Carlsberg Group Capital Structure & Financial Policy

Presentation for The Danish Society of Financial Analysts

8th April 2014

Lars Cordi, VP & Group Treasurer

1. Group development 2. Ambition 3. Ownership structure 4. Financial policy 5. Importance of investment grade 6. Cash is king

3

This is Carlsberg Group today

No. 1 in Northern & Eastern Europe and fourth largest brewer in the world

500 different beer brands

40,000 employees on three continents

36,000,000,000 bottles of beer sold in 2013

150 Markets around the world

Presentation for The Danish Society of Financial Analysts - 8th April 2014

4

The Carlsberg Group has undergone big changes in recent years

1990

OPERATIONS IN

Denmark, UK and Malawi. Minority ownerships in Finland, Italy and Malaysia

Carlsberg is an international beer brand but mainly through export and licensed brewing

MALAWI

+ 50% ownership

0-50% ownership

Joint ventures

Presentation for The Danish Society of Financial Analysts - 8th April 2014

MALAWI

5

The journey to becoming an international company begins – few leading positions globally

ACQUISITIONS

Sweden, Finland, Italy, Portugal, Lithuania, Poland, Croatia, Turkey, Nepal, Sri Lanka and Vietnam

1999

+ 50% ownership

0-50% ownership

Joint ventures

Presentation for The Danish Society of Financial Analysts - 8th April 2014

MALAWI

6

Merger with Orkla (Norway) and joint venture in BBH

ACQUISITIONS

Norway, Sweden, Switzerland, Poland, Turkey

JOINT VENTURES

BBH (Russia, Ukraine, Belarus and Baltic countries) is a joint venture between Carlsberg Breweries (owned by Carlsberg and Orkla) and UK brewer Scottish & Newcastle

2001

+ 50% ownership

0-50% ownership

Joint ventures

Presentation for The Danish Society of Financial Analysts - 8th April 2014

7

Further acquisitions in Europe and Asia and increased shareholdings in BBH through buy-out of Orkla’s shares

ACQUISITIONS

Norway, Germany, Serbia, Croatia, Bulgaria, Nepal, Western China, Laos, South Korea, Malawi JOINT VENTURES

BBH (Russia, Ukraine, Belarus, Kazakhstan and Baltic countries) is now a joint venture between Carlsberg Breweries and UK brewer Scottish & Newcastle

2004

MALAWI

+ 50% ownership

0-50% ownership

Joint ventures

Presentation for The Danish Society of Financial Analysts - 8th April 2014

8

Acquisition of Scottish & Newcastle gives majority ownership of BBH, France, Greece and more

ACQUISITIONS

BBH (Russia, Ukraine, Belarus, Kazakhstan, Uzbekistan, Baltic countries), France, Greece, India, Western China

DIVESTMENTS

Turkey, South Korea

The biggest acquisition by a Scandinavian company

2008

MALAWI

+ 50% ownership

0-50% ownership

Joint ventures

Presentation for The Danish Society of Financial Analysts - 8th April 2014

9

Carlsberg Group today – the world’s fourth largest international brewer

ACQUISITIONS

Increased shareholding in Chongqing Brewery Company in China to 60%

2013

MALAWI

+ 50% ownership

0-50% ownership

Joint ventures

Presentation for The Danish Society of Financial Analysts - 8th April 2014

Our three regions at a glance

Western Europe

% of total beer volume

% of EBIT

Eastern Europe Asia

2013

2013

Group

Presentation for The Danish Society of Financial Analysts - 8th April 2014 10

41 35 24

47 36 17

(2009: 43%) (2009: 44%) (2009: 13%)

(2009: 41%) (2009: 52%) (2009: 7%)

1. Group development 2. Ambition 3. Ownership structure 4. Financial policy 5. Importance of investment grade 6. Cash is king

12

We want to be a significant player in the markets where we choose to compete

• We want to balance our presence in both mature and growth markets

• Most of the western world is fully consolidated and major local player are owned by the big four international brewers

World’s top-4 brewers

Presentation for The Danish Society of Financial Analysts - 8th April 2014

1. Group development 2. Ambition 3. Ownership structure 4. Financial policy 5. Importance of investment grade 6. Cash is king

Group ownership structure

14

Carlsberg Foundation

Free float

Carlsberg A/S Listed on Nasdaq OMX

Copenhagen

Carlsberg Breweries A/S

Operating companies

30% of capital 75% of votes

70% of capital 25% of votes

100%

20%

34% 20%

26% Denmark

USA

UK

Other

Note: Excluding The Carlsberg Foundation

Geographical break-down of shareholders

Presentation for The Danish Society of Financial Analysts - 8th April 2014

Carlsberg Foundation Charter

15

+ New dividend policy Min. 25% of retained earnings to be phased in over two years

1970

2007 51% of capital

2013 51% of votes 25% of capital

51% of votes No condition on capital

Presentation for The Danish Society of Financial Analysts - 8th April 2014

1. Group development 2. Ambition 3. Ownership structure 4. Financial policy 5. Importance of investment grade 6. Cash is king

Financial policy

• Centralized funding and risk management at the level of Carlsberg Breweries A/S

• Diversified sources of funding and smooth maturity profile

• Risk perception is to actively manage exposures

• Ample capital resources available at all times

• Committed to retaining investment grade credit rating

17 Presentation for The Danish Society of Financial Analysts - 8th April 2014

Funding structure

18

Carlsberg A/S Listed on Nasdaq OMX

Copenhagen

Carlsberg Breweries A/S

Operating companies

72%

18%

4% 5% 1%

Bonds

Non-current bank borrowing

Mortgages

Current bank borrowings

Other, current and non-current

Funding sources Conservative funding policy

• Main funding sources are bonds and long-term bank facilities

• A new EUR 2,510m multi-currency facility due February 2019 with options to extend additional 2 years was signed December 2013

• 5 bonds issued under €5bn

EMTN program

Centralized funding at the level of Carlsberg Breweries A/S

Presentation for The Danish Society of Financial Analysts - 8th April 2014

Commitment to Investment Grade

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• Rated by Fitch and Moody’s since January 2006

• Long Term Issuer Rating: BBB

• Outlook: Stable

• Date: 21-02-2011 (upgrade from

BBB-, stable outlook)

“Carlsberg Breweries A/S' (CB) ratings reflect

its leading positions in core markets, moderate

geographical diversification and increasing

focus on emerging countries. The ratings are

supported by the resilience of CB’s operating

profit and cash flow generation to a sequence

of challenges encountered in its core Russian

and western European markets.”

• Rating: Baa2

• Outlook: Stable

• Date: 23-02-2011 (upgrade from Baa3,

stable outlook)

“Carlsberg Breweries' Baa2 long-term issuer

rating is underpinned by the group's (1) scale as

one of the world's largest brewers, with leading

positions in some of its key European markets,

including Russia; (2) a degree of geographic

diversification ; and (3) solid cash flow

generation supporting net debt reduction, albeit

at a slower pace given ongoing challenging

trading conditions in the European beer sector.”

Presentation for The Danish Society of Financial Analysts - 8th April 2014

1. Group development 2. Ambition 3. Ownership structure 4. Financial policy 5. Importance of investment grade 6. Cash is king

Investment grade issuers have priority access to financial markets during volatile times

21

The Collapse of Lehman

Brother

The Sovereign Debt Crisis in Europe

Peripheral European

Debt Concerns

Source: Dealogic, Bloomberg, BNP Paribas

• Over all supply decreases as investors becomes more picky in volatile times

• The IG market is by far more resilient, is open longer and never totally shuts down even when volatility strike whereas the red Sub-IG (includes Non-rated) areas vanishes or significantly decrease during the same periods

• IG corporates will have greater access to bigger pools of liquidity at all times, but more specifically (and perhaps importantly) when liquidity freeze up

0

50

100

150

200

250

Q12008

Q22008

Q32008

Q42008

Q12009

Q22009

Q32009

Q42009

Q12010

Q22010

Q32010

Q42010

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Q12014

Sub-IG Corporate EUR IG Corporate EUR

0

10

20

30

40

50

60

70

80

90VIX Index (RHS)

Quarterly Issuance Volumes in Relation to the VIX Volatility Index since 2008

Presentation for The Danish Society of Financial Analysts - 8th April 2014

Investment grade issuers benefit from more stable funding costs during volatile times

Presentation for The Danish Society of Financial Analysts - 8th April 2014 22

Enron Default , Dotcom Bubble and 9/11 attack

Lehman Brother collapse and debt crisis

Peripheral European Debt Concerns ∆21%

Source: Merrill Lynch Index, BNP Parisbas

0

5

10

15

20

25

1999 2001 2003 2005 2007 2009 2011 2013

European BBB index European HY BB index

The costs differential between European BBB and BB High Yield Corporates since 1999

• The historical cost of funding between BBB and BB rated issuers shows that the BBB cost is much less volatile compared to BB

• Even though the funding cost rise for BBB corporates at distressed times, it remains low compared to the significant spikes BB corporates experience

• On a note separate to cost, there is of course other benefits of staying IG such as less covenants, longer maturities available etc.

1. Group development 2. Ambition 3. Ownership structure 4. Financial policy 5. Importance of investment grade 6. Cash is king

Strong focus on working capital management to improve financial flexibility

0%

2%

4%

6%

8%

10%

12%

2006 2007 2008 2009 2010 2011 2012 2013

ATWC/net revenue

24 Presentation for The Danish Society of Financial Analysts - 8th April 2014

• Group wide initiative to reduce average trade working capital

• Dedicated work streams and initiatives for inventories, accounts payable and accounts receivables