and reducing the financial risks that are a direct consequence of the group's operations, investments and financing. The group uses a fully integrated financial management system for managing financial positions related to financial instruments. The management monitors the group's risk concentration in areas such as customers, geographical areas, foreign currency etc. on a monthly basis. Furthermore, the management monitors changes in the group's risk concentration.
No changes were seen in the group's risk exposure and risk management relative to 2009/10.
The group's sale and purchase of goods in foreign currencies primarily takes place in EUR and, to a lesser extent, SEK, USD, NOK and PLN. No forward exchange contracts or similar have been concluded as at the balance sheet date as the management estimates that the group's currency risk is limited. The company's unhedged currency positions as at the balance sheet date can be specified as follows:
DKK '000
| Lik vider |
Receivables | Payables po | Net sition |
|
|---|---|---|---|---|
| EUR | 37,222 | 47,887 | (200,816) | (115,707) |
| USD | 684 | 124 | (6) | 802 |
| SEK | 358 | 6,317 | (774) | 5,901 |
| PLN | 339 | 1,167 | (68) | 1,438 |
| NOK | 518 | 3,106 | (469) | 3,155 |
| 30 April 2011 | 39,121 | 58,601 | (202,133) | (104,411) |
| EUR | 29,317 | 144,505 | (604,600) | (430,778) |
| USD | 68 | 484 | (884) | (332) |
| SEK | 0 | 9,081 | (4,001) | 5,080 |
| EEK | 2,298 | 9,276 | (7,309) | 4,265 |
| PLN | 1,102 | 798 | (229) | 1,671 |
| NOK | 0 | 3,661 | 0 | 3,661 |
| 30 April 2010 | 32,785 | 167,805 | (617,023) | (416,433) |
| GROUP DKK '000 |
2010/11 | 2009/10 |
|---|---|---|
| Equity's sensitivity to exchange rate fluctuations Effect if the EUR exchange rate was 1% lower than the actual exchange rate Effect if the USD exchange rate was 5% lower than the actual exchange rate Effect if the SEK exchange rate was 5% lower than the actual exchange rate Effect if the PLN exchange rate was 5% lower than the actual exchange rate |
1,576 (136) (295) (69) |
4,488 381 (1,214) (82) |
| Effect if the NOK exchange rate was 5% lower than the actual exchange rate | (158) 918 |
(1,684) 1,671 |
| Net profit/loss's sensitivity to exchange rate fluctuations Effect if the EUR exchange rate was 1% lower than the actual exchange rate Effect if the USD exchange rate was 5% lower than the actual exchange rate Effect if the SEK exchange rate was 5% lower than the actual exchange rate Effect if the PLN exchange rate was 5% lower than the actual exchange rate Effect if the NOK exchange rate was 5% lower than the actual exchange rate |
360 (145) (1,502) (12) (1,050) |
180 365 (960) 2 (1,501) |
| (2,348) | (1,919) |
The above shows the effect it would have had on equity and the net profit or loss for the year, respectively, if the exchange rate had been 1% and 5% lower than the actual exchange rate applied. If the exchange rate had been higher, it would have had a similar opposite effect on equity and the net profit or loss for the year, respectively.
The group's most significant currency exposure is also expected to concern transactions in the above-mentioned currencies in future. The transactions are expected to be at the level realised in 2010/11.
No financial contracts in the form of forward exchange contracts or similar have been concluded as at the balance sheet date as the management estimates that there are no significant risks associated with future cash flows in foreign currencies.
Due to the Harboe group's capital structure, the risk relating to fluctuations in market rates is limited. The group's net interest-bearing debt as at 30 April 2011 was DKK 140.6 million (2010: DKK 149.4 million). The debt carries a floating rate of interest.
An increase in the market rate of 1% would affect the profit or loss for the year before tax negatively by approx. DKK 1.4 million (2009/10 approx. DKK 1.5 million).
| GROUP DKK '000 |
2011 | 2010 |
|---|---|---|
| Fair value of interest rate swaps (EUR 13,400k) |
838 | |
| Interest falls due for payment as follows: | ||
| Within one year from the balance sheet date | 1,087 | |
| Between two and five years from the balance sheet date | 0 | |
| After five years from the balance sheet date | 0 | |
| 1,087 |
The due dates of financial liabilities are specified in the notes for the individual categories of liabilities. The group and the parent's liquidity reserve consists of cash and unutilised credit facilities.
| Cash | 39,913 | 43,774 |
|---|---|---|
| Unutilised credit facilities | 5,876 | 21,843 |
| Bond portfolio | 281,797 | 278,502 |
| 327,586 | 344,119 |
The group's primary credit risk concerns non-prepaid trade receivables. The group's customers are mainly large retail chains in Scandinavia, Germany and Estonia. The group has no significant credit risks relating to a single customer or partner.
The group is seeking to limit risks related to customers outside these countries by hedging receivables through letters of credit, bank guarantees and similar, which are included in the assessment of the necessary write-down for bad debts.
In the event that such hedging is not made or is exceeded, the group has laid down procedures for the approval of such risks.
The maximum credit risk associated with trade receivables corresponds to the carrying amount of such receivables.
The company's management estimates, on a regular basis, whether the group's capital structure matches the interests of the company and its shareholders. The group's overall objective is to ensure a capital structure that maintains a high level of financial resources at all times to enable investments in continued organic growth and value creation by constantly adapting to market developments and meeting customer requirements.
The group aims for its financial resources to be made up of its own funds and for them to be flexible enough to allow for growth through acquisitions or participation in large partnerships. The group's general strategy is consistent with previous years.
See also the section in the management's review on financial objectives, page 16.
The group's financial gearing appears from the financial highlights on page 8.
The portfolio of listed mortgage credit bonds is measured at listed prices and price quotes.
The portfolios of shares are measured at listed prices and price quotes.
Unlisted shares are measured on the basis of observable information or at cost.
Interest rate swaps are measured on the basis of generally accepted methods of measurement based on relevant observable swap curves.
Below is a classification of financial instruments measured at fair value based on the fair value hierarchy.
| 2010/11 | Level 1 Le DKK '000 |
vel 2 Le DKK '000 |
vel 3 DKK '000 |
Tot al DKK '000 |
|---|---|---|---|---|
| Listed mortgage credit bonds Listed shares Unlisted shares and securities |
281,797 157 - |
- - 2,160 |
- - 1,668 |
281,797 157 3,828 |
| Financial assets available for sale | 281,954 | 2,160 | 1,668 | 285,782 |
| Listed mortgage credit bonds | 278,502 | - | - | 278,502 |
|---|---|---|---|---|
| Listed shares | 185 | - | - | 185 |
| Unlisted shares and securities | - | 2,640 | 2,411 | 5,051 |
| Financial assets available for sale | 278,687 | 2,640 | 2,411 | 283,738 |
| Financial liabilities used as a hedging instrument | - | 838 | - | 838 |
| Financial liabilities measured at fair value | - | 838 | - | 838 |
No transfers between level 1 and level 2 have occurred during the financial year.
Financial instruments measured at fair value in the balance sheet based on methods of measurement according to which significant inputs are not based on observable market data (level 3):
| F DKK '000 |
inancial asset s available for sale |
|---|---|
| Carrying amount as at 1 May 2009 | 2,507 |
| Gains/losses in net profit/loss for the year Gains/losses in other comprehensive income Additions in connection with acquisition of enterprise Purchase Sale |
0 (951) 105 750 0 |
| Carrying amount as at 30 April 2010 | 2,411 |
| Gains/losses in net profit/loss for the year Gains/losses in other comprehensive income Purchase Sale |
0 (1,873) 1,130 0 |
| Carrying amount as at 30 April 2011 | 1,668 |
The following parties have a controlling influence in the parent and the group:
| Name | Domicile | Basis of control |
|---|---|---|
| Kirsten and Bernhard Griese | Spegerborgvej 4, 4230 Skælskør, Denmark | Shareholder with the majority of the voting rights |
During the financial year, the group has engaged in the following transactions with its related parties:
| 2010/11 DKK '000 |
influence in Harboes Bryggeri A/S* Owners with a controlling |
Associates | Directors, Board of Executives and other key staff members Members of the Board of |
Other related parties | Total |
|---|---|---|---|---|---|
| Sale of goods | 2,098 | 0 | 0 | 0 | 2,098 |
| Purchase of goods | 11,701 | 0 | 0 | 0 | 11,701 |
| Sale of non-current assets | 3,900 | 0 | 0 | 0 | 3,900 |
| Sale of services | 1,534 | 0 | 0 | 0 | 1,534 |
| Purchase of services | 1,786 | 0 | 1,381 | 0 | 3,167 |
| Sale of leases | 898 | 0 | 0 | 0 | 898 |
| Purchase of leases | 6,184 | 0 | 0 | 200 | 6,384 |
| Fees etc. | 6,592 | 0 | 15,503 | 408 | 22,503 |
| Deposits, leases | 2,281 | 0 | 0 | 0 | 2,281 |
| Trade receivables etc. | 3,230 | 0 | 0 | 0 | 3,230 |
| Trade payables etc. | 889 | 0 | 90 | 0 | 979 |
| Distribution of dividend | 1,180 | 0 | 58 | 19 | 1,199 |
| 2009/10 DKK '000 |
influence in Harboes Bryggeri A/S* Owners with a controlling |
Associates | Directors, Board of Executives and other key staff members Members of the Board of |
Other related parties | Total |
|---|---|---|---|---|---|
| Sale of goods | 1,166 | 0 | 38 | 0 | 1,204 |
| Purchase of goods | 4,104 | 171,004 | 17 | 13 | 175,138 |
| Sale of non-current assets | 0 | 521 | 0 | 0 | 521 |
| Sale of services | 1,568 | 0 | 0 | 0 | 1,568 |
| Purchase of services | 11,755 | 0 | 5,043 | 50 | 16,848 |
| Sale of leases | 814 | 6,086 | 0 | 0 | 6,900 |
| Purchase of leases | 6,361 | 0 | 0 | 0 | 6,361 |
| Fees etc. | 4,429 | 0 | 13,081 | 328 | 17,838 |
| Deposits, leases | 2,234 | 0 | 0 | 0 | 2,234 |
| Trade receivables etc. | 2,953 | 1,882 | 0 | 0 | 4,835 |
| Trade payables etc. | 582 | 0 | 401 | 13 | 996 |
| Distribution of dividend | 1,180 | 0 | 125 | 6 | 1,311 |
*) Including transactions with other companies having Bernhard Griese, CEO, as the main shareholder.
The purchase and sale of goods to related parties has been conducted at the normal selling prices of the group.
No security was provided and no guarantees were given in respect of outstanding balances as at the balance sheet date. Both receivables and payables will be settled in cash. During the financial year, no bad debts in respect of related parties were realised and no write-downs were made for probable bad debts.
The group has entered into leases in respect of land and buildings. The leases have been entered into with companies having Bernhard Griese, CEO, and his close relatives as main shareholders.
The leases, which are registered on the individual properties, are interminable until 2020 on the part of the lessor and until 2017 on the part of the lessee. The annual rent amounts to DKK 6,623k (2009/10: DKK 6,319k). The total future minimum lease payments in the period of interminability amounts to DKK 32,775k, cf. note 32.
Please refer to note 5 for information on remuneration paid to the Board of Directors, the Board of Executives and other key staff members of the group. The remuneration is included in the above.
At the board meeting on 28 June 2011, the Board of Directors adopted the present annual report for publication.
The annual report is presented to the shareholders of Harboes Bryggeri A/S for adoption at the annual general meeting on 24 August 2011.
| Parent DKK '000 |
NOTE | 2010/11 | 2009/10 |
|---|---|---|---|
| Gross revenue Taxes on beer and soft drinks |
756,751 (160,748) |
735,896 (166,577) |
|
| Revenue | 596,003 | 569,319 | |
| Production costs | 1 | (449,843) | (451,502) |
| Gross profit | 146,160 | 117,817 | |
| Other operating income Distribution costs Administrative expenses |
576 (89,363) (33,106) |
576 (81,590) (27,262) |
|
| Operating profit (EBIT) | 24,267 | 9,541 | |
| Income from investments in subsidiaries Financial income Financial expenses |
5 6 7 |
2,061 1,799 (6,507) |
0 4,259 (5,247) |
| Profit before tax | 21,620 | 8,553 | |
| Tax on profit/(loss) for the year Adjustment of tax regarding previous years |
8 8 |
(5,228) 0 |
(2,648) 65 |
| Net profit for the year | 16,392 | 5,970 | |
| Proposal for the distribution of net profit Dividend for the financial year Retained earnings |
9 | 9,000 7,392 |
9,000 (3,030) |
| 16,392 | 5,970 |
| Parent DKK '000 |
NOTE | 2010/11 | 2009/10 |
|---|---|---|---|
| Net profit for the year | 16,392 | 5,970 | |
| Other comprehensive income: Adjustment to fair value of financial assets available for sale Adjustment to fair value of financial assets available for sale, recirculation upon disposal Adjustment to fair value of financial instruments entered into for hedging future cash flows Tax on other comprehensive income |
(2,379) 263 838 (321) |
(1,116) 0 165 (40) |
|
| Other comprehensive income | (1,599) | (991) | |
| Total comprehensive income | 14,793 | 4,979 |
| Parent DKK '000 |
NOTE | 2011 | 2010 |
|---|---|---|---|
| Development projects Software Intangible assets under construction |
433 3,752 5,764 |
1,572 4,649 688 |
|
| Intangible assets | 10 | 9,949 | 6,909 |
| Land and buildings Plant and machinery Other plant, fixtures and fittings, tools and equipment Spare parts for own machinery Property, plant and equipment under construction |
117,105 227,364 32,313 3,993 18,751 |
108,528 182,559 31,925 3,887 22,471 |
|
| Property, plant and equipment | 11 | 399,526 | 349,370 |
| Investments in subsidiaries Financial assets available for sale Receivable from subsidiary |
12 13 13 |
170,977 3,880 23,434 |
171,573 5,131 23,434 |
| Financial assets | 198,291 | 200,138 | |
| Non-current assets | 607,766 | 556,417 | |
| Inventories | 14 | 53,659 | 50,065 |
| Trade receivables Receivables from subsidiaries Other receivables Prepayments |
15 16 |
135,084 730 3,679 2,131 |
136,524 3,076 3,045 618 |
| Receivables | 141,624 | 143,263 | |
| Cash | 17 | 1,704 | 583 |
| Assets held for sale | 18 | 2,992 | 2,992 |
| Current assets | 199,979 | 196,903 | |
| Assets | 807,745 | 753,320 |
| Parent | 2011 | 2010 | |
|---|---|---|---|
| DKK '000 | NOTE | ||
| Share capital | 19 | 60,000 | 60,000 |
| Share premium | 51,000 | 51,000 | |
| Reserves | (5,365) | (3,766) | |
| Retained earnings | 226,877 | 252,297 | |
| Equity | 332,512 | 359,531 | |
| Mortgage debt | 23 | 5,079 | 2,503 |
| Deferred tax liabilities | 21 | 36,182 | 32,930 |
| Deferred income | 3,840 | 4,416 | |
| Non-current liabilities | 45,101 | 39,849 | |
| Deferred income | 576 | 576 | |
| Mortgage debt | 23 | 138 | 142 |
| Bank debt | 24 | 168,337 | 153,157 |
| Trade payables | 87,140 | 69,417 | |
| Repurchase obligation, returnable packaging | 22 | 27,719 | 33,112 |
| Payables to subsidiaries | 76,005 | 26,212 | |
| Other payables | 25 | 62,314 | 64,942 |
| Income tax payable | 4,924 | 3,395 | |
| 427,153 | 350,953 | ||
| Liabilities in respect of assets held for sale | 2,979 | 2,987 | |
| Current liabilities | 430,132 | 353,940 | |
| Liabilities | 475,233 | 393,789 | |
| Equity and liabilities | 807,745 | 753,320 |
| Parent DKK '000 |
NOTE | 2011 | 2010 |
|---|---|---|---|
| Operating profit (EBIT) Depreciation, amortisation, impairment losses and write-downs Grants recognised as income Changes in net working capital |
4 28 |
24,267 55,417 (576) 6,244 |
9,541 56,957 (576) (66,213) |
| Cash flows from primary operating activities | 85,352 | (291) | |
| Financial income received Financial expenses paid Income tax paid |
3,860 (6,241) (765) |
4,259 (5,247) (246) |
|
| Cash flows from operating activities | 82,206 | (1,525) | |
| Purchase of intangible assets Purchase of property, plant and equipment Sale of property, plant and equipment Changes in financial assets Acquisition of subsidiary Change in loan to subsidiary/capital reduction |
(6,749) (104,076) 2,211 (1,130) 0 595 |
(3,262) (70,690) 79 (750) (34,009) 6,781 |
|
| Cash flows from investing activities | (109,149) | (101,851) | |
| Dividend paid to shareholders of parent Purchase/sale of treasury shares Repayment of mortgage debt Raising of mortgage debt Investment grant received |
(8,474) (33,338) (151) 2,708 0 |
(8,840) 29,516 (129) 0 5,567 |
|
| Cash flows from financing activities | (39,255) | 26,114 | |
| Changes in cash and cash equivalents | (66,198) | (77,262) | |
| Cash and cash equivalents as at 1 May | (175,710) | (98,448) | |
| Cash and cash equivalents as at 30 April | 29 | (241,908) | (175,710) |
DKK '000
| Share S capital pre |
hare mium re |
Other serves e |
Retained tot arn ing s e |
al quity |
|
|---|---|---|---|---|---|
| Equity as at 1 May 2009 | 60,000 | 51,000 | (2,775) | 225,651 | 333,876 |
| Net profit for the year Other comprehensive income after tax |
0 0 |
0 0 |
0 (991) |
5,970 0 |
5,970 (991) |
| Comprehensive income for the financial year | 0 | 0 | (991) | 5,970 | 4,979 |
| Sale of treasury shares Distributed dividend Dividend from treasury shares |
0 0 0 |
0 0 0 |
0 0 0 |
29,516 (9,000) 160 |
29,516 (9,000) 160 |
| 0 | 0 | 0 | 20,676 | 20,676 | |
| Equity as at 30 April 2010 | 60,000 | 51,000 | (3,766) | 252,297 | 359,531 |
| Equity as at 1 May 2010 Net profit for the year Other comprehensive income after tax |
60,000 0 0 |
51,000 0 0 |
(3,766) 0 (1,599) |
252,297 16,392 0 |
359,531 16,392 (1,599) |
| Comprehensive income for the financial year | 0 | 0 | (1,599) | 16,392 | 14,793 |
| Purchase of treasury shares Distributed dividend Dividend from treasury shares |
0 0 0 0 |
0 0 0 0 |
0 0 0 0 |
(33,338) (9,000) 526 (41,812) |
(33,338) (9,000) 526 (41,812) |
| Equity as at 30 April 2011 | 60,000 | 51,000 | (5,365) | 226,877 | 332,512 |
| Parent DKK '000 |
2010/11 | 2009/10 |
|---|---|---|
| Cost of sales | 374,736 | 364,916 |
| Write-down of inventories | 0 | 0 |
| Research and development costs, cf. note 2 | 401 | 871 |
| Depreciation, amortisation, impairment losses and write-downs, cf. note 4 | 46,378 | 50,087 |
| Other production costs | 28,328 | 35,628 |
| 449,843 | 451,502 |
| Research and development costs incurred | 3,970 | 871 |
|---|---|---|
| Development costs recognised as intangible assets, note 10 | (3,569) | 0 |
| Government grants received | 0 | 0 |
| 401 | 871 |
| Parent DKK '000 |
2010/11 | 2009/10 |
|---|---|---|
| Remuneration to the Board of Directors Wages and salaries Defined contribution plans Other social security costs Other staff costs |
895 90,914 8,858 6,489 7,988 |
620 78,173 8,017 4,008 8,143 |
| Refunds from public authorities | (313) 114,831 |
(506) 98,455 |
| Staff costs comprise: Production costs Distribution costs Administrative expenses Included in cost of development projects |
63,926 28,224 19,112 3,569 114,831 |
62,588 21,306 14,561 0 98,455 |
| Average number of employees | 204 | 184 |
| Other | ke y |
|||||
|---|---|---|---|---|---|---|
| Board | of Director s |
Board | of Execut ives |
staff member | s | |
| 2010/11 | 2009/10 | 2010/11 | 2009/10 | 2010/11 | 2009/10 | |
| DKK '000 | DKK '000 | DKK '000 | DKK '000 | DKK '000 | DKK '000 | |
| Remuneration paid to members of the management | ||||||
| Remuneration to the Board of Directors | 895 | 620 | 0 | 0 | 0 | 0 |
| Wages and salaries etc. | 0 | 0 | 5,221 | 3,093 | 11,101 | 7,300 |
| Pension | 0 | 0 | 240 | 238 | 662 | 624 |
| 895 | 620 | 5,461 | 3,331 | 11,763 | 7,924 |
The company's key staff are covered by a performance-related bonus programme. Termination benefits for managers constitute a maximum of two years' remuneration. The programmes are unchanged relative to last year.
The company has entered into defined contribution plan agreements with a significant part of the company's employees.
| Parent DKK '000 |
2010/11 | 2009/10 |
|---|---|---|
| Intangible assets | 3,709 | 1,948 |
| Buildings | 6,958 | 7,299 |
| Plant and machinery | 33,689 | 35,377 |
| Other plant, fixtures and fittings, tools and equipment | 11,752 | 12,162 |
| Profit/(loss) from the sale of property, plant and equipment | (691) | (79) |
| Impairment of assets held for sale | 0 | 250 |
| 55,417 | 56,957 | |
| Depreciation, amortisation, impairment losses and write-downs comprise: | ||
| Production costs | 46,378 | 50,087 |
| Distribution costs | 5,404 | 2,998 |
| Administrative expenses | 3,635 | 3,872 |
| 55,417 | 56,957 |
| Parent DKK '000 |
2010/11 | 2009/10 |
|---|---|---|
| Dividend | 2,061 | 0 |
| Interest on bank deposits etc. | 462 | 645 |
|---|---|---|
| Interest on receivables from group enterprises | 642 | 995 |
| Interest income from financial assets not measured at fair value via the net profit/(loss) for the year | 1,104 | 1,640 |
| Dividend from financial assets available for sale | 127 | 95 |
| Adjustment to fair value of liabilities in respect of assets held for sale | 8 | 0 |
| Net foreign exchange gains and losses | 560 | 2,524 |
| 1,799 | 4,259 |
| Parent DKK '000 |
2010/11 | 2009/10 |
|---|---|---|
| Interest on mortgage debt Interest on bank debt etc. |
214 5,140 |
233 4,996 |
| Interest on payables to group enterprises Financial expenses of financial liabilities not measured at fair value via the net profit/(loss) for the year |
1,153 6,507 |
18 5,247 |
| Of which included in the cost of property, plant and equipment | 0 | 0 |
| 6,507 | 5,247 |
| Current tax Change in deferred tax |
1,976 3,252 |
3,180 (532) |
|---|---|---|
| 5,228 | 2,648 | |
| Adjustment of deferred tax regarding previous financial years Adjustment of current tax regarding previous financial years |
0 0 |
871 (936) |
| 0 | (65) | |
| 5,228 | 2,583 |
The current income tax for the financial year has been calculated on the basis of a tax rate of 25% (2009/10: 25%).
| 2010/11 DKK '000 |
2010/11 % |
2009/10 DKK '000 |
2009/10 % |
|
|---|---|---|---|---|
| Profit before tax | 21,620 | 8,553 | ||
| Calculated tax thereon | 5,405 | 25.0 | 2,138 | 25.0 |
| Non-deductible income and expenses as well as depreciation, amortisation, impairment losses and write-downs |
(177) | (0.8) | 510 | 6.0 |
| 5,228 | 2,648 | |||
| Effective tax rate | 24.2 | 31.0 | ||
| Tax on income and expenses recognised in other comprehensive income can be specified as follows: | ||||
| Adjustment to fair value etc. of financial instruments entered into for hedging future cash flows Adjustment to fair value of financial assets available for sale |
(210) (111) |
(40) 0 |
||
| (321) | (40) | |||
| Tax on other income | ||||
| Adjustment to fair value etc. of financial instruments entered into for hedging future cash flows Adjustment to fair value of financial assets available for sale |
(210) (111) |
(40) 0 |
||
| (321) | (40) |
For a description of paid dividend and proposed dividend payments, please refer to note 14 of the consolidated financial statements.
| Parent DKK '000 pro |
Develop ment under jects So |
ftware | Plant con - stru ction |
|---|---|---|---|
| Cost as at 1 May 2010 | 3,628 | 5,580 | 688 |
| Additions | 0 | 1,673 | 5,695 |
| Disposals | 0 | 0 | (619) |
| Cost as at 30 April 2011 | 3,628 | 7,253 | 5,764 |
| Amortisation and impairment losses as at 1 May 2010 | 2,056 | 931 | 0 |
| Amortisation for the year | 1,139 | 2,570 | 0 |
| Amortisation and impairment losses as at 30 April 2011 | 3,195 | 3,501 | 0 |
| Carrying amount as at 30 April 2011 | 433 | 3,752 | 5,764 |
| Cost as at 1 May 2009 Reclassification of additions, beginning of year Additions |
3,088 540 0 |
1,478 4,102 0 |
2,068 688 -2,068 |
|---|---|---|---|
| Cost as at 30 April 2010 | 3,628 | 5,580 | 688 |
| Amortisation and impairment losses as at 1 May 2009 Amortisation for the year |
814 1,242 |
225 706 |
0 0 |
| Amortisation and impairment losses as at 30 April 2010 | 2,056 | 931 | 0 |
| Carrying amount as at 30 April 2010 | 1,572 | 4,649 | 688 |
| ot | her | sparep art s |
Plant | ||
|---|---|---|---|---|---|
| Parent | Land and p |
lant and p |
lant | for own under |
con |
| DKK '000 | Building s |
machiner y e |
ct. | machiner y |
stru ction |
| Cost as at 1 May 2010 | 232,949 | 612,779 | 138,225 | 3,887 | 22,471 |
| Additions | 16,631 | 78,494 | 12,564 | 375 | 18,751 |
| Disposals | (1,430) | 0 | (1,844) | (269) | (22,471) |
| Cost as at 30 April 2011 | 248,150 | 691,273 | 148,945 | 3,993 | 18,751 |
| Depreciation and impairment losses as at 1 May 2010 | 124,421 | 430,220 | 106,300 | 0 | 0 |
| Depreciation for the year | 6,958 | 33,689 | 11,752 | 0 | 0 |
| Reversal in connection with disposals | (334) | 0 | (1,420) | 0 | 0 |
| Depreciation and impairment losses as at 30 April 2011 | 131,045 | 463,909 | 116,632 | 0 | 0 |
| Carrying amount as at 30 April 2011 | 117,105 | 227,364 | 32,313 | 3,993 | 18,751 |
| Cost as at 1 May 2009 Additions Disposals |
228,114 4,835 0 |
570,986 41,793 0 |
124,776 13,843 (394) |
4,210 490 (813) |
6,618 22,471 (6,618) |
|---|---|---|---|---|---|
| Cost as at 30 April 2010 | 232,949 | 612,779 | 138,225 | 3,887 | 22,471 |
| Depreciation and impairment losses as at 1 May 2009 Depreciation for the year Reversal in connection with disposals |
117,122 7,299 0 |
394,843 35,377 0 |
94,532 12,162 (394) |
0 0 0 |
0 0 0 |
| Depreciation and impairment losses as at 30 April 2010 | 124,421 | 430,220 | 106,300 | 0 | 0 |
| Carrying amount as at 30 April 2010 | 108,528 | 182,559 | 31,925 | 3,887 | 22,471 |
| Parent DKK '000 |
2011 | 2010 |
|---|---|---|
| Cost as at 1 May Capital increase Additions in connection with the purchase of equity investments Dividend received (capital reduction) |
375,949 15 0 (611) |
341,940 25 33,984 0 |
| Cost as at 30 April | 375,353 | 375,949 |
| Impairment as at 1 May | (204,376) | (204,376) |
| Impairment as at 30 April | (204,376) | (204,376) |
| Carrying amount as at 30 April | 170,977 | 171,573 |
Investments in subsidiaries comprise:
Darguner Brauerei GmbH, Dargun, Germany, ownership interest of 100.00%, voting share of 100.00% AS Viru Õlu, Haljala, Estonia, ownership interest of 98.69%, voting share of 98.69% Harboe Norge AS, Moss, Norway, ownership interest of 100.00%, voting share of 100.00% Harboefarm A/S, Slagelse, Denmark, ownership interest of 100.00%, voting share of 100.00% Skælskør Bryghus, Slagelse, Denmark, ownership interest of 100.00%, voting share of 100.00% Harboe Sverige AB, Mölnlycke, Sweden, ownership interest of 100.00%, voting share of 100.00% Harboe Poland sp. Z O.O., Warsaw, Poland, ownership interest of 100.00%, voting share of 100.00% GourmetBryggeriet A/S, Roskilde, Denmark, ownership interest of 100.00%, voting share of 100.00%
New capital of DKK 15k was injected into Harboe Sverige AB in the period.
The composition of other ownership interests etc. in the group enterprises is consistent with that of last year.
Darguner Brauerei GmbH is audited by the audit firm AWADO Deutsche Audit GmbH, Germany.
The annual reports of the other subsidiaries are audited by Deloitte.
Parent DKK '000
Assets Receivable available from for sale subsidiary Cost as at 1 May 2010 8,269 23,434 Additions 1,130 0 Disposals 0 0 Cost as at 30 April 2011 9,399 23,434 Revaluations and impairment losses as at 1 May 2010 (3,138) 0 Adjustments for the year (2,381) 0 Revaluations and impairment losses as at 30 April 2011 (5,519) 0 Carrying amount as at 30 April 2011 3,880 23,434 Cost as at 1 May 2009 7,519 30,215 Additions 750 0 Disposals 0 (6,781) Cost as at 30 April 2010 8,269 23,434 Revaluations and impairment losses as at 1 May 2009 (2,022) 0 Adjustments for the year (1,116) 0 Revaluations and impairment losses as at 30 April 2010 (3,138) 0 Carrying amount as at 30 April 2010 5,131 23,434
Financial assets available for sale are measured at fair value at the balance sheet date.
| DKK '000 | 2011 | 2010 |
|---|---|---|
| Listed shares Unlisted shares |
157 3,723 |
185 4,946 |
| 3,880 | 5,131 | |
| Receivable from subsidiary | 23,434 | 23,434 |
| Parent DKK '000 |
2011 | 2010 |
|---|---|---|
| Raw materials, intermediates and non-returnable packaging Finished goods and goods for resale |
25,887 27,772 |
24,092 25,973 |
| 53,659 | 50,065 |
| Trade receivables | 135,084 | 136,524 |
|---|---|---|
| Provisions account as at 1 May Ascertained losses and payments received concerning claims previously written off for the year Reversed write-downs Write-downs for bad debts for the year |
400 4 0 (4) |
400 4 0 (4) |
| 400 | 400 | |
| Write-downs for the year recognised in the income statement | (4) | (4) |
Direct write-downs of receivables are made if the value, based on an individual assessment of the individual debtors' ability to pay, is reduced, e.g. as a result of a suspension of payments etc. Write-downs are made at the calculated net realisable value.
All major overdue receivables have been written off as at the balance sheet date.
| Parent DKK '000 |
2011 | 2010 |
|---|---|---|
| Other receivables | 3,679 | 3,045 |
| No special credit risks in respect of receivables exist. | ||
17. Cash
| Cash and bank deposits | 1,704 | 583 |
|---|---|---|
| ------------------------ | ------- | ----- |
18. Assets held for sale
The Board of Directors of Harboes Bryggeri A/S has decided to sell one of its residential properties. The property is expected to sell within 12 months. Proceeds from the sale are expected to correspond to the carrying amount of assets and liabilities.
| Property, plant and equipment Impairment losses for the year |
2,992 0 |
3,242 (250) |
|---|---|---|
| Assets held for sale | 2,992 | 2,992 |
| Payables in respect of assets held for sale | (2,979) | (2,987) |
| Net assets held for sale | 13 | 5 |
The share capital amounts to DKK 60,000k, distributed on DKK 6,400k of Class A shares and DKK 53,600k of Class B shares. Each Class A share of DKK 10 carries 10 votes, and each Class B share of DKK 10 carries 1 vote.
The Class B shares are listed on NASDAQ OMX Copenhagen.
The past four years have not seen any movements in the share capital.
| S 2011 |
2010 | Nominal value | hare share |
of capital |
||
|---|---|---|---|---|---|---|
| No. of share s of DKK 10 o |
No. of share s f DKK 10 |
2011 DKK '000 |
2010 DKK '000 |
2011 % |
2010 % |
|
| Treasury shares as at 1 May | 64,945 | 292,312 | 650 | 2,923 | 1.1 | 4.9 |
| Purchase of treasury shares Sale of treasury shares |
285,640 0 |
0 (227,367) |
2,856 0 |
0 (2,274) |
4.7 0.0 |
0 (3.8) |
| Treasury shares as at 30 April | 350,585 | 64,945 | 3,506 | 649 | 5.8 | 1.1 |
Harboes Bryggeri A/S holds treasury Class B shares which have been purchased to ensure optimal investment of cash funds. According to a decision made by the general meeting on 5 November 2011, the company can acquire up to 50% of the share capital until the company's annual general meeting in 2015.
In 2010/11, the company acquired treasury shares at a nominal value of 2,856k at an average price of 116.71, corresponding to DKK 33.3 million (2009/10: no purchase).
In 2010/11, the company has not sold any treasury shares (2009/10: sold treasury shares at a nominal value of DKK 2,274k, corresponding to DKK 29.5 million in connection with the acquisition of an enterprise).
| Deferred tax assets and liabilities as at 1 May 2009 Change in deferred tax recognised in the income statement |
Deferred tax asset s 0 0 |
Deferred tax liabilities 32,591 339 |
|---|---|---|
| Deferred tax assets and tax liabilities as at 30 April 2010 | 0 | 32,930 |
| Change in deferred tax recognised in the income statement | 0 | 3,252 |
| Deferred tax assets and tax liabilities as at 30 April 2011 | 0 | 36,182 |
| 2011 | 2010 | |
| Deferred tax is recognised in the balance sheet as follows: |
| Deferred tax liabilities | 36,182 | 32,930 |
|---|---|---|
| Recogn ised in the income |
|||
|---|---|---|---|
| 1 May | state ment |
30 Apr il |
|
| Non-current assets | 29,653 | 3,171 | 32,824 |
| Current assets | 1,773 | 461 | 2,234 |
| Tax losses | 1,504 | (380) | 1,124 |
| Deferred tax liabilities 2011 | 32,930 | 3,252 | 36,182 |
| Non-current assets | 29,072 | 581 | 29,653 |
| Current assets | 1,613 | 160 | 1,773 |
| Tax losses | 1,906 | (402) | 1,504 |
| Deferred tax liabilities 2010 | 32,591 | 339 | 32,930 |
| Parent DKK '000 |
2011 | 2010 |
|---|---|---|
| Repurchase obligation as at 1 May Change during the financial year, net |
33,112 (5,393) |
32,494 618 |
| Repurchase obligation as at 30 April | 27,719 | 33,112 |
| Provisions are recognised in the balance sheet as follows: Current liabilities Non-current liabilities |
27,719 0 |
33,112 0 |
| 27,719 | 33,112 |
The repurchase obligation has been adjusted on the basis of the net sale of returnable packaging for the year less an estimated wastage in the volume of returnable packaging in circulation.
| Mortgage debt secured on real property | 5,217 | 2,645 |
|---|---|---|
| Mortgage debt falls due as follows: | ||
| On demand within one year from the balance sheet date | 138 | 142 |
| Between two and five years from the balance sheet date | 590 | 506 |
| After five years from the balance sheet date | 4,489 | 1,997 |
| 5,217 | 2,645 | |
| Mortgage debt is recognised in the balance sheet as follows: | ||
| Current liabilities | 138 | 142 |
| Non-current liabilities | 5,079 | 2,503 |
| 5,217 | 2,645 |
DKK '000
| 30 April 2011 | F Curren cy |
Expiry | ixed / r floating |
Effective A intere st t ate % |
mor - ised cost DKK '000 |
Nominal F value DKK '000 |
air value DKK '000 |
|---|---|---|---|---|---|---|---|
| Mortgage debt | DKK | 2028 | Floating | 1.7-2.5 | 5,217 | 5,309 | 5,249 |
| 30 April 2010 | |||||||
| Mortgage debt | DKK | 2028 | Floating | 3.0-3.5 | 2,645 | 2,744 | 2,730 |
The fair value has been determined at the present value of expected future instalments and interest payments using the current market rate as the discount rate.
| 2011 | 2010 | |
|---|---|---|
| Overdraft facility | 168,337 | 153,157 |
| Bank debt recognised in the balance sheet as follows: | ||
| Short-term payable | 168,337 | 153,157 |
| The bank debt falls due for payment as follows: | ||
| On demand within one year from the balance sheet date | 168,337 | 153,157 |
| 30 April 2011 | F Curren cy |
Expiry | ixed / r floating |
Effective A intere st t ate % |
mor - ised cost DKK '000 |
Nominal F value DKK '000 |
air value DKK '000 |
|---|---|---|---|---|---|---|---|
| Overdraft facility | DKK | 2012 | Floating | 2.4-2.7 | 20,648 | 20,648 | 20,648 |
| Overdraft facility | EUR | 2012 | Floating | 2.2-2.8 | 147,689 | 147,689 | 147,689 |
| Overdraft facility | 168,337 | 168,337 | 168,337 | ||||
| 30 April 2010 | |||||||
| Overdraft facility | DKK | 2011 | Floating | 2.5-4.5 | 3,010 | 3,010 | 3,010 |
| Overdraft facility | SEK | 2011 | Floating | 1.75-2.25 | 2,843 | 2,843 | 2,843 |
| Overdraft facility | EUR | 2011 | Floating | 2.5-3.0 | 47,304 | 47,304 | 47,304 |
| Overdraft facility | EUR | 2011 | Fixed | 3.3 | 100,000 | 100,000 | 100,000 |
| Overdraft facility | 153,157 | 153,157 | 153,157 |
The fair value has been determined at the present value of expected future instalments and interest payments using the current market rate as the discount rate.
| Parent DKK '000 |
2011 | 2010 |
|---|---|---|
| Wages and salaries, holiday pay, income tax deducted at source, social contributions etc. payable | 4,711 | 6,793 |
| Holiday pay obligations etc. | 5,449 | 5,075 |
| VAT and taxes payable | 16,040 | 18,960 |
| Other costs payable | 36,114 | 33,276 |
| Derivative financial instruments, cf. note 29 | 0 | 838 |
| 62,314 | 64,942 |
Holiday pay obligations etc. cover obligations to pay wages and salaries during holidays, which employees, as at the balance sheet date, have earned a right to take in the following financial year.
The carrying amount of payables concerning wages and salaries, income tax deducted at source, social contributions, holiday pay etc., derivative financial instruments, VAT and taxes as well as other costs payable corresponds to the fair value of such liabilities.
For the years 2009-2021, operating leases concerning the lease of properties, machinery and other plant have been entered into. The leases have been concluded for a minimum of 3-10 years with fixed lease payments to be indexed annually. The leases are interminable in the period stated, after which they may be renewed for periods of one year.
| Parent DKK '000 |
2011 | 2010 |
|---|---|---|
| Minimum lease payments recognised in the income statement | 5,131 | 4,272 |
| The minimum lease payments comprise: | ||
| Production | 1,879 | 2,051 |
| Distribution | 2,872 | 1,683 |
| Administration | 380 | 538 |
| 5,131 | 4,272 | |
| The total future minimum lease payments for interminable leases fall due for payment as follows: | ||
| Within one year from the balance sheet date | 3,182 | 3,362 |
| Between two and five years from the balance sheet date | 2,299 | 2,051 |
| After five years from the balance sheet date | 563 | 0 |
| 6,044 | 5,413 |
The company leases land and buildings from companies having Bernhard Griese, CEO, and his close relatives as main shareholders. The annual rent amounts to DKK 459k (2009/10: DKK 259k).
| Parent DKK '000 |
2011 | 2010 |
|---|---|---|
| Security Mortgage debt has been secured by way of a mortgage over properties with associated plant and machinery (mortgaged fixtures and fittings). |
||
| Carrying amount of mortgaged properties | 7,496 | 4,478 |
| Mortgage deed registered to the mortgagor with a nominal value of DKK 750k over Danish properties is kept in own depository. | ||
| The parent has provided a guarantee for the mortgage debt of its subsidiaries. The guarantee has been maximised at DKK 280.9 million (30 April 2010: DKK 305.9 million) |
||
| Debt of subsidiaries | 280,124 | 305,138 |
No pending court cases etc. exist which are deemed by the management to have a serious negative impact on the financial standing of the parent and the group apart from what has already been disclosed in the annual report.
The parent has issued a declaration of support to the subsidiary AS Viru Ölu, Estonia, with a view to securing the subsidiary's liquidity. The declaration is effective for 12 months as from the balance sheet date.
Government grants received have been used to purchase property, plant and equipment. The grants are subject to certain conditions being fulfilled, and repayment of the grants may be requested within a period of five years if the assets are disposed of or production is discontinued. No current repayment obligation exists.
| Parent DKK '000 |
2011 | 2010 |
|---|---|---|
| Change in inventories | (3,594) | (3,301) |
| Change in trade receivables | 1,440 | (32,804) |
| Change in other receivables | (2,147) | (2,215) |
| Change in trade payables etc. | 17,723 | (19,695) |
| Change in other payables | (7,178) | (8,198) |
| 6,244 | (66,213) |
| Cash and bank deposits | 1,704 | 583 |
|---|---|---|
| Overdraft facilities | (168,337) | (153,157) |
| Intercompany balance, net | (75,275) | (23,136) |
| (241,908) | (175,710) |
The group has undrawn credit facilities totalling DKK 5,876k.
| Parent DKK '000 |
2011 | 2010 | |
|---|---|---|---|
| Reserve for adjustment to fair value of financial assets available for sale Reserve for value adjustment of hedging instruments |
(5,365) 0 |
(3,138) (628) |
|
| (5,365) | (3,766) | ||
| Reserve for value adjustment of hedging instruments |
Reserve for value adjustment of financial assets available for sale |
Total | |
| Other reserves as at 1 May 2010 | (628) | (3,138) | (3,766) |
| Adjustment to fair value of financial instruments entered into to hedge future cash flows, reversals on repayment Adjustment to fair value of financial assets available for sale Adjustment to fair value of financial assets available for sale, |
838 0 |
0 (2,379) |
838 (2,379) |
| recirculation to income statement in connection with disposal Tax on income and expenses recognised in other comprehensive income |
0 (210) |
263 (111) |
263 (321) |
| Other reserves as at 30 April 2011 | 0 | (5,365) | (5,365) |
| Other reserves as at 1 May 2009 Adjustment to fair value of financial instruments entered into for hedging future cash flows Adjustment to fair value of financial assets available for sale Tax on income and expenses recognised directly in equity |
(753) 165 0 (40) |
(2,022) 0 (1,116) 0 |
(2,775) 165 (1,116) (40) |
| Other reserves as at 30 April 2010 | 628 | (3,138) | (3,766) |
| Parent DKK '000 |
2010/11 | 2009/10 |
|---|---|---|
| Statutory audit | 1,102 | 967 |
| Other assurance engagements | 75 | 50 |
| Tax advice | 0 | 36 |
| Other services | 506 | 361 |
| 1,683 | 1,414 |
| Parent DKK '000 |
2011 | 2010 |
|---|---|---|
| Trade receivables | 135,084 | 136,524 |
| Receivables from subsidiaries (long-term) | 23,434 | 23,434 |
| Receivables from subsidiaries (short-term) | 730 | 3,076 |
| Other receivables | 3,679 | 3,045 |
| Cash | 1,704 | 583 |
| Loans and receivables | 164,631 | 166,662 |
| Financial assets available for sale | 3,880 | 5,131 |
| Derivative financial instruments entered into for hedging future cash flows | 0 | 838 |
| Financial liabilities used as hedging instruments | 0 | 838 |
| Mortgage debt | 5,217 | 2,503 |
| Bank debt | 168,337 | 153,157 |
| Trade payables | 87,140 | 69,417 |
| Repurchase obligation, returnable packaging | 27,719 | 33,112 |
| Payables to subsidiaries | 76,005 | 26,212 |
| Other payables | 62,314 | 64,942 |
| Financial liabilities in respect of assets held for sale | 2,979 | 2,987 |
| Financial liabilities measured at amortised cost | 429,711 | 352,330 |
Please refer to the section on risks on page 36 of the management's review.
The parent's sale and purchase of goods in foreign currencies primarily takes place in EUR and, to a lesser extent, NOK and SEK. No forward exchange contracts or similar have been concluded as at the balance sheet date as the management estimates that the parent's currency risk is limited. The company's unhedged currency positions as at the balance sheet date can be specified as follows:
| Cash and cash equivalent s |
Receivables | Payables | Net po sition |
|
|---|---|---|---|---|
| EUR | 0 | 34,900 | (183,556) | (148,656) |
| SEK | 296 | 6,317 | (767) | 5,846 |
| NOK | 409 | 3,106 | (443) | 3,072 |
| PLN | 65 | 1 | 0 | 66 |
| USD | 684 | 124 | (6) | 802 |
| GBP | 1 | 0 | 0 | 1 |
| 30 April 2011 | 1,455 | 44,448 | (184,772) | (138,869) |
| EUR | 0 | 22,943 | (183,413) | (160,470) |
| SEK | 0 | 9,081 | (1,158) | 7,923 |
| NOK | 0 | 3,661 | (914) | 2,747 |
| EEK | 65 | 26,288 | 0 | 26,353 |
| 30 April 2010 | 65 | 61,973 | (185,485) | (123,447) |
Net positions in EEK are primarily related to balances with subsidiaries.
| Parent DKK '000 |
2010/11 | 2009/10 |
|---|---|---|
| Equity's sensitivity to exchange rate fluctuations | ||
| Effect if the EUR exchange rate was 1% lower than the actual exchange rate | 1,487 | 1,599 |
| Effect if the SEK exchange rate was 5% lower than the actual exchange rate | (292) | (1,017) |
| Effect if the NOK exchange rate was 5% lower than the actual exchange rate | (154) | (1,229) |
| Effect if the USD exchange rate was 5% lower than the actual exchange rate | (40) | 0 |
| Effect if the PLN exchange rate was 5% lower than the actual exchange rate | (3) | 0 |
| Effect if the EEK exchange rate was 5% lower than the actual exchange rate | 0 | (1,024) |
| 998 | (1,671) | |
| Net profit/loss's sensitivity to exchange rate fluctuations | ||
| Effect if the EUR exchange rate was 1% lower than the actual exchange rate | 489 | 396 |
| Effect if the SEK exchange rate was 5% lower than the actual exchange rate | (2003) | (720) |
| Effect if the NOK exchange rate was 5% lower than the actual exchange rate | (1,324) | (1,126) |
| Effect if the USD exchange rate was 5% lower than the actual exchange rate | (40) | 0 |
| Effect if the EEK exchange rate was 5% lower than the actual exchange rate | 0 | (36) |
| (2,878) | (1,486) |
The parent's most significant exchange rate exposure concerns EUR, SEK, NOK and EEK. The above shows the effect it would have had on equity and the net profit or loss for the year, respectively, if the exchange rate had been 1% and 5% lower than the actual exchange rate applied. If the exchange rate had been higher, it would have had a similar opposite effect on equity and the net profit or loss for the year, respectively.
The parent's most significant currency exposure is also expected to concern transactions in the above-mentioned currencies in future. The transactions are expected to be at the level realised in 2010/11.
No financial contracts in the form of forward exchange contracts or similar have been concluded as at the balance sheet date as the management estimates that there are no significant risks associated with future cash flows in foreign currencies.
Due to the Harboe group's capital structure, the risk relating to fluctuations in market rates is limited. The parent's net interest-bearing debt as at 30 April 2011 was DKK 247.9 million (2010: DKK 181.3 million). The debt carries a floating rate of interest.
An increase in the market rate of 1% would affect the profit or loss for the year before tax negatively by approx. DKK 2.5 million (2009/10 approx. DKK 1.8 million).
| DKK '000 | |
|---|---|
| Fair value of interest rate swaps (EUR 13,400k) |
838 |
| Interest falls due for payment as follows: Within one year from the balance sheet date Between two and five years from the balance sheet date |
1,087 0 |
| 1,087 |
The due dates of financial liabilities are specified in the notes for the individual categories of liabilities. The group and the parent's liquidity reserve consists of cash, unutilised credit facilities and bond portfolios.
| 2011 | 2010 | |
|---|---|---|
| The liquidity reserve is comprised as follows: | ||
| Cash | 1,704 | 583 |
| Unutilised credit facilities (group) | 5,876 | 21,843 |
| Bond portfolio | 281,797 | 278,502 |
| 289,377 | 300,928 |
The group's primary credit risk in the parent concerns non-prepaid trade receivables. The parent's customers are mainly large companies in Denmark and Sweden. The parent has no significant credit risks relating to a single customer or partner.
The group is seeking to limit risks related to customers outside these countries by hedging receivables through letters of credit, bank guarantees and similar, which are included in the assessment of the necessary write-down for bad debts.
In the event that such hedging is not made or is exceeded, the company has laid down procedures for the approval of such risks. The maximum credit risk associated with trade receivables corresponds to the carrying amount of such receivables.
Reference is made to the section on financial objectives on page 15 of the management's review and note 38 to the consolidated financial statements.
The portfolio of listed mortgage credit bonds is measured at listed prices and price quotes.
The portfolios of shares are measured at listed prices and price quotes.
Unlisted shares are measured on the basis of observable information or at cost.
Interest rate swaps are measured on the basis of generally accepted methods of measurement based on relevant observable swap curves.
Below is a classification of financial instruments measured at fair value based on the fair value hierarchy.
| 2010/11 | Level 1 Le DKK '000 |
vel 2 Le DKK '000 |
vel 3 DKK '000 |
Tot al DKK '000 |
|---|---|---|---|---|
| Listed shares Unlisted shares and securities |
157 0 |
0 2,160 |
0 1,563 |
157 3,723 |
| Financial assets available for sale | 157 | 2,160 | 1,563 | 3,880 |
| Financial liabilities used as a hedging instrument | 0 | 0 | 0 | 0 |
| Financial liabilities measured at fair value | 0 | 0 | 0 | 0 |
| Listed shares Unlisted shares and securities |
185 0 |
0 2,640 |
0 2,306 |
185 4,946 |
|---|---|---|---|---|
| Financial assets available for sale | 185 | 2,640 | 2,306 | 5,131 |
| Financial liabilities used as a hedging instrument | 0 | 838 | 0 | 838 |
| Financial liabilities measured at fair value | 0 | 838 | 0 | 838 |
Financial instruments measured at fair value in the balance sheet based on methods of measurement according to which significant inputs are not based on observable market data (level 3):
| F DKK '000 |
|
|---|---|
| Carrying amount as at 1 May 2009 | 2,507 |
| Gains/losses in net profit/loss for the year Gains/losses in other comprehensive income Addition in connection with the acquisition of an enterprise Purchase Sale |
0 (951) 0 750 0 |
| Carrying amount as at 30 April 2010 | 2,306 |
| Gains/losses in net profit/loss for the year Gains/losses in other comprehensive income Purchase Sale |
0 (1,873) 1,130 0 |
| Carrying amount as at 30 April 2011 | 1,563 |
The following parties have a controlling interest in Harboes Bryggeri A/S:
| Name | Domicile | Basis of control |
|---|---|---|
| Kirsten and Bernhard Griese | Spegerborgvej 4, 4230 Skælskør, Denmark Shareholder with the majority of the voting rights |
For an overview of subsidiaries, please refer to note 12.
During the financial year, the parent has engaged in the following transactions with its related parties:
| DKK '000 | Subsidiaries | Owners with a controlling influence in Harboes Bryggeri A/S* |
Members of the Board of Executives and other key Directors, Board of staff members |
Other related parties | Total |
|---|---|---|---|---|---|
| 2010/11 | |||||
| Sale of goods | 36,607 | 18 | 0 | 0 | 36,625 |
| Purchase of goods | 28,645 | 147 | 0 | 0 | 28,792 |
| Sale of non-current assets | 37 | 1,600 | 0 | 0 | 1,637 |
| Purchase of non-current assets | 1,978 | 0 | 0 | 0 | 1,978 |
| Sale of services | 4,242 | 1,038 | 0 | 0 | 5,280 |
| Purchase of services | 5,833 | 1,349 | 1,381 | 0 | 8,563 |
| Sale of leases | 0 | 96 | 0 | 0 | 96 |
| Purchase of leases | 1,995 | 236 | 0 | 200 | 2,431 |
| Dividend received | 2,061 | 0 | 0 | 0 | 2,061 |
| Fees etc. | 0 | 5,821 | 12,483 | 408 | 18,712 |
| Trade receivables etc. | 24,164 | 278 | 0 | 0 | 24,442 |
| Trade payables etc. | 75,927 | 338 | 90 | 0 | 76,355 |
| Security, cf. note 27 | 280,882 | 0 | 0 | 0 | 280,882 |
| Distribution of dividend | 0 | 1,180 | 58 | 19 | 1,257 |
| 2009/10 | |||||
| Sale of goods | 29,377 | 0 | 0 | 0 | 29,377 |
| Purchase of goods | 25,600 | 741 | 0 | 13 | 26,354 |
| Sale of non-current assets | 75 | 0 | 0 | 0 | 75 |
| Purchase of non-current assets | 343 | 0 | 0 | 0 | 343 |
| Sale of services | 4,446 | 1,533 | 0 | 0 | 5,979 |
| Purchase of services | 2,074 | 6,980 | 4,273 | 50 | 13,377 |
| Sale of leases | 0 | 96 | 0 | 0 | 96 |
| Purchase of leases | 1,620 | 259 | 0 | 0 | 1,879 |
| Fees etc. | 0 | 3,658 | 8,544 | 328 | 12,530 |
| Trade receivables etc. | 27,066 | 2,578 | 0 | 0 | 29,644 |
| Trade payables etc. | 26,785 | 528 | 147 | 13 | 27,473 |
| Security, cf. note 27 | 305,944 | 0 | 0 | 0 | 305,944 |
| Distribution of dividend | 0 | 1,180 | 27 | 6 | 1,213 |
*) Including transactions with other companies having Bernhard Griese, CEO, as the main shareholder.
The purchase and sale of goods to related parties has been conducted at the normal selling prices of the parent.
No security has been provided and no guarantees have been given in respect of outstanding balances as at the balance sheet date. Both receivables and trade payables will be settled in cash. During the financial year, no bad debts in respect of related parties were realised and no write-downs were made for probable bad debts.
The company leases land and buildings from companies having Bernhard Griese, CEO, and his close relatives as main shareholders. The annual rent amounts to DKK 459k (2009/10: DKK 259k). The total future minimum lease payments in the period of interminability amount to DKK 100k. The amount is contained in the figures above.
Please refer to note 3 for information on remuneration paid to the Board of Directors, the Board of Executives and other key staff members of the group. The remuneration is included in the above.
Harboes Bryggeri A/S Spegerborgvej 34, 4230 Skælskør, Denmark CVR no.: 43 91 05 15 Registered in: The Municipality of Slagelse, Denmark Financial year: 1 May - 30 April Internet: www.harboes.dk
Anders Nielsen, Chairman, Lawyer Bernhard Griese, CEO Mads O. Krage, Executive Officer Mette Kirstine Agger, CEO Thøger Thøgersen, CEO Carl Erik Kjærsgaard, CEO Jens Bjarne Jensen, Brewery Worker (staff representative)
Audit Deloitte Statsautoriseret Revisionsaktieselskab
Annual general meeting to be held on 24 August 2011 at 10 am at Harboes Bryggeri A/S, Skælskør, Denmark
HARBOE'S BREWERY A/S · SPEGERBORGVEJ 34 · 4230 SKÆLSKØR
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