31.08.05 Carlsberg Asia Presentation.pdf - Carlsberg Group

Carlsberg Asia31 August 20051

Carlsberg and Chang agree on settlement• Settlement of the matters in dispute between Carlsberg and Chang,including the arbitrations in London and BangkokArbitration in London• Matter in dispute: Carlsberg terminated Carlsberg Asia joint venturebetween Carlsberg and Chang based on the argument that Changdid not inject agreed upon assets to the company.• Chang’s claim for damages: US$ 2 bn.2Arbitration in Bangkok• Matter in dispute: Carsbergs terminated licence agreement withChang because of non-fulfilment of contratual obligations.• Chang’s claim for damages: US$ 500 m.

Carlsberg is pleased with settlement• Settlement reflects a fair division of assets• Settlement ends prolonged and costly process3• Carlsberg is now able to concentrate on futuredevelopment in Asia

Carlsberg Asia ChronologyDecember 2000:• Carlsberg and Chang establish 50/50 joint venture, Carlsberg Asia,with the vision to create a significant brewing company in Asia.• The Agreement: Carlsberg is to inject all of its Asian activities in thecompany, and Chang is to inject an approx. 50% holding in CarlsbergBrewery Thailand Ltd. as well as the distribution company Sukhothai.February 2001:• Jointly owned Brewery Invest Pte Ltd acquires 5.2% of the shares inHite Brewery.November 2001• Chang acquires 49% of Carlsberg Brewery Hong Kong from SwireGroup LtdJanuary 2002:• Carlsberg Asia acquires 7.8% of the shares in Hite Brewery.April 2003:• Carlsberg Asia acquires 25% of the shares in Lao Brewery, Laos.4

Carlsberg Asia ChronologyMarch 2003:• Carlsberg removes Chang/KC from the Board of Carlsberg Asia.August 2003:• Carlsberg terminates the joint venture.• Chang commences arbitration in London against Carlsberg.• Carlsberg terminates license agreement with Chang in ThailandNovember 2003:• Chang commences arbitration in Bangkok against CarlsbergMay 2004:• Chang specifies claims in London of US$ 2 bnJuly 2004:• Chang specifies claims in Bangkok of US$ 500 mAugust 2005:• Settlement of disputes.5

Division of Property• No matter the rulings of the arbitration in London about theJV there would need to be a division af property followingthe termination af the JVGeneral terms for division of property:• Both parties take back what they injected or should haveinjected in the JV (including herein that Chang buys fromCarlsberg approximately 50% of Carlsberg Thai and 49%of Sukhothai Marketing Company).6• The parties divide, what they acquried in common via theJV – e.g. shares in Hite Brewery and Lao Brewery.In principle outside the division of property:• Carlsberg buys from Chang 49% of Carlsberg BreweryHong Kong – thereafter 100% owned by Carlsberg.

Division of Property (continued)Effectively 2.6% of shares in Hite Brewery, South Korea• Shares were acquired by jointly owned Brewery Invest Pte Ltd.before the termination of the JV and are now taken over byCarlsberg.7.8% of shares in Hite Brewery, South Korea• Shares were acquired by Carlsberg Asia before the termination ofthe JV – and are retained by Carlsberg.25% of shares in Lao Brewery, Laos.• Shares were acquired by Carlsberg Asia before the termination ofthe JV and is now owned by Carlsberg.• Chang is paid for the increase in value.49% of shares in Carlsberg Breweries Hong Kong• Shares are acquired by Carlsberg – now holding 100%7

Net consideration for the transfer of assets2.6% of Hite Brewery Carlsberg buys from Chang849% CBHKCarlsberg buys from ChangUS$ 120m25% of Lao Brewery7.8% of Hite BreweryCarlsberg pays to Chang a fairvalue adjustment to the purchaseprice of shares

Asia is high priority to Carlsberg• Succesful restart of Asian strategy. This region is corebusiness to Carlsberg – together with Western Europe andEastern Europe.• Significant Carlsberg M&A activity in Asia after terminationof JV.– Today 13 breweries in China– 2 breweries in Vietnam and MoU re Habeco– 1 brewery in Cambodia9

Significant upside in Asia• Today some 60% of Carlsbergs earnings are in WesternEurope; c.30% in Eastern Europe and c.10% in Asia.• Beer consumption in emerging markets in Eastern Europeand Asia holds significant upside due to strong macroeconomics.10• Strong commitment to further investments in Asia –investments in future growth.

Carlsberg in AsiaFive Brewery GroupsPosition: No. 1 in all targetprovinces in West ChinaGorkha Brewery Pvt. Ltd.Market share: 82%Position: No. 1 (50% owned)Lion Brewery Ceylon Ltd.Market Share: 82%Position: 1 (100% owned)Carlsberg BreweryMalaysia BerhadMarket Share: 52%Position: 1 (51% owned)Carlsberg SingaporePte. Ltd.Market Share: 24%Position: 2 (100% owned)Hite Brewery Co. Ltd.Market Share: 57%Position: 1 (25% owned)South East Asia Brewery &Hue Brewery Ltd.Market share: 8%Position:3 (60% / 50% respectively)MoU Signed with Hanoi BreweryMarket Share: 23%Position: 2Carlsberg Hong Kong Ltd.Market Share: 14%Position: 2 (100% owned)Lao Brewery Company Ltd.Market Share: 99%Position: 1 (25% owned)CambrewMarket Share: 45%Position: 1 (50% owned)11

Carlsberg in ChinaXINJIANG (pop.: 19 million)Wusu Brewery Group(5 breweries)34.5% ownedMarket share: 55%TIBET (pop.: 2.6 million)Lhasa Brewery33% ownedMarket share: 50%YUNNAN (pop.: 52 million)Dali Brew Group100% ownedMarketshare: 38%XINJIANGKuytunYining ShiheziUrumqiHamiTIBETLhasaGANSUQINGHAIXiningJiuquanLanzhouTianshuiChengduBeijingShanghaiQINGHAI (pop.: 5,1 million)Qing Huanghe Jianiang Brewery33.33% ownedMarket share: n/aGANSU (pop.: 23 million)Lanzhou Brewery Group(3 breweries)30% ownedMarket share: 65%12Kunming Huashi Brewery100% ownedMarket share: 7%YUNNANDaliKunmingCarlsberg Brewery Hong Kong100% ownedMarket share: 14%GUANGDONGGuanghouHuizhou Hong KongGUANGDONG (pop.: 74million)Carlsberg Brewery Guangdong99% ownedBrews Carlsberg beer to all ofChina

• Q & A13

• Supplementary Information14

The Chinese Beer Market• The biggest country in the World with population of 1.3 bn• The biggest beer market in the World with a total of 285 mhl consumed in 2004• Annual growth next 5 years estimated to be 15 mio. hl(growth in 2004: 35 m hl)• Still very fragmented market with top-3 players taking only30% market share.• Beer industry is very regional – no real Pan-Chinesebrewery• Mainstream segment (local brands) accounts for more than97% of total market.15

Carlsberg in Vietnam• Signing in May 2005 of Memorandum of Understandingon strategic coorporation with Habeco – Hanoi BeerCompany. The partnership will allow Habeco andCarlsberg to become market leaders in North & CentralVietnam.16• Carlsberg has already two joint ventures Vietnam:• Hué Brewery, Huè – 50/50 joint venture.• South East Asia Brewery, Hanoi – Carlsbergsownership: 60 %

Carlsberg in Cambodia• Carlsberg has recently acquired 50% of Cambrew.• Total capacity of 450.000 hl17• Market share 45%• High growth expected as per capita consumption is 6litres only – adjacent countries at 12-22 litres percapita