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Royal UNIBREW

Annual Report Apr 3, 2009

3380_10-k_2009-04-03_0fc5d73a-069b-4d51-b4f9-7d4958ef1d8d.pdf

Annual Report

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Annual Report 2008 Royal Unibrew A/S

The primary activities of Royal Unibrew are to market, sell, distribute and produce quality beverages focusing on branded products primarily within beer, malt and soft drinks.

Royal Unibrew owns the Albani and Faxe breweries in Denmark, Kalnapilis in Lithuania, Livu Alus and the soft drinks producer SIA Cido Grupa in Latvia, Brok, Strzelec and Browar Lomza in Poland as well as Antigua Brewery, Dominica Brewery and St. Vincent in the Caribbean.

CONTENTS

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HIghlights 2008

Net revenue in 2008 amounted to DKK 4,179 million corresponding to an 8% increase over 2007 (organic growth of some 3%), which reflects continued increased markets shares in most key markets. In H2, beer and soft drinks consumption declined in key markets due to the accelerating global economic crisis.

Operating profit before special items amounted to DKK 135 million (2007: DKK 244 million). The negative profit development is attributable to H2 reflecting the declining economic growth.

Special expenses relating to the closure of the Aarhus brewery, the Danish distribution reorganisation and the changes in Group Management affect results for 2008 negatively by some DKK 50 million (compared to a net income of some DKK 20 million in 2007).

Profit before tax and impairment of the assets in Poland but after special expenses amounted to DKK 2 million (2007: DKK 220 million), which is in accordance with the expectations expressed in the Interim Report for 1 January – 30 September 2008 of 20 November 2008.

In continuation of Management's decision to change the strategy for the Polish market, impairment losses of DKK 455 million have been recognised on the assets in Poland.

The total loss after impairment and provision for tax of DKK 30 million amounted to DKK 483 million in 2008 (2007: a profit of DKK 155 million).

Total net interest-bearing debt at the end of 2008 amounted to DKK 2,192 million. After year end, the total bank debt has been refinanced and there will be launched a process with a view to ensuring a more appropriate capital structure.

It is proposed that no dividend be distributed for 2008.

The "double up" strategy is replaced by a number of strategic main priorities focusing on structural and operational adjustments.

Based on a general uncertainty concerning the economic development, possible changed consumption habits and difficult financial conditions it is expected that the net revenue in 2009 will show a minor decline compared to 2008. EBIT (before "special expenses" and impairment) is expected to improve compared to 2008.

Financial Highlights and Key Ratios for Royal Unibrew A/S (Group)

2008 2007 2006 2005 2004
Sales (million hectolitres) 7.5 7.1 6.4 5.8 4.8
Financial Highlights (mDKK)
Income Statement
Net revenue 4,178.7 3,881.8 3,439.0 3,191.0 2,869.0
Operating profit before special items 134.9 244.1 347.7 302.7 307.1
Special items -50.1 20.2 -14.3 5.0 0.0
Impairment losses -385.0 0.0 0.0 0.0 0.0
Profit/loss before financial income and expenses -300.2 264.3 333.4 307.7 307.1
Impairment losses on investments -70.1 0.0 0.0 0.0 0.0
Net financials -82.7 -44.1 -13.0 -25.6 -36.8
Profit/loss before tax -453.0 220.2 320.4 282.1 270.3
Consolidated profit/loss -483.2 155.2 230.3 220.6 194.9
Royal Unibrew A/S' share of profit/loss -484.3 151.7 227.6 221.1 194.1
Balance Sheet
Total assets 4,051.4 3,781.3 3,413.6 3,187.8 2,530.8
Equity 574.8 1,119.5 1,148.1 1,149.8 1,080.4
Net interest-bearing debt 2,191.9 1,586.1 1,047.8 1,007.3 693.5
Free cash flow -356.2 157.0 206.0 252.2 232.7
Per share
Royal Unibrew A/S' share of earnings per share (DKK) -89.0 26.4 38.0 35.4 30.6
Royal Unibrew A/S' diluted share of earnings per share (DKK) -89.0 26.2 37.6 35.4 30.6
Cash flow per share (DKK) 19.0 26.3 70.9 61.2 64.5
Diluted cash flow per share (DKK) 19.0 26.1 70.2 61.2 64.5
Dividend per share (DKK) 0.0 10.0 10.0 10.0 9.0
Year-end price per share 118.5 534.0 740.0 532.0 377.0
Employees
Average number of employees 2,755 2,659 2,278 2,202 1,628
Key Figures (mDKK)
EBITDA 254.6 392.5 535.9 493.2 495.1
EBIT -300.2 264.3 333.4 307.7 307.1
Key Ratios (%)
Return on invested capital (ROIC) 3.1 7.4 12.1 11.7 11.8
Profit margin 3.2 6.3 10.1 9.5 10.7
EBIT margin -7.2 6.8 9.7 9.6 10.7
Free cash flow as a percentage of net revenue -8.5 4.0 6.0 7.9 8.1
Net interest-bearing debt/EBITDA 8.6 4.0 2.0 2.0 1.4
Equity ratio 14.2 29.6 33.6 36.1 42.7
Debt ratio 381.3 141.7 88.7 85.1 64.2
Asset turnover 1.0 1.0 1.0 1.0 1.1
Return on net assets 3.8 8.0 12.9 12.1 13.5
Return on equity after tax -57.0 13.7 20.0 19.8 18.7
Dividend rate 0.0 38.9 27.2 28.8 29.5
Net interest-bearing debt Mortgage debt and debt to credit institutions less cash at bank and in hand, interest-bearing
current investments and receivables
Free cash flow Cash flow from operating activities less net investments in property, plant and equipment and
plus dividends from associates
Dividend per share (DKK) Proposed dividend per share
Earnings per share (DKK) Royal Unibrew's share of profit for the year/number of shares in circulation
Cash flow per share (DKK) Cash flow from operating activities/number of shares in circulation
Diluted earnings and cash flow per share Royal Unibrew A/S' share of earnings and cash flow, respectively, from operating activities/
(DKK) average number of shares in circulation including share options "in-the-money"
EBITDA Earnings before interest, tax, depreciation, amortisation and impairment losses as well as
profit from sale of property, plant and equipment and amortisation of intangible assets
EBIT Earnings before interest and tax
Return on invested capital after tax Operating profit before special items net of tax as a percentage of average invested capital
including goodwill (ROIC) (equity + minority interests + non-current provisions + net interest-bearing debt – financial
assets)
Profit margin Operating profit before special items as a percentage of net revenue
EBIT margin EBIT as a percentage of net revenue
Free cash flow as a percentage of net Free cash flow as a percentage of net revenue
revenue
Net interest-bearing debt/EBITDA The ratio of net interest-bearing debt at year end to EBITDA
Equity ratio Equity at year end as a percentage of total assets
Debt ratio Net interest-bearing debt at year end as a percentage of year-end equity
Asset turnover Net revenue/total assets at year end
Return on net assets Operating profit before special items as a percentage of average operating assets. Operating
assets comprise total assets less cash and cash equivalents, other interest-bearing assets and
investments in associates
Net return on equity Consolidated profit after tax as a percentage of average equity
Dividend rate Dividend calculated for the full share capital as a percentage of the Parent Company
shareholders' share of consolidated profit after tax for the year

CHANGED FOCUS IN A NEW ERA

2008 was a year characterised by major challenges to Royal Unibrew – both externally and internally.

During the year, the financial crisis developed into an actual recession in many countries, which had a negative effect on demand for our beer and soft drinks. We are, however, pleased to note that our strong brands have generally gained market shares.

The crisis intensified many of the challenges facing us following a number of years of active participation in the consolidation of the brewery industry. Strong earnings and generous access to financing made acquisitions a key element of our strategy. Our focus was on growth, and for several years Royal Unibrew developed positively by combining organic growth in existing markets with cultivation of new markets through brewery acquisitions. Our aim was to reinforce the Group's strategic platform and prospects, and our acquisitions in Latvia and Lithuania are good examples of our strategy proving correct and profitable.

Our largest challenge in 2008 was the development in our Polish activities. Over the past years, we have acquired three regional breweries. The investments were made with the expectation that we would be able to develop and strengthen the regional breweries and brands, and reap synergies in a continuously growing beer market, thus improving our earnings. However, the strategy did not generate the expected results. We did not achieve the expected growth, and our existing product mix does not provide the basis for creating adequate returns. We have therefore decided to change our strategy for Poland, which regrettably implies a requirement for recognising material impairment losses on the Polish assets. This significantly affects our results for 2008.

In 2008 considerable investments were made with a view to strengthening Royal Unibrew's competiveness. The brewing activities in Aarhus were transferred to Faxe and Odense, a new Danish distribution structure is being established and investments were made in new packaging and packing lines. Finally, we acquired Livu Alus, the third largest brewery in Latvia. At the same time, the preparation for alternative use of the brewery property in Aarhus was initiated with a view to sale.

Towards the end of 2008 Royal Unibrew's access to financing has become harder, and developments in Poland created a need for refinancing Royal Unibrew's bank debt. This refinancing is now in place for the next two years, and in that period we will direct efforts at achieving a more appropriate capital structure.

The current market situation combined with disappointing results – particularly in Poland – makes

new demands on Royal Unibrew. The basis of realising the targets of the "double up" strategy from January 2008 no longer exists. We have decided to replace the "double up" strategy with a number of strategic main priorities comprising comprehensive structural and operational adjustments in each key market area in order to reduce our debt and increase profitability.

In Poland we will now concentrate our sales and marketing efforts on our strongest brands in order to achieve a more profitable product range. At the same time, we will consolidate the production structure as the brewery in Koszalin will be closed. Finally, activities at the head office will be adjusted.

In Denmark we come close to realising the planned reorganisation in connection with the transfer of production from Aarhus to Faxe and Odense as well as the sweeping change of the distribution structure. To create a more competitive and profitable basis, we are now launching a broad structural and organisational adjustment, which will, as it is implemented in 2009, contribute towards simplifying and enhancing the efficiency of the Danish business.

In the Baltic countries we will combine activities at management level to improve resource utilisation. My first months as CEO have not only proved to me that we have a major task ahead of us, but also that we have a number of important resources and strong points on which to capitalise. We have a committed and wellqualified staff, a generally well-operating and highly advanced production system and last, but not least, a number of strong, profitable brands which enable us continuously to win market shares. In the Danish market, both Royal and Egekilde are performing well, and Faxe Kondi remains one of the strongest brands in the soft drinks segment. In Italy Ceres Strong Ale holds an undiminished strong market position in spite of difficult market conditions in 2008.

In our Baltic markets, both Cido and Kalnapilis are very strong. Finally, there is Vitamalt – the number three, global brand in the market for malt drinks, which continues to hold unutilised potential.

We will spend 2009 focusing on our strong points to ensure that Royal Unibrew as a business will again hold the position that shareholders, employees and our surroundings rightly expect from us.

Henrik Brandt CEO

MANAGEMENT'S REVIEW

NEW STRATEGIC MAIN PRIORITIES

2008 was a very challenging year to Royal Unibrew, and both internal and external challenges grew in H2. Results were particularly affected by a requirement for recognising impairment losses in Poland. The developments necessitated reassessment of Royal Unibrew's overall strategy.

The main challenge in 2008 was the development in Poland. In recent years, focus has been on growth and investments, and Royal Unibrew has acquired three regional breweries and a major shareholding in a fourth regional brewery. These investments were made based on an expectation that Royal Unibrew would be able to develop and strengthen the companies with the relating brands and reap synergies, thus creating increased earnings in a continuously growing beer market. The established strategy did not yield the expected results due to inadequate growth and a product mix that has not been optimal.

Moreover, in consequence of the international financial crisis, market conditions deteriorated, which led to a decline in beer and soft drinks demand in H2.

These circumstances necessitated considerable changes by the Company. Against this background, at the end of September 2008, the Supervisory Board announced the withdrawal of Poul Møller as CEO and the appointment of his successor, Henrik Brandt, who is to chart and follow a new course for Royal Unibrew.

As announced in the Interim Report for Q3 2008, the new Group Management has now reviewed the "double up" strategy. The structural and operational assumptions of the strategy as well as the current market conditions make the overall basis of growth in revenue and results under "double up" unrealistic. In light of this, Royal Unibrew will no longer report on progress measured against the "double up" strategy and the initiatives defined in this strategy.

The "double up" strategy is replaced by a number of strategic main priorities focusing on necessary structural and operational adjustments. The objective is material earnings improvement as well as more efficient capitalisation on the Company's market positions.

The main priorities are as follows:

• In Poland sales and marketing efforts will be concentrated. The production structure will be adapted by closing the brewery in Koszalin. Production will be transferred primarily to the brewery in Łomza, which is Royal Unibrew's largest and most efficient brewery in Poland. At the same time, the activity at the head office in Warsaw will be reviewed. These material changes to Royal Unibrew's strategy in Poland result in

an adjustment of future earnings expectations. On this basis, it has been considered necessary to recognise impairment losses on the Polish activities of DKK 455 million. These value adjustments, which have no cash flow effect, affect the income statement and equity negatively in 2008. The changes in Poland are expected to make redundant some 100 full-time employees.

  • In Denmark, Royal Unibrew is, as planned, completing a major change of the production platform and the distribution system. These activities, which are expected to be completed in April 2009, will provide Royal Unibrew's Danish business with a more competitive and profitable base. In order to further simplify and enhance the efficiency of the business, a broad structural and organisational adjustment is now launched. This is expected to result in a reduction of the number of employees in staff and administrative functions by some 100 full-time employees.
  • In order to strengthen the already strong market positions in the Baltic countries, joint operating management will be established. The combination will enable improved resource utilisation within product development, production, logistics and administration while maintaining strong local market presence.
  • With a view to boosting the Group's cash flow, 2009 will have special focus on optimising the Group's working capital and investments. At the same time, a process will be launched to ensure a more appropriate capital structure.

Management expects these measures to strengthen the Company. With the recently realised investments in new, competitive types of packaging, a more efficient distribution and production structure as well as increased sales and marketing efforts directed at strategic brands, the Company's overall competitiveness is expected to be enhanced.

RESULTS 2008

Royal Unibrew's net revenue amounted to DKK 4.2 billion in 2008, a 7.6% increase over 2007. Operating profit before special items amounted to DKK 135 million, which isDKK 109 million below the 2007 figure. The consolidated loss (after tax) amounted to DKK 483 million (2007: a profit of DKK 155 million).

Except for impairment losses on the Polish activities, the Company's results are in accordance with the latest expectations announced for 2008, see Interim Report for the period 1 January - 30 September 2008 of 20 November 2008.

Total group sales in 2008 aggregated 7.5 million hectolitres of beer, malt and soft drinks, corresponding to a 5.4% increase over 2007, of which some 5 percentage points are attributable to the acquisition of Polish, Caribbean and Latvian activities not included in all of 2007.

Beer and malt drinks sales aggregated 5.3 million hectolitres in 2007, corresponding to an approximate increase of 9% over 2007, whereas soft drinks sales (including mineral water and fruit juices, etc) were at the 2007 level, some 2.2 million hectolitres.

Net revenue increased by 7.6% amounting to DKK 4.2 billion. Organic growth represented some 3 percentage points, whereas some 4 percentage points related to acquisitions.

The organic growth is the result of positive growth in H1, whereas growth in H2 and in particular Q4 was negative and affected by the economic decline, which set off a general consumption reduction in markets that are key to Royal Unibrew. Royal Unibrew strengthened its market position by increasing or maintaining its market shares.

Gross profit for the year amounting to DKK 1.7 billion was at the level of the gross profit for 2007. The gross margin was 41.8% and thus 3.3 percentage points lower than in 2007. The gross margin reduction is partly due to inability to compensate for higher raw materials prices by customer price increases in declining markets, partly to a shift in sales towards products and markets with lower realisable values. Both gross profit and gross margin were positively affected by the increased productivity at the Danish breweries as compared to 2007.

Operating profit before special items amounted to DKK 135 million in 2008, or DKK 109 million below the 2007 figure. The development is primarily due to a 9% increase in sales and distribution expenses over 2007, of which 2% is attributable to acquisitions. This increase in expenses was primarily related to increased sales and marketing expenses (some DKK 80 million) to strengthen market shares for the Group's strategic brands, which has now

Developments in sales and revenue in the market areas were as follows:

Developments 2007-2008 Western Europe Eastern Europe Malt and Overseas Royal Unibrew total
(including misc. revenue)
Markets
Growth Total Growth Total Growth Total Growth Total
Sales (thousand hectolitres) -1.5% 3,707 14.9% 3,158 4.8% 593 5.4% 7,458
Share of sales 50% 42% 8% 100%
Net revenue (DKKm) 1.9% 2,537 24.2% 1,129 6.2% 513 7.6% 4,179
Share of net revenue 61% 27% 12% 100%

RETURN ON NET ASSETS (ROIC)

FREE CASH FLOW AS % OF NET REVENUE

been achieved in all key markets. Administrative expenses were reduced by 10%, including an organic reduction of 15 percentage points – primarily due to the resource adjustment implemented in 2007.

Earnings before interest, tax, depreciation and amortisation (EBITDA) amounted to DKK 255 million compared to DKK 393 million in 2007.

"Special items" amounting to an expense of some DKK 50 million comprise expenses of DKK 84 million relating to the closure of the breweries in Aarhus and Maribo, change of the Danish distribution structure and of Group Management as well as income due to lower required impairment losses on brewery assets from the Aarhus and Maribo breweries than assessed in 2007.

"Impairment losses" of DKK 455 million relate partly to impairment of intangible assets and property, plant and equipment related to the Group's Polish subsidiary, Royal Unibrew Polska, of DKK 385 million, partly impairment of DKK 70 million of the value of investments in the Polish company Perla Browary Lubelskie, see the following section "Impairment losses".

Income from investments in associates decreased by DKK 5 million from 2007 amounting to DKK 23 million compared to DKK 28 million in 2007. The Norwegian Hansa Borg Bryggerier saw considerably improved results. The investments in Banjul Breweries were sold in 2007, and, as of mid 2007, St. Vincent Breweries has been recognised in the consolidated financial statements as a subsidiary, which, combined with lower earnings by Solomon Breweries, has reduced income from associates as compared to 2007.

The Group's net interest expenses increased by DKK 33 million to DKK 105 million due to the increase in net interest-bearing debt of some DKK 600 million.

The loss before tax of the Royal Unibrew Group for 2008 amounted to DKK 453 million compared to DKK 220 million in 2007.

Consolidated loss (after tax) amounted to DKK 483 million, a decrease by DKK 638 million from the profit of DKK 155 million in 2008.

The effective tax rate is materially affected by the impairment losses and the considerable loss of the Polish subsidiary not affecting the tax expense.

IMPAIRMENT LOSSES

Due to the established strategy for Poland not having produced the expected results and to the market decline, it has been necessary to reassess the value of the underlying activities. The reassessment disclosed material impairment of the value of intangible assets, property, plant and equipment as well as financial assets. In connection with preparing the Annual Report for 2008, Management has made an estimate of the value of the assets leading to recognition at 31 December 2008 of an impairment loss on intangible assets of DKK 261 million, and on property, plant and equipment of the Group's Polish subsidiary of DKK 124 million, a total of DKK 385 million. Moreover, the value of the investments in the Polish company Perla Browary Lubelskie has been adjusted downwards by DKK 70 million.

OPERATING PROFIT BEFORE SPECIAL ITEMS

PROFIT BEFORE TAX CONSOLIDATED PROFIT

DEVELOPMENTS IN INDIVIDUAL MARKET SEGMENTS

Financial highlights of the Group's activities broken down on market segments were as follows in 2008:

Western
Europe
Eastern
Europe
Malt and
Overseas
Markets
Unallocated Group
Sales (million hectolitres) 3.7 3.2 0.6 - 7.5
Share of sales 50% 42% 8% 100%
Net revenue (DKKm) 2,537 1,129 513 - 4,179
Share of net revenue 61% 27% 12% 100%
Operating profit/loss (before special items) (DKKm) 185 -51 51 -50 135
Profit margin 7.3% -4.5% 10.0% 3.2%
EBIT (excluding impairment losses) (DKKm) 137 -52 50 -50 85
EBIT margin 5.4% -4.6% 9.6% 2.0%
Assets (DKKm) 2,466 1,203 382 - 4,051
Liabilities (DKKm) 971 406 106 1,994 3,477

SALES

NET REVENUE

Western Europe

2008 2007 % change
Sales (million hectolitres) 3.7 3.8 -2
Net revenue (DKKm) 2,537 2,490 2
Operating profit (before special items) (DKKm) 185 252 -28
Profit margin (%) 7.3 10.2
EBIT (DKKm) 137 161 -14
EBIT margin (%) 5.4 6.4

The Western Europe segment comprises the markets for beer and soft drinks in Denmark and the Nordic countries as well as in Germany, Italy and France. Western Europe accounts for 50% of total sales and 61% of net revenue.

Royal Unibrew's activities in the Western European markets developed positively in H1 2008 with increases in both sales and revenue. In Q3 and more significantly in Q4, general economic conditions in the region resulted in consumer and customer reluctance. The declining market also resulted in increased price competition. In spite of this development, Royal Unibrew saw a 2% revenue increase in 2008, whereas sales were reduced by 2% from 2007. Supported by increased marketing efforts, Royal Unibrew succeeded in winning market shares in all key markets in Western Europe.

Net selling price increases only partly compensated for the higher raw materials prices, and sales in 2008 shifted towards markets where the selling price per product unit is lower than the Western European average. These

circumstances as well as the increased marketing efforts affected operating profit negatively, whereas the figure was positively affected by the adjustment of staff resources at the end of 2007 and by the higher production efficiency at the Danish breweries. Overall, the operating profit before special items realised in Western Europe is DKK 67 million below that of 2007, and profit margin has been reduced from 10.2% to 7.3% of net revenue. "Special expenses" amounted to DKK 48 million in 2008 compared to DKK 91 million in 2007, after which EBIT in 2008 amounted to DKK 137 million compared to DKK 161 million in 2007. In 2008 "special expenses" comprised expenses relating to the closure of the brewery in Aarhus as well as changes to the Danish distribution structure and to Group Management. Moreover, the required impairment losses on the brewery activities of the closed breweries in Maribo and Aarhus turned out to be lower than those recognised in the financial statements for 2007, which has reduced "special expenses".

Western Europe Actual 2008 Growth over 2007
Net revenue
(DKKm)
Sales (thousand
hectolitres)
Net revenue (%) Sales (%)
Denmark 1,276 1,714 2 -4
Italy 657 463 -9 -15
Germany 484 1,236 22 11
Nordic countries 44 117 -12 -25
Other markets 76 177 6 6
Total Western Europe 2,537 3,707 2 -2

In Denmark Royal Unibrew won market shares both on branded beer and on soft drinks. Revenue increased by 2%, whereas total demand was declining. The increase in market shares is, among other things, attributable to several successful campaigns.

The Royal brand increased its market share to more than 10% in the branded beer market. Ceres, Albani and Thor maintained their shares, whereas Heineken's market share went up.

Royal Unibrew's brands in the soft drinks segment hold a market share slightly below 30%. The market shares of both Pepsi, Faxe Kondi and Egekilde have been increasing. Egekilde now holds a market share of more than 30%. The increasing soft drinks market shares are substantially due to the introduction of new PET containers.

In Italy total beer sales were declining, primarily due to the weather in Q2 and a general economic decline, which

especially affected consumption in the HoReCa segment negatively. Royal Unibrew's revenue in Italy declined by 9% in 2008. Ceres won market shares in both the HoReCa and the retail segment. As an element in Royal Unibrew's strategy of expanding the market for Ceres Strong Ale, several line extensions were launched during the year.

Results in Italy were negatively affected by a significant reduction in customers' inventories towards the end of the year.

In Germany (including cross-border trade) net revenue increased by 22% as sales of branded beer, particularly the Royal brand, as well as Egekilde went up.

EASTERN EUROPE

2008 2007 % change
Sales (million hectolitres) 3.2 2.7 15
Net revenue (DKKm) 1,129 909 24
Operating loss (before special items) (DKKm) -51 -23 -118
Profit margin (%) -4.5 -2.6
EBIT (excluding impairment losses) (DKKm) -52 88 -156
EBIT margin (%) -4.6 9.7

The Eastern Europe segment comprises the markets for beer, fruit juices and soft drinks in Latvia, Lithuania and Poland. Eastern Europe accounts for 42% of total sales and 27% of net revenue.

Sales and revenue in Eastern Europe went up by 15% and 24%, respectively, in 2008. Organic growth (excluding the acquisition effect from the acquisition of the Polish brewery Lomza at 1 May 2007 and of the Latvian brewery Livu Alus at 1 January 2008) was 5% and 12%, respectively, in 2008.

The segment showed a significantly higher operating loss in 2008 than in 2007. The primary reason is that the established strategy for the Polish marked did not produce the expected results. The Polish companies did not meet the expectations for organic growth and

product mix. Poland realised a highly unsatisfactory and material operating loss, which more than offsets the profits realised in Lithuania and Latvia. The decrease in EBIT (before impairment losses) is furthermore related to "special income and expenses", which in 2007 represented a net income of DKK 111 million comprising a profit on the sale of a brewery property in Vilnius and impairment losses on production assets due to the closure of the breweries in Vilnius in Lithuania and Lielvarde in Latvia.

EBIT in Eastern Europe, including the recognised impairment losses of DKK 385 million on the values of intangible assets and property, plant and equipment related to the Polish activities, was a negative DKK 437 million in 2008.

Eastern Europe Actual 2008 Growth over 2007
Net revenue
(DKKm)
Sales (thousand
hectolitres)
Net revenue (%) Sales (%)
Lithuania 397 918 24 16
Latvia 365 1,186 10 4
Poland 354 1,028 46 31
Other markets 13 26 -17 -22
Total Eastern Europe 1,129 3,158 24 15

In Lithuania Kalnapilio-Tauro Grupe increased its market shares on both beer and fruit juices in 2008, and total revenue increased by 24%. The Kalnapilis brand developed satisfactorily with an increasing market share – eg due to the launch of a new high-profile bottle for the entire Kalnapilis range. At the same time, a new 1.5-litre PET Kalnapilis was launched, which increased the market share in the PET segment. Tauras also increased its market share. Kalnapilis and Tauras are the two fastest growing brands in Lithuania and combined the two brands now represent some 25% of beer sales. In spite of a declining market for fruit juices, both the Cido fruit juice and the Cido nectar products won market shares.

In Latvia revenue went up by 10% in 2008. The Livu brand was relaunched with new formulas, design and marketing, which resulted in an increasing market share measured by value. Lacplesis also increased its market share measured by value as well as volumes due to a positive development in can sales. The fruit juice market is declining due to the unfavourable economic conditions in Latvia. The Latvian market is seeing intensified competition, but Cido has managed to maintain its market share measured by both value and volumes remaining Latvia's leading fruit juice brand. Cido XL was relaunched in a new design, which was successful. The launch of the Mangali near-water products in 2008 was successful and contributed towards increasing the Mangali brand market share significantly.

In early 2008, Royal Unibrew acquired Livu Alus, the number 3 Latvian brewery business in terms of size, and the brewery has been fully integrated with the Group's existing brewery activities in Latvia. The production of Lacplesis at the Lielvarde brewery has been transferred to the Livu brewery, and simultaneously the Lielvarde brewery was closed.

In Poland the Group invested significantly in executing the marketing and sales strategy for regional brands, but during H2 2008 the beer consumption slowed down, and due to an insufficient growth and a non optimal product mix the strategy did not lead to the expected results.

Malt and Overseas Markets

2008 2007 % change
Sales (million hectolitres) 0.6 0.6 5
Net revenue (DKKm) 513 483 6
Operating profit (before special items) (DKKm) 51 63 -20
Profit margin (%) 10.0 13.1
EBIT (DKKm) 50 63 -23
EBIT margin (%) 9.6 13.1

The "Malt and Overseas Markets" segment comprises, in addition to all malt drinks markets, the beer and soft drinks activities in the UK, Caribbean and North American markets. "Malt and Overseas Markets" accounts for 8% of total sales and 12% of net revenue.

In this segment growth was realised in both sales and revenue in 2008. The acquisition-related growth from the breweries in St. Vincent, Antigua and Dominica, which were acquired in mid 2007, represented 12% and 13%,

respectively; thus organic sales and revenue reduction of some 7% has been realised measured in DKK, whereas the decrease was 3% measured in local currencies. It is estimated that the declining USD and GBP rates have affected revenue and results in the segment negatively by DKK 20 million and DKK 15 million, respectively, in 2008. The development in the underlying demand should be viewed especially in light of the decline in the Caribbean economies, see below.

Malt and Overseas Markets Actual 2008 Growth over 2007
Net revenue
(DKKm)
Sales (thousand
hectolitres)
Net revenue (%) Sales (%)
The Caribbean 296 277 10 12
The UK 79 82 -3 1
Africa 71 140 17 11
USA/Canada 37 50 -4 2
Other European markets 18 20 -3 -5
The Middle East 12 24 -18 -39
Total Malt and Overseas Markets 513 593 6 5

Developments in the Caribbean in 2008 were affected by increasing raw materials prices and reduced disposable income in the region, primarily due to the financial crisis in the USA and its spill-over effect on Royal Unibrew's markets by way of declining tourism, increasing unemployment and fewer money transfers from residents of the USA. Therefore, 2008 has been a very difficult year in the region. Product price increases have resulted in declining market shares, and earnings have been reduced. In the markets where Royal Unibrew is represented, the market share held is typically 40-45%, whereas the market share in the islands in which Royal Unibrew has its own breweries is between 50% and 80%. No new products have been launched in the region in 2008.

In Africa revenue went up by 17% in 2008 in a strongly growing market. The main part of the growth was realised in Tanzania, where Vitamalt holds a market share of some 44%.

In the UK market Supermalt maintained its market share. In H2 Supermalt Light was successfully launched in several major chains including Tesco and Asda-Walmart.

In the USA Royal Unibrew saw declining sales due to the dollar rate and lost market shares due to price increases. In Canada Faxe 10% maintains its position in the strong-beer segment.

BRAND AND PRODUCT DEVELOPMENT

During 2008 Royal Unibrew launched a number of new campaigns, products and container types. At the same time, the entire Royal Unibrew product range was reviewed with a view to rejecting the least profitable brands. Even with a smaller product range, and in spite of intense competition in the wake of the generally deteriorated market conditions, Royal Unibrew succeeded 10 in achieving stronger market positions in 2008. In Management's assessment, Royal Unibrew's strategic brands are crucial to the results achieved – especially in times of weak economic growth when consumers are particularly liable to choose brands to obtain real value. Hence, the Royal Unibrew brands are considered a safe choice by many consumers.

The Group's strategic brands, including Ceres Strong Ale, Royal beer, Kalnapilis beer, Faxe beer, Lāčplēsis beer, Łomża beer, Faxe Kondi, Egekilde, Cido fruit juice and the Vitamalt malt drink, achieved good results in 2008 by way of increased market shares. However, also other important brands of the Group's product portfolio strengthened their positions in 2008 through successful innovation and new marketing initiatives.

In Denmark the Royal brand continues to show progress. In 2008 the market share of the Royal family increased to more than 10%. Moreover, the Group's regional beer brands, Albani, Ceres and Thor, consolidated their positions in 2008. Heineken beer, which is sold on a licence basis, is now the best-selling import beer in Denmark. In the soft drinks segment, Royal Unibrew introduced a new PET container, which strengthened the market positions of both Pepsi and Faxe Kondi. The launch of Faxe Kondi Pro – developed in cooperation with Team Danmark – contributed towards maintaining Faxe Kondi's leading market position. Finally, Egekilde reinforced its market-leading position on mineral water both by means of new types of containers and through sponsorships with high impact.

In Italy Royal Unibrew has for several years, by means of its Ceres Strong Ale brand, held a strong position in the special segment for imported strong beer. In 2008 this position was further consolidated by line extension with the new product Ceres Strong Ale Kiss, which is a softer and milder variety. Other new activities in the Italian market were a prize-winning website, a competition among young artists to design individualised cans as well as a new advertising concept.

In Lithuania Royal Unibrew's strategic brand, Kalnapilis, was strengthened through the launch of new profile glass bottles as well as high-quality 1.5-litre PET bottles. Also Tauras, another key brand to Royal Unibrew in Lithuania, continued to show progress in 2008. Kalnapilis and Tauras are the fastest growing beer brands in Lithuania.

In Latvia Royal Unibrew also saw good developments in the beer market. The Group's leading brand in Latvia is Lāčplēsis, and also in 2008 the brand grew. The growth was primarily based on new container types and the introduction of 1.5-litre PET bottles and cans. The relaunch of the Līvu brand (which Royal Unibrew acquired in early 2008) has been successful, and Latvian consumers are now offered a broad range of beer types. Cido, the Group's strategic fruit juice brand, consolidated its clear leading position in the market in 2008 through new product launches within, among other things, nectar (Cido XL) and ice tea as well as new designs. Finally, the Mangali mineral water brand was line extended by a number of taste varieties.

Łomża is Royal Unibrew's leading brand in Poland. One of the major action areas in 2008 has been to consolidate and expand the regional position of the brand. This has been effected eg through considerable sales and marketing efforts, including the special "Łomża Beer Festival" event.

In the international markets for malt drinks, Royal Unibrew focused on defending Vitamalt's position as the leading quality brand through consumer activities, special offers targeting the young consumer segment and the use of new sales channels. Supermalt consolidated the market leading position of the brand in the UK through the launch of a light version of the popular Supermalt Original.

FAXE, Royal Unibrew's international beer brand, consolidated its status in the segment for international quality beer.

INTELLECTUAL CAPITAL AND COMPETENCIES

One of the main prerequisites of being able to maintain and strengthen Royal Unibrew's position is the Company's ability to develop intellectual capital and competencies. All group enterprises therefore focus on developing and retaining existing employees with the right competencies and on attracting new talent.

The employees of Royal Unibrew possess crucial knowledge of the many markets and customer categories serviced by the Group, including supply and distribution issues within the product categories. This knowledge secures our competitive position and forms the basis of achieving the Group's strategies and objectives.

In line with the international development of the Group, employees are to an increasing extent assigned to positions abroad from both the Parent Company and subsidiaries. Furthermore, competent foreign employees have been employed both at management and staff level during the year. This ensures rooting of knowledge of the markets as well as optimisation of cooperation across the Group.

INFORMATION TECHNOLOGY

Royal Unibrew has decided to apply SAP's ERP system as

the ERP platform in all major group enterprises as well as Microsoft as office application and CRM platform. At this time, this platform has been implemented in Denmark, Lithuania, Poland, the UK, Italy, France, Antigua and Dominica. The other enterprises use local IT solutions, which are expected to be successively replaced by SAP's ERP system.

In H1 2009, the implementation of a new distribution concept will be completed in Denmark involving the establishment of a call centre with related technology, use of dynamic route planning as well as integration of the entire distribution chain from production to customer, in one overall solution.

Furthermore, in 2008 dynamic route planning was introduced in Latvia as well as a number of improvements to the sales and production planning process.

SHARE OPTIONS

In 2009 it was decided to cancel the Company's share option programme for 2008-2010 for the Executive Board and selected executives.

The decision has been made as the assumptions on which the programme was set up in the spring of 2008 must now be considered shattered as a consequence of the Company's share price development.

The Company's option obligations under the option programmes are expected to be covered by the portfolio of treasury shares.

The market value of the unexercised options is estimated at DKK 0.9 million (under the Black-Scholes formula).

An expense of DKK 2.2 million has been charged in the Annual Report for 2008 regarding the option programmes.

BALANCE SHEET AND CASH FLOW STATEMENT

Royal Unibrew's balance sheet total amounted to DKK 4,051 million at the end of 2008, which is an increase

of DKK 270 million over 2007. The recognised impairment losses on the assets related to the Polish business reduced the balance sheet total by DKK 455 million, whereas revaluation of the brewery property in Aarhus (see below) increased the balance sheet total by DKK 240 million. Disregarding these two items, the balance sheet total increased by DKK 485 million due to the development in the Group's other activities. This increase is primarily related to considerable investments in production facilities, totalling some DKK 520 million, primarily the strategic investments in PET bottling units in Denmark and the Baltic countries and the transfer of production plant in Denmark from Aarhus to Faxe and Odense as well as some DKK 125 million relating to the acquisition of the Latvian brewery Livu Alus. The market value of the contracts entered into to hedge raw materials purchase prices is recognised in "prepayments" in assets and in "other payables" in current liabilities and contributes materially to the increase of the balance sheet total.

The brewery activities in Aarhus were discontinued in the autumn of 2008 and the work of preparing for alternative use of the centrally situated areas with a view to sale of the site was commenced. Analyses and project descriptions are progressing as planned and a changed local plan is expected in mid 2010. Due to the changed conditions in the real property market, the value of the property is considered to be lower than previously indicated (DKK 600 – 900 million).

The brewery property in Aarhus has been reclassified from "land and buildings" to "project development properties" in the balance sheet, and based on valuations, its carrying amount has been re-valued by DKK 240 million to DKK 400 million. The revaluation has been recognised directly in equity less the deferred tax liability of DKK 60 million, and therefore does not affect net profit/loss for the year.

SHARE OPTIONS

On a total basis, the following share options remain unexercised:

Granted Total number
unexercised
Number held by
Executive Board
Exercise price Exercise period
Re 2003 5,993 0 401 4/2007 - 4/2009
Re 2004 8,080 2,092 478 4/2008 - 4/2010
Re 2005 15,832 2,462 648 4/2009 - 4/2011
Re 2006 16,172 2,756 695 4/2010 - 4/2012
Re 2007 12,362 2,231 510 4/2011 - 4/2013
Granted 2008 re Stragetic Plan 20,460 2,231 510 4/2011 - 4/2013
Total 78,899 11,772

Group equity amounted to DKK 575 million at the end of 2008, which is DKK 544 million below the 2007 figure. The reduction is primarily attributable to the negative comprehensive income of DKK 447 million for the year as well as payment of dividend and acquisition of shares for treasury of DKK 100 million. Comprehensive income was positively affected by DKK 180 million (after tax) by the revaluation of the brewery property in Aarhus. Moreover, comprehensive income comprises the loss for the year of DKK 483 million, value adjustments of foreign group enterprises by a negative DKK 99 million and of hedging instruments by a negative DKK 45 million. The equity ratio represented 14.2% compared to 29.6% at the end of 2007.

Free cash flow before investments in acquisitions amounted to a negative DKK 356 million in 2008 comprising positive cash flows from operating activities of DKK 103 million and negative cash flows from net investments of DKK 473 million. Dividends received from associates amounted to DKK 14 million. Cash flows from operating activities were DKK 48 million lower in 2008 than in 2007. The cash result with deduction of interest and tax payments amounted to DKK 12 million and was DKK 210 million lower than in 2007. A reduction in working capital increased cash flows by DKK 94 million in 2008, which was a DKK 164 million improvement on 2007.

At the end of 2008 , the Group's cash resources, in addition to cash and bank balances of DKK 90 million, comprised committed, unutilised credit facilities of some DKK 225 million. As described in the below section on

capital structure, the Group's credit facilities were renegotiated in 2009.

In 2008 Royal Unibrew A/S acquired a total of 252,186 shares for treasury at DKK 46 million under the share buy-back programme launched in 2007 and completed in Q1 2008. In August 2008, a capital reduction of DKK 3 million was realised by cancellation of 300,000 treasury shares. After this, the Company held a total of 106,674 treasury shares at the end of 2008, equal to some 1.9% of the Company's total capital. These shares are expected to be used to cover the Company's share option programme.

CAPITAL STRUCTURE, SHARE BUY-BACK PROGRAMME AND DIVIDEND POLICY

The adopted strategy and market development have, as previously mentioned, led to a requirement for recognising impairment losses on the assets in Poland. This has resulted in a material reduction of the Group's equity. As agreed limits of loan agreements in terms of solvency ratio and debt ratio would thus not be observed, the Company has conducted negotiations with its main bankers. These negotiations led to the Company entering into an agreement with the banks that these will make the credit facilities considered necessary by the Company available to the Company for the next two years. As part of the agreement, new underlying covenants have been established, and the agreement is subject to rules on provision of security and distribution of dividend.

The Supervisory Board finds the Company's financial structure inappropriate. Therefore, a process has been launched to ensure a more appropriate financial structure.

RETURN ON EQUITY

In that connection, the Supervisory Board will consider all relevant possibilities. It has been important for the Supervisory Board to secure the required time for this process, which has been achieved by establishing the above credit facilities, irrespective of this resulting in an increase in total financial expenses due to, among other things, the increased interest differential.

The Company's net interest-bearing debt increased significantly during 2008, primarily due to considerable investments in new technology and production structure reorganisation in Denmark as well as the acquisition of Livu Alus in Latvia in early 2008, amounting to almost DKK 2.2 billion at the end of 2008. A reduction of the debt will therefore be a key focus in future years, to which, among other things, the process launched by the Supervisory Board should contribute.

At the operational level, continuous efforts will be directed at freeing as much cash as possible. However, due to the necessary investment programme, including completion of changes to the Danish production and distribution structure and the increased expenses relating to the establishment of the required credit facilities, operating activities alone are not expected to contribute towards reducing net interest-bearing debt during 2009.

However, the target of reducing interest-bearing debt to a level corresponding to three times EBITDA is maintained.

Consequently, the Supervisory Board has found it natural to recommend to the Annual General Meeting that no dividend be distributed for the financial year 2008. Similarly, it is the intention not to recommend dividend

in the financial year 2009 as well as there will not be realised share buy-backs until the ratio of net interestbearing debt to EBITDA has been reduced to the targeted level.

MANAGEMENT CHANGES

Henrik Brandt took up the position as CEO on 1 November 2008 (see Announcement RU31/2008 of 29 September 2008), and Hans Savonije took up the position as Executive Director of Northern Europe on 1 October 2008 (see Announcement RU28/2008 of 1 August 2008).

RESOLUTIONS BY THE SUPERVISORY BOARD AND RECOMMENDATIONS FOR THE ANNUAL GENERAL MEETING

The Supervisory Board recommends to the Annual General Meeting that, due to the Company's considerable interest-bearing debt, Royal Unibrew A/S should not pay any dividend for 2008. The Supervisory Board proposes that the net loss of the Parent Company be allocated to retained earnings.

Furthermore, the Supervisory Board will propose that the Annual General Meeting authorise the Supervisory Board to acquire up to 10% shares for treasury, cf section 48 of the Danish Companies Act, in the period up until the next Annual General Meeting.

Finally, the Supervisory Board will propose that the duty of rotation for Royal Unibrew's Annual General Meetings be abolished to the effect that future Annual General Meetings are held, at the Supervisory Board's discretion, either in Funen, in Faxe or in Greater Copenhagen. At the same time, it is the Supervisory

NET INTEREST-BEARING DEBT/EBITDA

DEBT RATIO

Board's intention that, as of 2009, no further shareholders' meetings should be held. The Annual General Meetings in 2009 and 2010 will be held in Funen.

PROSPECTS

During H2, market conditions changed significantly due to the globally declining economic growth, and several markets are now seeing recession. Both customers and consumers were affected by the general uncertainty resulting in consumer reluctance and reduction of inventories in the distribution chain.

In spite of beer and soft drinks being considered less sensitive to market fluctuations than many other product categories, the considerable market volatility and inadequate visibility are expected to continue in 2009.

The general uncertainty of the economic development, possibly changed consumption habits and difficult financial conditions imply that predictions of the future are significantly more difficult to make than previously, and that expectations of future developments, even in the short term, are subject to considerable uncertainty.

In 2008 Royal Unibrew won market shares in most key markets, and Royal Unibrew is still expecting to see a favourable development in market positions and thus defend the market share wins. However, the key markets to which Royal Unibrew has exposure (Denmark, Italy, the Baltic countries and Poland) are not expected to show growth, and there are considerable signs of recession. Consequently, only moderate net selling price increases are anticipated in most markets in 2009. Royal Unibrew's sales and revenue are therefore expected to be slightly declining in 2009 as compared to 2008. It is assumed in that connection that consumer behaviour will not show any material negative trends as compared to the last months of 2008 as regards for example choice of price categories and sales channels.

The development in expenses in 2009 will be affected by an approximate 6% increase in raw material costs compared to 2008 due to the contracts and hedges made in 2008, whereas pay increases in most markets are expected to moderate as compared to previously.

The comprehensive projects commenced in Denmark in

2008 in connection with the reorganisation of the Danish production structure (closure of the Aarhus brewery) and the change of the distribution system will have a positive effect on profitability in 2009 as projects are completed during H1 2009.

In connection with the change of Royal Unibrew's strategic focus mentioned above, a number of initiatives will be launched:

  • In Poland sales and marketing efforts will be concentrated. The production network structure will be simplified by closing the brewery in Koszalin, and activities at the head office in Warsaw will be adjusted. The total staff is expected to be reduced by some 100, and EBIT is expected to improve.
  • In continuation of the changes to the production platform and the distribution system in Denmark, a structural and organisational adjustment will be initiated in order to further simplify and enhance the efficiency of the Danish business. The staff is expected to be reduced by some 100 salaried employees, and EBIT is expected to improve.
  • In order to strengthen the already strong market positions in Latvia and Lithuania, joint operating management will be established. The combination enables improved resource utilisation within product development, production, logistics and administration while maintaining strong local market presence. These initiatives are expected only to have a limited effect in 2009.
  • With a view to boosting the Group's cash flow, 2009 will have special focus on optimising the Group's working capital and investments. It is, however, expected that operating activities alone will not contribute towards a material reduction of interest-bearing debt during 2009. At the same time, a process will be launched to ensure a more appropriate capital structure.

Due to the material investments made in 2008, depreciation will increase in 2009 as compared to 2008.

Based on the above, EBIT (before "special items" and impairment) is expected to be better than the corresponding figure in 2008 (DKK 135 million).

"Special items" – primarily related to the abovementioned reorganisation in Poland and Denmark – are expected to affect results for the year negatively by DKK 35 million in Q1 2009.

Royal Unibrew's net financials in 2009 are expected to amount to DKK 160 – 180 million. The level of net financials is especially affected by the increased interest differential due to refinancing as well as by the increased average indebtedness.

It is assumed that the general interest level will remain unchanged in 2009.

The tax rate for 2009 is expected to be at DKK 45 million since, due to the size of the Company's debt, financial expenses are not fully deductible

As to cash flow focus will be on reducing the basic working capital. Likewise, investments apart of those already started in 2008 will be held at a low level. Totally, it is expected that the interest-bearing debt will not be reduced in 2009, but it is a continuing objective to reduce the interest-bearing debt to a level of three EBITDA. A process will be launched with a view to ensuring a more appropriate capital structure.

The expected development in 2009 is – in addition to the above-mentioned issues – subject primarily to the general economic situation not deteriorating further and to no significant changes occurring in consumer behaviour during the year. Increased duties on beer and soft drinks and potentially increasing VAT rates may have a negative effect on any affected markets.

Intensified competition may obstruct the net price increases assumed by Royal Unibrew.

In terms of foreign exchange, it has been assumed that DKK will remain stable to EUR. Material changes to the exchange rates at the end of 2008, primarily LVL, LTL and GBP, may affect the above expectations.

STATEMENTS ABOUT THE FUTURE

The statements about the future made in the Annual Report for 2008 reflect Management's expectations in respect of future events and financial results, as well as of economic trends in key markets and developments in international money, foreign exchange and interest rate markets. Statements about the future will inherently involve uncertainty and may be affected by – in addition to global economic conditions - market-driven price reductions, market acceptance of new products, packaging and container types, unforeseen termination of working relationships and changes to regulatory aspects (taxes, environment, packaging), etc. The actual results may therefore deviate from the expectations stated.

Royal Unibrew is a party to a limited number of legal actions. These legal actions are not expected to have any material impact on the financial position of Royal Unibrew.

ANNUAL GENERAL MEETING

The Annual General Meeting of Royal Unibrew will be held on 29 April 2009, at 17:00 in Odense.

TRANSLATION OF THE ANNUAL REPORT

The Annual Report is available in Danish and English. In case of discrepancy, the Danish version shall prevail.

SHAREHOLDER INFORMATION

Share capital 56,000,000
Number of shares 5,600,000
Denomination DKK 10
Number of share classes 1
Restriction of voting right 10%
Place of listing NASDAQ OMX Copenhagen A/S
Short name RBREW
ISIN code DK10242999
Bloomberg code RBREW DC
Reuter code RBREW.CO
Index Mid Cap+

Share information

The share capital of Royal Unibrew at 31 December 2008 amounted to DKK 56,000,000 distributed on shares of DKK 10. In 2008 the share capital was reduced by DKK

3,000,000 succeeding the previously completed share buy-back programme. Royal Unibrew is not planning any share buy-backs in 2009.

Development in Royal Unibrew's share capital

DKK '000 2008 2007 2006 2005 2004
Balance at 1 January 59,000 61,800 63,700 63,700 65,635
Capital reduction -3,000 -2,800 -1,900 -1,935
Balance at 31 December 56,000 59,000 61,800 63,700 63,700

VOLUME OF TRADE

million shares

RESULT AND DIVIDEND PER SHARE

The supervisory board cannot without prior approval at the General Meeting decide to issue or acquire shares for treasury.

The Supervisory Board has been authorised to increase the Company's share capital by up to DKK 6,000,000 by way of one or more issues before 1 May 2009.

Each share of DKK 10 carries one vote. Any shareholder registered in the Company's register of shareholders is entitled to vote. However, no shareholder may on his own behalf exercise voting powers for a share purchase of more than 10% of the share capital of the Company.

The shares are listed on NASDAQ OMX Copenhagen A/S, and Royal Unibrew is included in the MidCap+ Index.

At the beginning of 2008, the price of the Royal Unibrew share was 534, whereas it was 118 at the end of 2008. The price change during 2008 resulted in Royal Unibrew's market capitalisation at the end of 2008 amounting to DKK 664 million compared to DKK 3,151 million at the end of 2007.

During the year, a total of 1,694,701 shares were traded corresponding to 30% of the total number of shares at year end.

No agreements have been made between the Company and its Management or employees for compensation if they resign or their positions are made redundant due to a takeover bid. The realisation of a takeover bid which results in a change of control of the Company will entitle a few trading partners and bankers to terminate their trading agreements with the Company.

The following institutions monitor the development of Royal Unibrew:

Ownership

At the end of 2008, Royal Unibrew had some 12,500 registered shareholders holding together 70% of the total share capital. Moreover, per 25 February 2009 the following shareholders have reported to Royal Unibrew shareholdings in excess of 5% of the share capital (under section 29 of the Danish Companies Act):

  • Stodir in Iceland: 20.46%
  • Artio International Equity Fund in the USA: 11.18%
  • ATP in Denmark: 5.95%
  • LD F.m.b.a. in Denmark: 5.77%
  • KAS Depository Trust Company in the Netherlands: 5%

Members of the Supervisory and Executive Boards are governed by Royal Unibrew's insider rules, and their share transactions are subject to a notification requirement. Individuals with inside information as well as their spouses and children below the age of 18 may trade Royal Unibrew shares only when the Supervisory Board has announced that the window for trading shares is open. This applies for a period of not more than four weeks following an announcement of financial results.

At 31 December 2008, Royal Unibrew held 106,674 treasury shares corresponding to 1.9% of the share capital.

The shareholders of Royal Unibrew are as follows:

Firm of analysts Analyst
ABG Sundal Collier Hans Gregersen
Crédit Suisse First Boston Michael Bleakley
Capinordic Peter Friis
Carnegie Casper Blom
Danske Equities Søren Samsøe
Enskilda Securities Michael K. Rasmussen
Gudme Raaschou Bank Stig Nymann
Handelsbanken Kitty Grøn
Jyske Bank Jens Houe Thomsen
Nordea Bank Patrick Setterberg
Sydbank Morten Imsgård

Financial calendar for 2009

Annual General Meeting:

29 April 2009 Annual General Meeting in Odense
Announcements of financial results:
26 February 2009 Annual Report 2008
29 April 2009 Q1 Report 2009
26 August 2009 H1 Report 2009
19 November 2009 Q3 Report 2009

Share-related ratios

2008 2007 2006 2005 2004
-89.0 26.4 38.0 35.4 30.6
89.0 26.2 37.6 35.4 30.6
19.0 26.3 70.9 61.2 64.5
19.0 26.1 70.2 61.2 64.5
118.5 534.0 740.0 532.0 377.0
0.0 10.0 10.0 10.0 9.0

Dividend and general meeting

The Supervisory Board recommends to the Annual General Meeting that, due to the Company's considerable interest-bearing debt, Royal Unibrew A/S should not pay any dividend for 2008. The Supervisory Board proposes that the net loss of the Parent Company be allocated to retained earnings. Further, the Supervisory Board will propose that the duty of rotation for Royal Unibrew's Annual General Meetings be abolished to the effect that future Annual General Meetings are held, at the Supervisory Board's discretion, either in Funen, in Faxe or in Greater Copenhagen. At the same time, it is the Supervisory Board's intention that, as of 2009, no further shareholders' meetings should be held. The Annual General Meetings in 2009 and 2010 will be held in Funen.

The Company's Annual General Meeting will be held on 29 April 2009 at 17:00 at the Odense Congress Center in Odense.

In order for shareholders to receive notification of the Annual General Meeting of Royal Unibrew, their shares must be registered. Registration is effected by contacting the bank holding the shares in safe custody. Registered shareholders may also register for automatic receipt of the Annual Report and the Brew Magazine through the investor portal at the Company's website.

Investor relations activities

Royal Unibrew aims at ensuring open and timely information for its shareholders and other stakeholders. A number of activities are carried out continuously to ensure good contacts with the Company's stakeholders.

Royal Unibrew holds analyst and investor meetings in both Denmark and abroad in connection with the publication of Interim and Annual Reports. Moreover, in 2008, Royal Unibrew participated in the Enskilda Securities Nordic Seminar, the Carnegie Small & Mid Cap Seminar in Stockholm and information meetings organised by the Danish Employees' Capital Pension Fund, etc. The presentations from these meetings are accessible at Unibrew's website, www.royalunibrew.com.

Furthermore, in 2008 Royal Unibrew held three webcasts in connection with the publication of the Annual Report 2007, the H1 Report 2008 and the Q3 Report 2008, respectively.

The Brew Magazine, which is the shareholder magazine of Royal Unibrew, is usually issued twice a year. However, in 2008 the magazine was only issued once. The Brew Magazine and the Annual Report are forwarded to the shareholders who have asked to receive them, and they are also accessible at the website.

CORPORATE GOVERNANCE

Royal Unibrew Management emphasises corporate governance and regularly performs reviews of the Company's rules, policies and practice. The objective is to ensure that the Company meets its obligations to shareholders, customers, employees, authorities and other stakeholders in the best possible way and that long-term value creation is supported.

NASDAQ OMX Copenhagen has issued Corporate Governance Recommendations, and Royal Unibrew is generally in compliance with these, with a few exceptions which are described below.

Supervisory board members' other duties, (recommendation V, 7):

It is recommended that a supervisory board member who is also a member of the Executive Board of an active company hold not more than three ordinary directorships or one chairmanship and one ordinary directorship in companies not forming part of the group unless in exceptional circumstances.

• Several members of the Supervisory Board do not comply with this recommendation, and the Supervisory Board assesses in each individual case the duties of the individual members outside the Group with a view to continuously ensuring that the individual supervisory board member can allocate the necessary resources to his/her work on the Supervisory Board of Royal Unibrew.

Remuneration of the Supervisory and Executive Boards, (recommendation VI, 5):

It is recommended that the Annual Report disclose remuneration of the individual members of the Supervisory Board and the Executive Board.

• The remuneration of members of the Supervisory Board is disclosed in the below section "Remuneration of Supervisory Board and Executive Board". Disclosure of remuneration of the individual members of the Executive Board is not at present considered material to stakeholders' assessment. The remuneration of the Executive Board is described in detail in note 4. The remuneration of the Executive Board is considered in line with that of comparable companies.

Independence of the Supervisory Board, (recommendation V,4)

It is recommended that members of the Company's Executive Board should not be members of the Supervisory Board.

• Henrik Brandt, CEO, who joined the Company in the autumn of 2008, has been a member of the Company's Supervisory Board for several years. The Company's CEO has decided to resign from the Supervisory Board at the next general meeting.

Market price of options at the time of allocation, (recommendation VI, 3):

It is recommended that redemption prices of allocated share options be higher than the market price at the time of allocation.

• Royal Unibrew fixes the redemption price of allocated share options on the basis of the average market price of the Company's share over the 10 trading days following the publication of the Annual Report in question. The pricing method is applied to ensure that the options are attractive.

Shareholder and stakeholder relations

Royal Unibrew's Management wants and works actively to maintain good and open communication and dialogue with its shareholders and other stakeholders. The Company believes that a high level of openness in the communication of information on the Company's development supports the Company's work and a fair valuation of the Company's shares. The Group's openness is limited only by the duties of disclosure of NASDAQ OMX and by competitive considerations.

The dialogue with and communication to shareholders and stakeholders take place by the issuing of Interim Reports and other announcements by the Company, via webcasts , meetings with investors, analysts and the press. Interim Reports and other announcements are accessible at Royal Unibrew's website immediately after being published. Our website also includes material used in connection with investor presentations and webcasts.

According to the Articles of Association of the Company, general meetings shall be convened at not less than one week's and not more than four weeks' notice. However, the Supervisory Board aims at convening general meetings of the Company at not less than three weeks' notice. It aims at formulating the notice convening the meeting and the agenda so as to give shareholders an adequate presentation of the business to be transacted at the general meeting. Proxies are limited to a specific general meeting and are formulated in such a way as to allow absent shareholders to give specific proxies for individual items of the agenda.

The Articles of Association of Royal Unibrew contain a restriction on voting according to which one single

shareholder or a group of cooperating shareholders cannot vote for more than 10% of the total number of votes. The Supervisory Board does not consider this provision protection against a potential serious investor taking over control of the Company if this is in the interest of the shareholders, but it is assumed that the provision will, if required, prevent takeover of actual control on the basis of a minority and in this situation instead promote a total bid for a controlling interest in the Company.

If a bid to take over the Company's shares is received, the Supervisory Board will – as required by legislation – communicate the bid to the shareholders accompanied by the Supervisory Board's comments

Work of the Supervisory Board

The Supervisory Board handles overall strategic management, financial and managerial supervision of the Company as well as continuous evaluation of the work performed by the Executive Board.

The Supervisory Board performs its work in accordance with the Rules of Procedure of the Company governing the Supervisory and Executive Boards. These Rules of Procedure are reviewed and updated regularly by the full Supervisory Board.

The supervisory board members meet for four annual ordinary board meetings, including one 2-day seminar focusing on the Company's strategic situation and prospects. In addition, the supervisory board members

meet when required. In 2008, the Supervisory Board held 11 meetings.

Royal Unibrew has not in the past established any standing board committees, but ad-hoc committees are established as required. No ad-hoc committees were established in 2008.

New rules require that as of 2009 audit committees be established by listed companies, and such committees must have at least one independent member with qualifications within accounting and/or auditing. The Supervisory Board of Royal Unibrew has decided to take on the audit committee tasks jointly.

Composition of the Supervisory Board

When composing the Supervisory Board, we emphasise that the members have the competencies required to solve the task. Candidates for the Supervisory Board are recommended for election by the general meeting supported by motivation in writing by the Supervisory Board as well as a description of the recruiting criteria.

At present, the Supervisory Board consists of six members elected by the general meeting and three members elected by the employees. When joining the Supervisory Board, the members elected by the employees are offered relevant training in serving on a board.

All members of the Supervisory Board elected by the general meeting except the CEO are considered independent.

The members of the Supervisory Board of Royal Unibrew are governed by an age limit of 65. A member of the Supervisory Board who changes his principal occupation during his term of office shall in principle be prepared to offer to resign if the rest of the Supervisory Board considers this advisable.

Regular evaluation of the work of the Supervisory Board is performed. The Executive Board and the cooperation between the Supervisory Board and the Executive Board are evaluated on an annual basis.

Remuneration of Supervisory Board and Executive Board

The members of the Supervisory Board are remunerated by a fixed annual amount for their continuing work on the Board. In connection with particularly comprehensive ad-hoc committee work, the Supervisory Board may, based on the scope of the work, determine a special remuneration. It is the aim that the remuneration of the Supervisory Board should match the level of comparable companies.

The Supervisory Board does not participate in incentive programmes, such as share option programmes, bonus pay, etc.

For 2008, unchanged fixed remuneration of DKK 1.7 million was paid to the Supervisory Board. Other than that, no special remuneration has been paid. The annual remuneration paid to ordinary members of the Supervisory Board amounts to DKK 150k. The Chairman and the Deputy Chairman receive remuneration of 2.5 and 1.5 times, respectively, the remuneration paid to ordinary members of the Supervisory Board.

A bonus pay programme has been established for the management team (including the Executive Board) of Royal Unibrew, the sales organisations and selected employees. The current share option programme has been cancelled as the assumptions for this programme have been considered shattered.

Redundancy payment agreed with the Executive Board is considered in line with arrangements of comparable enterprises.

Risk management

The Supervisory Board continuously assesses the various risks with which an internationally operating enterprise like Royal Unibrew is faced.

The key risks are summarised by the following main areas:

  • Financial risks (currency, interest rates, liquidity)
  • Exposure hazard and third-party risks
  • Credit risks (financial institutions and commercial receivables)
  • Market risks
  • Environmental risks

Financial, credit and market risks are assessed in connection with the Company's strategy and budgeting proce dures. Exposure hazard and third-party risks (insurance cover) are reviewed on an annual basis according to the Rules of Procedure for the Supervisory Board, whereas environmental risks are considered in connection with the Company's environmental reports. Furthermore, the Supervisory Board monitors the special risks that may result from the Company's involvement in the production and sale of alcoholic beverages.

Based on a systematic identification of the risk factors that affect Royal Unibrew, the Supervisory Board will in 2009 prepare a risk management policy contributing to the total risk exposure being monitored and adjusted on a current basis. For a detailed description of the Company's risks, reference is made to note 2 on page 47 and to page 34 (environmental risks).

SOCIAL RESPONSIBILITY

Royal Unibrew is aware of its social and environmental responsibility and has for several years continuously addressed a number of the related areas. In 2008 more systematic social responsibility work was initiated in several areas.

During 2009 Royal Unibrew's Corporate Social Responsibility reporting will be further developed

A number of new initiatives in 2008

In 2008 a new corporate Code of Ethics was formulated, and in continuation of this a common quality, food safety and environmental policy was prepared.

The main elements of the policy are:

  • Royal Unibrew's products and production should meet customer requirements and international standards for quality, food safety, environment, health & safety and human rights;
  • continued improvements should be made in the quality and environmental area with efforts directed at creating safe workplaces;
  • Royal Unibrew should be engaged in open dialogue on its social and environmental responsibility;
  • there should be focus on the efforts made by Royal Unibrew suppliers to improve quality and the environment as well as ethical standards.

Furthermore, in 2008 a number of specific policies were prepared and a number of activities were launched in the individual areas.

Human rights

Royal Unibrew does not tolerate discrimination of its employees due to gender, race or religion. Child labour and slave labour are not permitted, and Royal Unibrew seeks to ensure that partners and suppliers live up to this policy. In the supply area, the preparation of guidelines for assessing suppliers on quality, environment and ethics has been initiated.

Royal Unibrew employees have the right to unionise and the right to strike in accordance with the legislation in the countries in which Royal Unibrew has activities.

Employees and health & safety

Every year, Royal Unibrew carries out a job satisfaction survey among its employees. The objective is to improve the workplace by mutual effort. Accident frequency and absence due to accidents are recorded at all group breweries and reporting is made. The total number of accidents at work, and thus the accident frequency, for the entire Group was higher in 2008 than in 2007. In 2008 Royal Unibrew intensified the initiatives aimed at reducing the accident frequency, including specific measures, training and attitude management. The development will be monitored closely over the future period.

Food safety

A project has been launched comprising the implementation of a management system for food safety for the entire Group. This means that all Royal Unibrew breweries will be certified under the international standard for food safety, ISO22000, by the end of 2009.

Responsible alcohol consumption

Royal Unibrew takes responsibility for its communication on beer consumption in relation to advertising, sponsorships and campaigns, especially with respect to minors. Royal Unibrew complies with the relevant legislation in the countries in which the Company's products are marketed, and Royal Unibrew participates actively in Brewers of Europe's work with responsible alcohol consumption.

Competition

Royal Unibrew's business practice should always comply fully with competition regulation irrespective of the place of operation.

Bribery

Royal Unibrew's employees may neither pay nor accept any bribe or inappropriate payment for the sake of their own or the Company's gain. If employees are involved in bribery, disciplinary action will be taken against them. All Royal Unibrew production units have strong focus on the environmental impacts of the Company's production.

Environmental efforts

Our efforts are still primarily targeted at:

  • Reduction of energy consumption
  • Reduction of water consumption
  • Reduction of waste water discharge

The Danish breweries have environmental certification under the ISO14001 environmental standard as well as EMAS registration, and a special environmental report is prepared for production in Denmark.

Energy

Energy consumption per unit produced for the Group as a whole decreased by 5.1% in 2008 as compared to 2007. This was particularly caused by efficiency enhancement at the Polish breweries, in Lithuania and in Denmark. In the long term, it is expected that the production integrations will contribute towards more efficient production and thus lower energy consumption.

Water consumption and waste water

Water consumption per unit produced for the Group as a whole increased by 0.4% from 2007, due to, among other things, water consumption per unit produced at the brewery in Aarhus increasing at the end of 2008 as a result of reduced production leading up to the production stop. Waste water discharge for the Group, however,

decreased by 1.7% in 2008 due to reduced discharge from the breweries in Faxe and Odense.

Resources

An important means to improving our environmental results is the minimisation of all types of waste of resources. Wastage and shrinkage are currently measured, eg in production, and improvement projects are launched on a current basis. Moreover, efforts are directed at increasing the recycling of water and waste. To the extent possible, water is recycled in places where water quality is not so crucial. Mask, which is a residual product from malt, is sold to local farmers as animal feed. Solid waste, such as glass, is returned to the manufacturer, who uses the returned glass for new bottles.

At some Royal Unibrew breweries, capture plants for carbon dioxide have been installed to capture the carbon dioxide released in the brewing process. By this, the environment is protected from carbon dioxide discharges from the brewery, and at the same time the impact from the carbon dioxide quantities that the brewery would otherwise have purchased is saved.

Targets for 2009

In the environmental area, Royal Unibrew will in 2009 continue working at the implementation of the common policy and objectives for the entire Group. Our efforts will

ENERGY CONSUMPTION

SAFETY ACCIDENTS FREQUENCY

No/1 million working hours

concentrate on energy and water savings. Furthermore, working environment and health & safety will be target areas of high priority.

Also in 2009 targeted efforts will be directed at reducing Royal Unibrew's indirect environmental impacts in areas such as the development of lighter packaging and container types for bottles and distribution.

In 2009 the results of a project concerning calculation of the CO2 foot print for beer and soft drinks produced in Denmark will be published. Royal Unibrew has participated in a project in this area together with Carlsberg and the Danish industry association.

Additional information and documentation on environmental issues of Royal Unibrew

Reference is made to Royal Unibrew's Environmental Report for the EMAS registered breweries for 2008, which will be issued in May 2009. This report provides detailed environmental information on the external and internal environmental work of Royal Unibrew, Denmark.

You may obtain a copy of the Environmental Report by contacting Royal Unibrew A/S or by downloading them at our website (www.royalunibrew.com).

WASTE WATER

WATER CONSUMPTION

Management's Statement on the Annual Report

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

The Annual Report was prepared in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for listed companies.

We consider the accounting policies applied appropriate and the accounting estimates made reasonable, and, in our opinion, the Consolidated and Parent Company Financial Statements provide the information relevant to assess the financial circumstances of the Group and the Parent Company. Accordingly, in our opinion, the Consolidated and Parent Company

Financial Statements give a true and fair view of the financial position of the Group and the Parent Company as well as of the results of the Group and Parent Company operations and cash flows for the financial year 2008.

In our Opinion, Management's Review gives a true and fair view of the development in the activities and financial circumstances of the Group and the Parent Company, of results of operations for the year and of the overall financial position of the enterprises comprised by the Consolidated Financial Statements as well as of the financial position of the Parent Company, and a description of the key risks and uncertainties facing them.

We recommend that the Annual Report be adopted at the Annual General Meeting.

Faxe, 25 February 2009

Executive Board Supervisory Board
Henrik Brandt, CEO Steen Weirsøe, Chairman
Hans Savonije, International Director Tommy Pedersen, Deputy Chairman
Ulrik Sørensen, CFO Henrik Brandt
Ulrik Bülow
Erik Christensen
Erik Højsholt
Allan Meier Jensen
Kirsten Liisberg
Hemming Van

Independent Auditor' report

We have audited the Annual Report of Royal Unibrew A/S for the financial year 2008, which comprises reviews, Management's Statement, income statement, balance sheet, statement of changes in equity, cash flow statement, significant accounting policies and notes for the Group as well as for the Parent Company. The Annual Report is prepared in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for annual reports of listed companies.

Management's Responsibility for the Annual Report

Management is responsible for the preparation and fair presentation of the Annual Report in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for annual reports of listed companies. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of an Annual Report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor's Responsibility

Our responsibility is to express an opinion on the Annual Report 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 Annual Report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Annual Report. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the Annual Report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Entity's preparation and fair presentation of the Annual Report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the Annual Report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Our audit has not resulted in any qualification.

Opinion

In our opinion, the Annual Report gives a true and fair view of the financial position at 31 December 2008 of the Group and the Parent Company and of the results of the Group and Parent Company operations and cash flows for the financial year 2008 in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for annual reports of listed companies.

Faxe, 25 February 2009

Ernst & Young Statsautoriseret Revisionsaktieselskab Leif Shermer Eskild Jakobsen State Authorised Public Accountants

Group
stru
cture
Segment Ownership Currency Share capital
Western Europe
Subsidiaries
Aktieselskabet Cerekem International LTD., Faxe, Denmark 100.0% DKK 1,000,000
Albani Sverige AB, Sweden 100.0% SEK 305,000
Centre Nordique d'Alimentation EURL, France 100.0% EUR 200,000
Ceres S.p.A., Italy 100.0% EUR 206,400
Faxe Getränke-Vertrieb GmbH, Germany 100.0% EUR 127,823
Maribo Bryghus A/S, Maribo, Denmark 100.0% DKK 1,805,500
Associates
Hansa Borg Skandinavisk Holding A/S, Faxe, Denmark 25.0% DKK 53,577,400
Hansa Borg Holding ASA, Norway 100.0% NOK 54,600,000
Hansa Borg Bryggerierne ASA, Norway 100.0% NOK 29,065,000
Nuuk Imeq A/S, Nuuk, Greenland DKK 38,000,000
Eastern Europe
Subsidiaries
AB Kalnapilio-Tauro Grupe, Lithuania 100.0% LTL 62,682,000
Royal Unibrew Services UAB, Lithuania 100.0% LTL 150,000
SIA "Cido Grupa", Latvia 100.0% LVL 785,074
Royal Unibrew Polska Sp. z o. o., Poland 100.0% PLN 107,302,400
Malt and Overseas Markets
Subsidiaries
Supermalt UK Ltd., UK 100.0% GBP 9,700,000
Vitamalt (West Africa) Ltd., UK 100.0% GBP 10,000
Drinktech Holding AG, Switzerland 100.0% CHF 100,000
Impec Holding SAS, Guadeloupe 51.0% EUR 5,294,000
Import-Export Compagnie S.A., Guadeloupe 100.0% EUR 304,898
Impec Martinique S.A., Martinique 100.0% EUR 8,000
The Danish Brewery Group Inc., USA 100.0% USD 100,000
St. Vincent Breweries Ltd., St. Vincent 76.5% XCD 18,310,000
Antigua Brewery Ltd., Antigua 93.0% XCD 21,747,075
Antigua PET Plant Ltd., Antigua 75.0% XCD 1,500,000
Dominica Brewery & Beverages Ltd., Dominica 58.0% XCD 10,000,000
Royal Unibrew Caribbean Ltd., Puerto Rico 100.0% USD 200,000
Associates
Solomon Breweries Limited, Solomon Islands 35.2% SBD 21,600,000
Activity
Production, sales and distribution
Sales and distribution Holding company Other activity
------------------------------------------------ -- ------------------------ -- ----------------- -- ----------------

Income Statement for 1 January - 31 December (DKK '000)

Parent Company Group
2007 2008 Note 2008 2007
2,894,423 3,088,400 Revenue 4,918,600 4,574,173
-309,738 -337,332 Beer and mineral water excises -739,897 -692,411
2,584,685 2,751,068 Net revenue 4,178,703 3,881,762
-1,400,478 -1,559,763 4,5 Production costs -2,433,298 -2,129,173
1,184,207 1,191,305 Gross profit 1,745,405 1,752,589
-809,934 -866,806 4,5 Sales and distribution expenses -1,387,543 -1,268,783
-167,648 -150,627 4,5 Administrative expenses -226,844 -249,042
3,824 3,830 Other operating income 3,835 9,289
210,449 177,702 Operating profit before special items 134,853 244,053
0 0 6 Special income 0 128,068
-76,611 -51,231 6 Special expenses -50,125 -107,823
0 0 12 Impairment losses -384,957 0
133,838 126,471 Profit/loss before financial income and expenses -300,229 264,298
14 Income after tax from investments 22,654 27,998
39,760 99,290 Dividend from subsidiaries and associates 0 0
0 -709,071 12,13 Impairment losses on investments and balances -70,104 0
25,294 52,666 7 Financial income 33,899 26,704
-101,509 -143,057 8 Financial expenses -139,185 -98,836
97,383 -573,701 Profit/loss before tax -452,965 220,164
-28,783 -32,000 9 Tax on the profit/loss for the year -30,200 -64,930
68,600 -605,701 Net profit/loss for the year -483,165 155,234
distributed as follows:
Parent Company shareholders' share of net profit/loss -484,333 151,747
Minority shareholders' share of net profit/loss 1,168 3,487
Net profit/loss for the year -483,165 155,234
Parent Company shareholders' share of earnings per
16 share (DKK) -89.0 26.4
Parent Company shareholders' share of diluted
16 earnings per share (DKK) -89.0 26.2

Assets at 31 December (DKK '000)

Parent Company Group
2007 2008 Note NON-CURRENT ASSETS 2008 2007
80,645 80,645 Goodwill 311,275 487,861
2,990 4,048 Trademarks 167,885 278,351
7,589 6,406 Distribution rights 7,186 8,524
91,224 91,099 10,11,12 Intangible assets 486,346 774,736
468,006 326,745 Land and buildings 643,363 770,679
400,000 Project development properties 400,000
162,824 263,163 Plant and machinery 529,291 488,715
150,397 131,685 Other fixtures and fittings, tools and equipment 214,997 240,091
36,573 210,477 Property, plant and equipment in progress 291,787 57,536
817,800 1,332,070 10,25 Property, plant and equipment 2,079,438 1,557,021
1,462,026 1,014,696 Investments in subsidiaries 0 0
179,231 113,470 14 Investments in associates 87,650 225,691
134,529 76,386 Receivables from subsidiaries 0 0
25,481 20,634 Receivables from associates 20,634 25,481
2,519 56,432 Other investments 56,900 3,018
10,763 10,556 Other receivables 11,939 11,592
1,814,549 1,292,174 10,13,26 Financial assets 177,123 265,782
2,723,573 2,715,343 Non-current assets 2,742,907 2,597,539
CURRENT ASSETS
56,647 56,590 Raw materials and consumables 122,194 169,316
13,083 12,014 Work in progress 27,177 25,816
87,507 152,456 Finished goods and purchased finished goods 265,302 156,461
157,237 221,060 Inventories 414,673 351,593
168,340 180,098 Trade receivables 541,566 577,847
285,342 276,156 Receivables from subsidiaries 0 0
1,012 1,008 Receivables from associates 1,008 1,012
48,829 93,570 Other receivables 113,679 64,035
15,087 134,466 15 Prepayments 147,191 31,435
518,610 685,298 Receivables 803,444 674,329
20,597 36,055 Cash at bank and in hand 90,384 157,832
696,444 942,413 Current assets 1,308,501 1,183,754
3,420,017 3,657,756 Assets 4,051,408 3,781,293

Liabilities and Equity at 31 December (DKK '000)

Parent Company Group
2007 2008 Note EQUITY 2008 2007
59,000 56,000 16 Share capital 56,000 59,000
0 180,000 Revaluation reserves 180,000 0
0 0 Translation reserve -102,279 -7,694
9,994 -34,289 Hedging reserve -34,603 10,057
924,695 283,618 Retained earnings 440,788 960,411
59,000 0 Proposed dividend 0 59,000
1,052,689 485,329 Equity of Parent Company shareholders 539,906 1,080,774
0 0 Minority interests 34,922 38,689
1,052,689 485,329 Equity 574,828 1,119,463
96,094 169,731 17 Deferred tax 179,378 127,718
734,503 734,655 18 Mortgage debt 734,655 749,751
645,203 770,504 18 Credit institutions 968,888 790,260
1,475,800 1,674,890 Non-current liabilities 1,882,921 1,667,729
0 0 18 Mortgage debt 0 953
145,278 488,286 18 Credit institutions 599,335 228,433
84,141 59,572 19 Repurchase obligations, returnable packaging 74,056 97,533
207,382 391,175 Trade payables 523,175 350,407
281,118 234,491 Payables to subsidiaries 0 0
12,730 Corporation tax 0 54,759
54,862 37,177 VAT, excise duties, etc 61,439 98,764
106,017 286,836 15 Other payables 335,654 163,252
891,528 1,497,537 Current liabilities 1,593,659 994,101
2,367,328 3,172,427 Liabilities 3,476,580 2,661,830
3,420,017 3,657,756 Liabilities and equity 4,051,408 3,781,293

Statement of Changes in Equity for 1 January - 31 December (DKK '000)

Group

Share capital Revaluation
reserves
Translation
reserve
Hedging
reserve
Retained
earnings
Proposed
dividend for
the year
Minority
interests'
share
Total
61,800 0 -9,194 1,975 1,018,823 61,800 12,917 1,148,121
-1,750
3,250
-4,699 -4,590 -11,039
3,250
13,443 13,443
-2,743 -2,743
-2,618 -2,618
0 0 1,500 8,082 -4,699 0 -4,590 293
92,747 59,000 3,487 155,234
0 0 1,500 8,082 88,048 59,000 -1,103 155,527
26,875 26,875
-57,722 -57,722
4,078 -4,078 0
-162,598 -162,598
6,854 6,854
3,100 3,100
-2,800 2,800 0
-694 -694
-2,800 0 0 0 -146,460 -61,800 26,875 -184,185
-2,800 0 1,500 8,082 -58,412 -2,800 25,772 -28,658
59,000 0 -7,694 10,057 960,411 59,000 38,689 1,119,463
240,000 240,000
-60,000 -60,000
-94,585 86 -4,935 -99,434
-34,902 -34,902
-13,443 -13,443
3,685 3,685
0 180,000 -94,585 -44,660 86 0 -4,935 35,906
-484,333 0 1,168 -483,165
0 180,000 -94,585 -44,660 -484,247 0 -3,767 -447,259
-54,901 -54,901
4,099 -4,099 0
-46,244 -46,244
1,551 1,551
2,218 2,218
-3,000 3,000 0
-3,000 0 0 0 -35,376 -59,000 0 -97,376
-3,000 180,000 -94,585 -44,660 -519,623 -59,000 -3,767 -544,635
56,000 180,000 -102,279 -34,603 440,788 0 34,922 574,828

Statement of Changes in Equity for 1 January - 31 December (DKK '000)

Parent Company

Share capital Revaluation
reserves
Translation
reserve
Retained
earnings
Proposed
dividend for
the year
Total
Equity at 31 December 2006 61,800 0 2,637 1,061,274 61,800 1,187,511
Value and exchange adjustment, foreign
subsidiaries
Tax on value and exchange adjustment
Value adjustment of hedging instruments, end of year 13,356 13,356
Reversal of value adjustment of hedging
instruments, beginning of year
-3,662 -3,662
Tax on hedging instruments -2,337 -2,337
Net gains recognised directly in equity 0 0 7,357 0 0 7,357
Net profit for the year 9,600 59,000 68,600
Comprehensive income 0 0 7,357 9,600 59,000 75,957
Minority shares of acquired businesses
Dividend distributed to shareholders -57,722 -57,722
Dividend on treasury shares 4,078 -4,078 0
Acquisition of shares for treasury -162,598 -162,598
Sale of treasury shares 6,854 6,854
Share-based payments 3,100 3,100
Reduction of capital -2,800 2,800 0
Tax on equity movements -413 -413
Total shareholders -2,800 0 0 -146,179 -61,800 -210,779
Total changes in equity in 2007 -2,800 0 7,357 -136,579 -2,800 -134,822
Equity at 31 December 2007 59,000 0 9,994 924,695 59,000 1,052,689
Revaluation of project development property 240,000 240,000
Tax on revaluation of project development property -60,000 -60,000
Value and exchange adjustment, foreign
subsidiaries
Value adjustment of hedging instruments, end of year -34,289 -34,289
Reversal of value adjustment of hedging
instruments, beginning of year
-13,356 -13,356
Tax on hedging instruments 3,362 3,362
Net gains recognised directly in equity 0 180,000 -44,283 0 0 135,717
Net profit/loss for the year -605,701 0 -605,701
Comprehensive income 0 180,000 -44,283 -605,701 0 -469,984
Dividend distributed to shareholders -54,901 -54,901
Dividend on treasury shares 4,099 -4,099 0
Acquisition of shares for treasury -46,244 -46,244
Sale of treasury shares 1,551 1,551
Share-based payments 2,218 2,218
Reduction of capital -3,000 3,000 0
Total shareholders -3,000 0 0 -35,376 -59,000 -97,376
Total changes in equity in 2008 -3,000 180,000 -44,283 -641,077 -59,000 -567,360
Equity at 31 December 2008 56,000 180,000 -34,289 283,618 0 485,329

Only the hedging reserve and retained earnings may be used for distribution of dividend to Parent Company shareholders. Retained earnings include share premium account of DKK 53.9 million for which a separate restricted reserve is no longer required due to changes to the Danish Companies Act.

Cash Flow Statement for 1 January - 31 December (DKK '000)

Parent Company Group
2007 2008 Note 2008 2007
68,600 -605,701 Net profit/loss for the year -483,165 155,234
238,777 814,986 20 Adjustments for non-cash operating items 744,950 239,666
307,377 209,285 261,785 394,900
Change in working capital:
75,504 10,126 +/- change in receivables 51,578 -45,364
17,660 -63,823 +/- change in inventories -81,622 -14,472
-26,533 93,807 +/- change in payables 123,737 -10,812
374,008 249,395 Cash flows from operating activities before
financial income and expenses
355,478 324,252
25,148 52,660 Financial income 34,003 26,923
-80,281 -104,423 Financial expenses -151,865 -92,823
318,875 197,632 Cash flows from operating activities 237,616 258,352
-82,401 -77,354 Corporation tax paid -134,408 -106,895
236,474 120,278 Cash flows from operating activities 103,208 151,457
39,760 99,290 Dividends received from subsidiaries and associates 14,336 15,958
116 0 Sale of securities
42,902 9,244 Sale of property, plant and equipment 45,349 212,141
-130,489 -363,045 Purchase of property, plant and equipment -519,107 -222,543
188,763 -134,233 Free cash flow -356,214 157,013
6,000 0 Sale of associates 17,990
-424,817 0 20 Acquisition of subsidiaries -126,546 -393,477
-57,265 -38,400 Acquisition of intangible and financial assets -3,045 -2,340
-523,793 -292,911 Cash flows from investing activities -589,013 -372,271
300,123 125,453 Proceeds from raising of non-current debt 141,986 300,123
-65,652 0 Repayment of non-current debt -16,049 -69,923
-10,737 343,008 Change in current debt to credit institutions 391,799 -5,036
-15,851 -180,776 Change in financing of subsidiaries
-57,722 -54,901 Dividends paid -54,901 -57,722
-162,598 -46,244 Acquisition of shares for treasury -46,244 -162,598
6,854 1,551 Sale of treasury shares 1,551 6,854
-5,583 188,091 Cash flows from financing activities 418,142 11,698
-292,902 15,458 Change in cash and cash equivalents -67,663 -209,116
313,499 20,597 Cash and cash equivalents at 1 January 157,832 368,320
0 0 Exchange adjustment 215 -1,372
20,597 36,055 Cash and cash equivalents at 31 December 90,384 157,832

Notes to the Annual Report 2008

Contents

Note Page
Descriptive notes
1 Critical accounting estimates and judgements 46
2 Financial risk management 47
3 Segment reporting 52
Notes referring to Income Statement, Balance Sheet and Cash Flow Statement
4 Staff expenses 55
5 Expenses broken down by type 57
6 Special income and expenses 58
7 Financial income 58
8 Financial expenses 59
9 Tax on the profit for the year 59
10 Non-current assets 60
11 Intangible assets 62
12 Impairment tests 64
13 Non-current assets measured at fair value 66
14 Investments in associates 67
15 Prepayments and other payables 67
16 Portfolio of treasury shares and earnings/cash flow per share 68
17 Deferred tax 69
18 Interest-bearing debt 70
19 Repurchase obligation, returnable packaging 71
20 Cash Flow Statement 71
Other notes
21 Fee to auditors 72
22 Contingent liabilities and other contractual obligations 72
23 Related parties 73
24 Acquisitions 74
25 Property, plant and equipment 76
26 Financial assets 78
27 Significant accounting policies 80

Descriptive notes Note 1 Critical accounting estimates and judgements

In connection with the preparation of the Parent Company and Consolidated Annual Report, Management makes estimates and judgements as to how recognition and measurement of assets and liabilities should take place based on the accounting policies applied.

The calculation of carrying amounts of certain assets and liabilities requires judgement as to how assets and liabilities should be classified in the financial statements and how future events will affect the value of these assets and liabilities at the balance sheet date. Estimates that are material to the financial reporting are made eg by impairment tests of intangible and financial assets, calculation of depreciation and impairment losses on property, plant and equipment, provisions for bad debts, calculation of repurchase obligation relating to returnable packaging as well as assessment of contingent liabilities. Management has opted to apply the exemption provision of IAS 16 which allows the measurement of project development properties at fair value. In 2008, a change of the classification of investments in an associate was assessed necessary. Estimate of the fair value of project development properties resulted in revaluation of the value of the brewery properties in Aarhus by DKK 240 million, and impairment tests of non-current assets relating to the Group's Polish activities resulted in impairment losses of DKK 455 million (DKK 709 million in the Parent Company), see notes 12 and 13.

The estimates made are based on assumptions which Management considers reasonable but which are inherently uncertain and unpredictable.

As regards the estimates and judgements made in

connection with impairment tests, reference is made to the description in note 12 and to note 27 "Significant accounting policies" which also describes the estimated useful lives applied in calculating depreciation of property, plant and equipment as well as the calculation principles applied in calculating the repurchase obligation relating to returnable packaging.

Provisions for bad debts are made on the basis of an individual assessment of the risk of incurring losses on the receivables, including the maturity profile of the receivables and debtors' current credit rating. At 31 December 2008, total provisions for bad debts amount to DKK 26 million (31 Dec 2007: DKK 21 million). Reference is made to note 2 for a summary of trade receivables due.

With respect to business acquisitions, an assessment of the value of the assets and liabilities acquired, including trademarks, is made. Trademarks with a good market position and earnings and of which Management intends and expects to maintain the value are assessed to have an indefinite useful life. The value is determined on the basis of an expected future cash flow from the trademarks using a discount rate equal to that used for impairment tests.

Deferred tax assets, including the value of tax losses to be carried forward for set-off against positive taxable income in later years, are recognised if, based on Management's assessment, utilisation of the assets is considered possible. The assessment is made annually.

Considering the above, Management's assessments in relation to the accounting policies applied did not have any material effect on the amounts recognised in the Annual Report.

The Group's financial risks are managed centrally by Group Treasury according to the Treasury Policy approved by the Supervisory Board, which includes guidelines for the handling of currency, interest rate, liquidity and credit risks. Commodity risks are handled under a commodity risk policy approved by the Supervisory Board allocating responsibilities to Group Purchase and Group Treasury.

The risk description covers both the Parent Company and the Group unless otherwise stated.

Currency risk

Royal Unibrew is primarily exposed to currency risks through its export activities. Purchases are in all materiality made in the currencies in which the Group has income, which results in a total reduction of the currency risk. Furthermore, the translation of loans to/ from subsidiaries as well as the Group's net debt is subject to currency risk unless these are established in DKK.

The above constitutes Royal Unibrew's transaction risk, which is hedged actively according to the Treasury Policy. The objective is to reduce negative effects on the Group's profit and cash flows in the current and future financial years. Expressed as the maximum loss with a 95% probability within 1 year, the gross transaction risk represents some 10% of expected EBITDA. The risk is monitored and hedged continually so as not to exceed 1% of expected EBITDA. The Group primarily has currency positions in EUR, USD, GBP, SEK, PLN, LVL and LTL.

Exchange risks related to Royal Unibrew's ownership of foreign subsidiaries will, as a general rule, not be hedged.

Financial risks such as the loss of competitive strength due to long-term exchange rate changes are not hedged by financial instruments but are included in Royal Unibrew's strategic considerations.

Interest rate risk

Royal Unibrew's interest rate risk is virtually exclusively related to the Group's debt portfolio. Interest rate changes will affect the market value of fixed-interest loans as well as interest payments on floating-rate liabilities.

In Royal Unibrew's assessment, the key interest rate risk is related to the immediate effect of interest rate changes on the Group's interest payment flows and Royal Unibrew focuses only secondarily on changes in the market value of the debt. It is group policy to limit the effect of interest rate changes on profit and cash flows while, within this framework, also achieving the lowest possible financing cost. At the end of 2008, net interest-bearing debt amounted to DKK 2,192 million, 34% of which comprised mortgage loans with an average term to maturity of 21 years. After year end, the Group's credit facilities have been renegotiated with the lenders, after which the remaining part of the debt comprises committed bank credit facilities with a maturity of 2 years. Some 69% of the net debt is fixed-rate with a fixed-interest period of 1 year. A one percentage point interest rate change will affect the Group's interest expenses by some +/- DKK 7 million (Parent Company +/- DKK 5 million).

The debt is established solely in currencies in which the Group has commercial activities.

Credit risks

The Group's credit risks relate primarily to trade receivables and counterparty risks.

Royal Unibrew seeks to limit risks relating to credit granting to customers outside Denmark through extensive use of insurance cover. Where insurance cover is not established or is exceeded, Royal Unibrew has established procedures for approval of such risks. There are no material credit risks on individual customers.

Trade receivables fall due as follows:

31.12.2007 31.12.2008
Not due 388,732 373,185
Due:
From 1-15 days 123,515 109,479
From 16-90 days 50,202 46,938
More than 90 days 36,842 210,559 38,579 194,996
Provisions for bad debts -21,444 -26,615
577,847 541,566

Current receivables, other than trade receivables, all fall due for payment in 2008.

Liquidity risks

It is group policy that its cash resources should be adequate to meet the expected liquidity requirements in the current and next financial year. The cash resources may be bank deposits, short-term bonds and unutilised credit facilities.

After year end, negotiations have been closed with the Group's lenders for provision of the credit facilities considered necessary by Management. As part of the agreement, new underlying covenants have been established, and the agreement is subject to rules on provision of security and distribution of dividend.

After this, confirmed credit facilities represent 100% of the total net debt. The confirmed credit facilities comprise mortgage loans with a term to maturity of 21 years as well as bank credit facilities with a maturity of 2 years. As the total committed credit facilities amount to DKK 2,750 million, there is committed, unutilised cash facilities of DKK 558 million measured on the basis of net debt at the end of 2008.

Capital management

Royal Unibrew wishes to focus on optimising the Group's weighted average cost of capital (WACC) and increasing shareholder value. Results developments in 2007 and 2008 have resulted in the Group's net interest-bearing debt reaching a level of more than 8 times EBITDA at the end of 2008.

At the operational level, continuous efforts will be directed at freeing as much cash as possible. However, due to the necessary investment programme, including completion of changes to the Danish production and distribution structure and the increased expenses relating to the establishment of the required credit facilities, operating activities alone are not expected to contribute towards reducing net interest-bearing debt during 2009.

It is, however, the Group's continued target to reduce the interest-bearing debt to a level corresponding to 3 times EBITDA.

Commodity risks

The commodity risk relates primarily to the purchasing of cans (aluminium), malt (barley) and hops as well as energy. The assumptions for making purchases and establishing hedges differ for the commodity groups mentioned.

The objective of managing Royal Unibrew's commodity risk is to achieve a smooth and time-differentiated effect of commodity price increases, which is primarily achieved by entering into fixed-price agreements with the relevant suppliers. As regards the Group's purchase of cans, financial contracts have further been made to hedge the risk of aluminium and oil price increases, respectively. Exchange rate changes with respect to the settlement currency of aluminium and oil, USD, are an element of the overall currency risk management.

Other risks

Market risks have in 2008 affected Royal Unibrew's results materially, which may also be the case in future years. Currently, the economic development in many of the Group's markets and the resulting consumer reluctance have affected both volume sales and the market value of the Group's products negatively. Furthermore, competition has intensified resulting in limited possibilities of realising sales price increases.

For quite a number of years, Royal Unibrew has recorded significant revenue in the Italian market. In 2008 this market represented 16% (2007: 19%) of total group sales. Changes to consumption patterns or the competitive situation in Italy could therefore influence Royal Unibrew's results materially.

As a producer of alcoholic products, Royal Unibrew is sensitive to changes in the public alcohol policy – including indirect tax policies in the Group's respective markets. For example, a change of the Danish indirect tax policy as compared to those of neighbouring countries could lead to a change of cross-border trading patterns. This applies primarily to Germany, Norway and Sweden.

Legislative changes with respect to permitted types of containers and returning of containers could also result in significant changes to consumption patterns. In Germany (including cross-border trading) large parts of the Group's products are sold in cans, whereas sales in Italy are primarily related to products in non-returnable glass bottles.

The Company's risks in general insurance areas (buildings, movables and trading losses) are covered partly through insurance and partly by own risks. The total risks are assessed by the Supervisory Board on an annual basis and external specialists review the breweries for relevant risks on a regular basis.

Note 2 Financial risk management (continued)

Currency and interest rate risks and use of derivative financial instruments (Group)

Financial instruments entered into to hedge expected future transactions and qualifying as hedge accounting under IAS 39:

Group and Parent Company

2008 2007
Period Contract
amount
Market value Deferred gain
(+) / loss (-)
Contract
amount
Market value Deferred gain
(+) / loss (-)
Forward contracts:
GBP 0 - 1 year 28,841 23,000 5,841 32,681 30,481 2,200
USD 0 - 1 year -75,078 -79,522 4,444
CAD 0 - 1 year 10,108 8,622 1,486 12,776 12,903 -127
EUR 0 - 1 year 298,831 299,103 -272 373,040 372,880 160
SEK 0 - 1 year -38,808 -35,596 -3,212
USD/LVL 0 - 1 year -5,067 -5,523 456 -5,057 -4,340 -717
218,827 210,084 8,743 413,440 411,924 1,516

Financial instruments entered into to hedge expected future transactions not qualifying as hedge accounting under IAS 39:

Group and Parent Company

2008 2007
Period Contract
amount
Market value Gain (+) /
loss (-)
Contract
amount
Market value Gain (+) /
loss (-)
Forward contracts:
USD/LVL 0 - 1 year -8,338 -7,155 -1,183
SEK 0 - 1 year -36,450 -35,216 -1,234
-44,788 -42,371 -2,417

Note 2 Financial risk management (continued)

Currency and interest rate risks and use of derivative financial instruments

Forward contracts used for hedging of financial assets and liabilities with material risks

Parent Company Group
Net exposure Hedged by
forward
contracts/loans
Net position Net exposure Hedged by
forward
contracts/loans
Net position
31/12 2008
Currency
-2,010 -39,505 37,495 LVL -186,341 -185,024 -1,317
22,402 22,402 NOK 22,402 22,402
149,620 42,389 107,231 PLN -91,443 -68,307 -23,136
31/12 2007
Currency
41,830 0 41,830 LVL 7,861 1,252 6,609
28,801 25,481 3,320 NOK 28,801 25,481 3,320
187,469 166,460 21,009 PLN 1,668 166,460 -164,792

Note 2 Financial risk management (continued)

31/12 2008 Interest rate risk
Time of repricing/maturity Fixed Effective
< 1.5 years > 1.5 years Total interest part rate %
Mortgage credit institutes 737,204 737,204 737,204 4.7%-4.8%
Credit institutions
PLN 110,696 110,696
LVL 145,303 145,303
EUR 327,827 442,677 770,504 770,504 3.7%-4.1%
Other 216 216
584,042 1,179,881 1,763,923 1,507,708

The effective rates of interest have been calculated based on the interest rate level at 31 December 2008.

The earlier of time of repricing and time of repayment has been used.

The floating-rate facilities are affected by the development in the short money market rates.

The list does not include overdraft facilities.

The refinancing described above, which took place after the date of statement, does not affect the above breakdown, but increases the effective rate on EUR loans with credit institutions.

31/12 2007 Interest rate risk
Time of repricing/maturity Fixed Effective
< 1.5 years > 1.5 years Total interest part rate %
Mortgage and credit institutions 953 749,751 750,704 754,248 4.6%-4.8%
Credit institutions, current
PLN 611,903 611,903
LVL 58,106 58,106
DKK 41,690 41,690
NOK 41,378 41,378
USD 41,047 41,047
EUR 21,922 182,052 203,974 182,052 4.8%-5.1%
Other 20,595 20,595
837,594 931,803 1,769,397 936,300

The effective rates of interest have been calculated based on the interest rate level at 31 December 2007. The earlier of time of repricing and time of repayment has been used.

Note 3 Segment reporting

The Group's activities break down as follows on geographic segments:

Malt and
Overseas
Western Europe Eastern Europe Markets Unallocated Total
2008 (mDKK)
Net revenue 2,536.2 1,129.2 513.3 4,178.7
Operating profit/loss 184.6 -51.1 51.2 -49.8 134.9
Special items -47.2 -1.2 -1.7 -50.1
Impairment losses -385.0 -385.0
Earnings before interest and tax (EBIT) 137.4 -437.3 49.5 -49.8 -300.2
Net financials -8.2 -18.4 -29.7 -49.0 -105.3
Share of income from associates 18.9 0.0 3.7 22.6
Impairment losses -70.1 -70.1
Profit/loss before tax 148.1 -525.8 23.5 -98.8 -453.0
Tax -30.2 -30.2
Profit/loss for the year 148.1 -525.8 23.5 -129.0 -483.2
Depreciation and amortisation 65.1 84.0 20.6 169.9
Assets 2,396.9 1,202.6 364.3 0.0 3,963.8
Associates 70.1 17.5 87.6
Total assets 2,467.0 1,202.6 381.8 0.0 4,051.4
Purchase of property, plant and
equipment
363.2 139.7 16.2 519.1
Purchase of property, plant and
equipment on acquisition
119.2 119.2
Purchase of intangible assets 1.1 1.1
Purchase of intangible assets on
acquisition
6.4 6.4
Liabilities 971.0 406.1 106.0 1,993.5 3,476.6
Sales (million hectolitres) 3.7 3.2 0.6 7.5

Note 3 Segment reporting (continued)

The Group's activities break down as follows on geographic segments: Western Europe Eastern Europe Malt and Overseas Markets Unallocated Total 2007 (mDKK) Net revenue 2,489.6 909.3 482.9 3,881.8 Operating profit/loss 251.6 -23.4 63.4 -47.5 244.1 Special items -91.1 111.3 20.2 Earnings before interest and tax (EBIT) 160.5 87.9 63.4 -47.5 264.3 Net financials 0.3 -10.9 -1.0 -60.5 -72.1 Share of income from associates 13.2 5.8 9.0 28.0 Profit/loss before tax 174.0 82.8 71.4 -108.0 220.2 Tax -65.0 -65.0 Profit/loss for the year 174.0 82.8 71.4 -173.0 155.2 Depreciation and amortisation 103.6 -50.4 24.0 53.7 130.9 Assets 2,102.3 832.8 379.9 240.6 3,555.6 Associates 66.8 142.6 16.3 225.7 Total assets 2,169.1 975.4 396.2 240.6 3,781.3 Purchase of property, plant and equipment 131.4 84.5 6.6 222.5 Purchase of property, plant and equipment on acquisition 112.3 125.0 237.3 Purchase of intangible assets 1.5 1.5 Purchase of intangible assets on acquisition 187.7 71.1 258.8 Liabilities 746.1 293.6 97.1 1,525.0 2,661.8 Sales (million hectolitres) 3.8 2.7 0.6 7.1

Note 3 Segment reporting (continued)

Segment reporting 2004 - 2008

The Group's activities break down as follows on geographic segments:
-- -- -- -- -- -- -- -- -- ---------------------------------------------------------------------- -- --
(mDKK) Western Europe Eastern Europe Malt and
Overseas
Markets
Unallocated Group
2008
Net revenue 2,536.2 1,129.2 513.3 0.0 4,178.7
Operating profit/loss 184.6 -51.1 51.2 -49.8 134.9
Assets 2,467.0 1,202.6 381.8 0.0 4,051.4
Liabilities 971.0 406.1 106.0 1,993.5 3,476.6
Sales (million hectolitres) 3.7 3.2 0.6 0.0 7.5
2007
Net revenue 2,489.6 909.3 482.9 0.0 3,881.8
Operating profit/loss 251.6 -23.4 63.4 -47.5 244.1
Assets 2,169.1 975.4 396.2 240.6 3,781.3
Liabilities 746.1 293.6 97.1 1,525.0 2,661.8
Sales (million hectolitres) 3.8 2.7 0.6 0.0 7.1
2006
Net revenue 2,414.1 671.5 353.4 0.0 3,439.0
Operating profit/loss 319.8 -22.0 97.6 -47.7 347.7
Assets 2,325.1 662.6 163.4 262.5 3,413.6
Liabilities 760.8 194.7 24.3 1,285.7 2,265.5
Sales (million hectolitres) 3.8 2.2 0.4 0.0 6.4
2005
Net revenue 2,371.1 576.5 243.4 0.0 3,191.0
Operating profit/loss 332.1 -15.4 22.9 -36.9 302.7
Assets 2,120.7 662.6 143.3 261.2 3,187.8
Liabilities 640.1 194.6 25.8 1,177.5 2,038.0
Sales (million hectolitres) 3.6 1.9 0.3 0.0 5.8
2004
Net revenue 2,279.9 358.9 230.2 0.0 2,869.0
Operating profit/loss 330.9 2.2 18.5 -44.5 307.1
Assets 1,829.5 327.0 81.0 293.3 2,530.8
Liabilities 630.1 73.9 22.0 724.4 1,450.4
Sales (million hectolitres) 3.5 1.1 0.2 0.0 4.8

Note 4 Staff expenses

Staff expenses are included in production costs, sales and distribution expenses as well as administrative expenses and break down as follows:

Parent Company Group
2007 2008 2008 2007
366,858 382,718 Wages and salaries 578,957 570,788
29,092 29,921 Contributions to pension schemes 56,922 50,292
800 1,925 Share-based payments 1,925 800
11,243 9,374 Remuneration of Executive Board 9,374 11,243
2,300 -1,194 Share-based remuneration of Executive Board -1,194 2,300
1,650 1,650 Remuneration of Supervisory Board 1,650 1,650
940 1,020 Other social security expenses 2,341 2,565
22,587 20,743 Other staff expenses 29,642 30,087
435,470 446,157 Total 679,617 669,725
957 978 Average number of employees 2,755 2,659

Severance pay to the former CEO is not included in staff expenses but in special expenses, see note 6.

Note 4 Staff expenses (continued)

For incentive purposes, the following share option schemes have been established for the Executive Board and other members of the management team of the Group. Each option carries a right to acquire 1 share of DKK 10.

Executive
Board
number
Other man.
team
number
Total
number
Exercise
price
Exercise
period
Granted in 2002 14,564 0 14,564 240-315 6/2005-5/2009
Granted re 2003 7,492 7,492 14,984 401 3/2007-4/2009
Granted re 2004 5,230 4,524 9,754 478 3/2008-4/2010
Granted re 2005 16,258 9,856 26,114 648 4/2009-4/2011
Granted re 2006 14,236 8,626 22,862 740 4/2010-4/2012
Unexercised at 31 December 2006 57,780 30,498 88,278
Changed classification -5,303 5,303 0
Adjustment of grant 2006, final price -292 250 -42 695
Expected granting 2007 14,305 4,840 19,145 534 * 4/2011-4/2013
Exercised in 2007 -16,437 -5,245 -21,682 240-401
Unexercised at 31 December 2007 50,053 35,646 85,699
Changed classification -22,523 22,523 0
Adjustment of grant 2007, final price -6,194 1,481 -4,713 510 *
Granted 2008 re Strategic Plan 6,223 14,237 20,460 510 * 4/2011-4/2013
Exercised in 2008 -2,919 -628 -3,547 401-478
Cancelled in 2008 -12,868 -6,132 -19,000
Unexercised at 31 December 2008 11,772 67,127 78,899
distributed on:
Granted re 2003 0 5,993 5,993 401
Granted re 2004 2,092 5,988 8,080 478
Granted re 2005 2,462 13,370 15,832 648
Granted re 2006 2,756 13,416 16,172 695
Granted re 2007 2,231 10,131 12,362 510 *
Granted 2008 re Strategic Plan 2,231 18,229 20,460 510 *
11,772 67,127 78,899
Market value at 31 December 2007 5.8 million 3.9 million 9.7 million
Market value at 31 December 2008 0.1 million 0.8 million 0.9 million

Based on a share price of the Royal Unibrew share of 118.5 at 31 December 2008, the market value of the options has been calculated by means of the Black-Scholes model.

The calculation is based on an assumption of 65% volatility (2007:30%), a risk-free interest rate of 3.6-4.3% (2007: 5.0-5.3%) and annual dividend per share of DKK 2.0%. The exercise price of share options granted re 2008 is assumed to be 118.5.

* The exercise price of the share options granted re 2007 has in 2008 been determined as the average market price of the Company's shares over the 10 trading days following the publication of the Annual Report for 2007 (4 March - 17 March 2008). The price has thus changed from 534 at 31 December 2007 to 510.

Note 5 Expenses broken down by type

Parent Company Group
2007 2008 Aggregated 2008 2007
1,400,478 1,559,763 Production costs 2,433,298 2,129,173
809,934 866,806 Sales and distribution expenses 1,387,543 1,268,783
167,648 150,627 Administrative expenses 226,844 249,042
2,378,060 2,577,196 Total 4,047,685 3,646,998
break down by type as follows:
1,002,325 1,133,550 Raw materials and consumables 1,797,429 1,564,793
435,470 446,157 Wages, salaries and other staff expenses 679,617 669,725
133,789 141,188 Operating and maintenance expenses 242,088 220,842
358,006 366,133 Distribution expenses and carriage 479,370 460,620
269,901 296,178 Sales and marketing expenses 503,130 446,839
1,147 4,265 Bad trade debts 13,660 2,110
81,334 85,981 Office supplies etc 129,871 115,348
Depreciation and profit from sale of property, plant and
96,088 103,744 equipment 202,520 166,721
2,378,060 2,577,196 Total 4,047,685 3,646,998

Total depreciation and impairment losses as well as profit from sale of property, plant and equipment are included in the following items in the income statement:

Parent Company Group
2007 2008 2008 2007
79,881 86,597 Production costs 166,741 126,264
7,337 8,297 Sales and distribution expenses 24,751 22,193
8,870 8,850 Administrative expenses 11,028 18,264
96,088 103,744 202,520 166,721
Special income -128,068
72,505 -27,450 Special expenses -32,657 92,271
168,593 76,294 Total 169,863 130,924

Note 6 Special income and expenses

Parent Company Group
2007 2008 2008 2007
Profit on sale of property in Eastern Europe 128,068
0 0 Total special income 0 128,068
-76,611 -51,231 Expenses and value adjustment of assets related to
reorganisation in Denmark
-48,278 -87,646
Expenses and value adjustment of assets related to reorganisation
in the rest of Western Europe and Eastern Europe
-1,847 -20,177
-76,611 -51,231 Total special expenses -50,125 -107,823

In addition to expenses and a positive value adjustment of assets related to the closure of the breweries in Aarhus and Maribo of DKK 27,250k as well as reorganisation of the distribution structure, expenses in 2008 relating to Denmark include expenses resulting from the change to Group Management.

Note 7 Financial income

Parent Company Group
2007 2008 Interest income 2008 2007
2,251 1,143 Cash at bank and in hand 2,135 9,481
244 240 Trade receivables 3,004 442
2,521 2,509 Receivables from associates 2,509 2,521
8,044 26,703 Receivables from subsidiaries
Exchange adjustments
5,863 893 Cash at bank and in hand 1,057 5,863
1,751 Trade payables 1,685
2,158 Trade receivables 2,392
173 Credit institutions 173
16,936 Forward contracts and spot transactions 18,687
Exchange gains
6,009 Mortgage credit institutes 6,009
223 21 Securities 1,810 1,909
139 139 Other financial income 447 479
25,294 52,666 33,899 26,704

Note 8 Finansielle omkostninger

Parent Company Group
2007 2008 Interest expenses 2008 2007
-26,998 -34,977 Mortgage credit institutes -35,373 -28,037
-42,794 -50,618 Credit institutions -74,997 -54,861
-2,981 -12,639 Payables to subsidiaries
-3,669 -1,090 Other payables -1,180 -4,305
Exchange adjustments
-19,709 0 Credit institutions -4,991
-3,416 0 Trade receivables -3,238 -4,766
-626 0 Trade payables -626
-25,043 Intercompany loan -25,043
-18,186 Hedge loan
Exchange losses
-571 -12 Securities -12 -496
Mortgage credit institutes -178
Other
-102 -8 Expenses re mortgage credit institutes -8 -102
-643 -484 Other financial expenses 844 -652
-101,509 -143,057 -139,185 -98,836

Note 9 Tax on the profit/loss for the year

Parent Company Group
2007 2008 2008 2007
46,921 10,300 Tax on the taxable income for the year 30,155 91,286
8,412 2,900 Adjustment of previous year 4,700 1,427
-23,800 73,637 Adjustment of deferred tax 51,660 -28,002
31,533 86,837 Total 86,515 64,711
which breaks down as follows:
28,783 32,000 Tax on profit for the year 30,200 64,930
2,750 54,837 Tax on equity entries 56,315 -219
31,533 86,837 Total tax 86,515 64,711
25.0 25.0 Current Danish tax rate 25.0 25.0
9.1 -29.8 Effect on tax rate of permanent differences -25.4 1.2
-13.1 Changed Danish tax rate -5.8
8.6 -0.8 Adjustment of previous year -5.3 0.6
Differences in effective tax rates of foreign subsidiaries -1.0 8.5
29.6 -5.6 Effective tax rate -6.7 29.5

Note 10 Non-current assets

Group
Intangible
assets
Property,
plant and
equipment
Financial
assets
Total
non-current
assets
Cost at 1 January 2007 510,864 3,547,125 239,089 4,297,078
Exchange adjustments 9,836 9,787 7,255 26,878
Adjustment of cost, beginning of year 2,459 2,459
Reclassification -8,119 -8,119
Additions upon acquisition 258,809 237,268 496,077
Additions for the year 1,523 222,543 817 224,883
Disposals for the year -1,584 -259,259 -24,214 -285,057
Cost at 31 December 2007 779,448 3,759,923 214,828 4,754,199
Amortisation, depreciation, revaluations and
impairment losses at 1 January 2007
-3,376 -2,120,268 41,573 -2,082,071
Exchange adjustments -3,605 1,132 -2,473
Adjustment of cost, beginning of year 513 513
Reclassification 186 -7,228 -7,042
Dividend -15,958 -15,958
Revaluations and impairment losses for the year 32,873 32,873
Amortisation and depreciation for the year -1,336 -177,370 -178,706
Impairment losses for the year -92,271 -92,271
Amortisation, depreciation and impairment
of assets sold and discontinued
189,913 -1,438 188,475
Amortisation, depreciation, revaluations and
impairment losses at 31 December 2007
-4,712 -2,202,902 50,954 -2,156,660
Carrying amount at 31 December 2007 774,736 1,557,021 265,782 2,597,539
Cost at 1 January 2008 779,448 3,759,923 214,828 4,754,199
Exchange adjustments -43,293 -56,631 -22,231 -122,155
Reclassification 11,596 11,596
Additions for the year 10,466 519,107 1,308 530,881
Additions upon acquisition 6,419 119,158 125,577
Disposals for the year -583,843 -988 -584,831
Cost at 31 December 2008 753,040 3,769,310 192,917 4,715,267
Amortisation, depreciation, revaluations and
impairment losses at 1 January 2008 -4,712 -2,202,902 50,954 -2,156,660
Exchange adjustments 25,694 -3,617 22,077
Reclassification -5,783 -5,783
Dividend -14,336 -14,336
Revaluations and impairment losses for the year 143,138 -48,795 94,343
Amortisation and depreciation for the year -261,982 -213,416 -475,398
Amortisation, depreciation and impairment of
assets sold and discontinued
563,397 563,397
Amortisation, depreciation, revaluations and
impairment losses at 31 December 2008
-266,694 -1,689,872 -15,794 -1,972,360
Carrying amount at 31 December 2008 486,346 2,079,438 177,123 2,742,907
Note 11, 12 Note 12, 13, 25 Note 13, 26

Note 10 Non-current assets (continued)

Parent Company

Intangible
assets
Property,
plant and
equipment
Financial
assets
Total
non-current
assets
Cost at 1 January 2007 95,463 2,639,470 1,233,604 3,968,537
Exchange adjustments 817 817
Additions for the year 130,489 616,611 747,100
Disposals for the year -197,649 -16,851 -214,500
Cost at 31 December 2007 95,463 2,572,310 1,834,181 4,501,954
Amortisation, depreciation, revaluations and impairment losses
at 1 January 2007
-3,064 -1,740,285 -19,780 -1,763,129
Revaluations and impairment losses for the year -72,505 -44 -72,549
Amortisation, depreciation and impairment losses for the year -1,175 -110,077 -111,252
Amortisation, depreciation and impairment of assets sold and
discontinued
168,357 192 168,549
Amortisation, depreciation, revaluations and impairment
losses at 31 December 2007
-4,239 -1,754,510 -19,632 -1,778,381
Carrying amount at 31 December 2007 91,224 817,800 1,814,549 2,723,573
Cost at 1 January 2008 95,463 2,572,310 1,834,181 4,501,954
Reclassification -4,847 -4,847
Additions for the year 1,058 363,045 194,339 558,442
Disposals for the year -414,753 -2,805 -417,558
Cost at 31 December 2008 96,521 2,520,602 2,020,868 4,637,991
Amortisation, depreciation, revaluations and impairment losses
at 1 January 2008
-4,239 -1,754,510 -19,632 -1,778,381
Revaluations and impairment losses for the year -709,062 -709,062
Amortisation and depreciation for the year -1,183 -110,039 -111,222
Impairment losses for the year 267,450 267,450
Amortisation, depreciation and impairment of assets sold and
discontinued
408,567 408,567
Amortisation, depreciation, revaluations and impairment
losses at 31 December 2008
-5,422 -1,188,532 -728,694 -1,922,648
Carrying amount at 31 December 2008 91,099 1,332,070 1,292,174 2,715,343
Note 11 Note 13, 25 Note 12, 13, 26

Note 11 Intangible assets

Group

Goodwill Trademarks Distribution
rights
Total intangible
assets
Cost at 1 January 2007 323,398 174,236 13,230 510,864
Reclassification -1,674 1,674 0
Exchange adjustments 5,682 4,148 6 9,836
Additions upon acquisition 160,516 98,293 258,809
Additions for the year 1,523 1,523
Disposals for the year -1,584 -1,584
Cost at 31 December 2007 487,861 278,351 13,236 779,448
Amortisation and impairment losses at 1 January 2007 0 0 3,376 3,376
Amortisation for the year 1,336 1,336
Amortisation and impairment losses at 31 December 2007 0 0 4,712 4,712
Carrying amount at 31 December 2007 487,861 278,351 8,524 774,736
Cost at 1 January 2008 487,861 278,351 13,236 779,448
Exchange adjustments -24,902 -18,390 -1 -43,293
Additions upon acquisition 6,419 6,419
Additions for the year 9,408 1,058 10,466
Cost at 31 December 2008 472,367 267,438 13,235 753,040
Amortisation and impairment losses at 1 January 2008 0 0 4,712 4,712
Amortisation and impairment losses for the year 161,092 99,553 1,337 261,982
Amortisation and impairment losses at 31 December 2008 161,092 99,553 6,049 266,694
Carrying amount at 31 December 2008 311,275 167,885 7,186 486,346

See note 12 for impairment test.

Note 11 Intangible assets (continued)

Parent Company

Goodwill Trademarks Distribution
rights
Total intangible
assets
Cost at 1 January 2007 80,645 2,990 11,828 95,463
Cost at 31 December 2007 80,645 2,990 11,828 95,463
Amortisation and impairment losses at 1 January 2007 0 0 -3,064 -3,064
Amortisation for the year -1,175 -1,175
Amortisation and impairment losses at 31 December 2007 0 0 -4,239 -4,239
Carrying amount at 31 December 2007 80,645 2,990 7,589 91,224
Cost at 1 January 2008 80,645 2,990 11,828 95,463
Additions for the year 1,058 1,058
Cost at 31 December 2008 80,645 4,048 11,828 96,521
Amortisation and impairment losses at 1 January 2008 0 0 -4,239 -4,239
Amortisation for the year -1,183 -1,183
Amortisation and impairment losses at 31 December 2008 0 0 -5,422 -5,422
Carrying amount at 31 December 2008 80,645 4,048 6,406 91,099

Note 12 Impairment tests

Impairment tests of goodwill and trademarks

Annual impairment tests are carried out of the carrying amount of goodwill and trademarks with indefinite useful lives. The impairment test in 2008 gave rise to impairment of the value of both goodwill and trademarks related to Poland.

The carrying amount of goodwill and trademarks at 31 December is related to the cash-generating operational units and breaks down as follows:

2008 Goodwill Trademarks Total Share
Denmark (Western Europe) 80,645 4,048 84,693 18%
Lithuania (Eastern Europe) 153,772 153,772 32%
Latvia (Eastern Europe) 3,339 115,215 118,554 25%
Poland (Eastern Europe) 11,609 11,609 2%
The Caribbean (Malt and Overseas) 67,287 34,152 101,439 21%
Africa (Malt and Overseas) 6,232 2,861 9,093 2%
Total 311,275 167,885 479,160 100%
2007
Denmark (Western Europe) 80,645 2,990 83,635 11%
Lithuania (Eastern Europe) 152,795 152,795 20%
Latvia (Eastern Europe) 2,687 110,693 113,380 15%
Poland (Eastern Europe) 185,967 128,076 314,043 41%
The Caribbean (Malt and Overseas) 55,605 32,795 88,400 11%
Africa (Malt and Overseas) 10,162 3,797 13,959 2%
Total 487,861 278,351 766,212 100%

Note 12 Impairment tests (continued)

The recoverable amount is based on value in use, which is calculated by means of estimated net cash flows on the basis of budgets and forecasts for 2009-2011 approved by Management as well as estimated market driven discount rates and growth rates. Generally limited revenue growth is expected in 2009-2011 especially in Eastern Europe, whereas gross margins are expected to remain stable. The key assumptions underlying the calculation of recoverable amount are as indicated below. Except for discount rates, the interval of the assumptions in the segments remains unchanged from 2007.

Western Europe Eastern Europe Malt and
Overseas
Markets
Gross margin 45.0% 25-45% 25-50%
Growth rate 2012-2015 0.0% 1-4% 3-4%
Growth rate on terminal value 1.5% 1.5% 1.5%
Discount rate (WACC) 7.0% 9.3%-9.9% 7.5-14.2%

The forecasted gross margins approved by Management are based on prior results and expected market developments. The average growth rates applied are in accordance with Management's expectations taking into account industry conditions in the individual markets. The discount rates applied are before tax and reflect current specific risks in the individual market. The assumptions applied by Management are inherently subject to uncertainty and unpredictability.

Impairment losses on non-current assets related to Poland

As mentioned above, based on the estimated recoverable amount of the non-current assets related to the activities in the Group's Polish subsidiary, impairment losses have been recognised on the carrying amount at 31 December 2008. The reason for the estimated recoverable amount now being lower is the changed market conditions in Poland in 2008, which are assessed to imply considerably reduced earnings potential and reduced possibilities of capitalising on the potential of the built-up trademarks and the existing production capacity at the three Polish breweries, see mention in Management's Review.

The carrying amount of the assets on which impairment losses have been recognised if specified as follows:

Carrying
amount before
impairment loss
Impairment loss Carrying
amount after
impairment loss
Group
Goodwill 161,392 -161,392 0
Trademarks 111,150 -99,553 11,597
Property, plant and equipment 236,779 -124,012 112,767
509,321 -384,957 124,364
Parent Company
Investments in subsidiary 561,548 -561,548 0
Balances with subsidiary 174,513 -98,127 76,386
736,061 -659,675 76,386

The impairment losses of the Parent Company can generally be attributed to the Polish activities. The same assumptions as those stated above under the Group have been applied when calculating the impairment losses of the Parent Company.

In the Parent Company a less favourable development in key assumptions may lead to recognition of impairment losses being required with respect to the investment in the Caribbean brewery companies.

Note 13 Non-current assets measured at fair value

Investment in Perla Browary Lubelskie

In prior years, the Company's 48.4% investment in the Polish brewery Perla Browary Lubelskie was classified and recognised as an associate as, in Management's assessment, the Group exercised significant influence in the Polish company. Developments during 2008 imply that, in Management's opinion, the classification as an associate can no longer be maintained. Consequently, the investment has been reclassified from investment in associate to other investments. The carrying amount of the investment at the time of reclassification has been deemed cost for the purpose of reclassification to other investments.

At a subsequent measurement of the investment at fair value, the discounted cash flow model has been applied. As Perla Browary Lubelskie is a private company and only makes limited disclosures on its future operations, expectations of future cash flow are materially based on Management's estimate.

The fair value of the Company's investment in Perla Browary Lubelskie has been stated at PLN 30 million in the Parent Company financial statements. The carrying amount prior to the remeasurement at fair value amounted to DKK 124 million in the consolidated financial statements and DKK 103 million in the Parent Company financial statements. Accordingly, net loss for the year is affected negatively by DKK 70 million for the Group and by DKK 49 million for the Parent Company due to the impairment loss.

Project development properties

Following the closure of the Aarhus brewery, the Company plans to develop the brewery properties for alternative use, including managing the process of amending the existing local plan so that the properties may be used for other purposes than brewery activities. Consequently, the brewery properties have been reclassified from land and buildings to project development properties in the consolidated and Parent Company financial statements.

The project development properties have been measured at fair value at 31 December 2008 based on an estimate. As a basis of its estimate of the fair values at the end of 2008 and the beginning of 2009, the Company has obtained valuation reports from authorised valuers with knowledge of the area in which the properties are situated.

Furthermore, Management's estimate is based on an assessment as to which use of the project development properties would be enabled by an amended local plan. The process of amending the local plan is in the start-up phase; therefore, the use of the project development properties enabled by a new local plan remains subject to uncertainty. This uncertainty has led to a reduction of the estimated fair value as compared to the value at which Management expects to be able to sell the project development properties at a later stage.

On the above-mentioned assumptions, Management has estimated the fair value of the project development properties in Aarhus at DKK 400 million.

The carrying amount prior to the fair value adjustment was DKK 160 million. The valuation at a fair value of DKK 400 million has therefore implied a revaluation of DKK 240 million which has been recognised in revaluation reserves in equity with deduction of deferred tax of DKK 60 million.

The fair value of DKK 400 million recognised in the balance sheet has, as mentioned, been based on assessments taking into account the market situation at 31 December 2008 as well as the uncertainty relating to the local plan. As the properties are not expected to be sold until 2010 at the earliest, the value at the time of sale may differ materially from the currently estimated fair value.

Note 14 Investments in associates

Parent Company Group
2007 2008 2008 2007
185,338 179,231 Balance at 1 January 225,691 231,285
Exchange adjustments -21,001 7,703
-103,300 Reclassification -124,008 -15,347
389 37,539 Additions for the year 389
-6,496 Disposals for the year -15,299
Share of profit for the year 22,654 27,998
Share of equity movements for the year -1,350 4,920
Dividend -14,336 -15,958
179,231 113,470 Balance at 31 December 87,650 225,691

Investments in Perla Browary Lubelskie has in 2008 been reclassified to other investments.

Stated on a pro rata basis, the Parent Company's and the Group's shares of assets, liabilities, revenue and profit basis break down on segments as follows:

2008 Assets Liabilities Revenue Profit basis
Western Europe 308,880 240,147 415,508 12,262
Malt and Overseas Markets 31,393 13,849 20,845 3,180
Parent Company and Group 340,273 253,996 436,353 15,442
2007 Assets Liabilities Revenue Profit basis
Parent Company investments
Western Europe 330,017 252,177 401,571 9,504
Eastern Europe 96,454 24,588 207,326 6,625
Total Parent Company 426,471 276,765 608,897 16,129
Other Group investments
Malt and Overseas Markets 20,450 6,421 18,266 3,811
Total Group 446,921 283,186 627,163 19,940

Note 15 Prepayments and other payables

The items "Prepayments" and "Other payables" are in 2008 materially affected by market value adjustment of commodity hedge contracts entered into to hedge commodity purchases.

Note 16 Portfolio of treasury shares and basis for calculation of earnings/cash flow per share

Value of treasury shares held:

Parent Company
2008 2007
Balance at 1 January 0 0
Additions 46,244 162,598
Disposals -1,551 -6,854
Transferred to equity, net -44,693 -155,744
Balance at 31 December 0 0

Treasury shares held by the Parent Company:

Number Nom. value % of capital
Portfolio at 1 January 2007 366,343 3,663 5.9
Additions 252,186 2,522 4.3
Disposals -21,682 -217 -0.4
Cancelled upon reduction of capital -280,000 -2,800 -4.4
Portfolio at 31 December 2007 316,847 3,168 5.4
Portfolio at 1 January 2008 316,847 3,168 5.4
Additions 93,374 934 1.6
Disposals -3,547 -35 -0.1
Cancelled upon reduction of capital -300,000 -3,000 -5.0
Portfolio at 31 December 2008 106,674 1,067 1.9

The Group holds no other treasury shares.

Basis of calculation of earnings and cash flow per share

The Parent Company shareholders' share of loss for the year amounts to DKK -484,333k (2007: a positive DKK 151,747k).

The average number of treasury shares amounted to some 300,000 shares (2007: some 332,000 shares).

The average number of shares in circulation amounted to some 5,500,000 shares (2007: some 5,755,000 shares).

The average number of shares in circulation incl share options "in-the-money" amounted to some 5,500,000 shares (2007: some 5,792,000 shares).

Diluted earnings and cash flow per share have been calculated on the basis of the Parent Company shareholders' share of loss for the year.

Note 17 Deferred tax

Parent Company Group
2007 2008 2008 2007
119,598 96,094 Deferred tax at 1 January 127,718 127,720
-12,800 Adjustment of Danish tax rate -13,700
Additions upon acquisitions 29,150
-10,704 73,637 Deferred tax for the year 51,660 -15,452
96,094 169,731 Deferred tax at 31 December 179,378 127,718
13,826 13,756 Due within 1 year 0 20,710
Deferred tax relates to:
622 738 Intangible assets 7,738 17,622
88,702 158,487 Property, plant and equipment 160,416 108,642
-3,806 Financial assets -3,806
10,717 10,645 Current assets 12,396 13,230
-141 -139 Current liabilities -1,172 -2,852
Unutilised tax losses -5,118
96,094 169,731 179,378 127,718

The utilisation of unutilised tax losses with a tax value of some DKK 45 million (2007: 35 million) is not certain. Therefore, the corresponding tax asset has not been capitalised. Unutilised tax losses substantially expire over the next 5 years.

A foreign subsidiary has a recapture balance which has not been recognised in the basis of calculation of deferred tax as the recapture balance of some DKK 85 million is not expected to crystallise as tax.

Note 18 Interest-bearing debt

Parent Company Group
Mortgage debt Credit institutions Total Mortgage debt Credit institutions Total
31/12 2008
Maturity
488,286 488,286 Within 1 year 599,335 599,335
770,504 770,504 1 - 5 years 897,016 897,016
0 5 - 10 years 71,872 71,872
539,685 539,685 10 - 20 years 539,685 539,685
194,970 194,970 After 20 years 194,970 194,970
734,655 1,258,790 1,993,445 Total 734,655 1,568,223 2,302,878
713,986 1,252,624 1,966,610 Market value 713,986 1,568,223 2,282,209

The above reflects maturities based on the agreements with the Group's lenders in force until 31 December 2008. After year end, new credit facilities have been negotiated for the Group, including changed maturities, see below.

Maturity
Within 1 year
1 - 2 years 302,878 302,878
1,258,790 1,258,790 2 - 3 years 1,265,345 1,265,345
539,685 539,685 10 - 20 years 539,685 539,685
194,970 194,970 After 20 years 194,970 194,970
734,655 1,258,790 1,993,445 Total 734,655 1,568,223 2,302,878

31/12 2007

Maturity
145,278 145,278 Within 1 year 953 228,433 229,386
645,203 645,203 1 - 5 years 671,819 671,819
734,503 734,503 After 5 years 749,751 118,441 868,192
734,503 790,481 1,524,984 Total 750,704 1,018,693 1,769,397
735,696 790,481 1,526,177 Market value 752,313 1,018,693 1,771,006

Note 19 Repurchase obligation, returnable packaging:

Parent Company Group
2007 2008 2008 2007
87,876 84,141 Balance at 1 January 97,533 90,554
-3,735 -24,569 Adjustment for the year -23,477 6,979
84,141 59,572 Balance at 31 December 74,056 97,533

The change in the repurchase obligation for the year reflects net sales of returnable packaging for the year less estimated wastage of returnable packaging in circulation.

The reduction in the repurchase obligation in 2008 is primarily due to soft drinks in Denmark now being sold in recyclable disposable containers whereas previously they were sold in returnable containers.

Other notes (DKK '000)

Note 20 Cash Flow Statement

Adjustments for non-cash operating items

Parent Company Group
2007 2008 2008 2007
-39,760 -99,290 Dividend from subsidiaries
-25,294 -52,666 Financial income -33,899 -26,704
101,509 143,057 Financial expenses 139,185 98,836
183,757 83,772 Amortisation, depreciation and impairment of intangible assets
and property, plant and equipment
187,303 270,977
709,071 Impairment losses 455,061
28,783 32,000 Tax on the profit for the year 30,200 64,930
Income from investments in associates -22,654 -27,998
-13,645 -3,058 Net profit from sale of property, plant and equipment -12,346 -142,795
3,100 2,218 Share-based payments and remuneration 2,218 3,100
327 -118 Other adjustments -118 -680
238,777 814,986 Total 744,950 239,666

Acquisition of subsidiaries

Parent Company Group
2007 2008 Assets 2008 2007
424,817 Non-current assets 125,577 334,525
Current assets 969 115,653
Liabilities
Provisions -29,150
Non-current debt -39,309
Current debt -96,816
Minority interests -26,875
Goodwill on consolidation 160,516
424,817 0 Acquisition price 126,546 418,544
including cash and cash equivalents of -9,776
including shares previously acquired of -15,291
424,817 0 Cash acquisition price 126,546 393,477

Note 21 Fee to auditors

Parent Company Group
2007 2008 Fee for the audit of the Annual Report: 2008 2007
838 PricewaterhouseCoopers 1,395
838 1,552 Ernst & Young 3,658 2,045
1,676 1,552 3,658 3,440
Fee for non-audit services:
2,524 PricewaterhouseCoopers 2,577
561 555 Ernst & Young 1,070 682
3,085 555 1,070 3,259

Note 22 Contingent liabilities and other contractual obligations

Parent Company Group
2007 2008 Guarantees 2008 2007
142.1 142.7 Guarantees relating to subsidiaries 0.0
9.4 5.2 Other guarantees 5.2 9.4
151.5 147.9 Total 5.2 9.4
Rental and lease agreements
Total future payments:
14.9 26.5 Within 1 year 43.2 30.1
34.1 63.3 Between 1 and 5 years 79.1 46.4
0.3 Beyond 5 years 0.8 0.4
49.0 90.1 Total lease obligations (operating leases) 123.1 76.9

The lease obligations relate to production machinery, operating equipment and IT equipment.

8.8 13.2 Within 1 year 16.8 11.6
28.9 21.0 Between 1 and 5 years 22.8 28.9
5.2 Beyond 5 years 5.2
37.7 39.4 Total rental obligations 44.8 40.5
31.7 11.0 Banker's guarantees 13.5 43.8

The outcome of pending legal actions is not expected to have any material impact on the financial position of the Parent Company or the Group.

Note 23 Related parties

Related parties comprise the Supervisory Board and the Executive Board as well as subsidiaries and associates, cf. Group Structure, page 38. Transactions with associates relate to sale of the Group's products. Transactions with subsidiaries, including lending, are carried out on an arm's length basis.

The following transactions have been made with related parties:

Parent Company Group
2007 2008 Revenue 2008 2007
7,706 20,727 Sales to associates 20,727 8,971
734,260 703,213 Sales to subsidiaries
Purchases
12,193 50,382 Purchases from subsidiaries
Financial income and expenses
14,336 14,336 Dividends from associates 14,336 15,958
25,424 84,954 Dividends from subsidiaries
Surplus remaining on winding up of subsidiaries
2,521 2,509 Interest received from associates 2,509 2,521
8,044 26,703 Interest received from subsidiaries
2,981 -12,639 Interest paid to subsidiaries
Executive Board
11,243 9,374 Salaries 9,374 11,243
2,300 -1,194 Share options granted -1,194 2,300
Intercompany balances at 31 December
284,451 184,809 Loans to subsidiaries
25,481 20,634 Loans to associates 20,634 25,481
135,420 167,733 Receivables from subsidiaries
1,012 1,008 Receivables from associates 1,008 1,012
239,787 210,875 Loans from subsidiaries
41,331 23,616 Debt to subsidiaries
311,006 116,381 Capital contributed to subsidiaries
Guarantees and security
142,100 142,670 Guarantee for subsidiary

Transactions with subsidiaries are eliminated in the consolidated financial statements in accordance with the accounting policies applied.

Note 24 Acquisitions

Financial year 2008

At 1 January 2008, Royal Unibrew A/S' subsidiary Lacpleasa Alus has acquired assets and activity of the Latvian brewery Livu Alus. Livu Alus markets, sells and produces its own beer brand in Latvia, primarily in the Liepaja region.

Fair value
at date of
acquisition
Intangible assets 6,419
Property, plant and equipment 119,158
Inventories 969
126,546
corresponding to the cash acquisition price
including acquisition costs (consulting fees) of 1,022

Net asset values before acquisition are not stated.

Financial year 2007

In 2007, Royal Unibrew made the following business acquisitions:

May Ownership
Browar Lomza Sp. z o.o. The shares of Lomza were subsequently contributed to
situated in North East Poland. 100.00% Royal Unibrew Polska Sp. Z o. o.

The main activities of Browar Lomza are to market, sell, distribute and produce its own beer products under the Lomza brand, primarily in the geographic region around the city Lomza.

June/july Ownership
Antigua Brewery Ltd. 92.97%
Antigua PET Plant Ltd. 75.00%
Dominica Brewery & Beverages Ltd. 58.02%
St. Vincent Breweries Ltd. 76.48%

situated in the Caribbean Archipelago in Antigua, Dominica and St. Vincent, respectively.

The main activities of the breweries are to market, sell and produce own and licensed beer, malt and soft drinks in the respective islands where the breweries are situated. The breweries all own one beer and one soft drinks brand. Distribution in Antigua and Dominica is handled by an external distributor. Antigua PET Plant Ltd. owns a bottling unit which is used only at the brewery in Antigua.

Browar Lomza Sp. z o. o. The Caribbean
Fair value
at date of
acquisition
Carrying
amount prior to
acquisition
Fair value
at date of
acquisition
Carrying
amount prior to
acquisition
Net assets acquired 131,825 82,907 153,078 125,309
Minority share -26,875
126,203
Goodwill 124,665 42,124
Acquisition price 256,490 168,327
including cash and bank of -543 -9,233
Cash acquisition price 255,947 159,094
including acquisition costs (consulting fees) of 8,307 2,454

Note 24 Acquisitions (continued)

The value of goodwill is related to expected synergies from the integration with already existing activities in the operating markets of the acquired businesses. Moreover, the value of goodwill is related to expected additional sales of both Royal Unibrew Group products and products of the acquired businesses.

Browar Lomza The Caribbean
Pro forma calculated net revenue 2007 180,000 155,000
Pro forma calculated profit/loss 2007 -6,000 4,150
Recognised in profit/loss for the year -4,221 5,351
Consolidated financial statements:
Acquisition price, Parent Company 168,327
Intercompany profit on companies traded internally -6,273
Acquisition price, Group 162,054
including cash and bank of -9,233
including group investments prior to acquisition -15,971
Cash acquisition price, Group 136,850

The acquisition price of the Group differs from that of the Parent Company as some of the shares of St. Vincent and Antigua were acquired from the subsidiary Drinktech, and these companies were until the acquisition recognised in the consolidated financial statements as associates.

Total
Property,
plant and
equipment in
progress
3,547,125
64,888
9,787
1,299
2,459 0
-4,643
222,543
62,808
237,268
536
-259,259
-1,883
0
-61,469
3,759,923
61,536
-2,120,268
0
-3,605 513 186 -177,370 -92,271
-4,000
189,913 -2,202,902
-4,000
Group Other fixtures
and fittings,
tools and
equipment
723,210 1,638 -791 3 57,515 28,899 -109,820 9,149 709,803 -485,592 -964 780 186 -59,997 -8,467 84,342 -469,712
Plant and
machinery
1,649,264 5,322 3,250 2,027 77,265 128,797 -44,671 45,227 1,866,481 -1,248,422 -2,489 -271 -100,620 -63,798 37,834 -1,377,766
Land and
buildings
1,109,763 1,528 2,613 24,955 79,036 -102,885 7,093 1,122,103 -386,254 -152 4 -16,753 -16,006 67,737 -351,424
Cost at 1 January 2007 Exchange adjustment Adjustment of cost, beginning of year Reclassification Additions for the year Additions upon acquisition Disposals for the year Transfers for the year Cost at 31 December 2007 Depreciation and impairment losses at 1 January 2007 Exchange adjustment Adjustment of depreciation, beginning of year Reclassification Depreciation for the year Impairment losses for the year Depreciation and impairment of assets sold and
discontinued
Depreciation and impairment losses at 31
December 2007
Total 2,639,470 0 0 0 130,489 0 -197,649 0 2,572,310 -1,740,285 0 0 0 -110,077 -72,505 168,357 -1,754,510
Property,
plant and
equipment in
progress
35,255 39,193 -33,875 40,573 0 -4,000 -4,000
Parent Company Other fixtures
and fittings,
tools and
equipment
586,669 36,178 -98,205 7,528 532,170 -406,463 -42,519 -7,505 74,714 -381,773
Note 25 Property, plant and equipment Plant and
machinery
1,188,524 52,344 -30,828 24,515 1,234,555 -994,696 -57,614 -50,000 30,579 -1,071,731
Land and
buildings
829,022 2,774 -68,616 1,832 765,012 -339,126 -9,944 -11,000 63,064 -297,006

Land and buildings at a carrying amount of DKK 460.7 million have been provided as security for mortgage debt of DKK 734.5 million (2006: DKK 470.1 million and DKK 635.0 million, respectively).

Land and buildings at a carrying amount of DKK 470.7 million have been provided as security for mortgage debt of DKK 751.5 million (2006: DKK 485.6 million and DKK 652.3 million, respectively).

Notes to assets (DKK '000)

Note 25 Property, plant and equipment (continued)

Total 3,759,923 -56,631 11,596 519,107 119,158 -583,843 0 3,769,310 -2,202,902 25,694 -5,783 -213,416 143,138 563,397 -1,689,872 2,079,438
Property,
plant and
equipment
in progress
61,536 -386 310,651 17,061 -84 -96,991 291,787 -4,000 4,000 0 291,787 security for mortgage debt of DKK 734.5 million (2007: DKK 470.7 million and DKK 751.5
Land and buildings at a carrying amount of DKK 465.4 million have been provided as
Other fixtures
and fittings,
tools and
equipment
709,803 -8,042 12,299 59,966 418 -117,248 6,235 663,431 -469,712 3,497 -4,044 -66,578 -11,000 99,403 -448,434 214,997
Group Plant and
machinery
1,866,481 -33,527 -726 111,146 27,132 -421,240 74,995 1,624,261 -1,377,766 19,928 -1,892 -123,099 -35,585 423,444 -1,094,970 529,291
Project
ment
develop
properties
0 259,845 259,845 0 -99,845 240,000 140,155 400,000
Land and
buildings
1,122,103 -14,676 -259,822 37,344 74,547 -45,271 15,761 929,986 -351,424 2,269 99,998 -23,739 -50,277 36,550 -286,623 643,363 million, respectively).
Cost at 1 January 2008 Exchange adjustment Reclassification Additions for the year Additions upon acquisition Disposals for the year Transfers for the year Cost at 31 December 2008 Depreciation and impairment losses at
1 January 2008
Exchange adjustment Reclassification Depreciation for the year Depreciation and impairment losses for
the year
Depreciation and impairment of assets sold
and discontinued
Depreciation and impairment losses at
31 December 2008
Carrying amount at 31 December 2008
Total 2,572,310 0 0 363,045 0 -414,753 0 2,520,602 -1,754,510 0 0 -110,039 267,450 408,567 -1,188,532 1,332,070
Property,
plant and
equipment
in progress
40,573 210,454 -40,550 210,477 -4,000 4,000 0 210,477
Other fixtures
and fittings,
tools and
equipment
532,170 32,705 -68,719 2,528 498,684 -381,773 -42,718 57,492 -366,999 131,685
Parent Company Plant and
machinery
1,234,555 95,384 -331,116 32,119 1,030,942 -1,071,731 -53,182 27,450 329,684 -767,779 263,163
Project
ment
develop
properties
0 259,845 259,845 0 -99,845 240,000 140,155 400,000 Land and buildings at a carrying amount of DKK 465.4 million have been provided as security
for mortgage debt of DKK 734.5 million (2007: DKK 460.7 million and DKK 734.5 million,
Land and
buildings
765,012 -259,845 24,502 -14,918 5,903 520,654 -297,006 99,845 -14,139 17,391 -193,909 326,745 respectively).

Impairment losses, see note 12 50,277 63,035 11,000 124,312 240,000 240,000 Fair value adjustments, see note 13 240,000 240,000

Total 239,089 7,255 -8,119 817 -24,214 214,828 41,573
0
1,132 -7,228 -15,958 -1,438 32,873 50,954
0
265,782
Other
receiv-
ables
21,875 -10,283 11,592 11,592
Group Other
invest-
ments
2,864 428 -262 3,030 -26 -133 192 -45 -12 3,018
ables from
associates
Receiv-
24,664 817 25,481 0 0 25,481
ments in
associates
Invest-
189,686 6,438 -8,119 389 -13,669 174,725 41,599 1,265 -7,228 -15,958 -1,630 32,918 50,966 225,691
Cost at 1 January 2007 Exchange adjustment Reclassification Additions Disposals Cost at 31 December 2007 Revaluations and impairment losses at
1 January 2007
Exchange adjustment Reclassification Dividend Revaluations and impairment losses on disposals Revaluations and impairment losses for the year Revaluations and impairment losses at
31 December 2007
Carrying amount at 31 December 2007
Total 1,233,604 817 0 616,611 -16,851 1,834,181 -19,780 0 0 0 192 -44 -19,632 1,814,549
Other
receiv-
ables
20,856 -10,093 10,763 0 0 10,763
Other
invest-
ments
2,809 -262 2,547 -176 192 -44 -28 2,519
Parent Company ables from
associates
Receiv-
24,664 817 25,481 0 0 25,481
ables from
diaries
Receiv-
subsi-
0 134,529 134,529 0 0 134,529
Note 26 Financial assets ments in
associates
Invest-
185,338 389 -6,496 179,231 0 0 179,231
ments
in subsi-
Invest-
diaries
999,937 481,693 1,481,630 -19,604 -19,604 1,462,026
Note 26 Financial assets (continued)
Parent Company Group
ments
Invest
Invest ables from
Receiv
Receiv Other Other Invest Receiv Other Other
in subsi
diaries
ments in
associates
subsi
diaries
ables from
associates
invest
ments
ables
receiv
Total ments in
associates
ables from
associates
invest
ments
ables
receiv
Total
1,481,630 179,231 134,529 25,481 2,547 10,763 1,834,181 Cost at 1 January 2008 174,725 25,481 3,030 11,592 214,828
-4,847 -4,847 Exchange adjustment -17,384 -4,847 -22,231
-103,300 103,300 0 Reclassification -106,514 106,514 0
116,381 37,539 39,984 435 194,339 Additions 39 1,269 1,308
-2,163 -642 -2,805 Disposals -66 -922 -988
1,595,848 113,470 174,513 20,634 105,847 10,556 2,020,868 Cost at 31 December 2008 50,827 20,634 109,517 11,939 192,917
-19,604 0 0 0 -28 0 -19,632 Revaluations and impairment losses at
1 January 2008
50,966 0 -12 0 50,954
0 Exchange adjustment -3,617 -3,617
0 Reclassification -17,494 17,494 0
0 Dividend -14,336 -14,336
-561,548 -98,127 -49,387 -709,062 Revaluations and impairment losses for the year 21,304 -70,099 -48,795
-581,152 0 -98,127 0 -49,415 0 -728,694 Revaluations and impairment losses at
31 December 2008
36,823 0 -52,617 0 -15,794
1,014,696 113,470 76,386 20,634 56,432 10,556 1,292,174 Carrying amount at 31 December 2008 87,650 20,634 56,900 11,939 177,123
Value of goodwill included above 1,184
-561,548 -98,127 -659,675 Impairment losses, see note 12
-49,396 -49,396 Dagsværdiregulering, jf. note 13 -70,104 -70,104

Notes to assets (DKK '000)

81

Note 27 Significant accounting policies

GENERAL

The Annual Report has been prepared in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for annual reports of listed companies, cf the disclosure requirements for annual reports of listed companies laid down by the Copenhagen Stock Exchange and the Danish Statutory Order on Adoption of IFRS issued pursuant to the Danish Financial Statements Act.

Early implementation of new financial reporting standards

"The following standards, amendments to existing standards and interpretations adopted by the EU which are relevant to the parent company financial statements and the consolidated financial statements of Royal Unibrew have been implented during the 2008 financial year:

IAS 27(A) (Consolidated and Separate Financial Statements) concerning the determination of the cost of subsidiaries, associates and joint ventures. The amendment takes effect for the 2009 financial statemetns, but was implemented early in 2008. The amendment has resulted in dividend from subsidiaries and associates being recognised in the income statement of the Parent Company irrespective of dividend being earned in the period of ownership or not.

IFRIC 13 (Accounting for Customer Loyalty Programmes). The interpretation takes effect for financial years starting on or after 1 July 2008, but has been part of the accounting policies applied to date; therefore the interpretation has not resulted in any change of recognition and measurement for the Group.

New standards and interpretations that have not taken effect

The following standards and interpretations adopted by the EU which could potentially be relevant to Royal Unibrew have not yet taken effect and have not been implemented early:

IFRS 2 (Share-based Payment) on vesting conditions and cancellation of share-based payment arrangements. The amendments take effect for the 2009 financial statements and are not expected to affect recognition and measurement.

IFRS 8 (Operating Segments) and IAS 1 (Presentation of Financial Statements on the Statement of Comprehensive Income) – both take effect for the 2009 financial statements. The implementation of the standards implies only additional note disclosures.

IAS 23R (Borrowing Costs) concerning capitalisation of borrowing costs as part of the cost of the asset. The amendments take effect for the 2009 financial statements. The amendment implies that prospectively the Group is

required to capitalise borrowing costs relating to own construction of non-current assets. The amendment is only expected to have limited effect on recognition and measurement.

In addition to the above, a number of standards etc have been amended by the IASB but not yet adopted by the EU. Of these amendments, primarily IFRS 3(R) (Business Combinations) and IAS 27(R) (Consolidated and Separate Financial Statements) are expected to affect the Group's accounting policies, but, if so, only prospectively upon business acquisitions or sales.

The Annual Report is presented in DKK.

Some of the note disclosures required under IFRS are included in Management's Review.

Changes and additions to accounting policies Project development properties

Following the closing of the brewery in Aarhus, the Company intends to sell the brewery properties. The properties are assessed to have several possible applications; and will therefore prospectively be categorised as project development properties thus constituting a separate category of property, plant and equipment. The value of the project development properties at the time of reclassification has been stated at the carrying amount at the time of reclassification. Subsequently, the project development properties are measured at fair value according to the revaluation model of IAS 16. The adjustment from the value at the time of reclassification to fair value less deferred tax has been recognised directly in equity.

The accounting policy for measurement of project development properties has been added on page 85 under Property, plant and equipment.

Hedging of commodity prices

The Group has entered into contracts to hedge the prices of selected commodities in 2008. The accounting treatment of such contracts is not governed by specific IFRS provisions. The Group has determined the policy for the accounting treatment on the basis of the general recognition and measurement provisions of the IASB conceptual framework, which is detailed on page 82.

Other than the above, the accounting policies have not changed from 2007.

Recognition and measurement

Assets are recognised in the balance sheet when it is probable that future economic benefits attributable to the asset will flow to the Group, and the value of the asset can be measured reliably.

Liabilities are recognised in the balance sheet when

they are probable and can be measured reliably. Assets and liabilities are initially measured at cost. Subsequently, assets and liabilities are measured as described for each item below.

Recognition and measurement take into account losses and risks occurring before the presentation of the Annual Report which confirm or invalidate affairs and conditions existing at the balance sheet date.

Revenues are recognised in the income statement as earned. Furthermore, value adjustments of financial assets and liabilities measured at fair value or amortised cost are recognised. Moreover, all expenses incurred to achieve the earnings for the year are recognised, including depreciation, amortisation, impairment losses and provisions as well as reversals due to changed accounting estimates in the income statement.

Consolidated financial statements

The consolidated financial statements comprise Royal Unibrew A/S (the Parent Company) and enterprises in which the Parent Company exercises control (subsidiaries).

Enterprises in which the Group holds between 20% and 50% of the votes and exercises significant influence but not control are classified as associates.

The consolidated financial statements are prepared on the basis of financial statements of all group enterprises prepared under the Group's accounting policies by combining accounting items of a uniform nature. Elimination is made of intercompany income and expenses, unrealised intercompany profits and losses, balances and shareholdings. Comparative figures are not adjusted for newly acquired, sold or wound-up enterprises.

Business combinations

On acquisition of new enterprises the purchase method is applied, under which the identifiable assets and liabilities of newly acquired enterprises are measured at fair value at the time of acquisition.

In the case of business combinations made on or after 1 January 2004, positive differences between cost and fair value of identifiable assets and liabilities acquired are recognised as goodwill in intangible assets. At the time of acquisition, goodwill is allocated to the cash-generating units that subsequently form the basis of impairment tests. Goodwill and fair value adjustments in connection with the acquisition of a foreign enterprise with a functional currency that differs from the presentation currency of the Group are treated as assets and liabilities belonging to the foreign entity and are translated to the functional currency of the foreign entity at the exchange rates at the dates of transaction.

In the case of business combinations made prior to 1 January 2004, the accounting classification according to IFRS 1 has been maintained under the previous accounting policy. Goodwill is recognised on the basis of the cost recognised under the previous accounting policy (the Danish Financial Statements Act and Danish Accounting Standards) less amortisation and impairment losses up until 31 December 2003.

Gains or losses on disposal of subsidiaries and associates are calculated as the difference between the sales sum and the carrying amount of net assets at the time of sale (including the carrying amount of goodwill) net of expected expenses and adjusted for exchange adjustments previously recognised in equity.

Enterprises disposed of are recognised in the consolidated income statement up until the date of disposal. Comparative figures are not restated for newly acquired, sold or wound-up enterprises.

Minority interests

Minority interests are initially recognised on the basis of fair values of the assets, liabilities and contingent liabilities of the acquired enterprise at the time of acquisition.

The accounting items of subsidiaries are recognised fully in the consolidated financial statements. Minority interests' proportionate share of results of subsidiaries is shown as a separate item under distribution of profit. In the balance sheet, minority interests are recognised as part of equity but are shown separately from Parent Company shareholders' share of equity.

Translation policies

For each of the reporting entities of the Group, a functional currency is determined. The functional currency is the currency of the primary economic environment in which the reporting entity operates. Transactions in other currencies than the functional currency are transactions in foreign currencies.

Transactions in other currencies than the functional currency are initially translated into Danish kroner at the exchange rates at the dates of transaction. Receivables, payables and other monetary items in foreign currencies not settled at the balance sheet date are translated at the exchange rates at the balance sheet date. Exchange adjustments arising due to differences between the transaction date rates and the rates at the dates of payment or the rates at the balance sheet date, respectively, are recognised in financial income and expenses in the income statement. Property, plant and equipment and intangible assets, inventories and other non-monetary assets purchased in foreign currencies and

measured at historical cost are translated at the transaction date rates.

On recognition in the consolidated financial statements of enterprises with another functional currency than Danish kroner (DKK), income statements are translated at average annual exchange rates. Balance sheet items are translated at the exchange rates at the balance sheet date.

Exchange adjustments arising on the translation of the opening balance sheet items of foreign enterprises at exchange rates at the balance sheet date and on the translation of income statements from average exchange rates to exchange rates at the balance sheet date are recognised directly in equity. Similarly, exchange adjustments arising due to changes made directly in equity of foreign enterprises are recognised directly in equity.

On recognition in the consolidated financial statements of associates with a functional currency that differs from the presentation currency of the Parent Company, the share of results for the year is translated at average exchange rates, and the share of equity including goodwill is translated at the exchange rates at the balance sheet date. Exchange adjustments arising on the translation of the share of the opening equity of foreign associates at exchange rates at the balance sheet date and on the translation of the share of results for the year from average exchange rates to exchange rates at the balance sheet date are recognised directly in equity under a separate translation reserve.

Derivative financial instruments

Derivative financial instruments are initially recognised in the balance sheet at cost and are subsequently remeasured at their fair values. Positive and negative fair values of derivative financial instruments are included as other receivables and other payables, respectively.

Changes in the fair values of derivative financial instruments that are designated and qualify as fair value hedges of a recognised asset or a recognised liability are recognised in the income statement as are any changes in the value of the hedged asset or the hedged liability.

Changes in the fair values of derivative financial instruments that are designated and qualify as hedges of future cash flows are recognised directly in equity. Income and expenses relating to such hedging transactions are transferred from equity on realisation of the hedged item and are recognised in the same entry as the hedged item.

For derivative financial instruments which do not meet the criteria for hedge accounting, changes in fair values are recognised on a current basis in financial income and expenses in the income statement.

Hedging of commodity prices

Contracts entered into to hedge future commodity prices are not recognised in the balance sheet at inception. If the fair value of the contract subsequently turns negative, a liability is recognised in other payables in the balance sheet. The negative value of the contract is recognised in prepayments under assets. If the fair value of the contract is positive, the contract is not recognised in the balance sheet. When the contract expires, the fair value of the contract is recognised in the cost of the hedged commodity. In the event of changed expectations of future commodity purchases, the fair value of any excess contracts will be recognised in the income statement at the time when it is ascertained that the contracts no longer hedge the prices of future commodity purchases.

Leases

The Company only has leases that are considered operating leases. Payments made under operating leases are recognised in the income statement on a straight-line basis over the lease term.

Share-based payments

The Group only has schemes classified as equity-settled schemes. Share options are measured at fair value at the time of granting and are recognised in staff expenses in the income statement over the vesting period. The counter item is recognised directly in equity.

At the initial recognition of the share options, the number of options expected to vest is estimated. Subsequently, the estimate of the number of vested options is revised so that the total recognition is based on the actual number of options vested.

The fair value of the options granted is estimated on the basis of the Black-Scholes model. In determining fair value, conditions and terms related to the share options granted are taken into account.

Impairment

The carrying amounts of intangible assets and property, plant and equipment are reviewed on an annual basis to determine whether impairment has incurred other than that expressed by normal amortisation and depreciation. If so, the asset is written down to the higher of net selling price and value in use. Goodwill and other assets for which a value in use cannot be determined as the asset does not on an individual basis generate future cash flows are reviewed for impairment together with the group of assets (cash-generating units) to which they are attributable.

The carrying amount of goodwill and trademarks with indefinite useful lives is tested for impairment at least on

an annual basis, together with the other non-current assets of the cash-generating unit to which goodwill has been allocated, and is written down to recoverable amount in the income statement if the carrying amount exceeds the recoverable amount.

The carrying amount of financial assets measured at cost or amortised cost is written down for impairment if, due to changed expected net payments, the net present value is lower than the carrying amount.

Assets held for sale

Assets held for sale comprise non-current assets held for sale. Assets are classified as "held for sale" if their

carrying amount will principally be recovered through a sales transaction within 12 months according to a formalised plan.

Assets held for sale are measured at the date of classification at the lower of carrying amount and fair value less costs to sell. Subsequently, the assets are measured at fair value less costs to sell; however, any subsequent unrealised gain cannot exceed the accumulated impairment loss. Depreciation of assets ceases as of the date when they are classified as "held for sale".

Impairment losses arising on the initial classification as "held for sale" and subsequent losses or reversal of losses

are recognised in the income statement in the items to which they relate. Gains and losses are disclosed in the notes. Assets held for sale are shown in a separate line in the balance sheet.

INCOME STATEMENT

Revenue

Net revenue from the sale of goods is recognised in the income statement if delivery has been made before year end, and if revenues can be measured reliably and are expected to be received.

Net revenue is measured exclusive of VAT and net of discounts as well as excise duties on beer and mineral water. All types of discounts granted are recognised in net revenue.

Production costs

Production costs comprise direct and indirect expenses incurred to manufacture the finished goods representing revenue for the year, including expenses for raw materials and consumables purchases, salaries and wages, renting and leasing as well as depreciation of and impairment losses on production plant.

Production costs also include development costs that do not meet the criteria for capitalisation.

Sales and distribution expenses

Sales and distribution expenses comprise expenses for distribution and sales campaigns relating to goods sold during the year, including expenses for sales personnel, marketing, depreciation and amortisation as well as losses on trade receivables.

Administrative expenses

Administrative expenses comprise expenses for management and administration of the Group, including expenses for administrative personnel, management, office supplies, insurance, depreciation and amortisation.

Other operating income and other operating expenses

Other operating income and other operating expenses comprise income or expenses of a secondary nature compared to the core activities of the Company, including renting of property, plant and equipment, etc.

Special income and expenses

Special income and expenses comprise material nonrecurring income and expenses. These items are presented separately with a view to comparability in the income statement.

Income from investments in associates in the consolidated financial statements

The proportionate share of the results of associates is recognised in the income statement of the Group after adjusting for impairment losses on goodwill and eliminating the proportionate share of unrealised intercompany gains and losses.

Dividend on investments in subsidiaries and associates in the Parent Company financial statements

Dividend on investments in subsidiaries and associates is recognised in the Parent Company's income statement in the financial year in which dividend is declared.

Financial income and expenses

Financial income and financial expenses comprise interest, capital gains and losses on securities, balances and transactions in foreign currencies, amortisation of financial assets and liabilities, fair value adjustments of derivative financial instruments that do not qualify as hedge accounting as well as extra payments and repayment under the on-account taxation scheme, etc.

Tax

Tax for the year consists of current tax for the year and movements in deferred tax for the year. The tax attributable to the profit for the year is recognised in the income statement, whereas the tax attributable to equity entries is recognised directly in equity.

The Parent Company is jointly taxed with its Danish subsidiaries. The Danish current tax for the year is allocated to the jointly taxed Danish enterprises in proportion to their taxable incomes (full allocation with credit for tax losses).

BALANCE SHEET Intangible assets Goodwill

Goodwill is initially recognised in the balance sheet at cost as described under "Business combinations". Subsequently, goodwill is measured at cost less accumulated impairment losses.

The carrying amount of goodwill is allocated to the Group's cash-generating units at the time of acquisition. The determination of cash-generating units is based on management structure and internal financial management.

Trademarks and distribution rights

Trademarks and distribution rights are initially recognised in the balance sheet at cost. Subsequently, they are measured at cost less accumulated amortisation

and less any accumulated impairment losses. Trademarks and distribution rights are amortised on a straight-line basis over their estimated useful lives, 10 years. Trademarks with indefinite useful lives are, however, not amortised but are tested annually for impairment. It is the Group's strategy to maintain trademarks and their value.

Property, plant and equipment

Land and buildings, production plant and machinery and other fixtures and fittings, tools and equipment are measured at cost less accumulated depreciation and less any accumulated impairment losses. Borrowing costs relating to the acquisition of property, plant and equipment are expensed as incurred.

Depreciation is calculated on a straight-line basis over the useful lives of the assets, which are:

  • Buildings, 50 years
  • Installations, 25 years
  • Plant and machinery as well as other fixtures and fittings, tools and equipment, 5-8 years
  • Computer software, 3 years
  • Leasehold improvements over the term of the lease, max. 10 years
  • Plastic crates, 10 years
  • Bottles, 6 years
  • Kegs, 10 years

Profits and losses on the disposal of property, plant and equipment are calculated as the difference between the sales sum less the expenses necessary to make the sale and the carrying amount at the time of sale. Profits or losses are recognised in the income statement in production costs, sales or distribution expenses or administrative expenses, respectively.

Project development properties

Project development properties are measured at fair value based on valuations by expert valuers. The project development properties are revalued annually.

If the carrying amount is increased as a result of revaluation, the increase is recognised directly in equity in revaluation reserves. The increase is, however, recognised in the income statement if it offsets a reduction previously recognised in the income statement as a result of revaluation of the same site.

If the carrying amount is reduced as a result of revaluation, the reduction is recognised in the income statement. The reduction is, however, recognised directly in equity in revaluation reserves if a reserve has been made for the site in question under revaluation reserves.

Financial assets

Investments in associates in the consolidated financial statements

Investments in associates are measured in the balance sheet at the proportionate share of the net asset value of the enterprises calculated under the accounting policies of the Group with deduction or addition of the proportionate share of unrealised intercompany profits and losses and with addition of the carrying amount of goodwill.

Associates with a negative net asset value are measured at DKK 0. If the Group has a legal or constructive obligation to cover the negative balance of the associate, this obligation is recognised in liabilities.

Investments in subsidiaries and associates in the Parent Company financial statements

Investments in subsidiaries and associates are measured at cost and tested in the event of indication of impairment. Where cost exceeds the recoverable amount, the investment is written down to its lower recoverable amount.

Other investments

Other investments not included in the Group's trading portfolio (available for sale) are recognised in non-current assets at cost at the trading date and are subsequently measured at fair value equal to the market price as regards listed securities and at estimated fair value calculated on the basis of market data and recognised valuation methods as regards unlisted securities. Unrealised value adjustments are recognised directly in equity except for impairment losses and reversal of impairment losses which are recognised in financial income and expenses in the income statement. Upon realisation, the accumulated value adjustment recognised in equity is transferred to financial income and expenses in the income statement.

Other receivables

Other receivables under financial assets held to maturity are initially recognised at cost and are subsequently measured at amortised cost or an estimated lower value at the balance sheet date.

Current assets

Inventories

Inventories are measured at the lower of cost under the FIFO method and net realisable value of individual product groups. The net realisable value of inventories is calculated at the amount of future sales revenues expected to be generated by inventories at the balance sheet date in the process of normal operations and

determined allowing for marketability, obsolescence and development in expected sales sum with deduction of calculated selling expenses.

The cost of raw materials, consumables, goods for resale and purchased finished goods comprises invoiced price plus expenses directly attributable to the acquisition.

The cost of work in progress and finished goods comprises the cost of materials and direct labour with addition of indirect production costs. Indirect production costs comprise the cost of indirect materials and labour as well as maintenance and depreciation of and impairment losses on the machinery, factory buildings and equipment used in the manufacturing process as well as costs of factory administration and management.

Receivables

Receivables are initially measured at cost and are subsequently measured at amortised cost or an estimated lower value at the balance sheet date. This lower value is determined on the basis of an individual assessment of each receivable.

Prepayments

Prepayments recognised in assets comprise expenses incurred in respect of subsequent financial years.

Equity

Proposed dividend

Dividend is recognised as a liability at the time of adoption at the Annual General Meeting. Dividend distribution for the year proposed by Management is disclosed as a separate equity item.

Treasury shares

Treasury shares acquired by the Parent Company or subsidiaries are recognised at cost directly in equity under retained earnings. Where treasury shares are subsequently sold, any consideration is also recognised directly in equity. Dividend on treasury shares is recognised directly in equity under retained earnings.

Translation reserve

The translation reserve in the consolidated financial statements comprises exchange adjustments arising on the translation of the financial statements of foreign enterprises from their functional currencies into the presentation currency of the Group (DKK).

Upon full or part realisation of the net investment in the foreign enterprises, exchange adjustments are recognised in the income statement.

The translation reserve was reset at 1 January 2004 in accordance with IFRS 1.

Hedging reserve

The hedging reserve comprises changes to fair values of derivative financial instruments that are designated and qualify as cash flow hedges.

The hedging instrument is recognised in the income statement in the same item as the hedged transaction.

Deferred tax

Deferred tax is recognised in respect of all temporary differences between the carrying amounts and the tax base of assets and liabilities except for temporary differences arising at the time of acquisition that do not affect the profit for the year or the taxable income and temporary differences concerning goodwill. In cases where the computation of the tax base may be made according to alternative tax rules, deferred tax is measured on the basis of the intended use of the asset or settlement of the liability, respectively.

Deferred tax assets are recognised at the value at which they are expected to be realised, either by elimination in tax on future earnings or by set-off against deferred tax liabilities.

Deferred tax is measured on the basis of the tax rules and tax rates expected under the legislation at the balance sheet date to be effective when the deferred tax crystallises as current tax.

In the balance sheet, set-off is made between deferred tax assets and deferred tax liabilities within the same legal tax entity and jurisdiction.

Repurchase obligation relating to packaging in circulation

Plastic crates, bottles and kegs in circulation and held in inventory are recognised in property, plant and equipment, and the obligation to repurchase returnable packaging in circulation for which a deposit has been paid is recognised in provisions.

The repurchase obligation relating to packaging in circulation is calculated on the basis of estimated total volumes of packaging less packaging held in inventory.

Corporation tax

Current tax liabilities are recognised in the balance sheet as calculated tax on the expected taxable income for the year adjusted for tax on taxable incomes for previous years and for tax paid on account.

Debts

Mortgage loans and loans from credit institutions are recognised initially at the proceeds received net of transaction expenses incurred. Subsequently, the financial obligations are measured at amortised cost equal to the capitalised value using the effective interest method; the

difference between the proceeds and the nominal value is recognised in financial income and expenses in the income statement over the loan period.

Other debts, comprising trade payables, payables to subsidiaries and associates, VAT, excise duties, etc as well as other payables, are measured at amortised cost, substantially corresponding to the nominal debt.

CASH FLOW STATEMENT

The consolidated cash flow statement is presented under the indirect method based on the net profit for the year. The statement shows cash flows for the year, changes for the year in cash and cash equivalents as well as the Group's cash and cash equivalents at the beginning and end of the year.

Cash flows from operating activities are calculated as the net profit/loss for the year adjusted for non-cash operating items, changes in working capital, financial income and financial expenses, and corporation tax paid.

Cash flows from investing activities comprise acquisitions and disposals of property, plant and equipment, and financial assets as well as dividend received from associates. Cost is measured inclusive of expenses necessary to make the acquisition and sales prices after deduction of transaction expenses.

Cash flows from financing activities comprise changes to the amount or composition of the Group's share capital, payment of dividend as well as borrowing and repayment of interest-bearing debt.

Cash and cash equivalents include securities with a maturity of less than 3 months that can readily be turned into cash and are only subject to an insignificant risk of value changes.

SEGMENT REPORTING

The Group's business segment is beer and soft drinks sales. Reporting on the business segment is by geographical markets. Segment reporting is based on the Group's returns and risks and its internal financial reporting system.

Items included in net profit for the year, including income from investments in associates and financial income and expenses, are allocated to the extent that the items are directly or indirectly attributable to the markets.

Items allocated both by direct and indirect computation comprise "production costs" and "administrative expenses", which are allocated by indirect computation based on allocation keys determined on the basis of the market's drain on key resources. Administrative expenses incurred in the group functions of the Parent Company are partly allocated.

Non-current assets comprise the non-current assets that

are directly or indirectly used in connection with activities in the markets.

Segment liabilities comprise liabilities derived from activities in the market, including provisions, trade payables, VAT, excise duties and other payables.

FINANCIAL RATIOS

The Group's financial ratios have been calculated in accordance with the guidelines issued by the Danish Society of Financial Analysts for 2005.

The financial ratios are explained in the section on financial highlights and key ratios of the Group.

MANAGEMENT PROFILES AND DUTIES

Nedenstående gives oplysninger om bestyrelses- og direktionsmedlemmer, herunder deres ledelseshverv i danske og udenlandske selskaber samt krævende organisationsopgaver:

Members of the Supervisory Board

Steen Weirsøe, CEO (C)

Age: 61. On the Supervisory Board of Royal Unibrew since 1998, Chairman since 2004. MSc (Economics and Business Administration) in 1973. CEO of F. Junckers Industrier A/S 1983-94. Group Chief Executive of Danisco A/S 1994-99. Since 2000 CEO, Group Managing Director of DT Group a/s. Number of Royal Unibrew shares held: 1,520.

JCLI 5253 A/S including subsidiaries (BM)

Wolseley Holdings Danmark including subsidiaries (BM + CEO)

Tommy Pedersen, CEO (DC)

Age: 59. On the Supervisory Board of Royal Unibrew since 1998, Deputy Chairman since 2004. Diploma (Economics - Accounting and Economic Management) in 1976, Diploma (Economics - Organisation and Strategic Planning) in 1981. Employee of Sparekassen Fyn, Bikuben and Bikuben GiroBank A/S, most recently as Executive Bank Manager, 1966-96. Since 1997 CEO of Chr. Augustinus Fabrikker Aktieselskab and Augustinus Fonden. Number of Royal Unibrew shares held: 339.

FMS Holding af 2004 A/S (C) Fondsmæglerselskabet af 2004 A/S (C) Rungsted Sundpark A/S (C) Skodsborg Sundpark A/S (C) Ejendomsselskabet Jeudan A/S (DC) Fair Forsikring A/S (DC) Fair Invest A/S (DC) Kommuneforsikring A/S (DC) Kommmunernes Arbejdsskadeforsikring (DC) Brock og Michelsen A/S including subsidiaries (BM) Ole Flensted Holding A/S (BM) Peter Bodum A/S (BM) Pharmacosmos Holding A/S including subsidiaries (BM) Skandinavisk Holding A/S (BM) Skandinavian Tobacco Group A/S (BM) Tivoli A/S (BM)

Henrik Brandt, CEO (BM)

Age: 53. On the Supervisory Board of Royal Unibrew since 1998. On the Supervisory Board of Ferd A/S (Norwegian company) since 2004. MSc (Economics and Business Administration), MBA Stanford University, California. F.L. Schmidt Gruppen 1979-83. Skandinavisk Holding A/S 1985-87. CEO of Kevi A/S 1987-88. Skandinavisk Holding A/S 1988-89. CEO of Fritz Hansens Eft. A/S 1989-92. CEO of Munch Møbler A/S 1989-92. CEO of Skandinavisk Tobakskompagni A/S 1992-99. Managing Director of House of Prince A/S 1992-99. CEO, Group Managing Director of Sophus Berendsen A/S 1999-2002. CEO of Unomedical a/s 2003-08. Since November 2008 CEO of Royal Unibrew A/S. Number of Royal Unibrew shares held: 1,000.

Hansa Borg Skandinavisk Holding A/S (BM) Nuuk Imeq A/S (BM)

Ulrik Bülow, CEO (BM)

Age: 55. On the Supervisory Board of Royal Unibrew since 2000. MSc (Economics and Business Administration). Export Manager of Ferrosan A/S 1979-83. Marketing Manager of Buch + Deichmann A/S 1983-84. CEO of Matas A/S 1984-91. CEO of Egmont Books 1991-98. CEO of Sonofon Holding A/S 1998-2002. CEO of VisitDenmark 2004-2006. Since 2006, CEO of Synoptik Group A/S. Number of Royal Unibrew shares held: 1,000.

Brilleland A/S (C) Dansk Erhverv (BM) Egmont Fonden (BM) Egmont International Holding A/S (BM)

Erik Christensen, Stores Manager (BM elected by the employees)

Age: 54. On the Supervisory Board of Royal Unibrew since 2002. Motor Mechanic in 1975. Diploma in specialised technical studies in 1987. Motor Mechanic with Pedersen & Nielsen A/S Volvo Lastvogne in Randers, Denmark in the period 1975-80 and Works Manager with same in the period 1980-1988. Stores Manager of Royal Unibrew since 1988. Number of Royal Unibrew shares held: 140.

Erik Højsholt, Director (BM)

Age: 60. On the Supervisory Board of Royal Unibrew since 2004. Diploma (Economics – International Management) from the Århus School of Business 1975. Various positions with Danisco A/S 1965-82, Mercuri International A/S 1982-83, Aarhus Oliefabrik A/S 1983-87, Danmark Protein A/S 1987-91, New Zealand Dairy Board GmbH 1991-95, Arla Foods amba 1995-2000. Group CEO of Aarhus Oliefabrik/Aarhus United A/S 1999-2005. Chairman and CEO of AarhusKarlshamn AB until May 2006. Number of Royal Unibrew shares held: 830.

R2 Group A/S (C)

Fluxome Sciences A/S (C) Brødrene Kier A/S (C) Brødrene Hartmann A/S (C) Novopan Træindustri A/S (C) MacMann Berg Group (C) Vilhelm Kiers Fond (BM) Good Food Group A/S (BM) Hans Schourup A/S (BM) Aarhus Universitet (BM)

Allan Meier Jensen, Foreman Storekeeper (BM elected by the employees)

Age: 55. On the Supervisory Board of Royal Unibrew since 2008. Clerk/Storeman 1970-90. Business Diploma in operational management 1995. Departmental Manager at

DS Non Food Centrallager 1990-95. Foreman Storekeeper at the Reklamelageret (promotional articles) of Royal Unibrew since 1996. Number of Royal Unibrew shares held: 103.

Kirsten Wendelboe Liisberg, Brewery Hand (BM elected by the employees)

Age: 52. On the Supervisory Board of Royal Unibrew since 2006. Royal Unibrew employee at Albani since 1978, shop steward since 1991 and senior shop steward since 2000. Number of Royal Unibrew shares held: 81

Hemming Van, CEO (BM)

Age: 53. On the Supervisory Board of Royal Unibrew since 2004. MSc (Economics and Business Administration) from the Copenhagen Business School 1981. Employee of Mærsk Air I/S 1981-82, Director of Daloon Production (UK) Ltd 1982. Since 1989 CEO and majority shareholder of Daloon A/S. Number of Royal Unibrew shares held: 274.

Daloon A/S (CEO and BM) Easyfood A/S (C) Easy Production A/S (C) Easy Holding A/S (CEO + BM) Halberg A/S (BM) Halberg Kapital A/S (BM) Halberg Invest A/S (BM)

The supervisory board members elected by the general meeting are up for election every year and the members elected by the employees are up for election every four years.

Abbreviations:

CEO: Chief Executive Officer CFO: Chief Financial Officer

C: Chairman DC: Deputy Chairman BM: Board Member

Executive Board

Henrik Brandt, CEO (BM)

Age: 53. On the Supervisory Board of Royal Unibrew since 1998. On the Supervisory Board of Ferd A/S (Norwegian company) since 2004. MSc (Economics and Business Administration), MBA Stanford University, California. F.L. Schmidt Gruppen 1979-83. Skandinavisk Holding A/S 1985-87. CEO of Kevi A/S 1987-88. Skandinavisk Holding A/S 1988-89. CEO of Fritz Hansens Eft. A/S 1989-92. CEO of Munch Møbler A/S 1989-92. CEO of Skandinavisk Tobakskompagni A/S 1992-99. Managing Director of House of Prince A/S 1992-99. CEO, Group Managing Director of Sophus Berendsen A/S 1999-2002. CEO of Unomedical a/s 2003-08. Since November 2008 CEO of Royal Unibrew A/S. Number of Royal Unibrew shares held: 1,000.

Hansa Borg Skandinavisk Holding A/S (BM) Nuuk Imeq A/S (BM)

Hans Savonije, Executive Director

Age: 52. BA Business Administration in 1977. Sales Director & VP and Marketing Manager of Lever Faberge, Sweden, Marketing Director Lever Europe, Brussels, CEO Lever, Poland 1986-96. CEO Unilever, Turkey 1996-97. Divisional Director Central Europe, Russian Federation for the Coca Cola Company 1997-2001. CEO of Beverage Partners Worldwide, Coco-Cola & Nestlé 2002-2006. SVP Global Markets, Remy Cointreau Remy Associés, France 2006. CEO of World Lotteries Association, Switzerland 2007-08. Executive Director of Royal Unibrew since October 2008.

Number of Royal Unibrew shares held: 0.

Dansk Retursystem A/S (BM) Hansa Borg Skandinavisk Holding A/S (BM)

Ulrik Sørensen, CFO

Age: 58. MSc (Economics and Business Administration) in 1975. Financial Manager/CEO of DAN (B&W) Shipbuilding Services 1981-85. CFO of Chr. Islef & Co. A/S 1985-87. CFO of Danbyg Totalentreprise A/S 1987-93. CFO of Royal Unibrew since 1993. Number of Royal Unibrew shares held: 1,295.

Hansa Borg Skandinavisk Holding A/S (CEO)

Announcements to NASDAQ OMX Copenhagen in 2008

3 January 2008 01/2008 Share Buy-back at Royal Unibrew A/S
4 January 2008 02/2008 Royal Unibrew's acquisition of all activities of Livu Alus – Latvia's number 3 brewery in terms of size – now realised
7 January 2008 03/2008 Royal Unibrew's brewery in Aarhus
8 January 2008 04/2008 New Strategic Plan of Royal Unibrew A/S
11 January 2008 05/2008 Share Buy-back at Royal Unibrew A/S
17 January 2008 06/2008 Royal Unibrew sets new goals with double up
21 January 2008 07/2008 Section 29 announcement from Lonmodtagernes Dyrtidsfond
22 January 2008 08/2008 Share Buy-back at Royal Unibrew A/S
24 January 2008 09/2008 Kempen Capital Management NV owns 5% of the share capital in Royal Unibrew A/S
31 January 2008 10/2008 Share Buy-back at Royal Unibrew A/S
1 February 2008 11/2008 Royal Unibrew's brewery in Aarhus
11 February 2008 12/2008 Share Buy-back at Royal Unibrew A/S
20 February 2008 13/2008 Share Buy-back at Royal Unibrew A/S
25 February 2008 14/2008 Share Buy-back at Royal Unibrew A/S
26 February 2008 15/2008 Change in the Financial Calendar – Announcement of Annual Results 2007 of Royal Unibrew A/S
29 February 2008 16/2008 Annual Results 2007
26 March 2008 17/2008 Executive Director Northern Europe moves on to new challenges
28 March 2008 18/2008 Reporting according to the Danish Securities Act section 28a
3 April 2008 19/2008 Notice of the Annual General Meeting of Royal Unibrew A/S
9 April 2008 20/2008 Guidelines for incentive pay programme
28 April 2008 21/2008 Q1 Report 2008
28 April 2008 22/2008 Annual General Meeting of Royal Unibrew A/S
6 May 2008 23/2008 Reporting according to the Danish Securities Act section 28a
7 May 2008 24/2008 Reporting according to the Danish Securities Act section 28a
7 May 2008 25/2008 Reporting according to the Danish Securities Act section 28a
8 May 2008 26/2008 Reporting according to the Danish Securities Act section 28a
19 June 2008 27/2008 Executive Director Technics & Supply Povl Friis moves on to new challenges
1 August 2008 28/2008 New director in Royal Unibrew A/S
25 August 2008 29/2008 Interim Report for Q2 and H1 2008
26 August 2008 30/2008 Reduction of Capital and cancellation of treasury shares, amendment of Articles of Association
29 Sept. 2008 31/2008 Poul Møller resigns and Henrik Brandt will be new managing director (CEO) in Royal Unibrew A/S
At the same time the outlook for 2008 is reduced
5 October 2008 32/2008 Expectations for Royal Unibrew's results for 2008 – elaboration on Company Announcement No 31/2008
of 29 September 2008
20 Nov. 2008 33/2008 Interim Report for Q3 2008 and the Period 1 January - 30 September 2008
26 Nov. 2008 34/2008 Reporting according to the Danish Securities Act section 28a
18 Dec. 2008 35/2008 Changes in Royal Unibrew A/S' Financial Calendar for 2009

Royal Unibrew A/S

Faxe Allé 1 DK-4640 Faxe Tlf. 56 77 15 00 Fax 56 71 47 64 CVR 41 95 67 12 www.royalunibrew.com

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