Hello, welcome to the Royal Unibrew conference call. Throughout this call, all participants will be in a listen-only mode, and afterwards there will be a question and answer session. Today, I am pleased to present CEO Lars Jensen and CFO Lars Vestergaard. Please begin your meeting. Thank you very much. I'd like to welcome you all to this audiocast, where we will try to give you some details based on the acquisitions that we have announced yesterday. Two in a day is quite a lot. We have been working on these acquisitions for many months, it happens to come out on the same day, not something that I can advise others to do. I'd also like to stress that given that we have a process with clearance of competition authorities in Finland due to the size of the deal, and that we have a works council process in France, there's limits to how detailed we can go on a number of subjects. We will try to do the best as we can. Please go to slide number two, which highlights a bit of the strategic rationale of the acquisition of Solera. It's 100% acquisition of the total business, and it's a business that we are taking over from a private equity that has been building up the business over a number of years organically, widening the portfolio as well as by acquisitions. It's a strong platform that we are taking over. In terms of the product ranges, it has a very wide span. Although that wine is the biggest category, the organization has proven through a number of years that they have been able to build up propositions within beer, within soft drinks, within waters, within energy drinks, et cetera. When you look at the overall mindset, their capabilities, it's pretty equal to what we live every day in our multi-beverage markets in Denmark. The acquisition is about growth, and what they're providing is a really strong route to market. We do expect that we will be able, together with the team, to build a plan to grow the business further. This is by any means not a cost case. It's a growth case. It's about building a total Nordic-Baltic business that operates within the framework of being a multi-beverage. There's a big difference between the businesses in the three countries, and of course, we have a good, solid business in Finland. What is new to us is operational businesses in Norway and Sweden. We get a route to market access, which is on top of the partners that we already work together with in these countries. As I said, we will aim together with the Solera team to work towards a plan that builds the portfolio from being between multi-niche and niche to being real multi-beverage. Sorry, it is between multi-beverage and multi-niche. We want to build it towards being a multi-beverage. A really strong acquisition, we feel. Please move to slide three, which is the map of the business. As you can see here, it will complete the Nordic/Baltic landscape, and we will almost double the amount of consumers that we will target on an everyday basis. All in all, we will go beyond 30 million consumers that we can target with our broad portfolio. On the left-hand side on the slide, you can see that there is a range of different partners that Solera operates with. We have a similar set of partners that we operate with in Finland. Some of them are actually the same. Of course, one of the things that we do see as an opportunity here is to be a one-stop shop partner for many of the brands that we work together with. It completes the Nordic landscape, which we are really happy about. I would like Lars to check the next slide. Yeah. If you turn to slide four, here you can see the numbers for the business that we are looking at. The nature of the business we take over is a lower margin business than what we have in Royal Unibrew today. They mainly sell other people's brands or third-party brands, which by nature is lower margin than when you own the brands and have invested a lot of capital to produce them. The numbers are different than what you normally see in Royal Unibrew. We will get roughly DKK 1.3 billion in normalized revenue, and the reason why we talk about normalized revenue. COVID have kept the Norwegians in particular at home. That means that the revenue for this business has been substantially higher than what you see here in the monopolies, in particular when all the Norwegians could not travel abroad and buy wine and spirits. We've spent quite a bit of time on cleaning out for this COVID effect. DKK 1.3 billion in revenue, normalized EBITDA of around DKK 70 million, and EBIT margin in the neighborhood of 5%. We paid DKK 770 million, a multiple of 11. This will, of course, dilute the group margin in Royal Unibrew. As a standalone business, it would be difficult to move the margin to the same level as the Royal Unibrew group on this business. There will be quite a lot of work in moving the margins up by expanding the portfolio with own brands and do bolt-on acquisitions in the coming years. We funded the acquisitions from existing credit facilities. Even though we announced two acquisitions yesterday, they are not complete, any of them. We will deal with the question around the second tranche of share buybacks later on. The two transactions will not materially alter our credit profile, so not a big change in that. Or maybe I should just remember to mention that the closing of this transaction is pending a regulatory review, and it's in particular in Finland, where we have Hartwa-Trade and Solera, who are competing in the wines and spirits segment where we have a short process that needs to be completed. We expect that to be finalized during Q3. If you turn to the next page, you can see the revenue split of the three countries. You can see that the biggest piece is in Norway, which is a very strong business we have in Solera, the beverage group have in Norway. It's the second-largest player in the Nordics when you look at the monopoly markets. It's a big portfolio, and I think as Lars mentioned, they are very good at managing third-party brands, so importing leading brands into the markets, which is also something that Royal Unibrew have done with Pepsi and Heineken into Denmark, Finland, and the Baltics. Clearly some similarities in terms of that. If you take slide number six, Lars. Thank you, Lars. To give a little bit more color and detail on the operations in the three different countries, Lars did show you the revenue difference. Norway is by far the most developed market in the Solera portfolio. It's more than half of the employees that sits in the organization, and of course, also because that there is corporate functions that support the countries in Sweden and Finland from Oslo. It is a more advanced portfolio that the Norwegian business is operating. You can also see it on the portfolio, so to speak. The business is representing more producers, more categories, more brands, and ultimately it also carries a higher market share. The market shares that you see here on the slide indicates a number two position in the monopoly wine area, and most, I would say, importantly to complete the channel coverage, an estimated number one position in on-trade in wine. A number one position in wine is a market share which is in the neighborhood of between 20%-25%. A really wide coverage of customers. A very strong business. When we do benchmarking to other beverage companies in Norway, from a size point of view, is as big as the second brewer in the market. When you look at the margins, they are on a comparable basis to other beverage companies, is in a good spot. When we move to the Swedish business, that's a business that is being built up as we speak. That means that the portfolio is being expanded. It means that the channel coverage is being expanded and so on and so forth. That is a business that is at this moment of time is a bit subscale compared to the business in Norway. A growth case that needs acceleration and investment. You have the Finnish business, which is a business that is almost focused on the wine area, with a different focus than the portfolio that we are carrying in our Hartwa-Trade business. The Hartwa-Trade business is very strong in spirits, as an example. It's very strong towards on-trade, whereas the Solera business is stronger towards the wine business in the Alko system, and they are stronger towards the wholesale business, which tends to be smaller and mid-size on-trade customers. A relatively good match to the business that we have. We do see opportunities to create commercial synergies together. Lars, if you can take the next slide. Just looking at the outlook for the Royal Unibrew Group for this year, we keep our margin range that we've had for the two transactions. Of course, we get some EBIT in the rest of the year. It should be mentioned that we also have transaction costs that we will get in the remainder of the year, and they are both cases, so that means we also will start to invest in the businesses and spend commercial money on both of them in the remainder of the year. Of course, if you look at Solera, it comes with a lower margin than the group. We change our medium EBIT target, the margin target of 20%-21% to a long-term target. We will work on this for a number of years to get the margin up, but we do not change to a lower level. The way we want to increase the margin in the combined business is by realizing synergies from the acquisitions. The synergies will be to a very large extent commercial, that would be launching our brands in the two markets. When we start to sell our own brands, they come with higher margin than when you sell third-party brands. This will be where we get the uplift. That will be when we build our own portfolio, when we get the scale benefits of selling a broader portfolio. Also, it opens up for the opportunity to do bolt-on acquisitions, which will also deliver more synergies than when you just do a platform acquisition as the one we do. All in all, it changes the margin profile of us for a number of years, but from a pure value creation point of view, we believe that it gives us a lot of optionality to deliver value to the shareholders in the coming years. Yeah. Just maybe a final comment on the Solera piece here. We do see opportunities commercially. We have said growth many times. Lars has mentioned the optionality of the broader Royal Unibrew portfolio. That's one of the pillars. Another pillar is centered around the strong third-party brand portfolio. That is developing that even further, using cross-border synergies to build an even stronger proposition together with the partners. We have mentioned that there might be some optionalities in some assets that can be bolt on. We have proven that in a number of other markets. Of course, that's not a given, but it's something that we will have a look at as we speak. We could extend partnerships even further on than what we have today. There's a lot of optionality, and we'll have to work that through diligently with the Solera team in terms of what really makes sense in each of the markets, because it is the Royal Unibrew model that we will pursue here, and that is that we need to optimize the local opportunities. We need to look at each market individually and harvest the synergies across the countries, but with the aim of being the best and preferred partner for the trade and for the customers at the end of the day. That was my last words on Solera before your questions, and I guess you will have questions. Moving to the last slide of the presentation here, on the energy drink in France called Crazy Tiger. This is the real local energy drink. The two big players in the market that Crazy Tiger is competing with is Monster, and it's Red Bull, and then there's a bit of private label and smaller brands in the market. It's a category that is growing very fast. I've seen some of the analyst comments already have been digging into Nielsen numbers, which indicate over the last 12 months, a growth of between 20%, 25%, 30%, depending on which channel that you're looking at. It's a category that is growing, and energy drinks and lemonade are the two categories that are growing the most. If we will be able to conclude this acquisition, we will be exposed to the two fastest-growing categories in the beverage territory at this moment of time in France. We feel that that is really attractive. The 2020 revenue was about DKK 100 million. If you look at the equivalent size of the business in France for Lorina, it's about a 50% increase of our total revenue. As you know, that this is being produced by third party, so that also means that it is very asset light, and fits well into our footprint. The majority of the sales is conducted in the retail channel, which is a one-to-one link to what our business is in Lorina. We are also starting to develop the convenience channel, so we are adding on distribution points as we speak. That's the only area where we do not have an overlap, an overlay in terms of our sales. We also look forward to call it double the exposure of our sales force so that they can nurse a few brands instead of nursing one brand. With that, we would like to go to the Q&A, and thanks for listening in so far. Thank you. Ladies and gentlemen, if you do wish to ask a question, press zero one on your telephone keypad now. That is zero one to register for a question. We have a question from the line of Edward Mundy from Jefferies. Please go ahead. Morning, Lars and Lars. Congratulations on these transactions. You've been very busy. Just a quick question on some of the commercial opportunities as you think about putting your broader own brand business through this new distribution platform as well as your existing agency business. Are you able to perhaps provide a bit of a range as to sort of what type of revenue uplift might be feasible based on your analysis at this very early stage? Secondly, you mentioned an opportunity to sort of take the margin profile up, less about cost synergies, but more about putting your own business through this. Can you talk about sort of what type of timeframe that might take? Third of all, as you think about modeling this, any sort of broad comments you might be able to share on sort of what the business has been growing on an underlying basis and what it might grow at over the medium term would be really helpful. Yeah, thank you, Ed. I think, first of all, when it comes to building a commercial plan, we will do that together with the Solera team. We cannot share details on that, of course. We have some hypotheses. The hypotheses are centered around the same categories as we have highlighted as priority categories. There's no big difference between the Danish, Finnish/Norwegian, Swedish market. There are some categories that are growing a bit faster in some of the countries than in others. There are some categories where the consumers are more positive on new innovations, as an example, than in others where the markets are more conservative. Of course, we'll have to take that into consideration in terms of the speed that we are adding. I think organic growth, of course, takes a bit of time. You need to create the proposition, you need to get the listings, and you need to do the marketing to make it all happen. We will have the patience, and we will secure that we have the money to support that journey. I would say don't be too aggressive on this in the beginning. It must be ramped up. It's a long-term investment into making a full Nordic platform where we do see a lot of, I would say, business opportunities, and we have tried also to draw the link to the acquisition that we did in Canada, which is a 100% agency business. Now we have had the ownership of that business for a couple of years, and we have actually been able to grow the business on the agency side quite substantially. We have been back discussing with the agencies on how to grow the business even beyond what has been delivered before. We have made growth plans and taking that business to another level. You should not neglect the opportunity to work closer and better together with the partners in a total Nordic perspective because it is about a platform. It's not about single brand propositions. That also alludes to the next one that you asked about, and that's the margin and the timeframe. Normally, we say that midterm is two to three years, and long-term is three to five years. That's the kind of perspective that you should put on it in terms of working ourselves towards the range of 20%-21%. We would not be able to do that just by working on the margin in the acquired business, as Lars said. That would also have to be done by organic growth in the business that we are already managing. That will be a mix of the two is our hypothesis. You asked about the last question, what is the flight attitude of the business the last years? I think that the last one and a half years, the flight attitude of the Solera business has been really high, but as Lars said, it's COVID-related. I think one thing is the growth rate, and another thing is the quality of the growth. The business has been able to grow top line mid-single digit, something like that, if you normalize it over a five years period of time. What is very good to see is that the quality of the net revenue has also gone up. They have been able to work on the assortment, improve the operations on an ongoing basis. Not fast, but a little bit every year. That's where we come from. Great. Thanks. Appreciate the color. Our next question comes from the line of Fintan Ryan from JP Morgan. Please go ahead. Good morning, Lars. Lars, thanks for taking my questions. Following off from that, probably two from me, please. Firstly, we appreciate that you've held a 25% stake in Hansa Borg in Norway for a long period of time. How is that relationship affected by this acquisition? When you say you're looking for future growth or bolt-on opportunities in the Norwegian and Swedish markets, would it be fair to say that Hansa Borg could sort of fit the bill there? Secondly, quite recently, you provided the sort of midterm growth algorithm of the sort of 3%-5% EBIT growth, which you should be sort of factoring in plus or minus. Is it fair to assume that once you annualize both the Solera and the MC Energy acquisition, that sort of 3%-5% growth algorithm holds? If I take the question around Hansa first. Now, we have done this acquisition by our own, and honestly, of course, the Hansa team have only seen this yesterday. I think our view is that Hansa is a great business as well as Solera is a great business. If there's any merit in working together in some sort of way, there's many ways that that can be done. I think that would strengthen the totality, but that is, of course, something that we need to discuss with Hansa. If there's no merit, that is also okay. That's not an issue. We will do whatever we can to optimize and make the best portfolio available. Hansa has been performing well over the last 18 - 24 months. We are a happy owner of 25% of that business, and we have been that for about 20 years. No change in that. Yeah. To our growth algorithms, I think what was really important for us to communicate earlier on was that the focus of Royal Unibrew Group have shifted slightly towards over-investing in growth pockets. That is why we increased the growth element in our value creation formula. Of course, with this kind of acquisitions, we sort of signaled that we want to focus on organic growth in this acquisition. As Lars mentioned, this is something we want to do right. We want to make certain we get into categories where we can generate good margins, where our propositions fit the consumers, and we need to do that with the local teams. It's a bit early to evaluate whether we change the numbers on the organic growth formula, but clearly this is maybe putting it towards the upper end of our existing range rather than to the lower end. I think it's important for us really to make the plans, and then we can always evaluate the targets at a later point in time. What's important for us to ensure is that we build long-term, sustainable, profitable business in these markets, because with agency business, you can grow very fast with very low profitability, which is not a place we want to be. We do not change our targets at this point in time, but clearly the profile is more growth-oriented, so it is pointing in the right direction. Actually just one follow-up for me, because within the Solera portfolio, can you give us a sense of the sort of the category mix in terms of how much is wine, how much is beer, how much is soft drinks? We will come back to those details when we get the feedback from the competition authorities, and we'll be able to share more details of the different elements of the business. That's one of the questions that we have to wait on answering. Very clear. Thank you. I remind you that if you want to ask a question, you will have to press zero one on your telephone keypad now. Our next question comes from the line of Frans Hoyer from Handelsbanken. Please go ahead. Thank you very much. Just wanted to reconcile the 700 brands mentioned on slide five and then the 300, 250, and 200 brands mentioned on slide six. Not sure, I probably misunderstand the definitions here, but is there no overlap between the markets in terms of brands? There's some overlaps, but there's also a number of agencies that are just in place in a single country. I think when you look at the SKU numbers, if you compare that to the Hartwa-Trade business, which operates with around 800-900 different SKUs. That's a bit the benchmark. Of course, it's always, what is a brand, what is an SKU when you're in the wine territory? Look at the SKUs. That is what is really important. Okay. That's the short formula. Wanted to just touch on the issue of risk in this deal. Where do you see any pitfalls or risks that you need to be especially focused on? I'm thinking whether there is a concentration on your supplier side, the brand owners where you need to make sure they're on board. On the staff side, I guess this is very much a people's business. I gather that it's a strong sales force and what can you do there to mitigate any risk on that front? Yeah. I think for all acquisitions, you always look at three things. How do you secure your brands? Which in this case is third-party brands. How do you secure that they are continuously happy and that they are supportive also with the collaboration of Royal Unibrew. We have no reasons to believe why that should not be the case. If we look at what has happened in the past, we have not lost any of the partnerships after we took over Hartwa-Trade. Since we have taken over the agency business in Canada, we have only expanded with partner and even stronger partners. We have a long, strong heritage in doing both our brands and partner brands. The other one is, of course, how do we make sure that the employees that have delivered good results for the business that they are on board. I think the management of Solera and CapMan as a seller here have done what they can do to secure that there is retention in the business. Of course, the third one is the customers. How does the customer see us as an operator? Those are the three that we are always looking at evaluating and trying to secure so that the acquisition becomes a good acquisition. Yeah. Could you say something about how important your most important counter parties are on the supplier front or brand owner front rather? No, again, that's one of these questions where when we have the keys, we can start sharing more. At this moment of time we are bound by not selling. Okay. Thank you very much. Our next question comes from the line of André Thormann from Danske Bank. Please go ahead. Thanks a lot for taking my question. Just have three. In terms of normalizations, I just wanted to be sure here how much have you taken out on top line and EBITDA. Are these 2020 numbers? Are there any risk that some of these normalizations will come back in 2021 due to continued COVID effects? The second thing is in terms of guidance, just wanted to be sure here why you keep the 2021 guidance. Are all the EBITDA that comes in or will come in 2021 expected to be taken out again in integration cost or are there also something in transaction? My third question in terms of Solera, just wanted to ask if we could get a proxy on how much of their revenue that comes from these state-owned monopolies such as Vinmonopolet, Systembolaget and Alko. Yeah, that was it. Thanks. Regarding the normalization, the impact on the business in 2021 is very substantial in the first many months of the year. We have, of course, looked at that. If you look at the trends in the marketplace over the last 10 years or so, you can clearly by channel see what is the unusual uplift in the market due to COVID. If you take some of the monopolies, they have public figures where you can just see that the numbers spike during 2020 and 2021. It's actually not that hard to eliminate the monopoly element in what you say the market growth. We have a positive impact both in 2020, we have a positive impact in 2021, and that we have taken out in the numbers we've shared as normalized EBIT. Clearly, there's also a positive element in the business in 2021. As we haven't taken over the business yet, a lot of that uplift sits with the current owners. When we hope to get to a closing, we hope that COVID is behind us and things will start to normalize again. The numbers we've shared with you is post-COVID numbers. Regarding the guidance, there's a few things worth mentioning here. First of all is that we have not come to closing on any of the two acquisitions and we do not know what time it is that we will get the keys to the two businesses so that it's not half a year that we get both businesses and therefore it's less than 50% of the EBIT that would go to us. We have transaction cost on both businesses. As we have mentioned quite a number of times it is both businesses so we think it's more important for us to go in and really support the businesses with investments where we do see opportunities. In the rest of the year. There's a little bit of money for investments in commercial in the businesses. There are transaction costs, and then we do not know how long we will have the businesses for. Those three elements makes it a small number in terms of the impact on 2021. The clear priority for us is to ensure that these businesses are well integrated and grow faster rather than deliver synergies in the short term or deliver bottom line in the short term. I think, again, we have not been given all the clearances from the regulator, therefore, we cannot give you full details on how big a part of the business that is from monopolies. I think it's important to understand that the monopoly channel is extremely important for all beverage companies in the three markets that we talk about. As we have a fairly big exposure to Finland where you have the monopoly business, it is something that we already know how to deal with. That's a very important channel, and Solera is very capable of managing these channels. Okay. Thanks a lot. That was great. Just one last question in terms of MC Energy. Just check some numbers here, and as I see, the market share has been fairly flat the last three years. First of all, just wanted to ask whether you can confirm this and what the reason is for this, if it's correct. Thanks. I think, first of all, that the energy drink market is growing very fast. That's the first tick the box. If you look at the pricing of the asset in terms of the shelf price, it is slightly below the cans while this is sold in PET. It's not that different. There's a small difference to a brand like Monster. Red Bull is priced far higher than any other brands. It's pretty comparable to call it the mid-segment. In that segment even though that the big guys have been pushing extremely hard, have invested tons of marketing money, the brands have been able with relatively, I would say, low spending to keep up the pace of the market. I think that's actually quite positive, I would say. We look at it in a positive way that they have been able to keep the share. We have seen similar kind of developments in some other markets where the smaller brands have been squeezed out of the two big guys, which is not the case in France here. That, for us, indicates, and we have done excessive work on understanding the brand through consumer surveys, that actually indicates that the brand healthiness is in a sweet spot. We are pretty confident with what they have delivered. Cool. Thanks a lot. Our next question is a follow-up question from the line of Frans Hoyer from Handelsbanken. Please go ahead. Yeah. Two points. One is it's obvious that before you plan what to do in Sweden and Norway, you will leverage the expertise of the Solera people. From your point of view, as things stand now, which of the Unibrew brands is it that you would consider most interesting to launch into Sweden and Norway? Frans, I think we are not looking at it from a brand point of view yet. We are looking at it from a category point of view. We have brands in the Nordic countries, even in Italy, France, that could travel. This is about the category and then evaluating the brand proposition. Give you an example. The Solera business, as you can see, is carrying S.Pellegrino. They are doing really well, and that means that there is no reason why that we should push LemonSoda because we have the strongest brand in that category already. There might be other categories where we are not doing any business. If you look at a category like energy drinks in Sweden, there is no proposition at this moment of time in Solera's portfolio. We, of course, will have to evaluate if we have a proposition that could fit here. If you look at Norway, the business is doing business with the CELSIUS brand, and thereby covering a piece of the energy drinks market. We'll go through that kind of brand category matrix and work it through with the Solera people. It's back to the categories that we have talked about, no low sugar, no low alcohol, ready-to-drink cider, cocktails, energy drinks, enhanced waters, and so on. Of course, with the wine spirit portfolio, it will be a slightly different angle. Okay. Then a question on France and the energy drinks market there. Can you give us an indication of how progressed is the French energy drinks market compared to the progression achieved already in other markets like the Nordics, for instance? Yeah. Our evaluation is that Finland is probably the most developed market of all markets in Europe when it comes to energy drinks. Sweden and Denmark are just behind. Then you would see that the further south you go, the more years they will be behind. I would say maybe Germany is one or two years behind Denmark, Finland, whereas France is probably two, three years behind. Italy is probably three to four years behind. It's getting up to speed very rapidly. It might be that it's not three to four years, but it's only, at the end of the day, two to three years. When you look at the shelf, when you look at the innovations in the market, when you look at the way the different players are playing the market, the way that the retailers are looking at the category, it has not yet reached a mature level. It's a big optionality. Just to give it a little bit of color, we have launched LemonSoda Energy Activator in Italy, as we have talked about in the past. We have reached the highest distribution rate for any innovations that we have done in the past. We have reached a higher distribution than any other innovation that we have put into the Italian market over the last 10 years after having been in the market for about eight weeks, which clearly shows that the retailers are watching pretty closely at the energy drinks category, and they are open-minded for propositions to get on the shelf as long as they are relevant for the consumers. Yeah. Great. Thank you very much. Yep. There are no further questions registered, so I hand back to the speakers for any closing remarks. Thank you very much. Thank you for participating early, also for the London guys on the team here. We thought it was important to talk to you before the market opens up. Appreciate your participation questions, and we look forward to connect later on. Thank you.