fruit juices and soft drinks bottler for retailers and a

Annual Report 2012

Fruit juices and soft drinks

bottler for retailers and

A-brands

Refresco • Annual Report 20122

www.refresco.com

Refresco • Annual Report 2012 3

Fruit juices and soft drinks

bottler for retailers and

A-brands

We bring total supply chain solutions to our customers


Contents

Refresco at a Glance Our company 8 Our strategy 9 Key developments in 2012 10 Our locations in Europe 12

Executive Board Report 2012 Foreword 16 Business review 18 Financial performance 24 Prospects for 2013 28 Sustainability 30

Governance Governance structure 36 Executive Board and Supervisory Board 40 Risks 42

Supervisory Board Report 2012 50

Financial Review 2012 Financial Statements 58 Independent Auditor’s Report 116 Ten Years Refresco 117

Contact us 118

Refresco at a Glance



Our company

We manufacture high quality products in nine countries in Europe. Our key competencies are the manufacture of an extensive range of product and packaging combinations, managing effective supply chains and the development of innovative new products.

Our customersOur customers are leading European retailers and well- known brands (A-brands). We focus on developing tailor-made approaches to hard discounters, buying platforms and full service retailers. To maintain our path of growth, we aim to leverage the on-going trend among A-brands towards outsourcing their production by offering them a pan-European manufacturing platform with efficient supply chains and high quality standards.

Our productsWe manufacture a full range of soft drinks and fruit juices. Our product range includes a wide variety of fruit juices, carbonated soft drinks, ready-to-drink teas, functional/still drinks, energy drinks, sport drinks, waters, and other specialty drinks in a wide range of packaging.

Our peopleWe employ over 3,000 people throughout Europe. Our size brings economies of scale, but it is the ability of our highly skilled people to seize market opportunities and streamline operational processes that makes the difference.

Our MissionOur mission is to be the most reliable and cost effective bottler of soft drinks and fruit juices for leading European retailers and international A-brands and our ambition is to consistently increase the value of our business for the benefit of all our stakeholders. In close liaison with our customers and suppliers, we strive continuously to innovate, optimize, and further improve the sustainability of our supply chain.

Our VisionOur vision is to continue to grow our leading position in the highly fragmented European market. We operate on a local-for-local basis while, at the same time, sharing inter na tional back office support, purchasing power, latest production technology, product and process innovation, and financial resources for expansion. Reliability, quality, and cost competitiveness are crucial to our customers, and they remain our guiding principles in growing our business.


Refresco valuesEntrepreneurship,

No-nonsense, Teamwork,

Spirit, Focus.

Our strategy

Our strategy is to maintain and further grow our position as the preferred bottler of soft drinks and fruit juices to retailers and A-brand customers across Europe. We focus on healthy organic growth and on highly selective acquisitions.

Grow with our customersWe aim to expand our customer relationships by providing them with a wide range of product and packaging combi nations and total supply chain solutions in multiple geo graphies. We focus on providing high customer service as well as core innovations through the introduction of new packages, flavors, and varieties of soft drinks and fruit juices. We seek to expand our contract manufacturing business through an increasing number of exclusive long-term supply contracts for particular products and regions, enabling more and more A-brands to focus on brands and marketing rather than on manufacturing. By maintaining close relationships with our customers, we seek to grow with them as they expand their own businesses. We aim to achieve these goals through a combination of reliability, cost price leadership, high-quality product, production flexibility, smart market approaches, and good new product development programs.

We continue to invest in improving production flexibility and cost efficiency in our manufacturing and warehousing operations. We also continue to seek ways to consolidate our

manufacturing footprint in order to maximize utilization of production lines and to optimize economies of scale in production, purchasing, and distribution.

Buy & BuildSince its incorporation in 2000, Refresco has pursued a Buy & Build strategy. Our acquisitions are highly selective and focus on contributing to customer service, economies of scale, and cost effectiveness. They broaden our European presence, expand our product range, and add bottling capacity.

Work towards sustainabilityWe are committed to continuously improving our performance in the area of sustainability. We assess and implement alternative supply chain solutions, raw materials, packaging, and manufacturing processes to improve sustainability of our operations. Our customers expect Refresco to maintain high quality standards and to be innovative and cost-competitive. We expect the same from our suppliers. We work towards managing and reducing the environmental impact of our operations by focusing on energy, water, packaging, and waste. We never compromise on product quality and food safety or on a safe workplace.

Strategic integration: In addition to managing our production

processes efficiently, we partner closely with our customers in the

areas of purchasing, supply chain planning and execution, new product

development, and service.




Key developments in 2012

• Throughout the year we have taken the deliberate decision to focus on the better contributing volumes and the high growth segments of our business, and this has led to improvement in our financial performance.

• We made significant investments in four new bottling lines in Benelux and Italy to add capacity and to meet our customers’ changing needs and requirements.

• In line with our strategy, we were pleased to take on board a number of new contract manufacturing customers, which will support ongoing organic growth in 2013.

• The Group’s revenues were broadly in line with prior year. Our volumes fell from last year reflecting our commercial decision in late 2011 to let go volumes in the lower margin product categories.

• We completed the integration of Spumador, the largest Italian producer of carbonated soft drinks and water, into Refresco’s governance structure and purchasing schemes.

• We acquired Taja Sp. z o.o., a Polish private label manufacturer of carbonated soft drinks and water, thereby increasing our capacity in the fast growing Polish private label market.

• Rightsizings in Iberia, Italy, and the UK were completed to meet local market conditions and to improve our competitive positions in these markets.

Key performance indicators • Liters produced: 4,943.9 million

(2011: 4,956.6 million)• Revenue: EUR 1,538.3 million

(2011: EUR 1,523.4 million)• Adjusted EBITDA*: EUR 115.5 million

(2011: EUR 111.0 million)• Gross profit margin per liter: 11.7 euro cents

(2011: 11.6 euro cents)• Net cash flow from operating activities: EUR 49.6 million

(2011: EUR 41.8 million)• Net loss: EUR 18.2 million

(2011: EUR 25.9 million)


6,000

5,000

4,000

3,000

2,000

1,000

0

2008 2009 2010 2011 2012

1,600

1,400

1,200

1,000

800

600

400

200

0

2008 2009 2010 2011 2012

140

120

100

80

60

40

20

0

2008 2009 2010 2011 2012

6,000

5,000

4,000

3,000

2,000

1,000

0

2008 2009 2010 2011 2012

1,600

1,400

1,200

1,000

800

600

400

200

0

2008 2009 2010 2011 2012

140

120

100

80

60

40

20

0

2008 2009 2010 2011 2012

6,000

5,000

4,000

3,000

2,000

1,000

0

2008 2009 2010 2011 2012

1,600

1,400

1,200

1,000

800

600

400

200

0

2008 2009 2010 2011 2012

140

120

100

80

60

40

20

0

2008 2009 2010 2011 2012

Volume (in millions of liters)

* Reconciliation from operating profit to adjusted EBITDA is presented on page 26.

Adjusted EBITDA is not a measure of our financial performance under IFRS,

see page 119. We apply adjusted EBITDA to exclude the effects of certain

exceptional charges that we believe are not indicative of our underlying

operating performance. Such adjustments relate primarily to substantial one-off

restructurings, refinancing costs and costs relating to acquisitions or disposals.

Revenue (EUR millions)

Adjusted EBITDA* (EUR millions)

12 Refresco • Annual Report 2012


Our locations in Europe

Iberia

Poland

Germany

United Kingdom

France

Italy

Benelux

Refresco GroupRotterdam, The Netherlands

13Refresco • Annual Report 2012

Finland

Benelux

• Maarheeze (NL)

• Bodegraven (NL)

• Hoensbroek (NL)

• Ninove (BE)

Italy

• Caslino al Piano

• Spinone al Lago

• Quarona Sesia

• St. Andrea

• Sulmona

Iberia

• Oliva

• Marcilla

• Alcolea

France

• St. Donat

• St. Alban

• Nuits St. Georges

Germany

• Herrath

• Dachwig

• Grünsfeld

• Erftstadt

• Heerlen (NL)

International*

• Kêty (PL)

• Slemien (PL)

• Nieszawa (PL)

• Kuopio (FIN)

• Durham (UK)

179.6 million

153.0 million

155.5 million

384

428

442

18 bottling lines

22 bottling lines

25 bottling lines

467.2 million

246.0 million

337.0 million

617

570

600

20 bottling lines

11 bottling lines

28 bottling lines

Revenue per region.

Average number FTEs during 2012.

* International consists of the UK, Poland and Finland.

Executive Board Report 2012


Foreword

Following the significant input cost increases that our industry faced in 2011, our focus during the past year has been on recovering our margins, rightsizing our business accordingly, and searching for new opportunities to grow our market position. Despite continued high input costs and the depressed economic climate, we are pleased to report that we were able to improve our results by taking firm decisions to focus on the better contributing volumes and on the high growth segments of our business.

The Fast Moving Consumer Goods industry experienced tough competition throughout the year, evident in the pressures on the reported results of retail operators and manufacturers alike. Spain, Portugal, and Italy were those most affected by the economic downturn and these countries saw significant volume decreases at all price levels and in all product segments. Other European countries had to deal with various governmental austerity and budgetary measures, such as value added tax increases and sugar tax. The economic situation clearly slowed the consumption of soft drinks in 2012. In particular, orange juice and apple juice suffered from both the weak economic climate and the high concentrate prices. A-brand promotional activities continued throughout the year and this had a clear effect on our business. Despite the market indicators, we have confidence in the ongoing underlying growth of private label and thereby, also in the future prospects for our business. The growth is driven, on the one hand, by the long and consistent consumer trend towards private label products and, on the other hand, by the increased sophistication of private label products and manufacturers, retail consolidation, and the strong emergence of hard discounters, as well as the increased shelf space as private label becomes more important to retailers’ strategies.

“Our improvement in results was a combination of rightsizing our business and controlling our costs, supported by the on-going

growth of private label.”


Aart Duijzer CFO

Hans Roelofs CEO


Innovation and product co-development are key pillars in our customer relationships and are essential to boosting our organic growth. We believe that creativity toward the consumer as regards attractive price/quality propositions will be key to growing with our customers and to offsetting the effects of the high input costs and the weak economy. On the technology side, the packaging trend towards Aseptic PET should benefit our current Aseptic PET capacity and we are planning to invest further in this.

In 2012, the group’s revenue and volumes were broadly in line with prior year. The modest revenue growth came from a combination of volume increases following the acquisition of Spumador and higher average selling prices as increased input costs were passed on. Excluding Spumador, our volumes fell by 4.7%, reflecting our commercial decision in late 2011 to let go volumes in the lower margin product categories. In the long term, the strength of our business model lies in our ability to achieve the right balance between volume and margin. In line with current volume levels, we started to right-size our manufacturing capacity in the first half of 2012.

As anticipated throughout the year, the benefits of rightsizing and the related cost savings started to flow through to our results in the second half of the year. Our adjusted EBITDA, at EUR 115.5 million, was EUR 4.5 million up on last year. The margin per liter was up on last year, mainly because of the shift from lower margin volumes to higher margin products coupled with our ability to pass on increased input costs. At EUR 18.2 million, the group’s net loss was still a dis appointment, reflecting the lower volumes and the one-time restructuring costs accrued during the year.

As we move forward into 2013 and beyond, our intention is to continue to focus on the top-growth segments of the business. Hard discounters will remain the backbone of our international private label model, complemented by tailor-made approaches to international buying platforms and full service retailers. We will continue to look for opportunities to further

optimize our manufacturing footprint and to maintain our industry cost price leadership.

We expect the challenging business environment to continue in 2013 assuming the economic recession in Europe persists. We estimate only a modest level of growth in the total soft drinks market, though we do believe that private label will continue to outperform the market as a whole and thereby continue to contribute to our operations. Refresco has a strong position in the European private label soft drinks and fruit juices market, and this is complemented by increasing contract manufacturing for A-brands. We aim to increase our share of the contract manufacturing business and to play a central role in A-brand contract manufacturing at a pan- European level. Furthermore, thanks to our strong cash generation and recent refinancing, we enjoy both a strong financial position and the liquidity to develop our business further.

Finally, we would like to thank our customers and suppliers for their cooperation during 2012, and also our own teams across Europe for their dedication and their contribution to Refresco’s operations. We would also like to thank our shareholders, bondholders, and banks for the confidence and trust they have placed in Refresco.

Rotterdam, March 20, 2013

Executive Board Hans Roelofs – CEO Aart Duijzer – CFO



Business review

As in 2011, the market was characterized by high input costs and continued erosion of consumer disposable income. Our revenues were broadly in line with prior year. Volumes fell from last year, reflecting our commercial decision in late 2011 to let go volumes in the lower margin product categories. We improved our operating results, though lower volumes and one-time business rightsizing costs influenced the net result.

Market overviewHistorically the private label soft drinks market in Europe has enjoyed stable growth. Despite today’s challenging economic situation and the consequent fall in consumer disposable income, we do still believe in the underlying growth of private label. In 2012 the overall soft drinks consumption in Western Europe fell from prior year. Especially the juices segment continued under pressure in 2012 due to high concentrate prices. As these concentrate prices stabilize, we expect the segment to even-out.

Given that the soft drinks manufacturing industry in Western Europe remains highly fragmented, we believe that there is room for further consolidation.

Raw materialsFollowing the massive price increase in 2011, practically all primary raw and packaging materials continued at high levels in 2012. The input markets seemed to stabilize in late 2012, having peaked at record high price levels. We aim to mitigate price fluctuations in raw and packaging materials by for example consistently matching our raw material purchases with closings of tenders, the so-called back-to-back model.

Refresco works with a limited number of strategic suppliers for its key raw materials and packaging materials. A substantial amount of our raw materials is purchased centrally. In 2012, our orange juice supply was sourced mainly from Brazil. We also have our own pressing capacity of not-from concentrated orange juice at

our Oliva manufacturing site in Spain, with the remainder of the fresh orange juice being sourced from Brazil and from other locations in Spain. In 2012 the majority of our apple juice concentrate (sour and sweet) was sourced from Eastern Europe, Poland and Hungary in particular. Due to the European quota system for white sugar the majority of our sugar volume was sourced locally at high EU market prices. On the packaging side we source PET preforms and PET granulate mainly from European manufacturers. Aluminum cans were sourced from European manufacturers and liquid paper board mainly from the three major global suppliers. We are continually looking out improvements in our supply chain solutions that can benefit our customers.

Flexible manufacturing capabilities: Our state-of-the-art manufacturing equipment provides us with

the flexibility to manufacture a full range of products in a wide variety of packaging and to respond

quickly to our customers’ changing needs and requirements.

“Meeting high-volume customers’ requirements

quickly.”



Refresco is focused on producing soft drinks and fruit juices in a wide variety of packaging. Our production capabilities enable us to manufacture over 5,500 stock keeping units (SKUs) for both our private label and contract manufacturing

customers. Furthermore, we are also able to develop new packaging and products quickly to meet changing customer requirements and consumer demand, which positions us well to continue to serve our customers and their consumers.

Wide range of product and packaging combinations

Carbonated soft drinks 31.7% (2011: 31.0%)

Waters 24.4% (2011: 22.3%)

Fruit juices 17.4% (2011: 20.1%)

Ready-to-drink teas 11.9% (2011: 12.4%)

Functional and still drinks 10.8% (2011: 8.9%)

Energy drinks and other 3.8%

(2011: 5.3%)

PET 51.5%

(2011: 50.9%)

Aseptic PET 19.3%

(2011: 17.3%)

Carton 18.2%

(2011: 21.1%)

Cans 9.1%

(2011: 9.2%)

Other 1.9%

(2011: 1.5%)

Volume per product category Volume per packaging

Products and packagingWe saw the shift continue from the more expensive product categories, such as 100% fruit juices, to cheaper categories such as fruit drinks and carbonated soft drinks. Orange juice and apple juice were particularly affected by the latest price increases. Despite the slow-down in demand for fruit juices, we believe that the long-term prospects for this category are promising, in particular in juice concepts with added value. In 2012, fruit juices represented 17.4% of our total volume, a decrease of 2.7%-points compared to 2011. Our most recent acquisitions have increased share of the carbonated soft drinks and the water markets by 0.7%-points and 2.1%-points, respectively.

Furthermore, we saw the trend continue away from carton packaging to Aseptic PET. In 2012, 70.8% of our packaging volume consisted of plastic containers (PET and Aseptic PET). We continue to strive for high percentage of recycled PET in our plastic bottles. Liquid paper board accounted for 18.2% of volume and the remaining 11% was packaged in steel and aluminum cans and to a lesser extent in glass and pouches.



Volume per channel

Customer focused innovationApproximately 8-10% of our annual revenue is generated from new product and packaging innovations. In 2012, we focused particularly on new product development in non-preservative soft drinks and on Aseptic PET filling for carbonated soft drinks. The growth of Aseptic PET filling is evident in the growing number of product categories. Aseptic PET technology extends the shelf life of a product and allows the manufacture of soft drinks and fruit juices without preservatives. Furthermore, we expect above average growth to continue in product categories such as iced and ready-to-drink teas and energy drinks. Product development is most often carried out in close cooperation with the customer.

We search continuously for ways to improve the quality of the products we manufacture and to develop or modify the packaging we use. Value engineering aspects i.e. searching for alternatives for ingredients in recipes and packaging to meet our customers’ needs, fully exploiting our economies of scale in supply chain, purchasing and distribution as well as simplifying processes leading to higher efficiency and/or cost savings are all areas on which we have been focusing in 2012.

A leading customer base Refresco serves national and international retailers in Europe. We have long-standing partnerships with leading European hard discounters and full-service retailers with a broad and sophisticated range of private label offerings. In addition to suppying food retail operators, Refresco is also a contract manufacturer for a number of well known A-brands.

In 2012, our ten largest customers represented 62.3% of volume and 59.1% of revenue with more even distribution within this top group. Over time, we have re-balanced our customer portfolio, which in the early years consisted mainly of retailers, to include a larger share of A-brand manufacturers, and this has created greater long-term stability.

Our leading positions in the private label and contract manufacturing markets are supported by our pan-European manufacturing network and our strong category management and servicing skills. Our production locations are close to warehouses and distribution centers creating proximity to the customer.

Retail

Contract manufacturing

83%

17%

PET 51.5%

(2011: 50.9%)

Aseptic PET 19.3%

(2011: 17.3%)

Carton 18.2%

(2011: 21.1%)

Cans 9.1%

(2011: 9.2%)

Other 1.9%

(2011: 1.5%)


People and organizationRefresco employed 3,074 people (FTEs) in 2012 (3,034 in 2011), in the Netherlands, Belgium, Germany, France, Spain, Italy, the UK, Poland, and Finland. The modest increase in headcount was attributable mainly to the acquisitions of Spumador and Taja, partly offset by reorgani za tions completed in Iberia, Italy, and the UK.

Due to local market conditions and decreasing demand, we have terminated our rental contact at the Palma del Rio manufacturing site in Cordoba, Spain. To reflect market conditions and to protect the future prospects of our Iberian business, we have also completed extensive reorganizations at the remaining manufacturing sites. In Italy, we decided to close production at our leased manufacturing site in Gussago following the combination of weak market conditions in the region and the 2011 acquisition of Sulmona. The production at Gussago was transferred to other group-owned manu facturing sites. We have also transferred part of the Caslino al Piano production in the north of the country to our Sulmona manufacturing site in the center of Italy. In the UK, we have completed a restructuring program at our Durham site in order to further reduce our cost base and to improve efficiency in line with current volumes. Regrettably, the restructuring programs also led to redundancies in the countries affected.

At Refresco Group, we have made two significant improvements to our governance model. Firstly, to ensure a strong focus on the opportunities and challenges of today’s markets and to further strengthen the coordination and development of our international

customers, we have established a formal Group Commerce function. Secondly, to support Refresco’s ambitions as a world class manufacturer and to lead our footprint optimization, we have boosted the staff resources of the Group’s Operations function.

Succession management has continued to be a key theme in our Human Resources strategy at Refresco Group. To support our growth targets for the future, we have continued to work to ensure that we properly develop our high potentials and that they find interesting challenges within Refresco. Most of our senior managers have joined Refresco from outside the Group in recent years, and it is our ambition for the coming years to promote more internal Refresco management talent to higher positions across the businesses. We have targeted our recruitment efforts more specifically at middle-management talent, to be coached and developed in-house.

InvestmentsOur investments in acquisitions and capex projects aggre gated EUR 49.7 million in 2012. We invested significant amounts of capex in Germany, Italy, and Benelux, adding new bottling lines and replacing older lines with new technology. The remainder was invested in transferring our manufacturing capacity from closed lines and plants in Italy and Spain into other group-owned manu facturing sites and in replacement projects and modernization of our manufacturing set-up. We see these investments as the foundations for further organic growth and cost savings in 2013.



We acquired Taja, a Polish private label manufacturer of carbonated soft drinks and water, to create a nation-wide footprint and a platform for further customer-driven growth. Taja’s production site in Nieszawa is centrally situated in

Poland, close to the highways leading to the north and mid regions of the country. This acquisition complemented our existing production facilities and distribution lines in the south of the country.

Organizational structure

Refresco Group

Benelux France Italy

Poland

Germany Iberia

UK

International

Finland

Behavioral competencies at RefrescoOur size does bring economies of scale, but it is the ability of our people to seize market opportunities and streamline operational processes that makes the difference. We believe strongly that it is not only knowledge and experience, but also the right mind-set, that are critical to good performance. As a cost price leader, Refresco continuously needs to make its processes smarter, more flexible, and more sustainable. Our skilled production staff play a key role in ensuring that we work in the most efficient and effective manner possible.

Refresco encourages high performing talent to broaden their horizons internationally. Both short-term assignments and long-term career opportunities abroad are encouraged within the Group.

To ensure that the Refresco culture remains embedded within the Group, we recruit, reward, and appraise our people on the basis of behavioral competencies. These behavioral competencies set the standard for the results we expect from our employees and for the behavior essential to achieve the results to which we aspire.

In addition to the competencies we have set out below, our top management team members are identified, assessed, developed, and rewarded on the basis of their vision, leadership, entrepreneurship, and coaching skills.

Team work Behavioral flexibility IntegrityPerformance orientationResults orientation


General informationOn May 16, 2011 Refresco issued a total of EUR 360 million in 7.375% senior secured notes and EUR 300 million in senior secured floating rate notes (3 month EURIBOR + 400bps). The notes are due on May 15, 2018. The notes are listed on the Luxembourg Stock Exchange and have been admitted to trading on the unregulated Euro MTF market. In connection with the issue, Refresco obtained a EUR 75 million revolving credit facility (RCF) from a consortium of seven European banks.

Standard & Poor’s (S&P) reduced Refresco’s corporate and senior secured long-term rating from BB- to B+ with negative outlook on July 27, 2012. Moody’s downgraded Refresco’s ratings from B1 to B2 on July 10, 2012, at the same time re-affirming stable outlook.

Acquisition of TajaOn May 29, 2012, we completed the acquisition of Taja Sp. z o.o., a Polish private label manufacturer of carbonated soft drinks and water. The total cash-outflow for the acquisition was EUR 6.0 million which was financed from our available cash resources. The acquisition of Taja did contribute to the Group’s results for the current year, though the effect was not material. Due to its size, Taja’s results are not presented separately in the annual report.

Revenue and expensesGroup revenue totaled EUR 1,538.3 million in 2012, an increase of 1.0% on 2011. Excluding the impact of the Spumador acquisition, which closed in April 2011, revenue fell by EUR 23.4 million or 1.6%. This was attributable to an average 3.1% increase in selling prices offset by volume decreases of 4.7%. The higher average selling prices arose mainly because of increases in raw material and packaging material prices were passed on to our private label customers. In like-for-like comparisons, we have excluded the effects of Spumador acquisition up to mid-April 2012.

Revenue per channel was broadly in line with 2011. Bottling activities for private label customers and A-brands represented 75.1% and 16.6%, respectively, of revenue in 2012. Own value brands and other customers accounted for the remainder of the revenue.

Our commercial decision to let go of some volume in the lower margin product categories in the last quarter of 2011 was positively reflected in our gross margin per liter for 2012 but negatively impacted our annual volumes which decreased by 0.3%. The weak economic climate, downward trend in the total soft drinks market, and substantial volume loss in Iberia due to the tough local market conditions and competition adversely impacted our volumes. Excluding the Spumador acquisition, volume was down by 4.7%. We saw volumes fluctuate significantly towards the end of the year adding to the volatility of the market. This may have been caused in part by the continued A-brand promotions.

• Revenue totaled EUR 1,538.3 million, up 1.0% on 2011• Volume totaled 4,943.9 million litres, down 0.3% on 2011• Gross profit margin per litre was 11.7 euro cents,

up 0.9% on 2011• Adjusted EBITDA was EUR 115.5 million, up 4.1% on 2011• Refresco’s corporate and senior secured credit ratings

are as follows: S&P B+, outlook negative; Moody’s B2, outlook stable

Financial performance



Gross profit margin per liter was EUR 0.117 in 2012 compared to EUR 0.116 in 2011, the slight increase being mainly attributable to the shift away from lower margin volumes towards more profitable products and to our ability to pass on increased input costs toward the end of the year. Furthermore, margins increased despite the shift from juices to carbonated soft drinks and despite water and the addition of lower margin products from acquisitions.

Gross profit margin (as a percentage of revenue) was 37.7% for 2012 and in line with 2011. Passing on input cost increases to our private label customers has a direct impact on our revenue and gross profit margin percentage, but this does not affect the absolute gross profit margin per liter. Consequently, there can be inconsistencies between the fluctuations in gross profit margin percentage and gross profit margin per liter. As input costs can fluctuate significantly over time, our performance should be assessed in terms of gross profit margin per liter.

Raw materials and consumables totaled EUR 959.0 million, an increase of 1.0% on 2011 attributable to increases in the prices of key raw materials and packaging materials partly offset by lower sales volumes.

For most raw and packaging materials, we have a policy of purchasing forward to cover sales positions with customers. Some of the raw materials we require are priced only in USD,

and we mitigate the effect of exchange rate fluctuations by using USD purchase options and forward contracts.

Operating cost decreased by EUR 4.3 million in 2011. Excluding the effects of the Spumador acquisition, impairments, and exceptional costs, the operating costs fell by EUR 14.7 million compared to 2011, reflecting the measures taken to right-size our manufacturing capacity and the cost saving programs implemented.

Employee benefits expense totaled EUR 151.3 million, an increase of 5.1% compared to 2011. The increase was primarily attributable to increased headcount arising from the acquisition of Spumador and to costs related to the rightsizing measures taken in the UK, Spain and Italy. During 2012 the average number of employees (in full-time equivalents) was 3,074 compared to an average of 3,034 in 2011.

Depreciation, amortization, and impairment expense totaled EUR 73.4 million compared to EUR 73.5 million in 2011. Impairment amounted to EUR 7.5 million, arising largely from a write-down of goodwill in the UK due to reduced expected growth in that market, the Uelzen manufacturing plant in Germany and Gussago manufacturing plant in Italy. Impairments in 2011 amounted to EUR 9.1 million. Other operating expenses were EUR 319.9 million, a 3.5% decrease on 2011.

* By location of sales

** International consists of the UK,

Poland and Finland

Revenue per region*

BENELUX

30.3%FRANCE

16.0%GERMANY

21.9%IBERIA

11.7%ITALY

10.1%INTERNATIONAL**

10.0%


Rightsizing costs amounted to EUR 6.5 million in 2012, of which EUR 4.4 million related to costs incurred and EUR 1.6 million to impairments. Capex related to restructuring amounted to EUR 5.1 million attributable to the transfers of production capacity. The expected annualized run-rate savings resulting from the rightsizing measures are in the range of EUR 7 to 8 million.

Finance income of EUR 0.6 million was consistent with 2011. Finance expenses totaled EUR 48.4 million, compared to EUR 52.2 million in 2011. The decrease was attributable to lower overall finance costs following the recent refinancing and the 2011 write off of financing costs related to previous financing arrangements. The net amount of finance expenses in 2012 was EUR 47.8 million, representing a 7.2% decrease from EUR 51.5 million in 2011.

The effective tax rate was 44% negative, compared to a blended Group tax rate of 9.8%. The negative effective tax rate arises mainly from non-deductible impairment of goodwill in the UK. Furthermore, the tax effect of losses incurred during the year in the UK was not recognized. There were also some additional prior year tax accruals and some provisions made for tax audits. Income tax expense in 2012 was EUR 5.6 million, compared to EUR 0.1 million in 2011, reflecting the improved operating results.

ResultsThe operating profit in 2012 amounted to EUR 35.2 million compared to EUR 25.7 million in 2011. The improvement was mainly the result of the higher gross profit margins, the rightsizing of our business in line with current volumes, and the further cost savings achieved in 2012.

EBITDA for 2012 was EUR 108.6 million, compared to EUR 99.2 million for 2011. Excluding the rightsizing costs and other one-off items, the adjusted EBITDA was EUR 115.5 million, compared to EUR 111.0 million for 2011, reflecting the higher gross profit margins and the cost savings achieved.

Reconciliation of operating profit to adjusted EBITDA (in millions of euros)

2012 2011Operating profit / (loss) 35.2 25.7

Depreciation, amortization and impairment costs 73.4 73.5

EBITDA 108.6 99.2

Acquisition and other costs 2.1 2.2

Costs refinancing 0.3 8.0

Fair value adjustment acquisition 0.0 0.7

Restructuring cost 4.5 0.0

MtM revaluation US$ options 0.0 0.9

Adjusted EBITDA 115.5 111.0



The loss before taxes amounted to EUR 12.6 million, compared to EUR 25.8 million in 2011. The loss for the year was influenced by lower volumes and one-time costs related to the rightsizing of the business during the year. Balance sheet and financial positionTotal assets amounted to EUR 1,205.1 million at December 31, 2012, compared to EUR 1,262.9 million at December 31, 2011. The balance sheet fluctuations arose mainly from rightsizing our manufacturing capacity, decreased working capital and lower value of derivate financial instruments.

Capex spending was EUR 43.5 million, compared to EUR 41.5 million in 2011 mainly attributable to investments in new bottling lines and the transfer of capacity from closed production sites to other group-owned locations.

Despite the higher raw and packaging material prices working capital decreased by EUR 14.5 million from EUR 91.9 million in at December 31, 2011 to EUR 77.4 million. The decrease is within the range of normal seasonal working capital fluctuations. The cash position at December 31, 2012 was EUR 95.3 million, compared to EUR 89.6 million at December 31, 2011.

The Revolving Credit Facility of EUR 75.0 million was undrawn as of December 31, 2012.

Cash flowIn 2012 Refresco’s net cash generated from operating activities totaled EUR 49.6 million, compared to EUR 41.8 million in 2011. The increase was mainly attributable to higher EBITDA.

Distribution of profitsConsistent with 2011, the Executive Board’s proposal is that the Annual Meeting of Shareholders deducts the net loss from retained earnings. The balance sheet presented in this report for the period ended December 31, 2012, is before appropriation of the result for the financial year 2012.


Prospects for 2013

Assuming the high input costs persist and the purchasing power of the European consumer continues to come under pressure, in general, we see the difficult market conditions that prevailed in 2012 continuing in 2013. The current economic depression has made it more difficult to forecast the prospects for the soft drinks market as a whole and has led to increased volatility in market volumes. We believe, however, that the prospects for the European soft drinks industry generally, and the private label market in particular, continue to be encouraging.

The downtrend in consumer spending and the increasing unpredictability of consumer behavior is expected to continue. Even in this challenging environment, we expect Refresco to be able to bolster its position as the preferred bottler for retailers and A-brand customers. Refresco’s size enables us to take advantage of a wide variety of purchase and supply chain positions and opportunities in the areas of both pricing and sourcing of raw materials and packaging materials.

Our unique European presence and relationships with international customers, combined with our ability to offer total supply chain solutions and an extensive portfolio of soft drinks and fruit juices offerings, are expected to be strengths in this ever-changing market.

Results 2013Our results in 2013 will largely depend on the volumes we achieve in our tenders and in the soft drinks market as a whole. Our performance will also depend on our ability to find new growth opportunities with retail customers and A-brands. Overall, we expect modest upward trends in revenue and volumes as well as an increase in adjusted EBITDA supported by both the expected on-going growth of private label and increases in A-brand contract manufacturing and the rightsizing measures implemented in 2012 in our manufacturing footprint. We expect input cost levels for 2013 to be generally flat.

We expect R&D spending to be in line with 2012 and the number of employees to remain stable or show some decline as we seek further opportunities to optimize our manufacturing footprint. We expect capex spending to be slightly above 2012 due to planned investments.


Continue to improve cost efficiencies:

We plan to continue to invest in improving

production flexibility and cost efficiencies in our

manufacturing and warehousing operations.

We rely on a fully outsourced external logistics

network to distribute our products to retail

warehouses throughout Europe.


Sustainability

As a leading European soft drinks and fruit juices bottler for retailers and A-brands, Refresco recognizes its responsibilities to stake holders and to the environment. We are committed to manufacturing quality products in a sustainable manner, while consistently increasing the value of our business for all our stakeholders. We acknowledge that sustainability means conti nuous improvement, and we are fully geared up to developing sustainability performance in all areas of our operations, such as: • Creating sustainable supply chain solutions • Managing and reducing the environmental impact of our manufacturing operations • Enhancing safety, development, and training

Refresco’s approach to sustainabilityRefresco aims for a continuous broadening of its sustainability approach. Key areas of quality, environment, safety, and health are managed, reported, and monitored at a local level in each country in which we operate. Furthermore, each country has established a number of special sustainability initiatives, including, amongst others, carbon footprint reduction, waste water treatment, gas- electricity production, and community programs.

In 2012 we established a global platform of sustainability ambassadors, including the senior managers of each Refresco country of operations. The aim of this platform is to continuously evaluate our customers’ and stakeholders’ requirements, share best practices, and integrate our local sustainability programs into the Group’s operations and reporting systems. The platform will continue to develop group level performance indicators in the key areas of environment, sourcing, quality, health and safety, as well as in the related reporting systems.

Refresco’s approach to sustainability is very much hands-on. It is built on our strategy of further expanding our position as preferred bottler to retailers and A-brand customers in the European market. Furthermore, it reflects our mission to be the most reliable and cost effective bottler of soft drinks and fruit juices in Europe.


Food quality and safety: All our operating sites

are certified under either the International Food

Standard (IFS) or, in the UK, the British Retail

Consortium (BRC) protocol, as well as under

ISO 14001 standards, and the majority of our

sites are ISO 9001 certified. To ensure food

safety and quality, every production site has

implemented its own quality system (HACCP)

based on the critical control and quality points

in its production processes. Furthermore, our

sites are regularly audited by our retail and

A-brand customers.

As we seek to establish and maintain lasting partnerships with our customers, we realign our operations with their requirements on sustainability. In practice, we help our customers to achieve their sustainability targets by evaluating and implementing alternative supply chain solutions, materials, and manufacturing processes. Our flexible sourcing and bottling capabilities allow us to serve each customer in line with its individual needs.

We aim to build long-term relationships with our strategic suppliers based on respect, trust, mutual benefit, and joint product development. Our customers expect Refresco to maintain high quality standards and to be cost-competitive. We expect the same from our suppliers.

Where we are in a position to exert influence, we continuously search for opportunities to manage and reduce the environmental impact of our manufacturing operations in the areas of energy consumption, water consumption, packaging, and waste.

Our manufacturing locations focus on safety in the workplace and they maintain a zero accident policy which is monitored locally and reported and followed-up centrally. Within Refresco, we invest in talent and in management development to bring out the best in our organization and in our people.


Our commitments• To meet and exceed our customers’ sustainability

requirements• To launch at least one major sustainability project

each year in the Group• To engage our major partners in dialogue regarding

the Refresco Sustainability Strategy• To continuously search for opportunities to manage

and reduce our environmental impact and for ways to take appropriate action

• To maintain a zero accident policy• To develop our people’s talents



Sustainable supply chainSafety, quality, and supply reliability are at the heart of our supply chain partnerships. This fundamental principle precludes the use of unauthorized suppliers, manufacturing procedures, and activities that may prejudice Refresco’s standards or the sustainability of its businesses. If they wish to maintain an on-going and long-term business relationship with Refresco, suppliers must comply with prevailing legislation and with socially and environmentally sustainable business practices and they must be both cost competitive and continuously focused on improvement. Refresco representatives visit and audit key suppliers on a regular basis. Suppliers are evaluated in terms of such matters as their buildings and premises, food safety, good manufacturing practices, process controls, control of surrounding products, product identification and traceability, business principles including compliance of all local laws and environmental sustainability. Suppliers must have valid international quality certification in place.

We expect our suppliers to:• Ensure appropriate quality in compliance with our

strict requirements• Operate in compliance with the respective local laws,

including the social standards for human rights• Supply at a competitive price• Adhere to timely delivery• Provide good after-sales service• Safeguard safety and health• Commit to strict confidentiality• Mutually invest in a long term partnership and

aims for continuous improvements

Refresco requires that its trading partners who buy raw and packaging materials themselves for their own products ensure that their suppliers comply with the same conditions that Refresco expects from its own suppliers.

Sourcing of orange juice and sugar plays a major role in our supply chain. Refresco is one of the world’s five biggest buyers of Frozen Concentrated Orange Juice and Not-From- Concentrate Orange Juice. We aim to maintain robust long-term relationships with our strategic raw materials

suppliers based on respect, trust, mutual benefit, and joint product and process development.

In addition to global sourcing, we source Not-From- Concentrate fruit juices locally in southern Europe. On the packaging side, we work to identify sustainable alternatives for our customers.

Minimizing the environmental impacts of our manufacturing operations

EnergyEnergy consumption is important to us, both in maintaining our cost price leadership and in minimizing the negative environmental impact of our operations. Cooling, warming, machinery, and compressed air form the bulk of our energy consumption. Our aim here is to reduce energy consumption by optimal utilization of our machinery and investment in reduced energy equipment.

WaterWater is a key ingredient to many of our products. We have several fresh water wells, and protecting these is crucial to us in ensuring the quality of our products. Furthermore, we closely monitor the water/product ratio in our manufacturing processes, with the aim of reducing water consumption.

PackagingRefresco continues to take steps to reduce the aggregate amount of material used in its primary and secondary packaging. Lightweight packaging, closures, and secondary packaging are becoming the norm throughout Refresco, as light-weighting has become one of the major drivers in the soft drinks industry for addressing the environmental concerns surrounding plastic bottles and coping with major cost price increases of PET over the past years. We participate in a project for the development of sustainable PET bottle from bio-materials. Furthermore, Refresco has set goals to increase the recyclability of its packaging materials.

Logistics and transportationWith the locations of our manufacturing plants we are able to supply at short transportation lines and to provide the needed proximity to our customers. By combining deliveries of different products and customers, our aim is to have only fully loaded trucks and optimal pallet usage. Other initiatives include the usage of biogas trucks and LHVs (Longer Heavier Vehicles) and exploring alternatives such as truck-on-train transportation. In our search for optimal efficiency transpor tation with minimum impact on the environment, we place high priority on identifying suppliers that have a similar approach and can make a meaningful contribution to a sustainable supply chain.

Enhancing safety, development, and training Qualified employees are the key strength of our operations. Through specific training programs, we aim to create safe workplaces and to meet our own expectations and the expectations of our stakeholders in the areas of quality, safety, and health. Conducting and undergoing internal and external audits, and also dealing with complaints, keep us focused and result in the continuous development and improvement of our processes. Our ambition is to achieve and maintain a “zero accident” workplace.

Finally, our belief in the “first time right” principle in quality management enhances not only our cost efficiency, but also our environmental performance.

“Reducing environmental impacts

of our operations.”

Environmental management: Throughout our production sites,

we have implemented the ISO-standard 14001 on environmental

management, aimed at ensuring compliance with the various

environmental regulations applicable, as well as with the food

products regulations.


Governance



Governance structure

Refresco’s governance structure is decentralized, enabling the company to respond quickly to changes in market conditions and customer needs.

Regulatory environmentRefresco Group B.V. is a private limited liability company (“besloten vennootschap”) incorporated under the laws of The Netherlands. The company complies with the Dutch Civil Code and its Articles of Association.

Refresco complies with the indenture and offering circular relating to the senior secured notes and with the rules of the unregulated Euro MTF market operated by the Luxembourg Stock Exchange pertaining to financial reporting and disclosure. Neither the notes nor the company fall under the Act on Financial Supervision, the Act on the Supervision of the Securities Trade in The Netherlands, or the Dutch Corporate Governance Code.

Refresco’s corporate governance structure reflects those principles of the Dutch Corporate Governance Code which it considers to be beneficial to and supportive of its governance structure.

Corporate structureOur corporate structure consists of one international central office and 25 production sites. The Group produces and sells in nine European countries: The Netherlands, Belgium, Germany, France, Spain, Italy, the UK, Poland, and Finland. The local organizations are close to their customers and can be responsive to their needs while acting consistently across the Group. They are led by highly experienced and professional management teams, which meet regularly to ensure operating consistency across the Refresco Group.

A relatively small central team coordinates the central functions of strategy, business development, purchasing, commerce, manufacturing, supply chain & quality, finance and control, and human resources management. The central team achieves economies of scale and provides the local organizations with the tools to run the Group’s business in the most optimal manner possible. Each team member has a high level of independence and discretion in terms of developing individual ideas that contribute to the company’s best interests. What connects them is their deep understanding of the business and their can-do attitude.

Refresco Group has a two-tier board structure, with an Executive Board that manages the Group on a day-to-day basis and a Supervisory Board. The Executive and Supervisory Boards meet regularly.

Governance


Refresco Group B.V. General Meeting of Shareholders

Supervisory Board

Audit Committee Remuneration and Nominating Committee

Governance model

Executive BoardRefresco is managed on a day-to-day basis by the Executive Board, which is supervised and advised by the Supervisory Board. The Executive Board is responsible for Refresco’s overall management and performance and for the implementation of its Buy & Build strategy. Its agenda includes strategy formulation, provision of annual financial statements and quarterly reports, preparation of the annual budget and business plans, approval of major capital investments, supervision of the local organizations, monitoring of internal controls, acquisition policy and deal making, and other important policy matters.

The Executive Board provides the Supervisory Board with the information it needs and requests. The key items of information provided are the annual and long-term budgets, monthly management accounts, quarterly reports, the Annual Report, proposals for significant investments, acquisition memoranda, risk management and control reports, and major HR and ICT matters. The composition of the Executive Board shall be such that is able to carry out its duties properly. The Executive Board shall aim for a complementary range of experience, gender, and age.

Refresco does not meet Article 2:166 and 2:276 of Book 2 of the Dutch Civil Code, which indicates that management positions should be allocated such way that at least 30% of the positions are held by women and at least 30% by men. This arises because the company needs to ensure that the company has a competent Executive Board that has the required knowledge of the company, the manufacturing industry, and the company’s key market areas. When appointing future members to the Executive Board, the company will aim for a complementary range of experience, gender, and age.

The Managing Directors are responsible for managing the regional manufacturing and sales operations, with profit and loss and balance sheet responsibility. The Group Directors’ role in Refresco’s governance model is to liaise with the Executive Board on matters related to Refresco’s overall management and performance, to provide information to the Executive Board, and to implement the decisions taken by the Refresco group in their respective functional areas.

The composition of the Executive Board and its members’ key employment history are presented on p. 40-41.

Executive Board

Managing Directors and Group Directors

Innovation: Each of our business units employs a

dedicated research and development team. These

teams are responsible for, among other things,

performing quality testing on our products,

developing new technologies and processes

and introducing energy-friendly technology.

Supervisory BoardThe Supervisory Board is responsible for supervising and advising the Executive Board and for overseeing the general direction of the company’s operations and strategy.

The Supervisory Board consists of seven members appointed by the General Meeting of Shareholders.

The articles of association state that certain strategic or otherwise important decisions require the prior approval of the Supervisory Board. These include acquisitions, loan redemptions, and significant changes in the identity or nature of the company or its businesses. Each year the budget is prepared by the Executive Board and submitted to the Supervisory Board for its approval.

Refresco does not meet Article 2:166 and 2:276 of Book 2 of the Dutch Civil Code, which indicates that Supervisory Board positions should be allocated such way that at least 30% of the positions are held by women and at least 30% by men. This arises because the company needs to ensure that the company has a competent Supervisory Board that has the required knowledge of the company, the manu facturing industry, and the company’s key market areas. When appointing future members to the Supervisory Board, the company will aim for a complementary range of experience, gender, and age.

Governance


“We put great emphasis on quality

and food safety.”


The Supervisory Board has set up the Remuneration and Nominating Committee and the Audit Committee. The Remuneration and Nominating Committee reviews the Executive Board’s proposals concerning the remuneration policies for the Group. The Supervisory Board has delegated to the Audit Committee the tasks of supervising the internal and external audit procedures and of discussing and reviewing accounting policies and estimates. Charters are in place for both committees, which establish clear accountability. The Supervisory Board meetings also address other functions, such as HR, ICT, and risk management. The Chairman of the Supervisory Board is responsible for leading the Supervisory Board and also acts as a sounding board for the Executive Board.

The composition of the Supervisory Board and its members’ key employment history are presented on p. 40-41.

Code of conduct As a general principle, Refresco conducts all business operations with honesty, integrity, and transparency. Refresco operates as an open, transparent company which meets all legitimate requests for information, unless business or personal circumstances of those involved require confidentiality.

Refresco expects its employees to work with honesty, integrity, and respect for others. High standards of personal behavior must be observed in relationships with colleagues as well as in dealings with suppliers, agents, professional advisers, shareholders, banks, and other third parties.

Refresco recognizes that responsibility, reliability, and integrity are essential preconditions in terms of dealing with third parties such as suppliers, customers, and other stake-holders. Therefore Refresco will always act in good faith and expects its employees to refrain from acts that may prejudice these preconditions.

The Code of Conduct is published in its entirety on our website: www.refresco.com/our-company/#governance

Executive Board and Supervisory Board


Hans Roelofs

Chief Executive Officer (1963)

Aalt Dijkhuizen Member of the Supervisory Board (1953)

Aart Duijzer

Chief Financial Officer (1963)

Yiannis Petrides Chairman of the Supervisory Board (1958)

CEO Refresco since March 2007. Before joining Refresco Mr. Roelofs was CEO of Dumeco, a private label meat producer and processor. Mr. Roelofs started his career at Nutreco, rising to Managing Director of the Agri-Food Business and is a graduate of Wageningen University.

CFO Refresco since December 2000 and one of the co-founders of the company. Mr. Duijzer previously worked as Finance Director of the Continental European division of Hazlewood Foods Plc. Mr. Duijzer started his career at KPMG and holds a master’s degree in business economics from the Erasmus University in Rotterdam and is a Dutch chartered accountant.

Chairman of the Supervisory Board as from Jan 1, 2013. Mr. Petrides has broad experience in the FMCG and soft drinks industries. He is Vice-chairman of the Board of Directors of Campofrio Food Group, Vice-chairman of Board of Largo and a member of the Board of Puig. Mr. Petrides holds a BA/MBA degree from Cambridge University and an MBA from the Harvard Business School.

Member of the Supervisory Board since October 2009. Mr. Dijkhuizen is President and Chairman of Wageningen UR (University & Research centre) in The Netherlands since 2002 and he worked in the 90-ies as a professor specializing in animal health at the university. Between 1998 and 2002 he worked for Nutreco as Managing Director of the Business Group Agri Northern Europe.

Governance

The composition of the Executive Board and Supervisory Board is as of January 1, 2013. Mr. Yiannis Petrides was appointed as the new Chairman of the

Supervisory Board effective as of January 1, 2013. Mr. Marc Veen was Chairman of the Supervisory Board for the periods 2000-2003 and 2006-2012.


Pieter de Jong Member of the Supervisory Board (1964)

Hilmar Thor Kristinsson Member of the Supervisory Board (1971)

Peter Paul Verhallen Member of the Supervisory Board (1956)

Jon Sigurdsson Member of the Supervisory Board (1978)

Thorsteinn Jonsson Member of the Supervisory Board (1963)

Member of the Supervisory Board since May 2010. Mr. de Jong is Managing Director at 3i Europe plc Benelux. Before joining 3i in 2004, Mr. de Jong was managing director at Eiffel, a specialist services provider in Legal and Finance, and head of the advisory department at NIBC.

Member of the Supervisory Board since May 2006. Mr. Jonsson was the operator and owner of Vifilfell, the leading soft drinks bottler in Iceland from 1996 to 2011. Before working for Vifilfell he worked for the Federation of Icelandic Industries and for the Central Bank of Iceland as an economist.

Member of the Supervisory Board since August 2009. Mr. Kristinsson is also Vice Chairman of the Board of Norvestia Oyj. He has worked for Kaupthing as a director of a closed end equity fund and a pension fund and is Kaupthing’s nominated director on the board of directors of Ferskur Holding 1 B.V.

Member of the Supervisory Board since April 2009. In the past Mr. Sigurdsson served as CEO of Stodir from 2007 to 2010 and worked for Landsbanki hf. Currently he is the General Manager of Straumnes Ráðgjöf ehf and a partner at GAM Management ehf.

Member of the Supervisory Board since October 2009. Mr. Verhallen is a member of the Board of Hoogwegt Group and a management consultant. From 1996 to 1998 Mr. Verhallen was CFO and member of the Executive Board of Nutreco. Prior to that, Mr. Verhallen was a partner at KPMG in The Netherlands. Mr. Verhallen is a Dutch chartered accountant.


Strategic risksRisks related to the global financial and economic situation Historically, our results of operations have been influenced, and will continue to be influenced, by the general state of the global economy and consequently our income and results of operations depend, to a certain extent, on the performance of the global economy.

The continued weak economic situation in Europe has impacted the economies and markets in which we operate. The economic crisis has resulted in increased volatility and tighter credit markets, as well as in a lower level of liquidity in many financial markets. If these conditions persist or recur, they may negatively affect the future availability, terms, and cost of credit.

The timing and nature of any recovery in worldwide financial markets and in the global economy remain uncertain, and there can be no assurance that market conditions will improve in the near future. There can also be no assurance that market conditions

will not deteriorate, and this could cause demand in the soft beverage market to decline or remain at low levels for an extended period of time, having a material adverse effect on our business, financial condition, and results of operations.

How we address these risksWe have taken cost saving and re struc turing steps to protect the company’s financial health and to further strengthen our competitive position in the current economic situation. Working capital management continues to be a key area of attention to us. As a result, the cash position is strong and working capital control remains tight. A healthy cash flow is crucial and we are looking into as many alternatives as possible to maintain this.

We place great emphasis on long- standing relationships with European banks. Furthermore, we aim for conti nuous dialogue with our investment community to provide them with sufficient, timely,

RisksWe set out in this section our primary strategic, operational, financial, and other risks. The risks and uncertainties we describe in this chapter are not necessarily the only ones we face. Additional risks and uncertainties of which we are not aware or that we currently believe are immaterial, may also adversely affect our business, financial condition, or results of operations. Financial risks are also explained in more detail in the Notes to the Consolidated Financial Statements on page 74.

Our quality control and assurance programs are

designed to comply with the strictest European

requirements for safe food manufacturing.

Governance

and accurate information regarding Refresco’s operations and financial performance.

Refresco completed a structural refinancing of the company in 2011 by issuing senior secured notes totaling EUR 660.0 million and by obtaining a EUR 75.0 million revolving credit facility (RCF) from a consortium of European banks. This refinancing provides Refresco with a wider financing horizon, increased flexibility for integration, and greater headroom for acquisitions. The senior secured notes mature in 2018 and the RCF in 2017. The RCF was undrawn as of December 31, 2012.

Risks of a cyclical downturn reducing sales volumes and/or marginsMuch of Refresco’s revenue comes from economies that have been affected by the economic depression in Europe, and this has adversely impacted consumer markets and triggered changes in consumer behavior. Refresco’s business is largely dependent on continued

consumer demand, and lower consumer spending may reduce sales volumes and affect revenue and profitability. Recent years have demonstrated that the private label soft drinks and fruit juices market is less sensitive to an economic downturn than other Fast Moving Consumer Goods (FMCG) markets.

However, the margin pressures facing our retail customers remain severe, and we see increased promotional activities for A-brand soft drinks, adding to market volatility.

How we address these risksTo mitigate the risks of adverse effects in any one category, our strategy aims to diversify, in terms of products, customers and geography. Refresco closely monitors performance in the more volatile markets as well as at its customers and suppliers, and strives to respond quickly to protect its business. If deemed necessary, measures will be taken to align operations with adapted customer demand.

In 2012 we carried out a comprehensive review of our stock keeping units (SKUs) to respond to current consumer demand and we let go of some lower margin product volumes. We also right sized our manufacturing capacity to be in line with current volumes.

Operational risksRisks related to price fluctuations and supply side developments Consolidation in the soft drinks market has resulted in a reduced number of key raw materials and packaging materials suppliers. The manufacture of our products is highly dependent on an adequate supply of raw materials and packaging materials, most of which are only available from a limited number of suppliers. The loss of any one of such suppliers could disrupt our supply chain, which could reduce the utilization rates of our production sites and disrupt deliveries to customers, and in turn have a material adverse effect on our business, financial condition, and results of operations.



Although we have a policy of purchasing forward contracts for most raw materials and packaging materials to cover sales positions with customers there can be no assurance that such hedging measures will be effective. The limited number of suppliers for these materials weakens our negotiating positions and many customers do not commit to fixed volumes which may cause mismatch in our hedging. If the cost of raw materials or packaging materials increases, we may be unable to pass these costs on, in a full or timely manner, to our customers, and our competitors may have taken a long or short position that could provide them with an advantage. Any inability to pass these increases on fully to our customers on a timely basis or a fall in sales volumes due to price increases could have a material adverse effect on our business, financial condition, and results of operations.

Price fluctuations do not generally affect us where we act solely as a contract manufacturer of products on behalf of A-brand customers. Some of our A-brand customers direct us to purchase raw materials and packaging materials on their behalf and in accor dance with their specifications, including vendor selection and pricing terms. In such cases, we pass the cost of such purchases directly on to our A-brand customers.

In addition, our production sites use a significant amount of electricity, natural gas, and other energy sources. Fluctuations in the prices of fuel and other energy sources for which we do not have long-term pricing commitments or arrangements would affect our

operating costs, which could impact our business, financial condition, and results of operations.

How we address these risksWe have strong relationships with the majority of these suppliers and we have been able to hedge part of our requirements through medium-term contracts.

In 2012, the cost of many raw materials and packaging materials remained at high levels. In general, we purchase raw materials and commodities through forward contracts in order to cover sales positions with our customers, a policy called “back-to-back coverage”. The remaining risks are substantially mitigated through a combination of sales price increases, supply chain savings, and improvements in mix. Where appropriate, we also use exchange-traded futures to hedge price movements, especially in U.S. dollar purchases. Partly as a result of the recent acquisitions, Refresco has increasingly become a comprehensive soft drinks bottler rather than mainly a fruit juice producer. This has reduced the supply-side risk associated with vulnerability to individual commodities, raw materials, and packaging and also to the countries that supply them.

Risks related to seasonality Our sales are subject to seasonality. Recent acquisitions have contributed to the seasonal nature of our business through shifts in product portfolio towards carbonated soft drinks and water. Sales are generally higher in the summer months of April through September and lower during the winter months of October through March. While these factors lead to a natural

seasona lity in our sales, unseasonable weather can also significantly affect our sales and profitability compared to previous comparable periods. For example, during prolonged periods of unseasonably hot weather, consumers tend to switch to products such as water and RTD teas that may have lower profit margins as well as require us to adjust our product mix in other ways. Consequently, our operating results may fluctuate quarter to quarter. We also tend to experience a period of higher sales around the Christmas/New Year holiday period in late December through early January. Consequently, our operating results can fluctuate. Any inability to adapt to our customers’ requirements in terms of seasonality may result in lost sales which we are unable to recover and this could have a material adverse effect on our business, financial condition, and results of operations.

How we address these risksWe partner closely with customers on supply chain planning and execution to ensure optimal utilization of our manufacturing plans during low and high seasons. We have taken steps to increase the flexibility of our cost base to improve our adaptability to volume fluctuations.

Risks related to customer concentrationRefresco deals with several large customers but as the company grows through acquisition, concentration on individual customers has decreased. In 2012, our ten largest customers represented approximately 59.1% of revenue.

How we address these risksOver time, Refresco has re-balanced its customer portfolio, which in the early

Governance


years consisted mainly of retailers, with a larger share of A-brand manufacturers, creating greater long-term stability. Whereas contracts with retailers are renegotiated annually, we close bottling agreements with A-brand manufacturers for 3 to 5 years, thereby creating greater capacity utilization. We carefully manage our international customer relationships, monitoring growth and profitability and where necessary adjusting costs, complexity, and capacity. In 2012 we strengthened the Group Commerce function to ensure a strong focus on the opportunities and challenges in today’s markets and to further strengthen the coordination and development of our international customers. In order to reduce exposure to credit risk, we subject our customers to credit limits and creditworthiness tests, and sales are subject to payment conditions that are common practice in each country in which we operate. Material losses because of credit risk are not likely, especially due to the geographic diversification of our operations. We carefully monitor the effects of the economic downturn on our customers. As our customers are leading European or global retailers and A-brand companies, we do not insure credit risks.

The Group does not have any significant concentration of credit risk. Risks related to food safetyBecause the supply chain has become more and more globalized, increasing levels of regulatory and consumer focus continue to render food safety one of Refresco’s most significant business risks. Refresco may be faced with food- related problems, including dis ruptions to the supply chain caused by foodborne

illnesses, and these may have a material adverse effect on Refresco’s reputation, business, financial condition, and results of operations.

How we address these risksTo mitigate these risks and to ensure food safety and quality, all production sites have implemented their own quality system (HACCP) based on the critical control and quality points in their production processes. Additionally, to further ensure food safety, all production sites have been certified either under the International Food Standard (IFS) or, in the UK, under the British Retail Consortium (BRC) protocol. In many cases our manufacturing sites are also annually certified by A-brand customers. Refresco representatives also regularly visit and audit key suppliers and the results of these visits determine whether we accept, continue, or discontinue these relationships. Notwithstanding economic circumstances, Refresco remains dedicated to its quality standards.

Risks related to continuity of productionOperations at our production sites could be adversely affected by extra ordinary events, including fire, explosion, release of high-temperature steam or water, structural collapse, chemical spill, mechanical failure, extended or extraordinary maintenance, road construction or closures of primary access routes, severe weather conditions, directives from government agencies, or power interruptions. Any prolonged interruption at our production sites could materially reduce our production, sales revenue, and results of operations.

Any sustained interruption in production at any of our main production sites

could have a material adverse effect on our business, financial condition, and results of operations.

How we address these risksRefresco continues to invest significantly in its production sites and continuously strives for improvements in its health, safety, and environmental practices.

Because of the number of plants we have within the Group, we are able to produce nearly every individual stock-keeping unit (SKU) in more than one location. This helps secure an uninterrupted supply to our customers, even if circumstances become very challenging.

Together with a leading insurance broker, we have rolled out a program to continuously improve housekeeping and fire protection and to mitigate business interruption risks.

Financial risksIn addition to the risks set out above, Refresco is exposed to various other risks arising from financial operations and results. These risks relate to such matters as:

• Impact on net pension liabilities of changes in externally invested pension plan assets, interest rates, and life expectancy

• Maintenance of appropriate group cash flow levels

• Impact of currency movements on the Group’s earnings and on the translation of its underlying net assets

• Market liquidity and counterparty risks• Hedging of interest rate risks

through the use of swaps• Behavior of banks and credit insurers


Governance

The financial risks are described in more detail in the Notes to the Consolidated Financial Statements on page 74.

Other risksRefresco is exposed to varying degrees of risk and uncertainty in other areas, including competitive pricing, consumption levels, physical risks, legislative, tax, and regulatory develop ments, terrorism, and economic, political, and social conditions in the environments in which it operates. All of these risks could materially affect the Group’s business, revenue, operating profit, net profit, net assets, and liquidity. There may be other risks of which we are not aware or that are currently believed to be immaterial. As far as tax risks are concerned, we work closely with the Dutch tax authorities in a horizontal monitoring program. The program involves frequent contact regarding business developments in general, and more specifically, regarding the development and implementation of a tax strategy and a tax control framework. Furthermore, significant events are discussed and agreed with the tax authorities in advance, facilitating greater proactivity and timeliness on the part of the tax authorities and, thereby, significantly reducing our past and future tax risks.

We are subject to a number of local, national, supranational, and inter-national laws and other requirements relating to food production, packaging, recycling, labeling, distribution, product quality, safety and environmental control, fire safety, sanitation, water consumption and treatment, customs and foreign and trade, and workplace health and safety regulations. Any changes to these laws and regulations,

including those resulting from political, economic, or social events, may alter the environment in which we do business, and may have a material adverse effect on our business, financial condition, and results of operations.

InsuranceAs a multinational group with a broad range of products and operations in nine countries, Refresco is exposed to varying degrees of risk and uncertainty. It does not take out insurance against all risks and it retains a significant element of exposure to those risks against which it is insured. However, business assets in each country are insured against insurable risks as deemed appropriate. It is insured against key risks such as fire, business interruption, and product and general liability.

To ensure alignment and compliance across geographies, insurances are managed at group level together with a leading insurance broker.

Internal control and reporting proceduresRefresco has a program of internal control and reporting procedures in place. Internal audit procedures play a key role in providing, both to the local management teams and to the Executive Board, an objective view on, and ongoing assurance as to, the effectiveness of risk management and related control systems through-out Refresco. Refresco also has a comprehensive budgeting and monthly reporting system in place, with the annual budget being approved by the Executive and Supervisory Boards. Monthly reporting routines are in place to monitor performance against budget and prior year.

It is Refresco’s practice to bring newly acquired companies into the Group’s governance structure as soon as is practicable and, at the latest, by the end of the first full year of operations within the Group.

Roles and responsibilitiesThe Executive Board has the responsibility for the establishment and oversight of Refresco’s risk management framework. The Executive Board is responsible for identifying risks and implementing the risk management policies, internal controls, and reporting procedures. The Executive Board reports regularly to the Supervisory Board on issues relating to risk management and internal control and on the effectiveness of these programs.

We seek ways to consolidate production in

order to maximise utilisation and to realise fully

economies of scale in production, purchasing

and distribution.


Supervisory Board Report 2012



In carrying out its duties, the Supervisory Board is guided by the Dutch Civil Code, the company’s Articles of Association and the overall interests of Refresco and its business. The guidelines also include principles of the Dutch Corporate Governance Code that are applicable to Refresco and its current corporate governance structure.


Composition of the Supervisory Board In 2012, the Supervisory Board consisted of the following seven members: Name Date of initial appointment CommitteesMarc Veen* (Chairman) May, 2006 Chairman of the Audit CommitteeAalt Dijkhuizen October, 2009 Member of the Remuneration and NominatingPieter de Jong May, 2010 Chairman of the Remuneration and Nominating Committee Thorsteinn Jonsson May, 2006 -Hilmar Thor Kristinsson August, 2009 Member of the Audit CommitteeJon Sigurdsson April, 2009 Member of the Remuneration and Nominating CommitteePeter Paul Verhallen October, 2009 Member of the Audit Committee Yiannis Petrides** January, 2013 -

Changes Supervisory Board 2012* Mr. Marc Veen was Chairman of the Supervisory Board for the periods 2000-2003 and 2006-2012. ** Mr. Yiannis Petrides was appointed as the new Chairman of the Supervisory Board effective as of January 1, 2013.


Supervisory Board activities during 2012The Supervisory Board met eight times during 2012 and had regular contact with the Executive Board throughout the year. The meetings addressed routine commercial, operational, and financial matters and focused on key resource levels and strategy implementation. During its meetings, the Supervisory Board discussed acquisition opportunities and the integration of Spumador into Refresco’s organizational structure. The Chairman and CEO had regular meetings throughout the year, including preparatory meetings prior to the Supervisory Board Meetings.

Matters discussed during the year’s Supervisory Board meetings included:• Buy & Build strategy• Potential acquisition opportunities• Senior management appointments and significant Human

Resources matters• Major capital investments• Group and subsidiary operating and financial performance• Rightsizing and ongoing optimization of manufacturing

capacity • Budget 2013• Outlook and Business Plan 2013-2015• Governance model• Corporate Social Responsibility, Sustainability• Innovation• Risk and control framework and internal audit• Code of conduct and whistleblower procedure

None of the members of the Supervisory Board were frequently absent.

Risk and control framework and internal auditThe Supervisory Board oversees management’s monitoring of compliance with the group’s risk management policies and procedures and it reviews the adequacy of the risk management framework in terms of the risks faced by the group. Refresco has a program of internal control and reporting procedures in place. Internal audit procedures play

a key role in providing an objective view on, and ongoing assurance as to, the effectiveness of risk management and related control systems throughout Refresco. The Executive Board reports regularly to the Supervisory Board on issues relating to risk management and internal control and on the effectiveness of these programs. The Supervisory Board has nominated an Audit Committee, consisting of Supervisory Board members, which supervises the internal control and financial reporting procedures.

CommitteesThe Supervisory Board has two committees, the Remuneration and Nominating Committee and the Audit Committee.

Remuneration and Nominating CommitteeThe Remuneration and Nominating Committee is composed of at least three members, each of whom is a member of the Supervisory Board. Collectively, the Committee has the appropriate level of knowledge and experience in terms of supervising the Executive Board and in developing policy in respect of, among other things, the Executive and Supervisory Board remuneration, performance and appoint-ment procedures, and the monitoring thereof. In 2012, the Remuneration and Nominating Committee was composed of Messrs. De Jong (Chairman), Dijkhuizen, and Sigurdsson.

The Remuneration Committee met four times during the year. Audit CommitteeThe Audit Committee is composed of at least three members, each of whom is a member of the Supervisory Board. Collectively, the Committee has the appropriate level of knowledge and experience in terms of financial administration and accounting. In 2012, the Audit Committee was composed of Messrs. Veen (Chairman), Verhallen, and Kristinsson. The Audit Committee convened to discuss each quarterly report. All in all, the Audit Committee convened four times during the year, two of which were with the internal auditors and two with the external auditors. They discussed ongoing matters in respect of the risk



and control mechanisms, internal control policies, financial reporting, annual reports, internal and external audits, and the internal and external auditors’ observations.

Strategy and performance in 2012The Supervisory Board remains confident that, by pursuing its strategy, Refresco will be able to achieve an above market organic growth with its private label customers. The company seeks to expand its contract manufacturing business at a pan-European level providing them with bottling and supply chain services. A high level of innovation and good new development programs will be essential in boosting organic growth. Refresco will continue to improve its cost price leadership by focusing on the optimization of its manu facturing footprint and Overall Equipment Effectiveness (OEE) improvements. The company is also putting great emphasis on identifying new growth opportunities to expand its market position.

On the back of the steep rise in commodity prices and the weak economic climate in Europe, the Supervisory Board is pleased to have seen the recovery in financial performance during the second half of 2012. The decision in late 2011 to let go lower margin volumes and the consequent right-sizing of manufacturing capacity and cost base was implemented in early 2012, and this has contributed to the overall results. However the net loss of EUR 18.2 million, resulting from lower volumes and some one-off items, was a disappointment overall. The continued economic downturn adversely affected the markets in which Refresco operates, with Iberia having a particularly negative effect on the group’s results.

The senior secured notes, the undrawn RCF and the strong cash flow generation all provides the Group with a stable financial position and headroom for further development of its operations.

Annual Report 2012The 2012 Financial Statements were audited by PricewaterhouseCoopers Accountants N.V. Their independent auditor’s report can be found on page 116 of this Annual Report. The Supervisory Board endorses this Annual Report and recommends that the General Meeting of Shareholders adopt the 2012 Financial Statements as presented. In conclusionThe first signs of recovery in profitability confirm that the underlying business is sound and that the industry dynamics remain encouraging, all of which creates a solid basis for 2013. We would like to express our appreciation of the commitment and dedication shown by the Executive Board and by all of Refresco’s employees. Finally, the Supervisory Board wishes to thank its departing chairman Mr. Marc Veen for his valuable contribution to Refresco since the company was founded in 2000 and wishes him well for the future. Rotterdam, March 20, 2013On behalf of Supervisory Board

Yiannis Petrides, Chairman

Financial Review 2012



Financial Review


Consolidated income statement 58

Consolidated statement of comprehensive income 59

Consolidated balance sheet 60

Consolidated statement of changes in equity 61

Consolidated statement of cash flows 62

Notes to the consolidated financial statements 631 General 632 Significant accounting policies 643 Financial risk management 744 Notes to the consolidated income statement 825 Notes to the consolidated balance sheet 886 Supplementary notes 105

Company balance sheet 109

Company income statement 110

Notes to the company financial statements 1111 General 1112 Significant accounting policies 1113 Notes to the company balance sheet and income statement 111

Other information 115

Independent auditor’s report 116

Ten Years Refresco 117

Contents


Financial Review

Consolidated income statement

2012 2011

EUR million

Notes

Revenue 4.1 1,538.3 1,523.4

Other income 4.2 0.5 0.8Raw materials and consumables used 4.3 (959.0) (949.6)Employee benefits expense 4.4 (151.3) (143.9)Depreciation, Amortization and impairments 4.5 (73.4) (73.5)Other operating expenses 4.6 (319.9) (331.5)

Operating profit 35.2 25.7

Finance income 4.7 0.6 0.7Finance expense 4.7 (48.4) (52.2)

Net finance costs (47.8) (51.5)

Profit / (loss) before income tax (12.6) (25.8)

Income tax (expense) / benefit 4.8 (5.6) (0.1)

Profit / (loss) (18.2) (25.9)

Profit attributable to: Owners of the Company (18.2) (25.9)Non-controlling interest - -

Profit / (loss) (18.2) (25.9)

For the year ended December 31

The notes on page 63 to page 108 are an integral part of these consolidated financial statements.


Consolidated statement of comprehensive income

2012 2011

EUR million

Notes Foreign currency translation differences for foreign operations 4.1 (3.2)

Change in fair value of cash flow hedge (8.4) (0.1)Income tax (expenses) / benefits 1.8 -

Other comprehensive income / (loss) 5.9 (2.5) (3.3)

Profit / (loss) (18.2) (25.9)

Total comprehensive income / (loss) (20.7) (29.2)

Attributable to: Owners of the Company (20.7) (29.2)Non-controlling interest - -

Total comprehensive income / (loss) (20.7) (29.2)


All items included in other comprehensive income may be reclassified subsequently to profit or loss.



Financial Review

As at December 31

Consolidated balance sheet

2012 2011

EUR million

Notes Assets Property, plant and equipment 5.1 391.4 412.0Intangible fixed assets 5.2 298.2 301.0Other investments 5.3 3.9 1.3Deferred income tax 5.4 9.9 10.3

Total non-current assets 703.4 724.6

Inventories 5.5 149.7 151.7Derivative financial instruments 5.3 0.3 8.2Current income tax receivable 0.9 0.5Trade and other receivables 5.6 255.5 285.7Cash and cash equivalents 5.7 95.3 89.6Assets classified as held for sale 5.8 - 2.6

Total current assets 501.7 538.3

Total assets 1,205.1 1,262.9

Equity Share capital 4.3 4.3Share premium 259.8 259.8Other reserves (5.8) (3.3)Retained earnings (72.0) (46.1)Profit / (loss) for the year (18.2) (25.9)

Total equity 5.9 168.1 188.8

Liabilities Loans and borrowings 5.10 655.5 656.7Derivative financial instruments 3.1.3 10.9 12.2Employee benefits provisions 5.11 20.2 19.3Other provisions 5.12 1.5 1.8Deferred income tax 5.4 15.8 25.8Total non-current liabilities 703.9 715.8 Loans and borrowings 5.10 2.8 2.7Derivative financial instruments 5.3 1.3 -Trade and other payables 5.13 320.4 352.3Current income tax payable 5.9 1.7Provisions 5.11/5.12 2.7 1.6Total current liabilities 333.1 358.3

Total liabilities 1,037.0 1,074.1

Total equity and liabilities 1,205.1 1,262.9

Other reserves in the balance sheet consists of currency translation reserve and hedging reserve.



Consolidated statement of changes in equity

EUR million Issued share

capital

Share premium

CurrencyTranslation

reserve

Hedging reserve

Retained earnings

Profit/ (loss) for the year

Total equity

January 1, 2011 4.3 214.5 - - (55.5) 9.4 172.7Other comprehensive income - - (3.2) (0.1) - - (3.3)Profit / (loss) - - - - - (25.9) (25.9)

Total comprehensive income - - (3.2) (0.1) - (0.0) (29.2)

Share premium 3i - 45.2 - - - - 45.2Appropriation of result - - - - 9.4 (9.4) -

December 31, 2011 4.3 259.8 (3.2) (0.1) (46.1) (25.9) 188.8

Balance as at January 1, 2012 4.3 259.8 (3.2) (0.1) (46.1) (25.9) 188.8Other comprehensive income - - 3.8 (6.3) - - (2.5)Profit / (loss) - - - - - (18.2) (18.2)

Total comprehensive income - - 3.8 (6.3) - (18.2) (20.7)

Appropriation of result - - - - (25.9) 25.9 -

December 31, 2012 4.3 259.8 0.6 (6.4) (72.0) (18.2) 168.1

For notes on equity a reference is made to 5.9.



Financial Review



Consolidated statement of cash flows

2012 2011

EUR million

NotesCash flows from operating activities

Profit / (loss) after tax (18.2) (25.9)

Adjustments for:

Amortization, depreciation and impairments 5.1/5.2 73.4 73.5

Net change in fair value derivative financial instruments recognized in profit and loss and premiums paid (0.5) 1.6

Net finance costs 4.7 47.8 51.5

(Gain) / loss on sale of property, plant and equipment 4.2 (0.4) (0.8)

Income tax expense / (benefit) 4.8 5.6 0.1

Cash flows from operating activities before changes in working capital and provisions 107.7 100.0

Change in:

Inventories 5.5 3.4 (21.6)

Trade and other receivables 5.6 29.6 (12.7)

Trade and other payables 5.13 (32.9) 41.5

Total change in working capital 0.1 7.2

Interest received 0.5 0.7

Interest paid (50.6) (47.6)

Income taxes paid (9.9) (13.0)

Change in provisions 5.11/5.12 1.8 (5.5)

Net cash generated from operating activities 49.6 41.8

Cash flows from investing and acquisition activities Proceeds from sale of property, plant and equipment 5.1 5.9 2.2Purchase of property, plant and equipment 5.1 (42.9) (41.1)Purchase of intangible assets 5.2 (0.6) (0.4)Purchase / sale of other investments 5.3 (0.2) (0.1)Acquisition of subsidiary, net of cash acquired 6.1 (6.0) (123.7)

Net cash used in investing and acquisition activities (43.8) (163.1)

Cash flows from financing activities Proceeds from issue of share capital / changes in equity 5.9 - 45.2Proceeds from loans and borrowings 5.10 - 728.9Repayment of loans and borrowings 5.10 (2.8) (636.6)

Net cash (used in) / from financing activities (2.8) 137.5

Translation adjustment 2.7 (0.8)

Movement in cash and cash equivalents 5.7 15.4

Cash and cash equivalents as at January 1 5.7 89.6 74.2

Cash and cash equivalents as at December 31 5.7 95.3 89.6


Notes to the consolidated financial statements

1.1 Reporting entityRefresco Group B.V. (a private company with limited liability) is domiciled in the Netherlands, with its registered office at Fascinatio Boulevard 270, 3065 WB Rotterdam. The consolidated financial statements of Refresco Group B.V. (‘Refresco’, the ‘Group’ or the ‘Company’) as at and for the year ended December 31, 2012 comprise the financial statements of the Company and its subsidiaries (together referred to as the ‘Group’ and individually as ‘Group entities’).

The activities of the Group consist of the manufacturing of fruit juices and soft drinks for retailers and A brands. Sales and production are made both domestically and abroad, the European Union being the most important market. Refresco issued senior secured notes on May 16, 2011. The notes are listed on the Luxembourg Stock Exchange and admitted to trading on the Euro MTF market.

1.2 Basis of preparationStatement of complianceThe consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The consolidated financial statements have been prepared on the historical cost convention except for derivative financial instruments which are measured at fair value.

The consolidated financial statements were authorized for issue by the Supervisory Board on March 20, 2013 and were adopted by the Annual General Meeting of Shareholders on March 20, 2013.

The Company financial statements are part of the 2012 financial statements of Refresco Group B.V.

Functional and presentation currencyThese consolidated financial statements are presented in Euros, which is the Company’s functional currency. All financial information presented in Euros has been rounded to the nearest million with one decimal, unless stated otherwise.

Use of estimates and judgmentsThe preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses, especially the periodical review of useful lives and residual values of property plant and equipment. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any subsequent periods affected.

Information is provided in the following notes regarding the areas of estimation and critical judgment used in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements:

Notes• 2.8: Leased assets• 2.10: Impairment • 2.20: Determination of fair values• 3: Financial risk management• 5.1: Property plant and equipment• 5.2: Intangible fixed assets • 5.4: Deferred tax assets and liabilities • 5.11: Employee benefits provision• 5.12: Other provisions

1 General


Financial Review

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.

2.1 Basis of consolidationSubsidiariesSubsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and operating policies of an entity so as to benefit from its activities. In assessing control, potential voting rights that currently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases. The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by the Group.

The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments.

Transactions eliminated on consolidationIntra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions,

are eliminated in preparing the consolidated financial statements. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

2.2 Foreign currency Functional and presentation currencyItems included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”).

Transactions and balances in foreign currencyTransactions in foreign currencies are translated into the respective functional currencies of Group entities at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated into the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortized cost in foreign currency translated at the exchange rate at the end of the period. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated into the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on translation are recognized in profit or loss, except for differences arising on financial liabilities designated as a hedge of the net investment in a foreign operation, which are recognized in the foreign currency translation reserve.

Foreign operationsThe assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into Euros at the exchange rate at the reporting date. The income and expenses of foreign operations are

2 Significant accounting policies


translated into Euros at the exchange rates at the dates of the transactions (or at an average rate if this is not an unreasonable approximation).

Foreign currency differences arising thereon are recognized, in other comprehensive income, in the foreign currency translation reserve. When a foreign operation is disposed of, either in part or in full, the associated cumulative amount in the foreign currency translation reserve is transferred to profit or loss as an adjustment to the profit or loss on disposal.

Foreign exchange gains and losses arising on a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of the net investment in the foreign operation and are recognized in other comprehensive income in the foreign currency translation reserve.

Translation differences on intra-group long-term loans that effectively constitute a permanent increase or decrease in a net investment in a foreign operation are recognized in other comprehensive income in the reserve for translation differences.

2.3 Financial instrumentsNon-derivative financial instrumentsNon-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.

Non-derivative financial instruments are recognized initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition, non-derivative financial instruments are measured as described below.

Cash and cash equivalents comprise cash balances, checks in transit and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the cash management

processes are included as a component of cash and cash equivalents for the purpose of the cash flow statement.

The accounting for finance income and expense is described in note 2.17. Derivative financial instruments and hedging activitiesThe Group holds derivative financial instruments (interest rate swaps, forward exchange contracts and currency options) to hedge its foreign currency and interest rate risk exposures. The Group seeks to apply hedge accounting in order to minimize the effects of fluctuations of foreign currencies and interest rates in the profit or loss.

Derivative financial instruments are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at fair value. The method of recognizing the resulting gain or loss depends on whether the derivative financial instrument is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group applies cash flow hedge accounting.

The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The effective portion of changes in the fair value of derivative financial instruments that are designated and qualify as cash flow hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is recognized in the income statement immediately.

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised,


Financial Review

then hedge accounting is discontinued and the cumulative unrealized gain or loss previously recognized in other comprehensive income and presented in the hedging reserve in equity, is recognized in profit or loss immediately, or when a hedging instrument is terminated, but the hedged transaction still is expected to occur, the cumulative gain or loss at that point remains in other comprehensive income and is recognized in accordance with the above-mentioned policy when the transaction occurs. When the hedged item is a non-financial asset, the amount recognized in other comprehensive income is transferred to the carrying amount of the asset when it is recognized. In other cases the amount recognized in other comprehensive income is transferred to the same line of profit or loss in the same period that the hedged item affects profit or loss.

Where the financial instruments are held to hedge foreign currency purchases of raw materials and consumables, the changes are included in raw materials and consumables used. Where the instruments are held to hedge interest rate risk exposure, the changes are included in finance income and expense.

The fair values of various derivative instruments used for hedging purposes are disclosed in note 3.1.3. Movements of the hedging reserve in other comprehensive income are shown in note 5.9. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12 months and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as current assets or liabilities.

Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are carried at amortized cost using the effective interest method, less any impairment losses. They are included in current assets, except for loans and

receivables with maturities greater than 12 months after the balance sheet date.

2.4 Share capitalOrdinary share capitalOrdinary and Ordinary A and B share capital is classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.

Preference share capitalPreference share capital is classified as equity if it is non-redeemable, or redeemable only at the Company’s option, and any dividends are discretionary for the Company. Dividends thereon are recognized as distributions within equity upon approval by the General Meeting of Shareholders.

2.5 Non-controlling interestNon-controlling interest are recognized initially at their share of the identifiable assets, liabilities and contingent liabilities recognized in the purchase accounting, excluding goodwill.

Subsequently the allocation of profits between the parent and non-controlling interest are based on the indirect method, whereby the amount allocated to non-controlling interest represents their net effective interest in subsidiary.

2.6 Property, plant and equipmentRecognition and measurementItems of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labor, any other costs directly attributable to bringing the assets to a condition suitable for their intended use, and the costs of dismantling and removing the items and restoring of the site on which they are located. Borrowing costs that are directly attributable to the acquisition or


construction of a qualifying asset are allocated to the assets when incurred.

When elements of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the net proceeds of disposal with the carrying amount and are recognized on a net basis in other income in profit or loss.

Subsequent costsThe cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably, the carrying amount of the replaced part is derecognized. The costs of the day-to-day maintenance of property, plant and equipment are recognized in profit or loss as incurred.

DepreciationDepreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of each element of an item of property, plant and equipment. Land is not depreciated.

The estimated useful lives for the current and comparative periods are as follows:

• Buildings : 25 years• Machinery and equipment : 5-10 years• Other fixed assets : 3-10 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date.

2.7 Intangible assetsGoodwillGoodwill represents the excess of the cost of an acquisition over the fair value of the Group share of the net identifiable assets of the acquired subsidiary at the date of acquisition. Goodwill on acquisition of subsidiaries is included in ‘intangible assets’. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed.

Other intangiblesSoftware acquired by the Group is measured at cost less accumulated amortization and accumulated impairment losses. Subsequent expenditure is capitalized only to the extent that it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred. Amortization is recognized in the income statement on a straight-line basis over the estimated useful lives, generally 3 years.

Brands acquired, separately or as part of a business combination, are capitalized if they meet the definition of an intangible asset and the recognition criteria are satisfied. Brands acquired as part of a business combination are valued at fair value based on the relief from royalty method. Brands are amortized on an individual basis over the estimated useful life of the brand.

Customer and sales channel-related and contract-based intangibles are capitalized if they meet the definition of an intangible asset and the recognition criteria are satisfied. The relationship between brands and customer and sales channel-related intangibles is carefully considered so that brands and customer and sales channel-related intangibles are not both recognized on the basis of the same cash flows. Customer and sales channel-related and contract-based intangibles acquired as part of a business combination are valued at fair value and amortized over the period


Financial Review

of the contractual arrangements or the remaining useful life of the customer relationships.

2.8 Leased assetsLeases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. The main estimates and assumptions relate to residual values, applicable interest rates, economic lifetime of the assets and determination of the minimum lease payments. Upon initial recognition, the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. In view of the volume of the lease agreements as disclosed in note 6.2, these estimates are significant to the financial statements. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases and are not recognized on the balance sheet and disclosed in note 6.2.

2.9 InventoriesInventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the first-in first-out method, and includes expenditure incurred in acquiring the inventories, production and conversion costs and other costs incurred in bringing them to their existing location and condition. The cost of finished goods and work in progress includes an appropriate share of production overheads based on normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

2.10 ImpairmentFinancial assetsFinancial assets are assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of the asset that can be reliably estimated.

Impairment losses in respect of financial assets measured at amortized cost are calculated as the difference between the carrying amounts and present values of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is measured by reference to its fair value.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. Impairment losses are recognized in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For financial assets measured at amortized cost and for debit instruments measured in the available for sale category the reversal is recognized in profit or loss.

Non-financial assetsThe carrying amounts of non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated annually.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable cash flows from continuing use that are largely independent of the cash flows of other assets or groups of assets (the “cash-generating units”). For the purpose of impairment testing, the goodwill acquired in a business combination is allocated to cash-generating units that are expected to benefit from the synergies of the combination.


An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss. Impairment losses recognized in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (or group of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.

An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

2.11 Assets classified as held for saleNon-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. Immediately before classification as held for sale, the assets are re-measured in accordance with the accounting policies of the Group. Thereafter the assets are generally measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses on initial classification as held for sale and subsequent gains or losses on re-measurement are recognized in profit or loss. Gains are not recognized in excess of any cumulative impairment loss.

2.12 Employee benefitsDefined contribution plansA defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity with no legal or constructive obligation to pay further

amounts. Obligations for contributions to defined contribution pension plans are recognized as an employee benefits expense in profit or loss when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in future payments is available.

Defined benefit plansA defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior years; that benefit is discounted to determine its present value. Any unrecognized past service costs and the fair value of any plan assets are deducted. The discount rate is the yield at the reporting date on AA credit-rated bonds that have maturity dates approximating the terms of the obligations and that are denominated in the same currency in which the benefits are expected to be paid.

The calculation is performed annually by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to the Group, the asset recognized is limited to the total of any unrecognized past service costs and the present value of any economic benefits available in the form of future refunds from the plan or reductions in future contributions to the plan. An economic benefit is available to the Group if it is realizable during the life of the plan or on settlement of the plan liabilities.

When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognized in profit or loss on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognized immediately in profit or loss.

Cumulative unrecognized actuarial gains and losses arising from changes in actuarial assumptions exceeding 10% of the greater of the defined benefit obligation and the fair


Financial Review

value of the plan assets are recognized in profit or loss over the expected average future service years of the employees participating in the plan (the corridor approach).

Multi-employer plansThe Group also facilitates multi-employer plans, in which various employers contribute to one central pension union. In accordance with IAS 19, as the pension union managing the plan is not able to provide the Group with sufficient information to enable the Group to account for the plan as a defined benefit plan, the Group accounts for its multi-employer defined benefit plan as if it were a defined contribution plan.

Other long-term employee benefitsThe net obligation in respect of long-term employee benefits other than pension plans is the amount of future benefit that employees have earned in return for their service in the current and prior years; that benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The discount rate is the yield at the reporting date on AA credit-rated bonds that have maturity dates approximating the terms of the obligations of the Group. The calculation is performed using the projected unit credit method. Actuarial gains or losses are recognized in profit or loss in the period in which they arise.

Termination benefitsTermination benefits are recognized as an expense when the Group is demonstrably committed, without realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal retirement date or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Termination benefits for voluntary redundancies are recognized as an expense if the Group has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of acceptances can be reliably estimated.

Short-term benefitsShort-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognized for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be reliably estimated.

2.13 ProvisionsA provision is recognized if, as a result of a past event, the Group has a legal or constructive obligation that can be reliably estimated and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

RestructuringA provision for restructuring is recognized when the Group has approved a detailed and formal restructuring plan, and the restructuring has either commenced or been publicly announced. Future operating costs are not provided for.

2.14 RevenueProducts soldRevenue from the sale of products is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognized when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably.

Contract manufacturingContract manufacturing consists of the provision of manufacturing services and sale of the resultant product.


The nature and the risk profile of the contract with the customer are key in determining whether the Group is providing a manufacturing service or is selling a product. The revenue is recognized solely for the activities, ingredients and materials for which the Group is the principal and has the risk and rewards.

2.15 Government grantsGovernment grants are recognized at their fair value when it is reasonably assured that the Group will comply with the conditions attaching to them and that the grants will be received. Government grants relating to property, plant and equipment are deducted from the carrying amount of the asset. Government grants relating to period costs are deferred and recognized in the income statement over the period necessary to match them with the costs they are intended to compensate.

2.16 Lease paymentsPayments made under operating leases are recognized in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognized, as an integral part of the total lease expense, over the term of the lease. Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period of the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

2.17 Finance income and expenseFinance income comprises interest income on bank deposits and fair value gains and losses on hedging instruments that are recognized in profit or loss. Interest income is recognized in profit or loss as it accrues, using the effective interest method. Finance expense comprises interest expense on borrowings including derivative financial instruments, the unwinding of discount on provisions and fair value losses on interest hedging instruments that are recognized in profit or loss.

2.18 Income taxIncome tax expense comprises current and deferred tax. Income tax expense is recognized in profit or loss except to the extent that it relates to items recognized in equity or other comprehensive income in which case the income tax expense is also recognized in equity or other comprehensive income.

Current tax is the income tax expected to be payable on the taxable profit for the year, using tax rates enacted or substantively enacted at the reporting date, together with any adjustment to tax payable in respect of previous years.

Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. In addition, deferred tax is not recognized arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences in the reporting period they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets and liabilities are offset:

• If there is a legally enforceable right to offset current tax liabilities and assets, and

• If they relate to income taxes levied by the same tax authority on the same taxable entity or on different taxable entities which intend to settle current tax liabilities and assets on a net basis or the tax assets and liabilities of which will be realized simultaneously.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.


Financial Review

2.19 New standards and interpretations A number of new standards, amendments to standards and interpretations are not yet effective for the year ended December 31, 2012 and have not been applied in preparing these consolidated financial statements. As of 2012 the Group has implemented the following applicable standards with no impact, because the Group has no transactions to which the revisions apply.

• Amendments to IFRS 7 financial instruments – disclosures, transfer of financial assets.

The following revised standards and interpretations or amendments are not yet effective. The Group is currently assessing the impact of the following revised standards and interpretations or amendments that are not yet effective. These changes will be adopted on the effective dates noted and are not expected to have a material impact on the Group’s result of operations, financial position or disclosures unless indicated otherwise.

• IAS 1 Financial statement presentation regarding other comprehensive income, applicable to annual reporting periods beginning on or after July 1, 2012.

• IAS 12 Deferred tax: recovery of underlying assets, effective for periods beginning on or after January 1, 2013.

• IAS 19 Revised, Employee Benefits, applicable to annual reporting periods beginning on or after January 1, 2013. The Group has decided to adopt IAS 19R at the start of the fiscal year 2013. The key elements of the changes are as follows.

Immediate recognition of all changes in the funded position;

Interest Cost and Expected Return on Plan Assets are replaced with net interest on the Net Defined Benefit Liability/Asset;

Explicit assumptions regarding risk-sharing features must be taken into account.

IFRIC received a number of submissions in relation to risk-sharing. We expect that IFRIC will provide implementation guidance regarding risk-sharing. Therefore it may be

possible that, due to risk-sharing, this results in a change

in Defined benefit obligation under IAS 19R. The Group expects this change will have a material impact on equity and the results. When applied as of January 1, 2012 this would have a positive impact on the operating result of 2012 of EUR 1.1 million. The employee benefit provisions per year end would increase with EUR 4.5 million and it has a negative impact on other comprehensive income of EUR 3.8 million before tax.

• IAS 28 Investments in Associates and Joint Ventures (2011), applicable to annual reporting periods beginning on or after January 1, 2014.

• Amendments to IAS 32 Offsetting financial assets and financial liabilities, applicable to annual reporting periods beginning on or after January 1, 2014.

• Amendments to IFRS 7 Financial instruments disclosures, offsetting financial assets and liabilities, applicable to annual reporting periods beginning on or after January 1, 2013.

• IFRS 10 Consolidated Financial Statements, applicable to annual reporting periods beginning on or after January 1, 2014.

• IFRS 11 Joint Arrangements, applicable to annual reporting periods beginning on or after January 1, 2014.

• IFRS 12 Disclosure of Interests in Other Entities, applicable to annual reporting periods beginning on or after January 1, 2014.

• IFRS 13 Fair Value Measurement, applicable to annual reporting periods beginning on or after January 1, 2013.

The Group is currently assessing the impact of the following revised standards and interpretations or amendments that are not yet effective. These changes have not yet been endorsed by the EU, so will not necessarily be adopted by the effective dates noted.

• I FRS 9 Financial Instruments classification and measurement, hedge accounting and impairment, applicable to annual reporting periods beginning on or after January 1, 2015.


2.20 Determination of fair valuesA number of the accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the methods set out below. Where applicable further information regarding the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Property, plant and equipmentThe fair value of property, plant and equipment recognized as a result of a business combination is based on market values. The market value of property is the estimated amount for which a property would likely be exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The market value of items of machinery and equipment and other fixed assets is based on the quoted market prices for similar items.

Other intangible assetsThe fair value of brands and sales channels acquired in a business combination is determined based on the relief of royalty method. The fair value of other intangible assets is based on the discounted cash flows expected to be derived from the use and eventual sale of these assets.

InventoriesThe fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale and less a reasonable profit margin based on the effort required to complete and sell the inventories.

Trade and other receivablesThe fair value of trade and other receivables equals the carrying amount due to the short term nature.

Derivative financial instrumentsThe group defines the following different levels of fair value:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).

• Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).

• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

The fair value of all Groups derivatives at year-end is based on Level 2 valuations. In 2012 there were no reclassifications out of or into Level 1 and 3.

Non-derivative financial liabilitiesFair value for disclosure purposes is based on their listed market price, if available. If a listed market price is not available, the fair value is estimated by calculating of the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. For finance leases the market rate of interest is determined by reference to similar lease agreements.

2.21 SegmentationManagement considers the Group as one reportable segment because all production and sales are in Europe and the Executive Board manages the Group on consolidated level.


Financial Review

3 Financial risk management

3.1 Financial riskThe Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including foreign currency risk, fair value interest rate risk, cash flow interest rate risk and price risk). The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.

The Executive Board has the responsibility for the establishment and oversight of the risk management framework of the Group.

Risk management policies of the Group are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and in the activities of the Group. Through its training program and its management standards and procedures, the Group aims to develop a disciplined and constructive control environment in which all employees understand their roles and responsibilities.

The Supervisory Board oversees management’s monitoring of compliance with the risk management policies and procedures of the Group and it reviews the adequacy of the risk management framework in relation to the risks faced by the Group.

3.1.1 Credit riskCredit risk represents the risk that counter parties fail to meet their contractual obligations, and arises principally in the receivables from customers, cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions. The Group does not have any significant concentration of credit risk. In order to reduce the exposure to credit risk, the Group carries out ongoing credit evaluations of the financial position of customers but generally does not require collateral. Use is made of a combination of independent ratings and risk controls to assess the credit quality of the customer, taking into account its financial position, past experience and other factors. Sales are subject to payment conditions which are common practice in each country. The banks and financial institutions used as counterparty for holding cash and cash equivalents and deposits and in derivative transactions can be classified as high credit quality financial institutions (minimal A rating Standard & Poor’s). The Group has policies that limit the amount of credit exposure to individual financial institutions. Management believes that the likelihood of losses arising from credit risk is remote particularly in the light of the diversification of activities.


Carrying amount

2012 2011

EUR million

Euro-zone countries (EUR) 238.9 271.0UK (GBP) 8.6 7.3Poland (PLN) 8.0 7.4

255.5 285.7

The maximum exposure to credit risk for trade and other receivables at the reporting date by currency is as follows:

Carrying amount

2012 2011

EUR million

Notes Non-current investments 5.3 3.9 1.3Trade and other receivables 5.6 255.5 285.7Current investments 5.3 0.3 8.2Cash and cash equivalents 5.7 95.3 89.6

355.0 384.8

The carrying amount of financial assets represents the maximum credit exposure at the reporting date:Exposure to credit risk

2012 2011

EUR million Gross Impairment Gross Impairment

Not past due 220.4 - 243.8 -Past due 0 - 30 days 25.7 - 25.0 -Past due 31 - 60 days 4.7 - 6.7 -Past due more than 60 days 8.6 3.9 14.5 4.3

259.4 3.9 290.0 4.3

Ageing trade and other receivables and impairment losses:


Financial Review

December 31, 2012

EUR million Carrying amount

Contractual cash flows

6 months or less

6 - 12 months

1 - 2 years

2 - 5 years

> 5 years

Non-derivative financial liabilitiesNotes issued 651.0 909.5 19.6 19.6 39.1 156.4 674.9Finance lease and other loans 7.2 7.4 1.5 1.4 2.9 1.5 -Current liabilities 329.0 329.0 329.0 - - - -

987.2 1,245.9 350.0 21.0 42.0 158.0 674.9

Derivative financial liabilities Interest rate swaps 10.9 13.1 2.8 2.4 3.2 4.7 -

The Group determines impairment losses on the basis of specific estimates of losses incurred in respect of trade and other receivables. Based on historic default rates, the Group believes that no impairment loss has occurred in respect of trade receivables not past due or past due by up to 60 days.

3.1.2 Liquidity riskLiquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The approach of the Group to managing liquidity risk is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and more extreme conditions, without incurring unacceptable losses or risking damage to the reputation of the Group. The Group has a clear focus on financing long-term growth as well as current operations. Strong cost and cash management and controls over working capital and capital expenditure proposals are in place to ensure effective and efficient allocation of financial resources. The contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements, if applicable, are as shown in the following table. Insofar as these cash flows depend on future floating interest rates, the level of which was unknown on the balance sheet date, these cash flows have been estimated on the basis of rates prevailing on the balance sheet date.

2012 2011

EUR million

January 1 4.3 1.4Impairment loss recognized 0.5 1.1Acquisitions - 2.2Release of provision (0.2) -Write off (0.7) (0.4)Effect of movements in exchange rates - -

December 31 3.9 4.3

The movements in the impairment loss in respect of trade and other receivables during the year were as follows:


December 31, 2011

EUR million Carrying amount

Contractual cash flows

6 months or less

6 - 12 months

1 - 2 years

2 - 5 years

> 5 years

Non-derivative financial liabilitiesNotes issued 649.4 977.9 21.5 21.5 43.1 172.2 719.6Finance lease and other loans 10.1 11.0 1.8 1.5 2.9 4.8 -Current liabilities 355.5 355.5 355.5 - - - -

1,015.0 1,344.4 378.8 23.0 46.0 177.0 719.6

Derivative financial liabilities Interest rate swaps 12.3 13.4 3.0 2.5 2.8 5.1 -

3.1.3 Market riskForeign currency riskThe Group is exposed to currency risk mainly on purchases denominated in USD. At any point in time the Group hedges 80 to 100% of its foreign currency exposure on forecasted purchases. The Group uses currency option contracts and forward exchange contracts to hedge its currency risks, most of which have a maturity date of less than one year from the reporting date. When necessary, foreign currency contracts are rolled over on maturity.

In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates, as necessary, to address short-term imbalances. In order to minimize the impact of accounting mismatches in the profit or loss account, the Company started applying cash flow hedge accounting in 2011. The effectiveness of the hedge relationship is measured based on changes in intrinsic value of options and fair value of forward contracts. The changes in time value of the currency options are directly recorded in the income statement, as part of raw material costs. Throughout the year 2012 as well as per year end the cash flow hedge accounting relationships were fully effective. There are no forecasted transactions for which hedge accounting has been applied, but which are no longer expected to occur.

The fair value of foreign currency instruments per reporting date is -/- EUR 1.1 million (2011: EUR 8.2 million). The effective part of the intrinsic value changes of the foreign currency option contracts and the fair value of the forward contracts amounted to a EUR 0.8 million loss net of deferred taxes in other comprehensive income (2011: EUR 4.3 million gain). In 2012 an amount of EUR 6.8 million was reclassified from Other Comprehensive Income to raw material costs (2011: EUR 1.1 million). During 2012 an amount of EUR 1.5 million was recorded in raw material costs due to ineffectiveness (2011: - ). The amounts deferred in equity at year-end are expected to occur and to affect profit and loss in 2013.


Financial Review

2012 2011

USD million

Trade payables 21.8 15.1Estimated forecast purchases 82.8 128.6

Gross exposure 104.6 143.7

Forward exchange contracts / Currency option contracts 99.3 140.4

Net exposure 5.3 3.3

The notional amounts of exposure to significant foreign currency risks were as follows:

The change in fair value of the financial instruments used to hedge currency risk is included in raw materials and consumables in the income statement, except for the instruments for which hedge accounting is applied.

The following significant exchange rates were applied during the year:

Sensitivity analysisA 10% strengthening or weakening of the Euro against the USD at reporting date would have changed equity and profit or loss by the amounts shown below.

Average Year-end

2012 2011 2012 2011

Value of EUR 1

USD 1.29 1.39 1.32 1.29GBP 0.81 0.86 0.82 0.84PLN 4.17 4.11 4.09 4.46

Profit / (loss) OCI

10% strengthening 10% weakening 10% strengthening 10% weakening

EUR million

Trade payables 1.5 (1.5) - -

Foreign currency hedge instruments (2.4) 1.3 3.1 (3.1)

Net effect (0.9) (0.2) 3.1 (3.1)


Interest rate riskThe Group is exposed to the effects of variable interest rates on interest-bearing long-term liabilities, which is partly offset by cash held at variable rates. On fixed interest receivables and liabilities, it is exposed to market value fluctuations. For certain variable interest rate long term liabilities, the Group has entered into interest rate swap agreements through which the Group effectively pays fixed interest rates on these liabilities. At any point in time the Group hedges 90 to 100% of the net interest rate risk. As at balance sheet date, interest rates were fixed on approximately 103.0% of the net of cash and financial liability positions. There is an slight over hedge due to remaining interest rate swaps of the former financing.

In 2011 the Group started applying cash flow hedge accounting to offset the profit or loss impact resulting of timing differences

between variable interest rate liabilities and the interest rate swap. Throughout the year 2011 and 2012 as well as per year end the cash flow hedge accounting relationships were effective.

The fair value of interest rate swaps per reporting date is -/- EUR 10.9 million (2011: -/- EUR 12.3 million). The effective part of the fair value changes of the interest rate swaps amounted to a EUR 5.7 million (2011: EUR -/- 4.4 million) loss net of deferred taxes in other comprehensive income. In 2012 an amount of EUR 3.0 million (2011: EUR 0.1 million) was reclassified from Other Comprehensive Income to financing cost. During 2012 no amounts were recorded in financing cost due to ineffectiveness. The amounts deferred in equity at year-end are expected to affect financing costs within the coming four years.

Carrying amount

2012 2011

EUR million

Notes Fixed rate instrumentsLoans and borrowings 5.10 362.4 364.3

362.4 364.3

Variable rate instrumentsCash 5.7 (95.3) (89.6)Non-current investments 5.3 (3.9) (1.3)Loans and borrowings 5.10 295.9 295.2

196.7 204.3

Notional amount interest rate swaps per year end 225.0 315.0Over / (under) hedged 28.3 110.7

ProfileAt the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was as follows:

Per end of 2011 and 2012 the Group was over hedged because some interest rate swaps related to the former financing are still in place. This situation is still in place because the Group decided not to sell excess interest rate swaps for cash flow purposes. The over hedge will fade out early 2013.


Financial Review

Profit / (loss) Other comprehensive income

December 31, 2012

EUR million 100 basispoints

increase

100 basispoints

decrease

100 basispoints

increase

100 basispoints

decrease

Interest (paid)/received on variable rate instruments (0.2) 1.6 - -Change fair value interest rate swaps 1.2 - (3.2) 1.4

Total 8.6 3.9 8.6 3.9

Profit / (loss) Other comprehensive income

December 31, 2011

EUR million 100 basispoints

increase

100 basispoints

decrease

100 basispoints

increase

100 basispoints

decrease

Interest (paid)/received on variable rate instruments (0.9) 0.9 - -Change fair value interest rate swaps 2.2 (1.9) 3.5 (3.6)

Total 1.3 (1.0) 3.5 (3.6)

Sensitivity analysis for fixed rate instrumentsThe Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not have affected profit or loss.

Sensitivity analysis for variable rate instrumentsA change of 100 basis points in interest rates at the reporting date would have changed equity and profit or loss by the amounts shown in table below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The group assumes that lowest Euribor rate reasonably possible is zero. The analysis is performed on the same basis as for 2011.

Fair valuesPer reporting date the interest rate swaps, foreign currency options, forward exchange contracts and assets held for sale are valued at fair value. The fair value of the senior secured notes issued per reporting date is EUR 662.5 million (2011: EUR 610.9 million), with a nominal value of EUR 660.0 million. The fair values of other financial assets and liabilities approximate the carrying amounts, as the impact of discounting is not significant.

Interest rates used for determining fair valueThe interest rates used to discount estimated cash flows of derivative financial instruments, where applicable, are based on 6 months Euribor curve at the reporting date. The implicit interest rate has been used for the finance leases and is 5.3% for both 2012 and 2011.


Price riskThe Group is exposed to commodity price risks. To manage these risks procurement operates within the framework of centrally specified policies and guidelines and must act in conformance with the required internal control measures.

The Group contract positions are based on a thorough understanding of the raw material markets and in principle contracted sales are covered back to back. During 2012 the Group continued to centralize the procurement of all raw and packaging materials. Authority levels of local management have been shifted towards the Group central procurement organization which is executing and monitoring the main contracts and important purchase decisions. Commodities are only purchased locally after approval of the central purchasing department. Contracts exceeding predefined limits must be authorized by the Executive Board. Existing contract positions are closely monitored and, when necessary, corrective actions are evaluated and implemented.

To enable it to stay abreast of the current situation in the raw materials markets and maintain its gross margins, the Group has introduced more pass-on clauses into sales contracts with customers. In parallel, the quality of management information has been enhanced by the development of a network enabling

knowledge of markets, suppliers and conditions of raw materials to be shared at Group level.

Pension riskThe Group contributes to a number of defined benefit plans that provide pension benefits to employees upon retirement in The Netherlands, Germany, Italy and the UK. The amount of the benefits depends on age, salary and years of service. Furthermore, the Group has an indemnity plan in France and obligations for jubilee in The Netherlands, Germany and France. The financial figures are affected by the market interest rates and fair value of listed bonds and equity shares included in plan assets.

3.2 Capital managementThe policy of the Group is to maintain a sufficient capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Executive Board monitors the capital employed, which consists of the capital in property, plant and equipment, as well as the net working capital. Furthermore, the Group monitors its cash positions, both actual and forecasted, on a weekly basis. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.

6M Euribor Curve

0,0000

0,2000

0,4000

0,6000

0,8000

1,0000

1,2000

1,4000

1,6000

1,8000

31-12-2011

1 W 6 M 1 Y 2 Y 3 Y 4 Y

31-12-2012


Financial Review

4.1 Revenue

4.2 Other incomeOther income relates entirely to gain and/or losses on sale of property, plant and equipment.

4 Notes to the consolidated income statement

2012 2011

EUR million

Private label and own brands 1,276.2 1,238.2Contract manufacturing 262.1 285.2

1,538.3 1,523.4

2012 2011

EUR million

Benelux 467.2 454.2Germany 337.0 331.5France 246.0 235.8Iberia 179.6 228.8Italy 153.0 119.6Other 155.5 153.5

1,538.3 1,523.4

Segmentation based on revenue per country is set forth in the table below.

2012 2011

EUR million

Raw materials and consumables 480.6 480.9Packaging materials 460.5 450.0Product tax 17.9 18.7

959.0 949.6

4.3 Raw materials and consumables used


4.4 Employee benefits expense

4.5 Depreciation, amortization and impairments

During 2012 the average number of employees in the Group, in full-time equivalents (“FTEs”), was 3,074 (2011: 3,034), of which 2,570 (2011: 2,538) were employed outside The Netherlands.

The impairment on intangible fixed assets relates to goodwill in the UK and the impairment on tangible fixed assets mainly relates to a plant in Italy due to closure and a plant in Germany. The 2011 impairments relate to goodwill in the UK and the impairment of a plant in Iberia due to termination of the partnership contract.

2012 2011

EUR million NotesWages and salaries 116.3 115.5Compulsory social security contributions 28.8 22.7Pension contributions to defined contribution schemes 5.11 1.8 1.3Pension costs of defined benefit schemes 5.11 4.4 4.4

151.3 143.9

2012 2011

EUR million NotesDepreciation of property, plant and equipment 5.1 62.1 61.1Amortization of intangible assets 5.2 3.8 3.3Impairments on tangible fixed assets 5.1 5.0 3.5Impairments on intangible fixed assets 5.2 2.5 5.6

73.4 73.5


Financial Review

4.6 Other operating expenses

Advice and legal costs in 2011 contains EUR 8.0 million related to the refinancing of the Group.

2012 2011

EUR million NotesFreight charges 75.4 80.1 Other cost of sales, including excise duties 60.3 53.3 Promotion costs 2.3 1.8 Temporary staff 13.2 13.9 Other personnel costs 9.1 9.6 Rent and leasing of machinery and equipment 6.2 18.0 21.0 Maintenance 30.3 35.4 Energy 38.9 37.0 Advice and legal costs 7.6 15.9 Housing costs, including rental of buildings 6.2 11.6 11.8 Storage costs 21.2 19.6 Other operating costs 32.0 32.1

319.9 331.5

4.7 Net finance costs Net finance costs recognized in the income statement:

2012 2011

EUR million

Interest income 0.6 0.7

Finance income 0.6 0.7

Interest expense on financial liabilities measured at amortized cost (49.7) (52.2)Cost of borrowings (1.7) (7.6)Change in fair value of derivatives recognized in profit and loss 3.0 7.6

Finance costs (48.4) (52.2)

Net finance costs (47.8) (51.5)


Finance income and costs recognized in other comprehensive income

2012 2011

EUR million

Foreign currency translation differences for foreign operations 4.1 (3.2)Effective portion of changes in fair value of cash flow hedges (1.7) (5.9)Tax effect 0.1 1.5

Net finance income / (costs) recognized in other comprehensive income, net of tax 2.5 (7.6)

Recognized in:Translation reserve 3.8 (3.2)Hedging reserve (1.3) (4.4)

Net finance income / (costs) recognized in other comprehensive income, net of tax 2.5 (7.6)

The net change in fair value of derivative financial instruments of EUR 3.0 million positive (2011: EUR 7.6 million positive) relates to changes in the fair value of the interest rate swaps concluded by the Group to hedge the external financing with variable interest rates. The amount reflects the change in fair value of interest rate swaps for which no hedge accounting is applied and release from other comprehensive income. The amounts are part of interest expenses.

The cost of borrowings relates to the financing costs which were capitalized in the aggregate amount and amortized over the terms of the loans and notes. During 2011 the capitalized amounts related to former financings have been recorded in profit and loss.

2012 2011

EUR million Initial Capitalized

Amount

Borrowing costs

Borrowing costs

Notes issued 2011 11.5 (1.7) (1.0)Syndicated loan facility 2008 6.3 - (4.4)Syndicated loan facility International 2010 2.3 - (2.2)

Costs of borrowings (1.7) (7.6)


Financial Review

4.8 Income tax (expense) / benefit

2012 2011

EUR million

Current tax expenseCurrent income tax (11.1) (7.3)Prior period taxes (0.7) 0.9 Other taxes (1.5) (1.4)

(13.3) (7.8)

Deferred tax expensesReversal of temporary differences 9.1 9.3 Change in tax rate - 0.1 (De)recognition (un)recognized deferred tax assets (2.2) (3.5)Prior period taxes 0.8 1.8

7.7 7.7

Total income tax (expense) / benefit (5.6) (0.1)

2012 2011

EUR million

% %

Result before tax (12.6) (25.8) Income tax based on the Group's blended tax rate 1.2 9.8% 4.4 17.2%Non-deductible operational expenses (0.9) (7.4%) (1.1) (4.1%)Non-deductible interest (1.2) (9.1%) - 0.0%Exempted participations related results (1.4) (11.1%) - 0.0%Change in tax rate - - 0.1 0.4%(De)recognition (un)recognized deferred tax assets (2.2) (17.6%) (4.9) (18.9%)Other taxes (1.4) (11.1%) (1.4) (5.4%)Prior period taxes 0.1 0.8% 2.7 10.4%Other reconciling items 0.2 1.6% (0.0) (0.2%)

Total income tax (expense) / benefits (5.6) (44.1%) (0.1) (0.5%)


The effective tax rate is 44% negative, compared to a blended Group tax rate of 9,8%.

The negative effective tax rate is mainly explained by non-deductible interest in France and non-deductible impairment of goodwill in the UK. Furthermore, the losses incurred during the year in the UK are not recognized and other taxes such as CVAE in France and IRAP in Italy have a negative impact on the effective tax rate. In addition the current tax accruals for prior years were underprovided and a provision for the tax audit in Spain has been accounted for. The amounts underprovided in prior years mainly relate to The Netherlands.

Income tax recognized in other comprehensive income

2012 2011

EUR million

Changes in tax on hedging reserve currency translation adjustment (0.3) -Changes in tax on hedging reserve foreign currency hedge instruments 1.7 (1.4)Changes in tax on hedging reserve interest rate swaps 0.4 1.4

Total income tax (expense) / benefit in other comprehensive income 1.8 -


Financial Review

5.1 Property plant and equipment

5 Notes to the consolidated balance sheet

EUR million Note Land and buildings

Machinery and

equipment

Other fixed assets

Under construction

Total

CostJanuary 1, 2011 224.1 246.8 12.5 38.7 522.1Additions 0.8 11.8 2.2 26.3 41.1Reclassifications (18.8) 74.6 (2.0) (55.3) (1.5)Acquisitions through business combinations 34.6 47.0 7.0 0.7 89.3Transfer from assets held for sale 5.8 (5.5) - - - (5.5)Disposals (0.4) (11.7) (1.8) (0.1) (14.0)Effect of movements in exchange rates (0.7) (1.0) - - (1.7)

December 31, 2011 234.1 367.5 17.9 10.3 629.8

January 1, 2012 234.1 367.5 17.9 10.3 629.8Additions 0.5 10.8 2.4 29.3 43.0Reclassifications (10.5) 21.0 18.6 (27.3) 1.8Acquisitions through business combinations 6.1 1.2 3.5 - - 4.7Transfer from assets held for sale 5.8 2.0 - - - 2.0Disposals (22.0) (31.6) (2.8) - (56.4)Effect of movements in exchange rates 0.7 2.1 - 0.1 2.9

December 31, 2012 206.0 373.3 36.0 12.5 627.8

Depreciation and impairment lossesJanuary 1, 2011 (37.6) (129.7) (3.1) - (170.4)Depreciation for the year 4.5 (10.6) (46.0) (4.5) - (61.1)Impairment (0.3) (3.2) - - (3.5)Transfer to assets held for sale 5.8 4.0 - - - 4.0Disposals - 11.0 1.5 - 12.5Effect of movements in exchange rates 0.1 0.6 - - 0.7

December 31, 2011 (44.4) (167.3) (6.1) - (217.8)

January 1, 2012 (44.4) (167.3) (6.1) - (217.8)Depreciation for the year 4.5 (10.0) (46.0) (6.1) - (62.1)Reclassification 3.7 1.9 (7.6) - (2.0)Impairment 4.5 (3.2) (1.5) (0.3) - (5.0)Transfer from assets held for sale 5.8 (0.9) - - - (0.9)Disposals 18.7 30.9 2.7 - 52.3Effect of movements in exchange rates (0.1) (0.8) - - (0.9)

December 31, 2012 (36.2) (182.8) (17.4) - (236.4)

Carrying amounts

January 1, 2011 186.5 117.1 9.4 38.7 351.7

December 31, 2011 189.7 200.2 11.8 10.3 412.0

December 31, 2012 169.8 190.5 18.6 12.5 391.4


Impairment lossesIn 2012 an impairment was recognized on a plant in Italy, Gussago, due to closure of the plant. In Germany an impairment was recorded on a plant which was not in use anymore and which is sold in December 2012. In addition an impairment on a plant which is not in use for years in Iberia has been recognized. The valuation of the plant in Iberia was performed in November 2012 based on available market prices performed by an external independent valuator.

Financial leases The Group leases a warehouse and production equipment under a number of finance lease agreements secured on the underlying leased assets (reference is made to note 5.10). At December 31, 2012, the carrying amount of leased plant and machinery was EUR 18.3 million (2011: EUR 20.7 million).

CollateralCollateral for the redemption of the notes and the revolving credit facility has been given on all fixed assets in The Netherlands and Germany, and on real estate in Finland and Poland.

Property, plant and equipment under constructionProperty, plant and equipment under construction relates mainly to expansion of production facilities in The Netherlands, France, and Germany. After construction is complete, the assets are reclassified to the applicable property, plant and equipment category. The net balance of reclassifications is related to assets under construction transferred to intangible fixed assets.


Financial Review

5.2 Intangible fixed assets

The net balance of reclassifications relates to assets which were classified as assets under construction in tangible fixed assets.

EUR million Note Goodwill Brands and sales channels

Other Assets under

construction

Total

CostJanuary 1, 2011 273.2 - 10.8 - 284.0Acquisitions through business combinations 25.2 7.4 0.2 - 32.8Additions at cost - - 0.3 0.2 0.5Disposals at cost - - (0.1) - (0.1)Reclassification from property plant and equipment - - 1.4 0.1 1.5Effect of movements in exchange rates (1.3) - - - (1.3)

December 31, 2011 297.1 7.4 12.6 0.3 317.4

January 1, 2012 297.1 7.4 12.6 0.3 317.4Acquisitions through business combinations 6.1 1.4 - - - 1.4Additions - - 0.1 0.5 0.6Disposals - - (0.1) - (0.1)Reclassifications - 0.2 0.6 (0.6) 0.2Effect of movements in exchange rates 1.6 - - - 1.6

December 31, 2012 300.1 7.6 13.2 0.2 321.1

Amortization and impairment lossesJanuary 1, 2012 (3.1) - (4.3) - (7.4)Amortization for the year 4.5 - (0.9) (2.4) - (3.3)Impairment losses 4.5 (5.6) - - - (5.6)Disposals - - 0.1 - 0.1Effect of movements in exchange rates (0.2) - - - (0.2)

December 31, 2011 (8.9) (0.9) (6.6) - (16.4)

January 1, 2012 (8.9) (0.9) (6.6) - (16.4)Amortization for the year 4.5 - (1.3) (2.5) - (3.8)Impairment losses 4.5 (2.5) - - - (2.5)Disposals - - 0.1 - 0.1Reclassifications - (0.3) 0.3 - -Effect of movements in exchange rates (0.2) - (0.1) - (0.3)

December 31, 2012 (11.6) (2.5) (8.8) - (22.9)

Carrying amounts

January 1, 2011 270.1 - 6.5 - 276.6

December 31, 2011 288.2 6.5 6.0 0.3 301.0

December 31, 2012 288.5 5.1 4.4 0.2 298.2


Amortization and impairment chargeAmortization and impairment losses are recognized in depreciation, amortization and impairment expense in the income statement.

Impairment testing for cash-generating units containing goodwillFor the purpose of impairment testing, goodwill is allocated to the business units of the Group, being the lowest level within the Group at which goodwill is monitored for internal management purposes.

The recoverable amounts of the cash-generating units are based on value-in-use calculations. Value-in-use was determined by discounting the future pre-tax cash flows generated from the continuing use of the unit using a pre-tax discount rate and was based on the following key assumptions:

• Cash flows were projected based on the current operating results, the budget for 2013 approved by the executive and supervisory board and the 3-year business plan covering the period 2013-2015. Future cash flows beyond this period were extrapolated using a growth rate which is based on the growth expectations of the private label segment in the total local market. These growth expectations are retrieved from researches from independent external sources. The growth rates are in a range of 1% to 1.5%

and are considered conservative taking into account the expected private label market development. The company takes into account production efficiency improvements, waste reduction and cost reduction programs currently started, which will contribute positive to the future cash flows. Management believes that this forecast period was appropriate to the long-term nature of the business.

• A pre-tax discount rate is based on credit risk per country, a weighted average cost of capital applicable to the industry and the applicable tax rate per cash generating unit. Compared to last year differences between business units increased as result of more detailed approach.

The aggregate carrying amounts of goodwill allocated to each unit are as follows:

2012 2011

EUR million

Benelux 93.7 93.7France 65.9 65.9Germany 39.8 39.8Iberia 35.7 35.7Poland 14.4 11.8UK 2.5 4.9Finland 11.3 11.3Italy 25.2 25.2

288.5 288.3


Financial Review

The values assigned to the key assumptions represent management’s assessment of future trends in the industry and are based on both external and internal sources (historical data). With the exception for the UK, the recoverable amounts of the units were determined to be higher than their carrying values and accordingly no impairment charges have been recognized. The impairment of EUR 2.5 million in the UK is mainly caused by a reduced expected growth of our activities in the local market. The other mutations on goodwill in the UK and Poland are caused by changes in exchange rates and the acquisition of Taja Sp. z o.o. (EUR 1.4 million). In 2011 EUR 5.6 million was impaired on goodwill in the UK.

Sensitivity analysisIf the undiscounted cash flow per cash-generating unit had been 10% lower than management’s estimates, that would have led to an additional reduction of the book value of goodwill at December 31, 2012 in the UK (EUR 2.0 million), Iberia (EUR 6.0 million), Italy (EUR 3.4 million) and Poland (EUR 2.0 million). If the estimated pre-tax discount rate applied to calculate the present value of future cash flows had been 100bp higher than management’s estimates, then that would have led to an additional reduction of the book value of goodwill per December 31, 2012 in the UK (EUR 2.4 million), Iberia (EUR 3.8 million), Italy (EUR 2.1 million) and Poland (EUR 2.2 million). The sensitivity analysis for the other cash-generating units did not result in additional impairments.

Pre-tax WACC 2012 2011

EUR million

Benelux 9.3% 10.0%France 11.3% 11.4%Germany 10.0% 10.1%Iberia 12.9% 10.7%Poland 9.9% 9.3%UK 9.2% 10.1%Finland 9.3% 10.1%Italy 12.1% 10.9%


The exposure to credit, currency and interest rate risks related to other investments is disclosed in note 3.1.3.

2012 2011

EUR million

Deposits and other financial fixed assets 3.9 1.3

3.9 1.3

5.3 Other investments

Non-current investments

2012 2011

EUR million

Derivatives used for foreign currency hedging 0.3 8.2

0.3 8.2

Current investments


Financial Review

Assets Liabilities Net

2012 2011 2012 2011 2012 2011

EUR million

Property plant and equipment - 0.3 (33.7) (35.2) (33.7) (34.9)Intangible assets 3.8 1.8 (0.1) - 3.7 1.8Inventories - 0.1 - - - 0.1Trade and other receivables 0.7 2.6 (0.2) (3.7) 0.5 (1.1)Loans and borrowings 1.7 1.0 (1.3) (2.2) 0.4 (1.2)Derivative financial instruments 2.7 3.1 - - 2.7 3.1Employee benefits provision 1.4 0.6 (0.2) (0.3) 1.2 0.3Other provisions 0.1 1.6 - - 0.1 1.6Current liabilities 1.9 0.9 (0.7) (1.3) 1.2 (0.4)

Deferred tax assets / (liabilities) 12.3 12.0 (36.2) (42.7) (23.9) (30.7)

Tax loss carry-forwards 18.0 15.2

Net Tax assets / (liabilities) 12.3 12.0 (36.2) (42.7) (5.9) (15.5)

Deferred tax to be recovered (settled) after more than 12 months 11.7 13.5

Deferred tax asset on balance sheet 9.9 10.3Deferred tax liability on balance sheet (15.8) (25.8)

Net deferred tax assets / (liabilities) (5.9) (15.5)

On the balance sheet deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority.

5.4 Deferred income tax assets and liabilities

Movement 2012 January 1 2012

Recognized in profit or loss

Recognized in OCI/ Equity

Acquired in business combinations

Effect of movement in

exchange rates

December 31 2012

EUR million Property plant and equipment (34.9) 1.5 - (0.3) - (33.7)Intangible assets 1.8 1.9 - - - 3.7Inventories 0.1 (0.1) - - - -Trade and other receivables (1.1) 1.6 - - - 0.5Loans and borrowings (1.2) 1.6 - - - 0.4Derivatives 3.1 (0.8) 0.4 - - 2.7Employee benefits provision 0.3 0.9 - - - 1.2Other provisions 1.6 (1.5) - - - 0.1Current liabilities (0.4) 0.1 1.4 - 0.1 1.2

Deferred tax assets / (liabilities) (30.7) 5.2 1.8 (0.3) 0.1 (23.9)

Tax loss carry-forwards 15.2 2.7 0.1 18.0

Net Tax assets / (liabilities) (15.5) 7.9 1.8 (0.3) 0.2 (5.9)


Movement 2011 January 1 2011

Recognized in profit or loss

Recognized in OCI/ Equity

Acquired in business combinations

Effect of movement in

exchange rates

December 31 2011

EUR million Property plant and equipment (29.7) 1.7 - (6.8) (0.1) (34.9)Intangible assets 1.3 0.5 - - - 1.8Inventories 0.2 0.1 - (0.2) - 0.1Trade and other receivables (1.5) 2.5 - (2.1) - (1.1)Loans and borrowings 1.0 (2.2) - - - (1.2)Derivatives 3.6 (0.5) - - - 3.1Employee benefits provision - 0.3 - - - 0.3Other provisions 0.7 1.1 - (0.2) - 1.6Current liabilities (1.7) 1.2 - - 0.1 (0.4)

Deferred tax assets / (liabilities) (26.1) 4.7 - (9.3) - (30.7)

Tax loss carry-forwards 11.9 3.2 0.1 15.2

Net Tax assets / (liabilities) (14.2) 7.9 - (9.3) 0.1 (15.5)

Tax losses carry-forwardsThe Group recognizes deferred tax assets on loss carry forwards when future profits are expected which can be offset with these losses. These loss carry forwards amount to EUR 115.8 million (2011: EUR 98.9 million) as per December 31, 2012, of which EUR 22.1 million (2011: EUR 17.1 million) is not recognized. The deferred tax assets related to loss carry forwards expire in the following years:

2012 2011

EUR million

2014 0.5 0.32015 0.0 0.1After 2015 but not Unlimited 6.1 2.2Unlimited 17.3 16.9

23.9 19.5

Recognized as deferred tax assets (net) 18.0 15.2Unrecognized 5.9 4.3

The increase in the deferred tax assets related to loss carry forwards is due to additional losses in Iberia and Italy. The unrecognized losses are fully attributable to the UK for which the Group does not expect future profits within a reasonable timeframe.


Financial Review

5.5 Inventories

2012 2011

EUR million

Stock of raw materials and consumables 89.6 87.3Stock of finished goods 60.1 64.4

149.7 151.7

2012 2011

EUR million

NotesTrade receivables 234.2 257.2Other receivables, prepayments and accrued income 9.7 16.6Other taxes and social security premiums 11.6 11.9

3.1.1 255.5 285.7

Non-current - -Current 255.5 285.7

5.6 Trade and other receivables

2012 2011

EUR million

NotesBank balances 92.8 34.6Deposits 2.5 55.0

Cash and cash equivalents 95.3 89.6

Bank overdrafts 5.10 - -

Cash and cash equivalents in the consolidated statement of cash flow 95.3 89.6

5.7 Cash and cash equivalents

Inventory is shown net of a provision for obsolescence of EUR 5.6 million (2011: EUR 5.4 million).

The exposure to credit and currency risks and impairment losses related to trade and other receivables is disclosed in note 3.

Total amount blocked for bank guarantees or issued letters of credits is EUR 2.4 million (2011: EUR 7.4 million). The term of the deposits is less than 6 months. The exposure to interest rate risk and the sensitivity analysis for financial assets and liabilities are disclosed in note 3.1.3.


5.8 Assets classified as held for sale

2012 2011

EUR million

Assets classified as held for sale as at January 1 2.6 -Transfer from / (to) property, plant and equipment (1.1) 1.5Acquired as part of acquisition - 1.1Assets sold (1.5) -

- 2.6

The assets held for sale end of 2011 consists of a plant in Germany and a plant in Italy acquired with the acquisition of Spumador. The plant in Germany has been sold in 2012, and the plant in Italy has been reclassified to the fixed assets as no sale is expected within one year.

5.9 EquityShare capitalShare capital as at December 31, 2011 and 2012 consists of:

• 4,307,333 ordinary shares with a nominal value of EUR 1.00 each

• 64,800 ordinary shares A with a nominal value of EUR 0.01 each

• 21,161 ordinary shares B with a nominal value of EUR 0.01 each

The holders of ordinary shares are entitled to receive dividends as declared from time to time. The holders of ordinary shares A and B have a priority right to a fixed cumulative dividend of 10% plus a first priority right in the event of winding up. Both the Company and the shareholders, including the holders of the ordinary shares A and B, agreed in the Articles of Association of the Company that any distribution of dividend is discretionary for the Company and requires the prior approval of the General Meeting of Shareholders of the Company. The holders of the ordinary shares A and B may resolve that the dividend to which they are entitled shall be credited to the dividend reserve maintained by the Company with respect to the ordinary shares A and B. The Company’s residual assets shall be paid first to the holders of the ordinary shares A and B and then,

if any balance remains, to the holders of the ordinary shares. Each ordinary share carries the right to one hundred votes and each ordinary share A and B carries the right to one vote. The Company can acquire fully paid-up shares (ordinary as well as ordinary A and B) in its own capital subject to among others the General Meeting of Shareholders having authorized the acquisition in accordance with the Articles of Association of the Company.

Share premiumOn March 24, 2010 the former shareholder 3i took a minority stake of 20.32% in the Group for a total value of EUR 84 million of which EUR 38.1 million was received in 2010. The remaining amount of EUR 45.9 million was received in 2011. The transaction fee paid to 3i of EUR 0.7 million is deducted from the share premium.

Other reservesThe other reserves consist of translation reserves and hedging reserves. The translation reserve comprises foreign currency differences arising from the translation of the financial statements of foreign operations of the Group. The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments where the hedged transaction has not yet occurred.


Financial Review

2012 2011

EUR million

Notes issues (Eurobond on Luxembourg Stock Exchange) 651.0 649.4Finance lease liabilities 4.5 7.3

655.5 656.7

Non-current liabilities

2012 2011

EUR million

Foreign currency translation differences on foreign operations 0.9 (3.2)Effective portion of changes in fair value interest rate swaps (7.5) (5.8)Effective portion of changes in fair value foreign currency instruments (1.1) 5.7Tax effect 1.9 -

Total other comprehensive income, net of tax (5.8) (3.3)

Recognized in: Translation reserve 0.6 (3.2)Hedging reserve (6.4) (0.1)

Total other comprehensive income, net of tax (5.8) (3.3)

Dividends In 2012 no dividends were paid. As at December 31, 2012, the unpaid cumulative dividend on the ordinary shares A and B amounted to EUR 89.1 million (2011: EUR 63.9 million).

Legal reservesThere are no legal reserves.

5.10 Loans and borrowingsThe interest-bearing loans and borrowings are recognized at amortized cost. The exposure to interest rate, foreign currency and liquidity risks is disclosed in note 3.1.

The other reserve per year end consists of the following amounts:

The nominal value of notes issued is EUR 660.0 million (2011: 660.0 million).


2012 2011

EUR million Notes Current portion of finance lease liabilities 2.8 2.5Current portion of other bank loans - 0.2

2.8 2.7

Bank overdrafts 5.7 - -

2.8 2.7

Current liabilities

EUR million Currency Nominal interest rate %

Repayment Face value 2012

Carrying amount 2012

Face value 2011


Floating rate senior secured Notes

EUR 3M Euribor + 4.0

2018 300.0 295.9 300.0 295.2

Fixed rate senior secured Notes

EUR 7.375 2018 360.0 355.1 360.0 354.2

Finance lease liabilities

EUR Various Various 7.3 7.3 9.8 9.8

Other EUR Various 2012 - - 0.2 0.2

Total interest-bearing liabilities 667.3 658.3 670.0 659.4

On May 16, 2011 the Group B.V. issued EUR 360 million in aggregate principal amount of 7.375% senior secured notes due 2018 (the Fixed Rate Notes) and EUR 300 million in aggregate principal amount of senior secured floating rate notes due 2018 (the Floating Rate Notes and, together with the Fixed Rate Notes, the Notes). Unless previously redeemed or repurchased and cancelled, the Notes will be redeemed at par on their maturity date, May 15, 2018. Costs directly attributable to the issuance of the Notes, amounting to EUR 11.5 million, are capitalized and amortized in the period

equal to the bond term. Remaining costs of the issuance are included in advice and legal costs.

Interest on the Fixed Rate Notes is payable semi-annually on May 15 and November 15 of each year, commencing on November 15, 2011. The Floating Rate Notes bear interest at a rate per annum, reset quarterly, equal to three-month EURIBOR plus 4.0%. Interest on the Floating Rate Notes is payable quarterly on February 15, May 15, August 15 and November 15 of each year, commencing on August 15, 2011.


Financial Review

2012 2011

EUR million Present value of (partly) unfunded obligations 26.6 22.3Present value of wholly funded obligations 52.9 46.5Present value of pension benefit obligations 79.5 68.8

Fair value of plan assets (54.6) (47.1)

Present value of net obligations 24.9 21.7

Effect of §58(b) - asset ceiling - -Unrecognized past service costs (0.2) (0.2)Unrecognized net actuarial gains / (losses) (4.5) (2.2)

Total employee benefits (asset) / liability 20.2 19.3

On May 16, 2011 Refresco Group B.V. entered into a revolving credit facility agreement (the RCF) with, among others, certain of its subsidiaries as borrowers and/or guarantors, Credit Suisse International, Deutsche Bank AG, London Branch, ABN AMRO Bank N.V., Société Générale, ING Bank N.V., Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. and Fortis Bank NV/SA, as mandated lead arrangers and original lenders, Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. as agent and Deutsche Bank AG, London Branch as security agent. The RCF provides for borrowings up to an aggregate of EUR 75 million on a committed basis. Loans may be borrowed, repaid and reborrowed at any time. The maturity date of the RCF is the sixth anniversary of the issuance of the Notes.

Interest on the RCF is payable every one, three or six months at the election of the relevant borrower. The RCF bears interest at a rate per annum equal to EURIBOR plus 3.0% (subject to the operation of a margin ratchet) plus mandatory cost (if any). The costs for maintaining the RCF are 1.2%. The RCF was not used during the year.

The collateral is the same for the Notes as it is for the RCF and comprises (among other things):

• Collateral over the shares of certain subsidiaries of Refresco Group B.V.;

• Collateral over majority of bank account receivables, receivables, moveable assets, contract receivables, insurance receivables, intellectual property, real estate, insurance receivables and material intellectual property rights in relation to brands.

Finance lease liabilitiesFinance lease liabilities relate mainly to a warehouse and an office building in France and production equipment in Germany (PET line). For the nominal value and cash outflow a references is made to note 3.1.2.

5.11 Employee benefits provisionThe Group contributes to a number of defined benefit plans that provide pension benefits to employees upon retirement in The Netherlands, Germany, Italy and the UK. The amount of the benefits depends on age, salary and years of service. Furthermore, the Group has an indemnity plan in France and obligations for jubilee in The Netherlands, Germany and France. The amounts included related to business combinations in 2011 are related to the acquisition of Spumador SpA.


2012 2011

EUR million Equity securities 2.6 2.3Debt securities 49.6 42.4Other 2.4 2.4

54.6 47.1

Plan assets can be detailed as follows:

The pension plan assets do not include the companies own shares or notes.

2012 2011

EUR million Defined benefit obligations as at January 1 68.8 64.4Net transfers in / (out) - (0.3)Benefits paid by the plan (2.2) (2.2)Current service costs 2.5 2.6Interest costs 3.5 3.6Plan participants contributions 0.3 0.3Effect of movements in exchange rates 0.1 0.1Actuarial losses / (gains) 6.5 (2.6)Business combinations - 2.9

Defined benefit obligations as at December 31 79.5 68.8

Movements in the present value of the defined benefit obligations


Financial Review

2012 2011

EUR million NotesCurrent service costs 2.5 2.5Interest on benefit obligations 3.5 3.6Expected return on plan assets (1.6) (1.8)Effect of §58(b) limit - 0.5

Pension costs of defined benefit schemes 4.4 4.4

Pension contributions to defined contribution schemes 1.8 1.3

Total employee benefits (asset) / liability 4.4 6.2 5.7

Expenses recognized in the income statement

The pension costs are recognized in the employee benefits expense. The actual return on plan assets was EUR 5.9 million positive (2011: EUR 1.5 million positive).

2012 2011

EUR million Fair value of plan assets as at January 1 47.1 44.4Benefits paid by the plan (2.2) (2.5)Employer contributions 3.4 3.3Plan participants contributions 0.3 0.3Expected return on plan assets 1.6 1.8Effect of movements in exchange rates 0.1 0.2Actuarial gains / (losses) 4.3 (0.4)

Fair value of plan assets as at December 31 54.6 47.1

Movements in the fair value of plan assets

The weighted average returns for The Netherlands, Germany, Italy and the UK are based on the strategic asset mixes and the corresponding yields for each asset category.


The assumptions regarding mortality experience are based on actuarial advice and latest available published statistics and mortality tables in each territory. For The Netherlands this was AG Prognose table 2012-2062, for Germany Heubeck 2005G, for France TF/TH 0406, for Italy RG48 and for the UK 105%S1PXA CMI 2010. The expected return on plan assets for 2012 is determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields at the end of the reporting period. Expected returns on equity reflect long term real rates of return experienced in the respective market.

2012 2011

% Discount rate as at December 31 3.8 5.1Expected return on plan assets as at January 1 3.4 4.0Inflation 2.0 2.0Future salary increases 2.7 2.7Future pension increases 0.9 1.7

2012 2011 2010 2009 2008

EUR million

Present value of defined benefit obligations 79.5 68.8 64.4 55.3 45.1Fair value of plan assets (54.6) (47.1) (44.4) (39.0) (32.7)

Deficit in the plan 24.9 21.7 20.0 16.3 12.4

Experience gains / (losses) arising on plan liabilities (4%) 0% (3%) (1%) 9%Experience adjustments arising on plan assets (8%) (1%) 4% 4% (12%)

Historical information

The Group expects that contributions to the defined benefit plans will be EUR 3.4 million in 2013 (2012: EUR 3.6 million). For the impact of IAS 19 Revised effective for periods beginning on or after January 1, 2013, a reference is made to note 2.19.

Actuarial assumptionsPrincipal actuarial assumptions at the reporting date (expressed as weighted averages):


Financial Review

5.13 Trade and other payables

2012 2011

EUR million NotesTrade accounts payable 231.3 267.8Other taxes and social security premiums 28.5 19.3Other payables, accruals and deferred income 60.6 65.2

3.1.2 320.4 352.3

The exposure to foreign currency and liquidity risks on trade and other payables is disclosed in note 3.1.

RestructuringThe provision for restructuring is the remaining part of the plan made in 2010 to further restructure the German organization and additional provisions for restructurings started in 2012 in the UK and Italy. There are no significant uncertainties about the amount or timing of outflow of resources.

Other provisionsOther provisions include provisions for customer claims and removal of asbestos in Italy and unfavorable contracts recognized in the purchase price allocation of the SDI acquisition in 2010. The non-current part will be utilized within five years.

Restructuring Other Total

EUR million

January 1, 2012 0.8 2.6 3.4Provisions made during the year 2.2 0.3 2.5Provisions used during the year (1.0) (0.9) (1.9)Provisions reversed during the year - - -Business combinations - - -Effect of movements in exchange rates - 0.2 0.2

December 31, 2012 2.0 2.2 4.2

Non-current - 1.5 1.5Current 2.0 0.7 2.7

5.12 Other provisions


6 Supplementary Notes

6.1 Acquisition of subsidiaries and non-controlling interests

On May 29, 2012 our Group company Refresco Poland Sp. z o.o. agreed to purchase 100% of the share capital of Taja Sp. z o.o. for EUR 4.6 million in cash. In addition a loan of EUR 1.7 million has been granted to redeem debts. Including cash acquired of EUR 0.3 million the net cash outflow totals to EUR 6.0 million. Taja Sp. z o.o. is a Polish private label manufacturer of carbonated soft drinks and

water and has one centrally located manufacturing site in Nieszawa, Poland, which provides us additional capacity in the growing Polish private label soft drinks market. For the period from acquisition to December 31, 2012 the contribution of the subsidiary to operating profit was not material. The goodwill paid mostly relates to manufacturing and freight synergies from combining operations.

Pre-acquisition carrying amounts were determined based on IFRS standards applicable as of the date of acquisition. The values of assets, liabilities, and contingent liabilities recognized on acquisition are their estimated fair values. Goodwill is not deductible for tax purposes.

Acquisition-related costs of EUR 0.3 million have been recognized in the income statement for the year ended 31 December 2012.

EUR million Notes Pre-acquisition carrying amount

Fair value adjustments

Recognized values on

acquisition

Property, plant and equipment 5.1 3.3 1.4 4.7Inventories 0.4 0.1 0.5Trade and other receivables 1.0 - 1.0Cash and cash equivalents 0.7 - 0.7Deferred tax liabilities 5.4 - (0.3) (0.3)Trade and other payables (3.4) - (3.4)Net identifiable assets and liabilities 2.0 1.2 3.2Goodwill on acquisition 5.2 1.4Consideration paid, satisfied in cash 4.6Cash acquired (0.3)

Net cash outflow 4.3

The acquisition had the following effect on the assets and liabilities on acquisition date (provisional purchase price allocation):


Financial Review

2012 2011

EUR million Less than one year 26.1 28.0Between one and five years 50.1 58.1More than five years 12.4 17.5

88.6 103.6

6.2 Commitments and contingent liabilitiesOperating lease and rental obligations

The Group leases office buildings, warehouses, machinery and equipment and cars. The lease arrangements do not contain any contingent rent or any restrictions related to other

financing activities of the Group. During 2012, EUR 25.8 million was recognized as expense in the income statement in respect of operating leases and rentals (2011: EUR 28.7 million).

Contingent liabilitiesBanks have issued guarantees to suppliers and customs on behalf of the Group in the aggregate amount of EUR 5.4 million (2011: EUR 7.4 million).

The group has several small facilities for issuing letters of credit and local overdraft facilities for cash pool purposes.

The Company forms a fiscal unity for income tax purposes with Refresco B.V., Refresco Holding B.V., Refresco Benelux B.V., and Soft Drink International B.V. The Company also forms a fiscal unity for VAT purposes with Refresco Holding B.V. and Refresco B.V. In accordance with the standard conditions,

the Company and the subsidiaries that are part of the fiscal unity are jointly and individually liable for taxation payable by the fiscal unity.

A limited number of claims have been filed against the Company and Group companies, which the Company disputes. Although the outcome of these disputes cannot be predicted with any certainty, it is assumed – partly on the basis of legal advice – that these will not have any significant impact on the Company’s financial position but could be material to the Company’s results of operations in any one accounting period.

EUR million Total 2012 Less than one year

One to five years

More than five years

Total 2011

Property, plant and equipment 5.2 5.2 - - 3.1Raw materials, packaging and utilities 244.8 239.9 4.9 - 297.2

250.0 245.1 4.9 - 300.3

Purchase and investment commitments


6.3 Related partiesShareholder structureThe Company’s shareholders are Ferskur Holding 1 B.V., 3i GC Holdings Ref 1 Sarl, 3i GC Holdings Ref 2 Sarl, Okil Holding B.V. and Godetia II B.V. The ultimate shareholders of Ferskur Holding 1 B.V. are Kaupthing Bank HF, Stodir HF, EAB1 Ehf and Vifilfell HF.

Identification of related partiesThe subsidiaries included in note 3.1 of the Company financial statements and above mentioned shareholders are considered to be related parties. Other identified related parties are: Okil Holding GmbH, Refresco KG, Menken Dairy Foods B.V., and members of management of the Group and subsidiaries. The transactions with these related parties relate primarily to the shareholding and debt financing of the Group.

Personnel compensation and transactions with Executive and Supervisory Board Members

Executive Board personnel compensationIn addition to their salaries, the Group also provides non-cash benefits to members of the Executive Board and contributes to a post-employment defined benefit plan on their behalf. In accordance with the terms of the plan, members of the Executive Board retire at age 65.

The remuneration for Supervisory Board members was EUR 0.3 million (2011: EUR 0.3 million).

Transactions with key management and directorsThe Executive Board members of the Group held (either directly or indirectly) 5.6% of the Company’s ordinary shares. None of the members of the Supervisory Board held any shares of the Company.

Compensation of the Executive Board members comprised the following:

2012 2011

EUR million Short-term employee benefits 1.4 1.7Post-employment benefits 0.2 0.2

1.6 1.9


Financial Review

Transaction value Balance outstanding dec-31

2012 2011 2012 2011

EUR million

Increase of shareholders’ equity3i - 45.2 (0.7) (0.7)

Total - 45.2 (0.7) (0.7)

Management Fees (charged)Ferskur Holding 1 B.V. 0.2 0.2 (0.1) (0.1)3i 0.1 0.1 - -Kaupthing / Arion Bank HF - 0.3 - -Stodir HF 0.1 - - -Menken Dairy Food B.V. - - 0.1 -

Total 0.4 0.6 - (0.1)

Transactions with related parties

Transactions underlying outstanding balances with these related parties are priced on an arm’s length basis and the balances are to be settled in cash within six months of the reporting date. None of the balances is secured.

6.4 Group entitiesThe overview of the entities of the Group is included in note 3.1 to the Company financial statements.


2012 2011

EUR million NotesAssetsFinancial fixed assets 3.1 139.4 132.5Loans to group companies 3.2 707.0 543.0Deferred tax 1.4 -

Total non-current assets 847.8 675.5

Receivables from group companies 12.3 177.6Current tax asset - 8.1Cash and cash equivalents 0.6 -

Total current assets 12.9 185.7

Total assets 860.7 861.2

Equity & liabilitiesShare capital 4.3 4.3Share premium 259.8 259.8Other reserves (5.8) (3.3)Retained earnings (72.0) (46.1)Profit / (loss) for the year (18.2) (25.9)

Total equity attributable to equity holders of the company 3.3 168.1 188.8

Loans and borrowings 3.4 660.0 660.0Deferred tax 0.2 -

Total non-current liabilities 660.2 660.0

Bank overdrafts - 2.5Trade and other payables 5.7 7.2Payable to group companies 26.7 2.6

Total current liabilities 32.4 12.4

Total equity and liabilities 860.7 861.2

Company balance sheet

As at December 31 (Before appropriation of result)


Financial Review

2012 2011

EUR million NotesShare in results from participating interests after taxation 3.1 9.6 (6.1)Other result after taxation (27.8) (19.8)

Profit / (loss) (18.2) (25.9)

Company income statement

For the year ended December 31 (Before appropriation of result)


2012 2011

EUR million January 1 132.5 136.1Share in result of participating interests 9.6 (6.1)Capital increase - 80.0Effect of movements in exchange rates 3.6 (3.7)Changes in cashflow hedge reserves (6.3) (0.1)Merger with Refresco International B.V. - (73.7)

December 31 139.4 132.5

Notes to the company financial statements

1 General

The financial statements of Refresco Group B.V. or ‘the Company’ are included in the consolidated financial statements of the Group. With reference to the Company income statement, use has been made of the exemption pursuant to Section 402 of Book 2 of the Dutch Civil Code.

2 Significant accounting policies

The principles for the recognition and measurement of assets and liabilities and for determination of the result for its Company financial statements, the Company makes use of the option provided in section 2:362 (8) of the Dutch Civil Code, under which the principles for the recognition and measurement of assets and liabilities and for determination of the result of the Company financial statements are the same as those applied for the consolidated financial statements (hereinafter referred to as principles for recognition and measurement). The consolidated financial statements are prepared according to the standards laid

down by the International Accounting Standards Board and adopted by the European Union. These principles are set out in the consolidated financial statements.

Participating interests over which control is exercised are carried on the basis of equity method. The share in the result of participating interests represents the Company’s share in the result of these participating interests. To the extent that they are deemed to be unrealized, results are not recognized on transactions between the Company and its participating interests and mutually between participating interests themselves.

3 Notes to the company balance sheet and income statement

3.1 Financial fixed assetsFinancial fixed assets consist of participating interests in Group companies. The movements in the participating interests in group companies were as follows:


Financial Review

Company Statutory seat Ownership

2012 2011

NOTE

Refresco Holding B.V. Dordrecht (The Netherlands) 6 100% 100%

Refresco B.V. Dordrecht (The Netherlands) 6 100% 100%

Soft Drink International B.V. Heerlen (The Netherlands) 6 100% 100%

Refresco Benelux B.V. Maarheeze (The Netherlands) 1/6 100% 100%

Refresco N.V. Ninove (Belgium) 100% 100%

Refresco Iberia S.A. Oliva (Spain) 100% 100%

Refresco Deutschland Holding GmbH Herrath (Germany) 100% 100%

Refresco Deutschland GmbH Herrath (Germany) 2/3 100% 100%

Logico GmbH & Co KG Erftstadt (Germany) 100% 100%

VIP-Juicemaker Holding O.Y. Kuopio (Finland) 100% 100%

VIP-Juicemaker O.Y. Kuopio (Finland) 100% 100%

Refresco France S.A.S. Marges (France) 4 100% 100%

Ferskur France S.A.S. Marges (France) 100% 100%

Refresco Holdings GB Ltd. London (UK) 100% 100%

Histogram Holdings Ltd. Durham (UK) 100% 100%

Refresco Ltd. Durham (UK) 100% 100%

Refresco Poland Sp. z o.o. Warsaw (Poland) 100% 100%

Kentpol Zywiecki Krysztal Sp. z o.o. Kety (Poland) 100% 100%

Taja Sp. z o.o. Nieszawa (Poland) 5 100% -

Refresco Italy S.p.A. Milan (Italy) 100% 100%

Spumador S.p.A. Caslino al Piano (Italy) 100% 100%

Medibev S.p.A. Milan (Italy) 100% 100%

1) On January 1, 2012 Frisdranken Industrie Winters B.V., Menken Drinks B.V. and Schiffers Food B.V. merged into Refresco Benelux B.V.2) On January 1, 2012 Hardthof Fruchtsaft GmbH, SDI Gmbh & Co KG, Logico Verwaltung GmbH merged into Krings Fruchtsaft GmbH.3) On June 15, 2012 Krings Fruchtsaft GmbH changed her name into Refresco Deutschland GmbH.4) On December 8, 2012 Eaux Minérales de Saint Alban-les-Eaux S.A. merged into Refresco France S.A.S., effective January 1, 2012.5) Reference is made to note 6.1 of the notes to the consolidated financial statements.6) Refresco Group B.V. has issued an 403 liability statement for these companies.

Refresco Group B.V. owns the following subsidiaries as at December 31:


2012 2011

EUR million January 1 543.0 35.5Loans translated to share capital - (35.0)Loans granted 163.7 632.3Currency translation adjustment 0.3 0.6Repaid due to merger with Refresco International B.V. - (95.5)New loan due to merger with Refresco International B.V. - 5.1

December 31 707.0 543.0

2012 2011

EUR million January 1 660.0 -Notes issued - 660.0

December 31 660.0 660.0

3.2 Loans to Group companies

Loans granted to Group companies have for majority to be repaid in 2018, in line with the notes issued. Interest charged is based on interest costs of notes issued with markup for credit risk and handling fee.

3.3 EquityFor details on equity, a reference is made to note 5.9 of the consolidated financial statements.

3.4 Loans and borrowings

For details on the notes issued a reference is made to note 5.10 of the consolidated financial statements. Costs directly attributable to the issuance are capitalized in the related subsidiaries of the Company. Remaining costs of the issuance are included in advice and legal costs of the related subsidiaries.

EUR million Currency Nominal interest rate %

Repayment Face value 2012


Face value 2011


Senior secured floating rate notes

EUR 3M Euribor + 4.0

2018 300.0 300.0 300.0 300.0

Senior secured fixed rate notes

EUR 7.375 2018 360.0 360.0 360.0 360.0

Total interest-bearing liabilities 660.0 660.0 660.0 660.0


Financial Review

3.5 RemunerationFor the remuneration to the Executive Board a reference is made to note 6.3 of the consolidated financial statements.

The company does not employ personnel.

3.6 Auditor’s feesWith reference to Section 2:382a(1) and (2) of the Dutch Civil Code, the following fees for the financial year have been charged by PricewaterhouseCoopers Accountants N.V. and the PricewaterhouseCoopers network inside and outside The Netherlands to the Company, its subsidiaries and other consolidated entities:

Rotterdam, March 20, 2013

Executive Board Hans Roelofs – Chief Executive OfficerAart Duijzer – Chief Financial Officer

Supervisory Board Marc Veen* (Chairman) May, 2006 Aalt Dijkhuizen October, 2009Pieter de Jong May, 2010Thorsteinn Jonsson May, 2006Hilmar Thor Kristinsson August, 2009Jon Sigurdsson April, 2009Peter Paul Verhallen October, 2009Yiannis Petrides** January, 2013

* Mr. Marc Veen was Chairman of the Supervisory Board for the periods 2000-2003 and 2006-2012.

** Mr. Yiannis Petrides was appointed as the new Chairman of the Supervisory Board effective as of January 1, 2013.

2012 2011

EUR million Statutory audit of financial statements 1.0 0.8Other auditing services - 0.7Tax advisory services 0.5 0.9Other non-audit services 0.4 0.1

Total 1.9 2.5

The other auditing services in 2011 are mainly related to work performed for the refinancing.


Other information

Provisions in the Articles of Association governing the appropriation of profitAccording to article 26 of the Articles of Association, the result for the year is at the free disposal of the General Meeting of Shareholders. Both the Company and the Shareholders agreed in an Additional Agreement to the Articles of Association that notwithstanding article 26.1 (Dividend distribution) of the Articles of Association, distribution of dividends or other payments on the shares will be subject to the prior approval of the General Meeting of Shareholders of the Company. Any such decision of the General Meeting of Shareholders of the Company shall be taken with an 80% majority vote in accordance with article 12.4 sub (xviii) of the Articles.

Proposal for profit appropriationThe Executive Board proposes to add the net result to the other reserves as retained earnings. This proposal has not yet been reflected in the financial statements.

Subsequent eventsNo material events took place after the close of the year end.


Financial Review

Independent Auditor’s Report

To: the General Meeting of Shareholders of Refresco Group B.V.

Report on the financial statementsWe have audited the accompanying financial statements 2012 of Refresco Group B.V., Dordrecht as set out on pages 58 to 114. The financial statements include the consolidated financial statements and the company financial statements. The consolidated financial statements comprise the consolidated balance sheet as at 31 December 2012, the consolidated income statement, the statements of comprehensive income, changes in equity and cash flows for the year then ended and the notes, comprising a summary of significant accounting policies and other explanatory information. The company financial statements comprise the company balance sheet as at 31 December 2012, the company income statement for the year then ended and the notes, comprising a summary of accounting policies and other explanatory information.

The Executive Board’s responsibilityThe Executive Board is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Dutch Civil Code, and for the preparation of the directors’ report in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the Executive Board is responsible for such internal control as it determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor

considers internal control relevant to the company’s preparation and fair presentation of the financial statements 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 company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Executive Board, as well as evaluating the overall presentation of the financial statements.

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

Opinion with respect to the consolidated financial statementsIn our opinion, the consolidated financial statements give a true and fair view of the financial position of Refresco Group B.V. as at 31 December 2012, and of its result and its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Dutch Civil Code.

Opinion with respect to the company financial statementsIn our opinion, the company financial statements give a true and fair view of the financial position of Refresco Group B.V. as at 31 December 2012, and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code.

Report on other legal and regulatory requirementsPursuant to the legal requirement under Section 2: 393 sub 5 at e and f of the Dutch Civil Code, we have no deficiencies to report as a result of our examination whether the directors’ report, to the extent we can assess, has been prepared in accordance with Part 9 of Book 2 of this Code, and whether the information as required under Section 2: 392 sub 1 at b-h has been annexed. Further we report that the directors’ report, to the extent we can assess, is consistent with the financial statements as required by Section 2: 391 sub 4 of the Dutch Civil Code.

Rotterdam, 20 March 2013PricewaterhouseCoopers Accountants N.V.

Fernand Izeboud RA


Ten years Refresco

2012 2011 2010 2009 2008 2007 2006 2005 2004 2003

EUR million

Income statementsRevenue 1,538.3 1,523.4 1,223.9 1,139.6 1,146.1 951.6 660.1 606.0 557.6 544.5

Gross margin % 2 28.8% 29.0% 32.0% 46.1% 39.2% 42.1% 43.4% 46.3% 47.9% 45.2%

Adjusted EBITDA 3 115.5 111.0 125.0 120.6 109.8 77.5 63.9 64.1 62.2 49.7

EBITDA % 7.1% 6.5% 9.4% 10.5% 9.6% 8.1% 9.7% 10.6% 11.2% 9.1%

EBITA 35.1 25.7 61.2 67.6 64.9 37.7 38.1 39.3 41.0 29.5

Profit / (loss) after income tax (18.2) (25.9) 8.8 7.6 (13.8) (26.9) (6.1) 7.9 9.2 10.7

Balance sheetsProperty, plant and equipment 391.4 412.0 351.7 328.8 323.0 333.6 226.1 207.5 215.9 179.5

Primary working capital 152.6 141.1 124.9 89.8 97.0 99.4 81.4 77.8 72.7 72.4

Capital employed excluding Goodwill 443.6 469.9 395.4 350.0 362.7 377.6 263.4 240.1 229.3 185.1

Other indicatorsVolume in liters (*million) 4,943.9 4,956.6 3,804.2 3,393.8 3,142.3 2,524.8 1,803.3 1,784.0 1,667.0 1,672.7

Employees in fte’s (year-end) 3,009 3,092 2,750 2,318 2,241 2,267 1,229 1,210 1,127 1,045

Return on capital employed % 7.9% 5.5% 15.5% 19.3% 18.1% 9.9% 14.4% 16.4% 17.9% 15.9%

Working capital days 36.2 33.8 37.3 28.7 30.9 38.1 45.0 46.9 47.6 48.5

Investments 43.5 41.6 48.2 48.5 36.8 40.1 30.3 18.2 38.1 29.0

1. Figures for 2008-2012 comply with IFRS. 2003-2007 are reported under Dutch GAAP.2. The gross margin used for calculation of the gross margin percentage includes freight charges and other cost of sales. 3. EBITDA is calculated as operating profit minus amortization, depreciation and impairments.

Adjusted EBITDA excludes costs related to acquisitions, refinancing and other one-off costs


Contact us

Refresco Group B.V.www.refresco.comFascinatio Boulevard 270P.O. Box 86653009 AR RotterdamThe NetherlandsT +31 10 440 5100F +31 10 440 [email protected]

Beneluxwww.refresco.nlwww.refresco.beRefresco Benelux B.V.Oranje Nassaulaan 44NL-6026 BX MaarheezeThe NetherlandsT +31 495 596 111F +31 495 593 [email protected]@refresco.be

Germanywww.refresco.deRefresco Deutschland GmbHSpeicker Straße 2-8 (2nd floor)P.O. Box 41061MönchengladbachGermanyT +49 2 161 2941 0F +49 2 161 2941 [email protected]

Francewww.refresco.frDélifruits S.A.S.B.P. 13, MargèsF-26260 Saint Donat sur l’HerbasseFranceT +33 475 45 4444F +33 475 45 [email protected]

Iberiawww.refrescoiberia.comRefresco Iberia S.L.Ctra. N-332, Km 206, 9E-46780 Oliva (Valencia)SpainT +34 96 285 0200F +34 96 285 [email protected]

Italywww.spumador.comSpumador SpAVia alla Fonte, 1322071 Caslino al Piano (Como)ItalyT +39 31 886 111F +39 31 904 [email protected]

Finlandwww.vip-juicemaker.fiVip-juicemaker OYKellolahdentie 20FI-70460 KuopioFinlandT +358 17 5858190F +358 17 [email protected]

United Kingdomwww.refresco.comRefresco LtdBelmont Industrial EstateDH1 1ST DurhamUnited KingdomT +44 191 386 7111F +44 191 386 [email protected]

Polandwww.refresco.plRefresco Poland Sp. z o.o.ul. Fabryczna 832-650 KêtyPolandT +48 33 845 11 56F +48 33 845 39 [email protected]

Colophon

This Annual Report is a publication of Refresco Group B.V.www.refresco.com

Request for information: [email protected]

Design:NoSuchCompanywww.nosuch.nl

Text:Refresco Group B.V.

Photography:Richard Sinon, Rogier Bos (p.40-41)

Print:Schefferdrukkerij

Non-IFRS MeasuresThe Company defines EBITDA as net profit before non-controlling interests, income tax, net financial costs, depreciation and amortisation and impairment of property, plant and equipment (‘PPE’). While the amounts included in EBITDA are derived from the Group’s financial information, it is not a financial measure determined in accordance with adopted IFRS. Accordingly, EBITDA should not be considered as an alternative to net income or operating income as a sole indica-tion of the Group’s performance or as an alternative to cash flows as a measure of the Group’s liquidity. The Company currently uses EBITDA in its business op-erations to, among others, evaluate the performance of its operations, develop budgets, and measure its performance against those budgets. The Company considers EBITDA a useful tool to assist in evaluating performance because it excludes interest, taxes and the most significant non-cash charges.

Forward Looking StatementsCertain statements in this document are not historical facts and are or are deemed to be ‘forward-looking’. The Company’s prospects, plans, financial position and business strategy, and statements pertaining to the capital resources, future expenditure for development projects and results of opera-tions, may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking termino-logy including, but not limited to; ‘may’, ‘expect’, ‘intend’, ‘estimate’, ‘antici-pate’, ‘plan’, ‘foresee’, ‘will’, ‘could’, ‘may’, ‘might’, ‘believe’ or ‘continue’ or the negatives of these terms or variations of them or similar terminology. Although the Company believes that the expectations reflected in these forward-looking

statements are reasonable, it can give no assurance that these expectations will prove to have been correct. These forward-looking statements involve a number of risks, uncertainties and other facts that may cause actual results to be materially different from those expressed or implied in these forward-looking statements because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond the Company’s ability to control or predict. Forward-looking statements are not guarantees of future performances.

Factors, risk and uncertainties that could cause actual outcomes and results to be materially different from those projected include, but are not limited to, the following: risks relating to changes in political, economic and social conditions; future prices and demand for the Company’s products and demand for the Group’s customers’ products; future expansion plans and capital expenditures; the Group’s relationship with, and conditions affecting, the Group’s customers; competition; weather conditions or catastrophic damage; and risks relating to global economic conditions and the global economic environment.

Forward-looking statements speak only as of the date of this document. The Company expressly disclaims any obligation or undertaking to release, publicly or otherwise, any updates or revisions to any forward-looking statement contained in this report to reflect any change in its expectations or any change in events, conditions, assumptions or circumstances on which any such statement is based unless so required by applicable law.


fruit juices and soft drinks bottler for retailers and a

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