Annual Report 2001 - Carlsberg Group

72 Financial Review of the Carlsberg Group
Cash flow
The cash flow statement gives a complete
overview of the origin and application of the cash
flow throughout the year.
Cash flow from the operations of the Group,
inclusive of financials but exclusive of changes in
the working capital, amounted to DKK 3.8bn
against DKK 3.0bn last year (15 months). Total
cash flow from operations amounted to DKK
2.2bn against DKK 2.3bn last year (15 months),
which is a considerable improvement when taking
into account the accounting period.
The Group has sold securities, resulting in a
positive net contribution of DKK 0.8bn. This revenue
has been applied to reduce short-term debt
to credit institutions. Increased tied-up working
capital amounted to DKK 1.6bn.
DKK 3.6bn was applied for the purchase of
tangible fixed assets and net DKK 2.0bn for the
acquisition of companies, etc.
Free cash flow amounted to a negative DKK
1.3bn against a negative DKK 3.8bn last year.
When taking the Group’s increase in debt into
consideration, a total positive cash flow of DKK
1.0bn appears for the financial year.
In aggregate, cash at bank and in hand of the
Group amounted to DKK 3.2bn at 31 December
2001.
Securities, cash and cash equivalents and
interest-bearing debt
At 31 December 2001, securities, cash and cash
equivalents, consisting of cash at bank and in
hand and listed securities, amounted to DKK
3.3bn (2000: DKK 2.9bn) based on official stock
exchange prices. Furthermore, confirmed but
unutilised credit facilities amounted to about DKK
4.4bn (2000: DKK 3.4bn).
The net interest-bearing debt totalled DKK
10.9bn which is an increase of about DKK 0.6bn.
This is a natural consequence of the investments
described above.
The Group’s loan portfolio consists of listed
bond loans, bilateral loan agreements and syndicated
credit facilities, primarily raised in currencies
in which the Group holds assets.
Financial risks
As an international business the Carlsberg Group
is exposed to a number of financial risks, primarily
through Carlsberg Breweries A/S. Financial risks
and management and planning of liquidity are
managed centrally, including funding and placement
of excess liquidity. The use of financial
instruments is regulated by instructions approved
by the Board of Directors and by internal procedures.
The instructions and procedures specify the
types of financial instruments allowed, counterparties
and risk limits.
Exchange rate risks
By far the predominant part of turnover originates
from foreign companies translating into Danish
kroner according to computed average exchange
rates. Fluctuations in these currencies against the
Danish krone will have a direct impact on the
Company’s profit and loss account. The
company’s exchange rate exposure is distributed
on many countries outside Denmark. Carlsberg
Breweries’ exchange rate exposure is primarily
related to EURO, GBP, CHF and RUR.
Compared to previous years, the Danish krone
accounts for a significantly smaller part of earnings.
This is mainly attributable to the addition of
Orkla’s beverage activities, of which BBH in particular
accounts for a substantial part of earnings
(30%).
In the balance sheet, fluctuations in exchange
rates affect primarily the translation of the foreign
companies’ equity at the exchange rate ruling at
the balance sheet date. Adjustment is made directly
against equity as is also the case with longterm
loans in foreign currencies raised to hedge
investments in subsidiaries.