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Annual Report 2018

Sunshine Mid b.v.www.refresco.comFascinatio Boulevard 270p.o. Box 86653009 ar RotterdamThe Netherlandst +31 10 440 [email protected]

Sunshine Mid b.v.

Contents

Sunshine Mid Annual Report 2018 4 Contents

6 management board report7 Message from the CEO

8 Key figures

10 This is us

14 How do we create value

16 Two platforms for growth

18 Financial results

22 Responsibility

26 Governance

27 Risks and risk management

33 financial review 201834 Consolidated income statement

35 Consolidated statement of other comprehensive income

36 Consolidated balance sheet

37 Consolidated statement of changes in equity

38 Consolidated statement of cash flows

39 Notes to the consolidated financial statements

82 Company income statement

83 Company balance sheet

88 other information88 Statutory provision with respect to appropriation of result

89 Independent auditor’s report

93 additional information93 Contact us

95 Glossary and forward-looking statements

Sunshine Mid Annual Report 2018 5 Contents

Management Board report

Sunshine Mid Annual Report 2018 6 Management Board report


Message from the CEO

Sunshine Mid Annual Report 2018 7 Message from the CEO

Dear stakeholder,

2018 was a truly transformational year for

Refresco. At the end of January we completed

the acquisition of Cott’s bottling business,

creating the world's largest independent bottler

for retailers and branded beverage companies.

We now provide our customers with an

unrivalled production platform and access to

beverage solutions across key markets. Another

milestone was the public to private transaction

by PAI and BCI in March.

year 2018 in summaryIntegration of the former Cott's bottling business in North America andthe UK has gotten off to a good start. Together, we have a well-balanced portfolio with exposure to all categories for retailers and astrengthened contract manufacturing exposure with uniquegeographical spread for branded beverage companies.

Integration in North America began immediately after the completionof the transaction in January. UK integration commenced in April oncewe had received approval from the Competition and Markets Authority(CMA), conditional to the divestment of Aseptic PET capacity at Cott'sNelson site. We are making good progress in realizing synergiesbased on scale and efficiency, cost advantages and commercialopportunities in both geographies and are well on track to fully realizeour synergy plan.

At the same time as acquiring Cott, we completed the public to privatetransaction by PAI & BCI in March, and with their full support of ourstrategy going forward, we are well positioned to further accelerateour growth.

The acquisition of Cott's bottling business has had a significant effecton our key performance indicators. Volumes increased in line with ourplan both on reported and on organic basis. Gross profit margin perliter was in line with last year, however our net results were impactedby the one-off costs related both to the Cott acquisition and theacquisition of Refresco by PAI and BCI, overruns in variable operatingcosts and some headwinds in input costs.

2018 was also notable as a record year for investments. We continuedto invest in our Aseptic PET capacity in Europe to meet ongoingcustomer demand for this technology which enables innovativerecipes and packaging. We also further expanded our canningcapacity in Europe and North America to meet customer demand andfurther invested in our capability to tap into new categories such asplant-based protein drinks and coffee drinks.

from bottler to beverage solutions providerWe used the acquisition of Cott’s bottling business as a catalyst torevisit the Group strategic plan for 2025 and the culture that we needto get us there. As we embark on a new journey to transform Refrescofrom bottler to beverage solutions provider, our success will be verymuch linked to our five values: entrepreneurial, excellent, agile,passionate and responsible and to how effectively we leverage ourcompetitive strengths: scale, innovation and strong customerrelationships.

I would like to thank all Refresco colleagues - whether with long orshort tenure - for their commitment and passion to serve ourcustomers day in, day out. As we move forward, we see endlessopportunities to grow with our customers on the back of our enhancedoffering and geographical presence in Europe and North America.

Hans RoelofsChief Executive Officer


Key figures

Sunshine Mid Annual Report 2018 8 Key figures

Pro-forma financial highlights

53.2% 1.0%Overall

volume growthOrganic

volume growth 1

14.0 €134mGross profit margin

per liter (euro cents)2,3Invested in

production capabilities

In millions of €, unless otherwise stated 2017-2018 2018 pro-forma 2017Volume (in millions of liters)1 8,613.0 10,888.0 7,104.2Revenue 2,963.6 3,737.1 2,268.8Gross margin 2 1,221.8 1,529.9 992.3Adjusted EBITDA2,3 278.8 323.3 213.9Net profit / (loss) (55.3) (106.7) 53.4Adjusted net profit / (loss)3 13.7 16.3 70.0Net debt 4 2,373.5 592. 7

1 When reference is made to organic volumes, the numbers for the former Cott bottling business and those of Refresco were combined 'as if' they were one prior to January 30, 2018.2 Gross margin and gross profit margin per liter are key performance indicators for Refresco and are reported on the level of Sunshine Top B.V., the parent company of the Group. For

calculation of gross margin and gross profit margin per liter a reference is made to the audited financial statements of Sunshine Top B.V. for the extended financial year 2017-2018.3 Gross profit margin per liter, adjusted EBITDA and adjusted net profit/(loss) are not a measure of our financial performance under IFRS. We apply adjusted EBITDA and adjusted net

profit to exclude the effects of certain exceptional charges that we believe are not indicative of our underlying operating performance. Such adjustments relate primarily tosubstantial one-off restructurings, costs relating to acquisitions or disposals and refinancing and related tax effects.

4 Net debt 2017-2018 includes €100 million shareholder funding.

Change in ownership and presentation of financial information in the Management Board reportRefresco Group N.V. was acquired by a consortium of PAl and BCI through Sunshine lnvestments B.V., 100% owned by Sunshine Mid B.V., ina public to private transaction in March 2018. Consequently, Refresco Group N.V. became Refresco Group B.V. Details of columns in tableabove:• 2017-2018: Consolidated financial information of Sunshine Mid B.V. for the period October 20, 2017 to December 31, 2018. The

results of Refresco were consolidated in the Sunshine Mid B.V. financial information as of March 29, 2018.• 2018 pro-forma: Sunshine Mid B.V. has prepared certain pro-forma information, see page 79 of the Financial Review, to facilitate

comparability of the financial information of Refresco. This pro-forma information comprises the financial information of Refresco GroupN.V. for the period January 1, 2018 - March 31, 2018 and the financial information of Sunshine Mid B.V for the period April 1, 2018 -December 31, 2018. Cott's bottling business was consolidated in the financial information as of January 30, 2018.

• 2017: Audited financial statements of Refresco Group N.V. for the year ending December 31, 2017.


Sunshine Mid Annual Report 2018 9 Key figures

Pro-forma volume per product category(10,888.0 million liters in 2018)

30.5%30.5%

20.2%20.2%17.7%17.7%

10.9%10.9%

9.5%9.5%

8.0%8.0%3.2%3.2% Carbonated soft

drinksWatersJuicesReady-to-drinkteasStill drinksSport drinks &Energy drinksOther

Pro-forma volume per channel(10,888.0 million liters in 2018)

69.2%69.2%

30.8%30.8%

Retailer brandsContractmanufacturing

Volume (in millions of liters)1

2014

2015

2016

2017

2018

0 4,000 8,000 12,000

0 4,000 8,000 12,000

Adjusted EBITDA (in millions of euros)1

2014

2015

2016

2017

2018

0 120 240 360

0 120 240 360

Gross profit margin per liter (in euro cents)1

2014

2015

2016

2017

2018

0 5 10 15

0 5 10 15

1 2018 numbers are pro-forma (including Cott as of January 30),numbers for 2014-2017 concern Refresco Group.

Revenue (in millions of euros)1

2014

2015

2016

2017

2018

0 1,500 3,000 4,500

0 1,500 3,000 4,500


Refresco is the world’s largest independent

bottler for retailers and A-brands. Refresco’s

vision is that eventually our drinks will be on

every table around the world. To make our

vision a reality we have defined a strategy for

growth built on a set of strategic priorities,

backed by a shared set of values and boosted

by our competitive strengths.

Today, we produce about 30 million liters

every day in 58 locations across 12 countries.

We operate on two continents – North

America and Europe – with ambitious plans to

expand and grow further in these markets.

Our valuesThe company values are at the heart of everything we do, guiding the way we think and act. Our five values are: entrepreneurial, agile, passionate, responsible and excellent. These values define how we do business, how we interact with each other and with customers, and how we weigh risks and make decisions. They have been essential in getting us where we are today, and will continue to steer us in the right direction, helping us achieve our ambitious goals.

This is us

EntrepreneurialWe understand the market – We use this knowledge to take

initiative and benefi t our customers.Recognize chances – We move fast to capitalize on new

opportunities and shape the market.Decisive – We act decisively even when we do not have all

the facts. Being decisive is more important than always being right. A winning team – We are highly result-driven and focused

on goals.

AgileFlexible – Being nimble and effi cient we adapt smoothly to

meet changing market dynamics and customer needs.Speed – We act fast in decision making and implementation.Creative – We seek inventive and innovative solutions for

every challenge.

Excellent Strive for excellence – We want to be better tomorrow than

we were today.Collaborative – We share best practices wherever possible

and encourage others to improve.Always ahead – Our drive to excel distinguishes us from others.

Responsible Trust – We are open, honest and transparent in all that we do.

Lead by example – We act responsibly towards our people, the planet and our products.

Care as if it was your own – Our products carry the names of our customers and we act on their behalf.

Employer of choice – We want to be a great place to work for every employee.

PassionateEnergy – Our competitive edge lies in our determination

and drive to win.Courage – We dare to make tough decisions that challenge

the status quo and benefi t our business and our customers.Empower – We give space and freedom to staff , encouraging them

to take ownership, responsibility and initiative.Proud – We are proud of the products we manufacture,

our company and what we stand for.

Sunshine Mid Annual Report 2018 10 This is us


PASSIONATE

EXCELLENT

responsible

AGILE

Entrepreneurial

together we are

Strategic priorities –taking a look at the futureWe have come a long way already, having grown the size of the company by twofold or more approximately every two years, since we started in 1999. Three strategic priorities will pave the way for continued growth of our business in the years to come.

Drive profitable growth• Add value through mergers & acquisitions

The first pillar of the strategy is to drive profitable growth through buy and build. We will continue to acquire companies in Europe and North America, filling product and capability gaps in the markets where we operate. When we see opportunities to be the number one or two market player, we will add new markets to the Refresco map.

• Extend into new categories The industry is growing slowly – currently around 2 to 3 % per year, with certain traditional categories such as juice and CSDs declining. But opportunities remain, and we need to make sure that we capture these. In addition, we need to expand into new categories such as beer, cider, water plus, organic, premium mixers etc.

• Embrace complexity Production runs and lead times continue to get shorter. The number of requests for unique bottle shapes with unique tops to meet specific environmental standards is increasing day

by day. We need flexibility in our operations and supply chain to meet this increasing complexity, while delivering it at the right price and with the right cost structure.

• Leverage procurement capabilities We will leverage our expertise and scale in procurement to benefit our customers. We are exploring opportunities to purchase raw materials for third parties who use fruits, concentrates, cans, carton etc. for their products.

Lead in operational excellenceOperational excellence is at the core of our business and it is about being excellent every single day.

• High quality manufacturing standards The result of customer focus, strong leadership, team work, problem solving and a commitment to continually improve activities in the workplace. It is something we do, day in, day out.

• Invest in flexible manufacturing platform We continually invest in our factories to ensure that we meet the high quality standards that our customers require and to have the flexible platforms needed to deliver complexity.

• Drive market innovation With state-of-the-art factories, we will also be better equipped to drive innovation, develop new capabilities and categories.



Organize to win• Build a stronger organization

Having strong leadership in place at all levels is essential. This entails training the next generation of leaders, supporting succession planning and growth into new countries and continents. It is also about building bridges to connect people across borders.

• Strengthen our people capabilities We will continue the work we are doing to structurally improve the way we manage and develop our people. We have already taken a big step forward with our internal promotion rate.

• Improve performance Regular performance evaluations will make people feel more valued and recognized, perform better and support the organization in achieving its ambitious goals. We have new tools in place to support this, and the task ahead is to roll these out to the whole group – including the newly acquired Cott’s bottling business.

• Become a Great Place to Work This is all about improving our work climate and creating a culture where people feel safe and supported, where they are allowed to make mistakes in order to learn and develop more effective behavior. We use the internationally highly-acclaimed Great Place to Work survey to measure employee engagement and track progress.

Competitive strengthsThe company values and the set of strategic priorities will support us in achieving our ambitions, creating success and growth. What sets us apart is what we call our competitive strengths: a unique combination of competitive advantages. • Scale• Innovation• Superior customer relationships

The advantage of scaleThe main driver of our consolidation strategy is to create scale and create cost leadership positions. We have been successful at this and today our scale and cost leadership are unrivalled in our industry. Global and sustainable sourcing: we are in a position to make a difference by sourcing sustainable raw materials whenever we can. And the more we buy, the better the conditions we can negotiate with suppliers, enabling us to offer more competitive contracts to our customers. Our extensive footprint is another good example of advantages of scale. Because of our broad reach across Europe and North America, we are close to our customers and remain close to local market customs and trends. Being close to the customer also results in lower transport costs and consequently competitive pricing.Building on our extensive footprint we are able to offer customers in each of those markets the full spectrum of products and packaging. We can offer our customers almost every conceivable product in almost every conceivable format.



Innovation keeps us ahead of the packWe invest a considerable amount in R&D, new technologies and flexible operations. Consequently innovation, which requires us to think outside of the box and develop solutions to complex requirements, is something that we are very good at.

Developing new concepts, categories and continuous product (co) development This is central to the work of our R&D platform. We have R&D professionals in each business unit, who collaborate as an international team. Latest market trends from different countries are shared, successful launches and the promising products being developed in current and emerging categories are discussed. The commercial teams use this insight to boost business, enabling customers around the Group to benefit from our knowledge. Using the knowledge, experience and reach of our R&D team we ensure that we are fast to market with new innovations and concepts to match upcoming trends.

Ability to manage complexity / flexible manufacturing platformWe are able to handle extremely complex production processes, dealing with a number of interesting challenges. This can include labels with product details printed in just one language, as opposed to multiple languages on the same label. It can include having to produce exact numbers of relatively small runs for each country, or having a very short lead time for production planning of multiple flavors split by country. We are able to get it done because of the flexibility that we have built into our operations and because of our willingness to think differently and be flexible.

Superior customer relationshipsSuperior customer relationships can be based on longevity of the relationship. Or on a strong and close relationship based upon an in-depth understanding of requirements and way of working. At Refresco, we have both.

On the contract manufacturing side, our close relationship and in-depth understanding of their needs enables us to support several A-brand customers with their move towards a so-called ‘asset-light model’.

One-stop shop provider / superior customer service levelsA well-known juice brand is another case in point. We have worked with them for more than 15 years and we do much more than just bottling for them. They outsource part of their sales activity, trade marketing and R&D to us. We are a one-stop shop provider, built into their route to market.

Long-term customer relationshipsOur relationships are broad, deep, intense and long. On the retail side, we have worked with our current Top 20 customers for almost two decades. Contracts may be short or change frequently, yet the relationship gets stronger year on year as we develop a deeper understanding of the customer’s needs.



How do we create value

Sunshine Mid Annual Report 2018 14 How do we create value

We offer our customers a flexible, efficient, multi-user productionplatform and beverage solutions across key markets. Our businessmodel combines production of retailer brands and contractmanufacturing for branded beverage companies on an effective multi-

user production platform that benefits from innovation, scaleadvantages, global procurement expertise and additional services.

inputs value creation process supported by

Innovations in product & packaging design and

process capability

As a bottler we have a direct impact on the environment through the sourcing and production process of the

drinks we manufacture for our customers.

Developing new concepts, categories and continuous

product (co-)development is central to the beverage solutions

we o er to our customers. In terms of process capability,

we focus on operational excellence in the delivery of products, services and

processes.

Flexible, efficient,

multi-user production

platform

Beverage solutions for retailers and A-brands

We deliver tailor-made solutions that meet our customer’s individual needs. Our scale provides cost advantages and access to full spectrum of products and packaging.

Supports new innovative business

financial capitalDebt/Equity

human capitalTalented employees

social & relationship capitalCustomer relationsSupplier relations

manufactured capitalInvestment in new & retro tted production lines

natural capital Water, energy, fruit, sweeteners, metal, PET, liquid paperboard

scale and breadth of skillset



platform


Additional value created by multi-user production

platform and tailored services

Breadth of skillset creates advantages in dealing with

growing complexity, to meet more diverse consumer needs

Global supply chain expertise creates quality, availability, traceability

and cost advantages

outcomes for key stakeholders

customers• Quality & reliability• Proximity & better service• Increased competitivness• Support new innovative business

societ y• More competition in the market place• More choice in the market• More sustainable options

for consumers

employees• Job creation• Career opportunities in an increasing

international setting• A great place to work

suppliers• Innovations partner• Growing customer with focus on

long term value creation

investors & lenders• Attractive returns


Sunshine Mid Annual Report 2018 15 How do we create value

We offer our retail customers an end-to-end solution that covers everystep of the process from sourcing of raw materials and packagingmaterials, product (co-)development, bottling, warehousing andlogistics solutions. Our branded beverage customers seek partnersthat have sufficient scale and geographic scope to provide the

production quality and flexibility that will meet their requirements inmultiple markets. Our multi-user production platform also supportsnew innovative business.

inputs value creation process supported by

Innovations in product & packaging design and

process capability

As a bottler we have a direct impact on the environment through the sourcing and production process of the

drinks we manufacture for our customers.

Developing new concepts, categories and continuous

product (co-)development is central to the beverage solutions

we o er to our customers. In terms of process capability,

we focus on operational excellence in the delivery of products, services and

processes.



platform

Beverage solutions for retailers and A-brands

We deliver tailor-made solutions that meet our customer’s individual needs. Our scale provides cost advantages and access to full spectrum of products and packaging.


financial capitalDebt/Equity

human capitalTalented employees

social & relationship capitalCustomer relationsSupplier relations

manufactured capitalInvestment in new & retro tted production lines

natural capital Water, energy, fruit, sweeteners, metal, PET, liquid paperboard

scale and breadth of skillset



platform


Additional value created by multi-user production

platform and tailored services

Breadth of skillset creates advantages in dealing with

growing complexity, to meet more diverse consumer needs

Global supply chain expertise creates quality, availability, traceability

and cost advantages

outcomes for key stakeholders

customers• Quality & reliability• Proximity & better service• Increased competitivness• Support new innovative business

societ y• More competition in the market place• More choice in the market• More sustainable options

for consumers

employees• Job creation• Career opportunities in an increasing

international setting• A great place to work

suppliers• Innovations partner• Growing customer with focus on

long term value creation

investors & lenders• Attractive returns


Two platforms for growth

Sunshine Mid Annual Report 2018 16 Two platforms for growth

North America Europe

Group headquartersRotterdam

the Netherlands

Employees(average FTEs)

Europe

5,580North America

3,040

Facilities

Our

58manufacturinglocations are strategicallylocated

Volume (in millions of liters)

Europe

7,127North America

3,761

Bottling lines

Europe

190North America

75


Sunshine Mid Annual Report 2018 17 Two platforms for growth

North America Europe

Group headquartersRotterdam

the Netherlands

Employees(average FTEs)

Europe

5,580North America

3,040

Facilities

Our

58manufacturinglocations are strategicallylocated

Volume (in millions of liters)

Europe

7,127North America

3,761

Bottling lines

Europe

190North America

75


Financial results

Sunshine Mid Annual Report 2018 18 Financial results

group structure (simplified)

presentation of financial informationThe consolidated financial information of Sunshine Mid B.V. concernsthe extended financial year for the period October 30, 2017 -December 31, 2018 (2017-2018). The results of Refresco wereconsolidated in the Sunshine Mid B.V. financial information as ofMarch 29, 2018. To facilitate comparability of the consolidatedfinancial information of the Group, Sunshine Mid B.V. has preparedcertain pro-forma information, for more information see page 79 theFinancial Review. This pro-forma information comprises the financialinformation of Refresco Group N.V. for the period January 1, 2018 -March 31, 2018 and the financial information of Sunshine Mid B.V. forthe period April 1, 2018 - December 31, 2018.

Cott's bottling business in North America and in the UK wasconsolidated in the financial information as of January 30, 2018.Where reference is made to 'like-for-like' volumes, the numbers for theformer Cott bottling business and those of Refresco were combinedand compared 'as if' they were one prior to this date.

acquisition of cott’s bottling businessOn January 30, 2018 Refresco completed the acquisition of Cott'sbottling activities. We started the integration of the two businesses inNorth America immediately after the closing of the transaction. In theUK we kicked off integration on April 3, 2018 after receiving the greenlight from the UK Competition and Markets Authority (CMA). TheCMA's green light required us to sell the aseptic PET productioncapacity at Cott's Nelson production site to a third party.

change in group ownership and financingIn March 2018, Refresco Group was acquired by a consortium of PAland BCI through Sunshine lnvestments B.V in a public to privatetransaction. The Refresco shares were delisted from Euronext inAmsterdam on April 26, 2018 and the buy-out procedure of theremaining 0.6% minority investors was completed in December 2018.

Following the completion of the public offer by PAl and BCI, Refrescorepaid its existing credit facilities and entered into a new syndicatedloan totaling EUR 1,217.0 million, USD 620.0 million and GBP200.0 million and a bridge financing of EUR 445.0 million. On May 4,2018 the bridge financing was refinanced through the issue ofEUR 445.0 million in senior notes due 2026 by Sunshine Mid B.V. Thelisting of the Senior Notes on the Official List of The InternationalStock Exchange was completed on October 23, 2018.

business integrationJoining forces with Cott's bottling business we created the world'slargest independent bottler for retailers and A-brands with leadershippositions across Europe and North America. Our first priority as onecompany is to serve our customers better than as two standalonebusinesses. This means enhancing our geographic proposition, ourspeed to market, our product and packaging offer and our innovationefforts. Our second priority is to ensure we maximize the full potentialand opportunities of the combined business. Bringing Refresco andCott’s bottling business together creates an industry-leadingcombination and we want to ensure we use this momentum to capturenew opportunities with our customers, prospects and suppliers. Lastbut not least our third priority is to achieve an efficient, smooth andrespectful integration. We have a dedicated Integration ManagementOffice (IMO) to lead and monitor the integration process well as localintegration teams and work streams to drive the process.

In Europe joining forces with Cott's bottling business gave us twohead offices in the UK, one in Kegworth and one in Bridgwater. Ourcombined head office was set up in Kegworth, where we have locatedall staff functions due to its central geographic position and proximityto customers. As we are combining two mature organizations, we havegone through consultation processes within the various functionaldisciplines. We have been able to create a number of opportunities forstaff who were able to relocate, but regretfully, we have not been ableto provide new positions for all employees working in either in theformer Cott's bottling business nor in the former Refresco UKbusiness.



“Emerging categories suchas protein drinks and

coffee drinks will continueto grow.”

••In North America we established a new leadership team in the twoweeks that followed the closing of the transaction. Integrating headoffice functions began immediately after the closing. In the US thismeant that we consolidated all our head office functions to Tampa,Florida and following consultation processes closed our regionalheadquarters in Wharton, New Jersey.

We expect to realize significant synergies in purchasing, overheads,operations and commercial, totaling to EUR 67.0 million (run rate) inthe first three years following consolidation.

marketWe operate in a low growth soft drinks market where cost leadershipand scale provide substantial competitive advantage. Via our buy andbuild strategy we have been able to significantly strengthen ourposition in existing markets, expand in to new markets and makeselective investments that complement our existing product portfolio.

We focus on retailer brand and contract manufacturing markets whichare expected to outperform the overall soft drinks market. Consumersincreasingly see retailer brands as a quality alternative to brandedproducts. They provide an opportunity for retailers to differentiatethemselves from the competition and drive customer loyalty.Consequently, retailers are expanding their retailer brand shelf spaceand consolidation amongst retailers and the growth of harddiscounters' share in the retailer brand market continues.

The outsourcing trend of international A-brands is gathering pace withgreater emphasis on innovation, more unique products, differentformats and consequently the ability to handle more complexity.When outsourcing, A-brands typically look for manufacturers who canprovide high quality standards, sufficient scale and footprint to meettheir geographical and service level needs as well as requirementsrelated to manufacturing quality, reliability and flexibility. Followingthe acquisition of Cott's bottling activities, we firmly believe that weare in a prime position to benefit from these market trends and it is akey element of our growth strategy.

products and packagingTraditional soft drinks categories such as ambient juice andcarbonated soft drinks are declining while water has seen significantgrowth. While we are active in the high margin water plus and contractmanufacturing business, we are less active in the low margin watercategory and therefore find it difficult to fully compensate the decline

in traditional soft drink volumes. We believe, however, that emergingcategories such as protein drinks and coffee drinks will continue togrow and we are investing in our production capabilities to tap intothese growth segments.

raw materials and packaging materialsOur main raw and packaging materials are orange juice, apple juice,sugar, aluminum cans, liquid paperboard and PET. Raw and packagingmaterial prices were under pressure and fluctuated considerablythroughout the year. PET and liquid paperboard prices were on veryhigh levels while can prices remained stable.

Where feasible, we have a policy of purchasing forward raw materialsand packaging materials to cover sales positions with customers.Some of the raw materials we require are only priced in USDs and wemitigate the effect of exchange rate fluctuations by using USDpurchase options and forward contracts. A reference to fluctuations inraw materials and packaging materials is made in 'Risk and riskmanagement' on page 27.

In 2018 our operations were impacted by market shortage of C02 inEurope and can shortage in North America that resulted in unexpectedhiccups in our supply chains.

volume and revenueReported volume totalled 8,613.0 million liters. Pro-forma volume was10,888.0 million liters (2017: 7,104.2 million liters), an increase of53.2%. The volume increase was driven mainly by new and additionalvolumes resulting from the Cott acquisition. When taking into accountthe results at Cott in 2017, the like-for-like increase in volume for theGroup was 1.0% in 2018 compared to 2017.

Retailer brands volume in 2018 increased by 66.5% to 7,539.2 millionliters on pro-forma basis compared to last year, largely driven by newand additional customer volumes from former Cott bottling activitiesin North America and the UK. Total contract manufacturing volumeincreased to 3,348.9 million liters, an increase of 30.0% from 2017on pro-forma basis. As a percentage of total volume, contractmanufacturing comprised 30.8% of total pro-forma Group volume(2017: 36.3%) reflecting the higher share of retailer brands in theacquired Cott's bottling business.

Reported revenue totalled EUR 2,963.6 million. Pro-forma revenuewas EUR 3,737.1 compared to EUR 2,268.8 million in 2017 drivenlargely by the Cott acquisition. Changes in revenue are mostly drivenby fluctuations in input prices which are passed on to customers. Assuch, revenue is not a representative indicator for the development ofour business.



Pro-forma volume per packaging type(10,888.0 million liters in 2018)

40.1%40.1%

24.2%24.2%

10.8%10.8%

23.0%23.0%

1.9%1.9% Aseptic PET /Hot fillPETCartonCansOther

Volume per region in million of liters1

(x 1 million liter)2017-2018

2018pro-

forma 2017

Europe 5,581.9 7,127.4 6241.6

North America 3,031.1 3,760.6 862.6

Total Group 8,613.010,888.0 7,104.2

gross profit margin per literGross margin and gross profit margin per liter are key performanceindicators for Refresco and are reported on the level of Sunshine TopB.V., the parent company of the Group. On a pro-forma basis, grossprofit margin per liter totaled 14.0 euro cents compared to14.0 euro cents in 2017, reflecting the net effect of synergies from theacquisition of Cott's bottling business and some headwinds in inputcosts. For calculation of gross margin and gross profit margin per litera reference is made to the audited financial statements of SunshineTop B.V. for the extended financial year 2017-2018.

input costs and operating costsReported employee benefits expenses amounted to EUR382.5 million. On pro-forma basis employee benefits expenses wereEUR 493.2 million compared to EUR 285.5 million in 2017. Theincrease is explained by the acquisition effect of Cott's bottlingbusiness. Depreciation, amortization and impairment costs totaledEUR 142.7 million for the extended financial year and EUR 173.9million on pro-forma basis compared to EUR 96.3 million in 2017. Theincrease is caused by the impact of the Cott acquisition. Otheroperating expenses were EUR 652.4 million and on a pro-forma basisEUR 834.6 million, an increase of EUR 319.0 million, or 62.8%,compared to 2017. Increase in operating costs is mainly due to theacquisition of Cott’s bottling business and higher variable operatingexpenses largely due to the introduction of new products and newproduction lines across the business.

operating profitOperating profit for the 2017-2018 period amounted to EUR 44.2million including other income of EUR 25.6 million from sold assets.On pro-forma basis operating profit totaled to EUR 28.2 millioncompared to EUR 94.9 million in 2017. The decrease is largelyattributable to one-off costs related to the acquisition of Cott'sbottling business and the acquisition of Refresco by PAI and BCI,higher variable operating expenses across the business and someheadwinds in input costs.

EBITDA was EUR 186.9 million for the 2017-2018 period andEUR 201.9 million on pro-forma basis, compared to EUR 191.2 millionin 2017.

The acquisition costs of EUR 46.6 million relate to the acquisition ofCott's bottling activities and the acquisition of Refresco by PAI andBCI. Other one-off items in operating profit relate to the Purchase PriceAllocation (PPA) of the Cott acquisition and acquisition of Refresco byPAI and BCI, integration costs and other costs and gains.

Reconciliation of operating profit to adjusted EBITDA1

(x 1 million euro)2017-2018

2018pro-

forma 2017

Operating profit 44.2 28.1 94.9

D&A and impairment costs 142.7 173.9 96.3

EBITDA 186.9 201.9 191.2

Acquisition cost 37.0 46.6 12.0

Other 55.0 74.8 10.7

Adjusted EBITDA 278.8 323.3 213.9

finance resultReported net finance costs totaled EUR 105.5 million. Pro-forma netfinance costs were EUR 160.5 million (2017: EUR 24.1 million). Theincrease is due to the new financing structure in place and includes awrite off of capitalized finance cost amounting to EUR 43.6 million.

net profitNet loss attributable to the owners of the company for the 2017-2018period was EUR 62.8 million in 2018. On pro-forma basis net loss wasEUR 115.2 million compared to a net profit of EUR 53.4 million in2017. Taking into account the acquisition costs, capitalized financecosts, gains on assets sold, tax effect on the exceptional costs andminority interest, adjusted net profit was EUR 16.3 million on pro-forma basis (2017: EUR 70.0 million).

1 The consolidated financial information of Sunshine Mid B.V. concerns the extended financial year for the period October

30, 2017 - December 31, 2018 (2017-2018). The results of Refresco were consolidated in the financial information of

Sunshine Mid B.V. as of March 29, 2018. 2018 pro-forma information comprises the financial information of Refresco Group

N.V. for the period January 1, 2018 - March 31, 2018 and the financial information of Sunshine Mid B.V. for the period April

1, 2018 - December 31, 2018. The 2017 numbers concern audited financial statements of Refresco Group N.V. for the year

ending December 31, 2017.



capex and working capitalWe continued to invest in new production technology to follow thegrowth of more natural, low calorie drinks, protein drinks, coffeedrinks, water, organic and premium juices and more sustainablepackaging. We spend on average 3-4% of revenue per year on capitalexpenditures, which is key for us to stay ahead of competition.

Capital expenditures accounted for EUR 133.6 million in 2018 on pro-forma basis (2017: EUR 84.6 million). Capex was invested in theinstallation of several new production lines and in the optimization ofthe existing manufacturing sites and warehousing facilities. In Europe,main projects included a greenfield project in Le Quesnoy, France toreplace current facilities and to accommodate aseptic PET volumes forcustomers in northern France, further investments in aseptic PETcapacities across the continent and investments in retort technologyto enable increased production of coffee drinks. In North America,investments included expansion of canning capacity and investmentin strategic production capacity through acquisition of two localbottling companies in Carlisle, Ohio and Kennewick in Washington.Integration-related capex was EUR 14.0 million and is part of the totalexpenditure of EUR 133.6 million in 2018.

Working capital at the end of 2018 was EUR 40.8 million compared toEUR 42.4 million in 2017.

balance sheetTotal assets amounted to EUR 4,579.4 million at December 31, 2018(2017: EUR 1,927.9 million). Total non-current assets amounted toEUR 3,379.4 million compared to EUR 1,171.0 million in 2017.Preliminary goodwill arising on acquisitions totaled EUR 1,667.5million (2017: EUR 523.4 million) and is derived from the acquisitionof Refresco Group N.V. by Sunshine Investments B.V., and includes theacquisition of Cott's bottling business by Refresco. Total intangiblefixed assets amounted to EUR 2,227.7 million (2017:EUR 540.4 million).

Cash and cash equivalents (net of overdrafts) at the end of 2018 wereEUR 139.6 million compared to EUR 145.7 million at year-end 2017.

Net debt at the end of the year amounted to EUR 2,373.5 million(2017: EUR 592.7 million) consisting of EUR 2,413.1 million in loansand borrowings, EUR 100.0 million shareholder funding andEUR 139.6 million in cash and cash equivalents (net of overdrafts).RCF of EUR 200.0 million was fully un-drawn as of December 31, 2018.

credit ratings as of december 31, 2018Moody's Long term rating Outlook

Sunshine Mid B.V. B2 StableS&P Long term rating Outlook

Sunshine Mid B.V. B+ Stable

Sunshine Investments B.V. B+ Stable

distribution of profitsThe Management Board's proposal is that the Annual Meeting ofShareholders deducts the net loss from retained earnings. Thebalance sheet presented in this report for the period ended December31, 2018, is before appropriation of the result for the extendedfinancial year 2017-2018.

FINANCIAL STATEMENTS 2018The Financial Statements were audited by Ernst & Young AccountantsLLP. Their independent auditor’s report can be found on page 89 ofthis Annual Report.

events after the review periodOn February 8, 2019 Refresco announced acquisition of Cott'sconcentrate manufacturing business and beverage innovationplatform in Columbus, Georgia (US). The branded RC ColaInternational activities were an additional part of the acquisitionwhich we simultaneously divested and sold to RC Global BeveragesInc. The transaction will not have a significant impact on our results orcash flows in 2019.

looking aheadWe expect that our capital expenditures will be driven by ourcontinuing efforts to optimize production at our facilities throughinvestment in new technologies and production capabilities andnormal maintenance activities, which amount to approximatelyEUR 1 million per facility per year. We expect our average number ofemployees to increase as we progress in our buy & build strategy,which will be partly offset by ongoing optimization of ourmanufacturing footprint. We will incur capital expenditures inconnection with implementation and investment costs to achievesynergies from our acquisition of Cott’s bottling business. Weanticipate capital expenditures will increase in 2019 compared to thelevel of 2018 as a result of our acquisitions and the continuedupgrading of our manufacturing capabilities. We expect uncertainty inraw material and packaging material markets to remain high due totariffs introduced by the US and China, Brexit and general cool downof the global economy.


Responsibility

Sunshine Mid Annual Report 2018 22 Responsibility

In this chapter we explain our policy regarding

personnel and environmental matters and our

approach to high quality, sustainable and

innovative products. This Annual Report does

not include quantified performance data for

employee, safety and environmental topics as

we are in the process of integrating the recently

acquired businesses in North America and the

UK into our sustainability approach. We are

committed to obtaining, tracking and being

transparent with this information in the years to

come.

how do we manage responsibility?Our responsibility approach is coordinated centrally by a cross-functional and cross-business unit team. The framework, approachand ambitions are set by the Management Board.

stakeholders and stakeholder dialogueOur key stakeholders are employees, customers, suppliers, investorsand local communities. Engaging with our internal and externalstakeholders about responsible business practices has been a veryvaluable process. It has enabled us to establish an ongoing dialoguewith stakeholders about long-term business issues that matter and tobuild relationships based on trust and collaboration.

Employee engagementOur buy & build strategy means that we are regularly integrating newbusinesses into Refresco. 2018 was no exception, as we took on thelargest single integration project in the company's history. On theemployee engagement side, we focused on changing the identity ofthe former Cott bottling business to Refresco. This has involvedregular town-hall meetings to inform staff about the vision andstrategy of the company and how integration will work.

We used the acquisition of Cott's bottling business to also revisit theculture needed going forward. As a result, we refreshed our fivecompany values to chart our course: entrepreneurship, excellence,agile, responsible and passionate.

We seek active dialogue and strive for good relationships with ouremployees and their representatives. We want to build on our two-waycommunication channels. Our company-wide employee survey isdesigned for employees to share what they think about our leadership

style, our organizational culture, working environment and the way wemanage, develop and recognize our people’s contribution. Our nextemployee survey is scheduled for 2019 and will include the newlyacquired businesses in North America and the UK.

Customer engagementUnderstanding, meeting and exceeding our customers’ changingneeds and requirements is of paramount importance to us. In 2018we hosted several discussions with our key retailer and A-brandcustomers on responsibility matters.

Supplier engagementEvery two years we invite our suppliers to attend a one-day conferencein Rotterdam where we share information on Refresco’s strategy, thebeverages market, our business priorities and what this means for oursuppliers. The most recent meeting was held in April 2019. Wecontinued to roll out our Supplier Code of conduct to new suppliers.

our approach - happy people, happy planet, happyproductsOur sustainability framework builds on three pillars, ‘Happy People’,‘Happy Planet’ and ‘Happy Products’, directly aligned to the companystrategy and interests of our stakeholders. We are convinced that bycontributing to our people and the communities around us,minimizing the impact of our manufacturing operations on theenvironment and producing high quality, sustainable products we willcontribute to our company’s success and create value forstakeholders.

happy peopleWe want our own employees as well as our visitors, contractors andother third-party workers at our manufacturing and warehouselocations to feel safe and secure in their work, day in, day out, nomatter where they are. As well as providing our people a safe place towork, we also have a responsibility to take care of our work climateand contribute to the communities around us.

Our culture and career opportunitiesWe are in a fast moving business and we act quickly to captureopportunities that benefit our customers and our own business. Wehave a decentralized structure and we encourage people at all levelsto involve themselves on exciting projects within their country andacross the Group.

Our culture is based on our entrepreneurial mind-set where we giveour skilled people freedom to execute plans that contribute to ourcompany’s success. We come from different cultures and markets,and we know that everyone has the potential to make theircontribution count. There’s a strong emphasis on improvement, bothof the product, but also of the individual, which is why there areopportunities here for anyone enthusiastic enough to grasp them.Being part of a winning team with an inspirational vision for the futuremakes Refresco an exciting place to work. We offer talented people acompelling combination of an international work environment withlocal entrepreneurship.



Build a stronger organizationAs we continue to execute our buy & build strategy we need to furtherimprove our global organization. This requires us to smoothlyintegrate acquired companies into Refresco and to ensure our cultureand values are embedded across the Group. Expanding a businesslike ours needs a healthy pipeline of professional people movingthrough the organization. This relies on us developing the skills of ourcurrent employees as well as recruiting talented people from outsidethe organization. We strive for excellence in everything we do and wewant to create a place to work where people feel proud for what westand for, enjoy working together and have fun together. We continueto create awareness of the desired leadership behaviors and empowerour leaders, at all levels of the organization, as we strive to ensure ourentrepreneurial mindset and unique culture is embedded across theGroup.

In Europe, we continued to improve our people processes with furtherroll out of our people portal. Our aim is to improve performancedevelopment dialogue across the business and to eventually haveevery employee included in our performance development cycle. OurLeadership Acceleration Program (LEAP) saw a third generation offuture leaders of the business embarking upon the program. Based onthree modules, LEAP aims to fast-track organizational, intercultural,managerial and leadership skills of Refresco employees withleadership potential.

In North America, we kicked off multiple Rewire-to-Win programs,designed to ensure we have processes and behaviors that will enableus to win in the marketplace and capture the full potential of joiningforces in all we do. These programs included restructuring of ourcommercialization process for new projects and rewiring our S&OPprocess to provide for better decision making. We also updated ourDelegation of Authority Matrix to push decision making to theappropriate levels and enable faster decision making. Anothermilestone in 2018 was migration of four separate HR systems into oneintegral people platform.

In 2018 we employed 8,620 FTEs on average (2017: 5,140). Theincrease in headcount was attributable to the acquisition of Cott'sbottling business, partly offset rightsizing the combined organizationsin North America and the UK.

Health & safetyAlongside complying with the requirements set out in local legislationand third-party certificates, we have developed our own safetystandards that are coordinated centrally as part of our continuousimprovement program and implemented locally. The standards seekto ensure occupational safety at our manufacturing and warehouselocations.

We work to improve our safety record by identifying best practicesacross the business and replicating these in locations where we couldimprove.

great place to workWe want to be a workplace where we trust each other, enjoy thepeople we work with and take pride in what we do. We measure ourprogress in a Great Place to Work people survey. In 2018 leadershipteams have been working across the business with the 2017 GreatPlace to Work survey results to understand what our people thinkabout our leadership style, our culture and the way we develop andrecognize their contribution. We communicated the results inworkshop sessions where our people had the opportunity to decidethe key strengths and improvement areas to be addressed. Buildingon the experience and feedback of our first survey we created a toolkitto support people leaders and their teams in defining together areasof improvements and plans how to address them.

We embrace the survey as a tool for development with a higher scoreas a result. We are committed to continue the Great Place to Workprocess and our ultimate goal is to improve the level of pride, trustand fun across the company year on year. The results also help usmake the right adjustments to company policies and practices toensure that the talented people who work with us – and who will bejoining us this year – are keen to stay.

contributing to communitiesEach of our locations has a role to play in the surrounding community.Under the umbrella of Happy People, Happy Products, Happy Planetseach manufacturing site seeks to initiate at least one communityinitiative a year with a clear and direct link to the business.

happy planetWe believe protecting the environment is key to safeguarding ourfuture operations and we are focused on minimizing our impact on theenvironment. When making new investments or changes in existingproduction we always analyze environmental aspects as a part ofstandard decision making. The majority of our manufacturing sites inEurope comply with ISO 14001 certification for environmentalmanagement and we adhere to local legislation in all countries ofoperations.

We expect our suppliers to commit to protecting the environment incompliance with international standards relevant for their business aswell as the applicable laws and regulations. We require suppliers tostrive to continuously minimize the adverse environmental impacts oftheir activities, products and services through a responsiblemanagement of environmental aspects.

Furthermore we aim to minimize our impact on the environment bydecreasing the aggregate amount of material used in our primary andsecondary packaging. We additionally aim for a higher degree ofrecycled materials in our packaging.

Sustainable packagingOur key packaging materials are PET, liquid paperboard and metalcans. We buy these packaging materials mainly from major globalsuppliers with some volumes purchased from smaller manufacturersin Europe and North America. We source packaging materials



primarily for our retail customers while our A-brand customerstypically deliver their packaging materials to our manufacturing sites.

We worked closely with our suppliers to create lighter PET bottles toreduce the total material used. We aim for a higher proportion ofrecycled PET (RPET) in the bottles despite the challenges inavailability and pricing of the raw material. Furthermore, we areparticipating in a project to develop sustainable plastic bottlepackaging from bio materials. We are continually innovating togetherwith our suppliers to reduce the weight of the aluminum cans and lidswe use in our production.

Focus on plastic packagingIn 2018 we committed to making plastic packaging more sustainableand we will apply these commitments across the Refresco business.We commit that by 2025, 100 percent of soft drinks' primary plasticpackaging will be recyclable. Soft drinks PET bottles will contain aminimum 25% recycled material on average. Collection rates of softdrinks primary plastic packaging for recycling will be further increasedand optimized in all EU markets in collaboration with other packagingrecovery actors and soft drinks primary plastic packaging will bereused – including refillable bottles – where it makes environmentaland economic sense. The demand for RPET has increased significantlyin the market and consequently the prices have gone up. We thereforesupport plastic collection systems and deposit systems in all themarkets we operate to ensure sufficient supply of high quality RPET.

The soft drinks sector is ready to go way beyond its current target of aminimum 25% recycled material on average if the secondary rawmaterial market can make food-grade quality RPET sufficientlyavailable, accessible and affordable.

natural resources: water & energyWater is a key ingredient for many of the products we manufacture forour customers. It is also an exciting growth category. We have severalwater wells, and protecting these is crucial to our ability to providehigh quality products to our customers.

We closely monitor the water/product ratio in our manufacturingprocesses, with the aim of reducing water consumption. A solutionwhere PET bottles and cans are no longer rinsed with water but withair, is just one example of the tools we use to reduce waterconsumption in the manufacturing process. Water deficit is a growingproblem across the globe and we are working to improve our watermanagement.

Energy consumption is important to us, both in maintaining our costleadership and in minimizing the negative environmental impact ofour operations. Cooling, warming, machinery, and compressed airform the bulk of our energy consumption. Our aim here is to optimizethe utilization of our machinery and to invest in reduced energyequipment.

transportDue to the broad geographical spread of our manufacturing sites, weare able to supply with short transportation lines and provide theclose proximity our customers need. By combining different customerand product deliveries, we aim for fully loaded trucks and optimalpallet usage at all times. In our search for optimal efficiencytransportation with minimum impact on the environment, we place ahigh priority on identifying suppliers that have a similar approach andcan make a meaningful contribution to a sustainable supply chain.

happy productsWe deliver the highest quality and constantly improve thesustainability of the drinks we manufacture for our customers. Incollaboration with our customers, we champion innovation to drivemore natural products with less calories and enhance our productrange.

Food safetyFood safety encompasses actions aimed at ensuring fit forconsumption by the end-user and no detraction or damage for health.Maintaining high food safety standards is our license to operate andwe do not compromise this under any circumstances.

In Europe all our manufacturing sites are certified to a recognizedGlobal Food Safety Initiative Standard (GFSI) – which, depending onthe country, is Global Food Standard (BRC), FSSC 22000 or theInternational Features Standard Food (IFS Food). To ensure food safetyand quality, every manufacturing site has implemented its own qualitysystem tailored to the critical control and quality aspects applicableto its manufacturing processes. Quality control forms part of eachproduction line.

In North America our manufacturing sites are regulated through USFood & Drug Administration (US) and certified under the Safe QualityFood (SQF) Program or FSSC2200.

To respond to changing customer needs and requirements severalmanufacturing sites across both continents are also certified toproduce under Bio/EKO/Organic, UTZ/Rainforest Alliance andFairtrade, among other schemes. Our sites are also regularly auditedby our retail and A-brand customers.

sustainable sourcingWe align our ambition to purchase sustainable materials with theneeds of our customers and we secure long-term availability of ourkey raw materials by working towards improving social complianceand environmental standards across our supply chains.

We want to work closely with producers of raw materials and we aimto decrease our dependency on regions where economic or politicalturmoil and extreme weather can severely disrupt our supply chain.When we choose to work with trading partners who buy raw andpackaging materials for their own manufacturing processes we requirethem to ensure that their own suppliers comply with the sameconditions Refresco expects from them. We require our suppliers to



comply with local legislation and sign the Refresco Supplier Code ofConduct. Refresco expects its suppliers to embed the Code of Conductinto their organization and their supply chain by developing andimplementing appropriate internal business processes. Each suppliermust be able to demonstrate compliance with the Refresco SupplierCode of Conduct upon request by Refresco.

Refresco buys its juice raw materials according to the SGF-IRMAguidelines that are generally accepted in the global fruit juicesindustry. SGF stands for Safe-Global-Fair and is a non-profitorganization that carries out supplier audits and grants SGF-IRMAcertifications that cover the vast majority of raw materials used in theEuropean fruit juice industry.

Refresco aims for 100% sustainably sourced juice by 2030Refresco is a co-founder of the Sustainable Juice Covenant that aimsfor 100% sustainable juice by 2030. The covenant is open to all actorsin the juice supply chain and it is managed by IDH Sustainable TradeInitiative. We were looking for tools to translate our sustainablesourcing ambitions to concrete actions. As a result we entered indiscussions with IDH about an industry-wide, global initiative with ajoint definition of sustainability including social, human rights andenvironmental matters. The covenant aims to make the sourcing,production and trade of juices, purees and concentrates 100%sustainable by 2030.

Prevention of bribery and corruption and related resultsRefresco expects its suppliers to conduct their business with integrityand shall compete fairly. Suppliers will not offer gifts and/orhospitality of any value, directly or indirectly, in order to obtain anyimproper benefit or advantage. Also, suppliers are not allowed to offerany hospitality or transfer any gift of value to Refresco employees thatexceeds usual business conduct in their country of operation.Suppliers shall have a zero tolerance policy prohibiting any and allforms of bribery, corruption, extortion and embezzlement (coveringpromising, offering, giving or accepting any bribes). Suppliers areexpected to ensure that the sourcing of the products supplied do notfinance or benefit armed groups. Any violations of the abovedescribed policy are to be reported to the Compliance Officer ofRefresco. No violations were reported in 2018.

Prevention of the violation of human rights and fundamentalprinciples and rights at workRefresco sources raw and packaging materials from across the globe.In sustainable sourcing main topics include focus on human rightsand labor conditions in risk countries. Refresco expects that theorganizations and supply chains of its suppliers provide healthy andincident-free working environments for their employees andneighbors. Suppliers must implement appropriate controls andworking procedures preventing and controlling hazards and risksrelated to their specific industry. As a minimum, suppliers shallprovide portable drinking water, adequate restrooms, appropriateemergency procedures and first-aid assistance. Refresco expects itssuppliers to insist on "safety first" within the work environment.

Suppliers wishing to secure a long-term business relationship withRefresco need to respect the United Nation's Universal Declaration ofHuman Rights and the eight fundamental Conventions of theInternational Labour Organisation (ILO). In particular, suppliers mustensure that in their respective organizations and supply chain they:• Meet the minimum employment age limit defined by national

law, adhere to the applicable regulation and relevantfundamental convention of the ILO

• Prohibit compulsory or forced labor and meet or exceed nationallegal standards for wages and working hours

• Do not tolerate discrimination and harassment of any kind andensure freedom of association

Refresco requires its suppliers to sign the company's Supplier Code ofConduct and commit to continuously improve their overall socialperformance. We are not aware of any violations to the code in 2018.Should a supplier fail to uphold the principles set out in the SupplierCode of Conduct, Refresco has the right to either propose correctiveactions or to terminate the relevant agreement.

Key industry memberships contributing to long term success ofthe soft drink and fruit juice industry• Unesda - Soft drinks Europe• American Beverage Association• Fruit Juice CSR Platform• European Fruit Juice Association - AIJN• Sustainable Juice Covenant

healthy nutrition and innovationIn a constantly changing market, we are steadfast in our ambition toimprove and are always searching for new ways to drive innovation.Our production processes are highly flexible, enabling us to developthe right products in the right volumes and also to develop newproduct formulas and packaging combinations in line with customers’changing needs and requirements.

Our product innovation agenda builds on key trends shaping thebeverages industry:• Water+• Sugar reduction and replacement• Freshly brewed ice tea• Natural energy drinks• Premium juices• Plant protein and breakfast drinks

Packaging innovation is equally important and we team up with oursuppliers to find more recycled products, accelerate lightweightingand meet the demand for convenience. We believe that our focusedinnovation agenda coupled with major investments in ourmanufacturing capabilities will position us well to meet changingcustomer needs and requirements.


Governance

Sunshine Mid Annual Report 2018 26 Governance

organizational structureSunshine Mid B.V. is 100% owned by Sunshine Top B.V. the parent company of the Refresco Group. An overview of all the subsidiaries owned bySunshine Mid B.V. can be found on page 85 of this report. The company is managed by the Management Board comprising CEO Hans Roelofsand CFO Aart Duijzer. The Management Board is responsible for the overall performance of the company and the implementation of its strategy.At operational level, the organization is split into Europe and North America. Both regions are headed by an Operating Board, comprising theCOO for the respective region and regional Directors representing Finance, HR, Operations, Purchasing and Sales.

diversityThe Company strives for the right composition of its corporate bodies. Having the right experience and knowledge of the industry will be the keyappointment criteria for the Management Board. Both members of the Management Board have been with the Company for a long time. It is forthis reason that the Management Board is composed as it is today. In case of new vacancies to be filled within the Management Board, we willstrive for 30% of the seats to be allocated to women and therefore give equal opportunities to both men and women. However, the bestcandidate for the role concerned will be appointed.

change of controlSunshine Mid B.V., has issued EUR 445 million Senior Secured Notes. Upon certain events defined as constituting a change of control,Sunshine Mid B.V. will be required to make an offer to purchase the outstanding notes at a purchase price equal to 101% of their principalamount, plus accrued and unpaid interest and additional amounts, if any, to the date of purchase. The definitions used in respect of a changeof control expressly permit a third party to obtain control of Sunshine Mid B.V. in certain defined transactions without any obligation to make anoffer. It is not uncommon in our industry to have change of control provisions in commercial agreements.

tax policyThe company seeks a responsible approach to the management of taxes and relating risks. We adhere to the tax laws and related rules andregulations in the countries where we operate, not only to the letter of the law but also to its spirit. The company’s commercial needs areparamount and leading and therefore ‘tax follows the business’. We do not use artificial structures, instruments or tax havens solely for taxavoidance. Where possible we will create and maintain a relationship with local tax authorities and work closely together in an open andtransparent dialogue, creating mutual understanding and trust. See note 2.8 on page 41 of this report for the tax policy.

sunshine mid b.v. management board

Hans RoelofsCEO

Hans Roelofs joined Refresco in March 2007 and since then hasdriven rapid growth of the company. Before joining Refresco,Hans was CEO of Dumeco, a private label meat producer andprocessor. He started his career at Nutreco, rising to ManagingDirector of the Agri Food business. Hans is a graduate ofWageningen University, the Netherlands.

Aart DuijzerCFO

Aart Duijzer is one of the founders of the company. Prior tojoining Refresco in 2000, Aart worked as Finance Director of theContinental European division of Hazlewood Foods Plc. Aartstarted his career at KPMG and holds a Master’s degree inbusiness economics from the Erasmus University in Rotterdam,the Netherlands. He is a Dutch Chartered Accountant.


Risks and risk management

Sunshine Mid Annual Report 2018 27 Risks and risk management

refresco’s risk appetiteAs a basic principle, we believe that doing business comes withtaking risks. We expect our employees to be entrepreneurial, but alsoto act responsibly. This means that our employees should be able tomake their decisions by carefully considering both the risks and theopportunities while taking into account the interests of allstakeholders. Having a culture of openness, transparency andintegrity supports our employees in addressing any potential risksthey see.

To frame our approach towards the various risks our company isfacing, we categorize risks in four types. Each category comes with itsown risk appetite:

Strategic risksEntrepreneurship is one of Refresco’s values. We see a certain level ofrisk-taking as part of our nature and we are willing to take a carefullyweighted risk/return approach when doing business.

Operational risksRefresco has a prudent approach to operational risk management.Ensuring the high quality standards of our products, customer serviceand continuity of our production have the highest priority.

Financial risksRefresco seeks to identify, assess and, if necessary, mitigate financialrisks, which include currency and interest rate risks, in order tominimize potential adverse effects on our financial performance.

Legal and regulatory risksRefresco believes that compliance with laws is essential for doingbusiness and for that reason, we strive for full compliance withapplicable laws.

key risks

Risk Mitigation

strategic risks

Changes in customer and end-consumer preferences

Refresco produces products for its customers who in turn sell theseproducts to end consumers. Should there be a reduction inconsumer demand or customer requirements change in such a waythat we are not able to meet the new requirements, this may have anadverse effect on our business, financial condition and results ofoperations.

We aim for diversification in terms of product, packaging, customersand geography. This helps us to better anticipate changes in consumerdemand or customer requirements in a timely manner. Our flexiblemanufacturing processes also enable us to quickly adapt to changingcustomer requirements.

Buy & build strategy

We may not be able to execute this strategy due to a lack of suitabletargets. Furthermore, acquisitions may turn out to be less successfulthan anticipated.

If we are unsuccessful in the performance of our buy & buildstrategy, it will be difficult for the Group to grow. Unsuccessfulacquisitions may lead to higher costs for the company.

The Management Board is directly responsible for the execution of theacquisition strategy. We are continuously looking for companies withthe potential to fulfil our growth strategy.

Every acquisition process is supported by a team of dedicated andexperienced in-house professionals and external consultants whoperform due diligence to capture a proper assessment of the risks.

Any acquired business is integrated into the relevant jurisdiction asquickly as possible because we believe that local integration is the bestway to facilitate a cultural fit into our organization.

Finalization of the integration of Cott's bottling activities into theRefresco organization is being overseen by the members of theManagement Board. We established an Integration Monitoring Office totrack day-to-day progress and ensure a smooth transition. The leader ofthis team reports directly into the Management Board.



Risk Mitigation

Change in societal expectations around industry responsibility forpublic health and environment

There is a continued high level of media and government scrutiny onhealth and environmental concerns of consumers. Expectations fromconsumers and governmental and non-governmental bodies on theindustry taking responsibility in tackling health issues (such asobesity) and environmental issues (such as plastics) may grow,leading inter alia to changes in regulations impacting our productportfolio and manufacturing processes.

We take various initiatives to address the concerns of society aroundour impact on the environment and public health. More informationabout these initiatives can be found on pages 22 to 25. We support ourcustomers should they look for innovative solutions addressing theseconcerns. Additionally, we believe that addressing these concerns alsorequire an industry wide approach. We are a member of certain industrybodies in which - among other things - these concerns are beingdiscussed.

operational risks

Fluctuations in the prices of raw and packaging materials

The prices of raw and packaging materials fluctuate due to factorsbeyond the Group’s control. While the company aims to purchasesufficient raw and packaging materials to meet our estimated salesvolumes, these estimates may prove inaccurate. If the raw andpackaging materials costs increase, it may not be possible to passthe increase on to customers through price adjustments or in atimely manner. This could have a material adverse effect on thebusiness, financial condition and results of operations.

Our exposure to price fluctuations mostly impacts our retailer brandsbusiness. In contract manufacturing we more often operate on the basisof a tolling fee so the price risk is typically carried by the customer.

The Group has a centralized procurement department that closelymonitors price developments of raw and packaging materials. We havea policy to wherever possible purchase forward contracts that matchsales in volume as well as in time. The Group’s exposure is thereforelimited to under- or over-coverage by corresponding forward purchasecontracts.

A small percentage of input material cost fluctuations can sometimesincur delay in being passed on to customers, resulting in a small upsideor downside deviation of gross profit margin per liter over time.Occasionally, we may decide not to fully increase the prices of theproducts we manufacture in order to sell a greater volume of theseproducts.

Dependency on a limited number of suppliers

Our manufacture of products is highly dependent on an adequatesupply of certain raw materials including FCOJ, apple juice and sugaras well as certain packaging materials including liquid paperboard,aluminum cans and PET, most of which are only available from alimited number of suppliers. The limited number of suppliers forthese materials may undermine our negotiating position. The loss ofor delay in delivery by any one of these suppliers could lead to adisruption in our supply chain, which could reduce the utilizationrate of manufacturing sites and deliveries to customers, and in turnhave a material adverse effect on the business, financial conditionand results of operations.

This risk mainly applies for retailer brands, as these products are moredependent on the Group’s own sourcing than contract manufacturing,where the customer more often sources the raw materials.

We attempt to ensure that we always have sufficient raw and packagingmaterials in stock. To ensure we can cover sales positions with theGroup’s customers, we have adopted a policy to enter into forwardpurchase contracts – up to 12 months in advance – for most raw andpackaging materials. If there are not sufficient raw materials orpackaging, we discuss with our customers how to mitigate the impact.

Additionally, to ensure we have alternatives when needed, the Group iscontinuously looking to broaden its supplier base for the mostimportant raw and packaging materials.



Risk Mitigation

Costs of utilities

Our manufacturing and distribution processes include a high usageof utilities like gas, energy and transport costs. Utility costs mayfluctuate significantly representing a financial risk to our operations.

The risk of fluctuating utility costs such as gas and energy are mitigatedby entering into longer term utility contracts. Where possible, weinclude other utility costs in our contracts with customers and agree amechanism pursuant to which these costs are reviewed on a quarterlybasis.

Health, safety and environment

Our reputation could be jeopardized by a failure to maintain highquality standards for our products or high ethical, social andenvironmental standards for our activities, including human rightsrelated challenges in our supply chains.

Our manufacturing sites are subject to a number of environmentallaws and other regulations relating to environmental control, firesafety, sanitation, and water consumption and treatment.

To mitigate against the risks of quality and safety, each of our sites haveimplemented a quality system based on the critical control and qualitypoints.

All our European manufacturing sites are certified to a recognizedGlobal Food Safety Initiative Standard (GFSI) – which, depending on thecountry, is Global Food Standard (BRC), FSSC 22000 or the InternationalFeatures Standard Food (IFS Food). Furthermore, the majority of ourmanufacturing sites in Europe are ISO14001 certified. In North Americaour manufacturing sites are Safe Quality Food (SQF) certified. Our sitesare also regularly audited by our retail and A-brand customers. Whererelevant, we have taken out insurance for customary risks to cover anynegative financial consequences of the events insured to the maximumamount possible.

We request our suppliers of raw materials and packaging to respect theRefresco Supplier Code of Conduct. The code provides clear guidanceon how we expect our suppliers to act in the areas of compliance withlaws and regulations, integrity, gifts, hospitality & bribes, environment,product safety and quality, health and safety, labor conditions & humanrights, confidentiality, privacy and intellectual property.

If a supplier fails to uphold the principles set out in the Supplier Code ofConduct, Refresco has the right to either propose corrective actions orto terminate the relevant agreement.

In signing up to the sustainable juice covenant in 2017, we havecommitted to work on a series of practical actions to increase thesustainability of our supply chain, including labor conditions andhuman rights related challenges.

Production contingency

Operations at our sites could be adversely affected by extraordinaryevents which could materially reduce our production and have amaterial adverse effect on our business, financial condition andresults of operations.

We continue to invest significantly in our manufacturing sites and tostrive for improvement of our health, safety and environmental practice.Together with our insurance broker we have a program to regularlyreview our housekeeping, fire protection and environmentalmanagement to mitigate business interruption.

We have contingency plans in place pursuant to which we can moveproduction to other locations in case of emergencies.In Europe, we have a crisis management program pursuant to which ourEuropean region has uniform procedures for dealing with crises andcertain identified staff have been trained in crisis management. Weintend to roll this out in our North American region as well.



Risk Mitigation

Dependency on a relatively small number of customers

A significant portion of our revenue is concentrated with a relativelysmall number of customers; although we have multiple contractswith each of our customers. The Top-10 customers count forapproximately 45% of total revenue. The loss of such a customercould have a material adverse effect on our operating result andcash flow.

We have long term relationships with the majority of our customers anda high level of customer integration on supply chain, new productdevelopment and customer service. We believe this mitigates the Groupsufficiently against this risk.

Loss of senior management or key employees

Human capital is one of our key assets. The performance of seniormanagement and other key employees is critical to our success.There can be no assurance that Refresco will be successful inattracting or retaining highly qualified senior management and otherkey employees needed in the future, which could have an adverseeffect on the business.

We continue to invest time and resources in developing and training oursenior management and key employees. Furthermore, we continue toinvest in our leadership acceleration program LEAP because we believethat developing talent internally is preferable to attracting peopleexternally. To remain attractive, we encourage international mobilityand, where appropriate, we give our employees the opportunity to workin another business unit.

We regularly perform employee surveys. The findings help us tounderstand what our employees think about our leadership style,organizational culture, working environment and the way we manage,develop and recognize our people’s contribution.

Cybersecurity

The Group’s operating results may be adversely affected by abreakdown of its information technology systems or a failure todevelop those systems. The Group depends on key informationsystems to conduct its business, to provide information tomanagement and to prepare financial reports.

We rely on reputable third party providers for the majority of our keyinformation systems and business processing services supportingour operations in several different countries. A system failure, couldtherefore have serious consequences for the Group’s entirebusiness.

Based on the results of our “Read team approach” that took place in2017 we improved our IT security in various areas during 2018 toreduce vulnerabilities. We are reviewing the actions taken and progressmade across our European region. At group level, we increased thesecurity around mail traffic by activating additional technologies and afiltering mechanism to reduce external threats via mail. For Office 365,at the end of 2018, we engaged a partner to proactively monitor thecloud services.

financial risks

Currency risk

The Group is exposed to currency risk mainly on purchasesdenominated in USD. With expanding the operations in the UnitedStates and the recent developments in the United Kingdom, theexposure to USD, GBP and CAD risks has become a higher priority.

At any point in time, the Group hedges 70 to 80% of its foreign currencyexposure on contracted forecasted purchases. The Group uses currencyoption contracts and forward exchange contracts to hedge its currencyrisks, most of which have a maturity date of less than one year from thereporting date. When necessary, foreign currency contracts are rolledover on maturity.

In respect of other monetary assets and liabilities denominated inforeign currencies, the Group ensures that its net exposure is kept to anacceptable level by buying or selling foreign currencies at spot rates, asnecessary, to address short-term imbalances. See note 3 to thefinancial statements on page 51 for more detail.



Risk Mitigation

Other financial risks

Note 3 to the financial statements on pages 61 to 68 gives moredetail regarding the company’s approach towards financial riskmanagement and addresses certain identified risks.

legal and regulatory risks

Non-compliance with laws

The Group may fail to comply with any laws and regulations that areapplicable to its business and production facilities and/or supplychains. This may lead to fines, interruptions in operations andincreased costs.

Additionally, the Group may have to recall products manufactured forthird parties which may lead to significant harm to the Group’sreputation.

Refresco operates a Code of Conduct. Our customers perform audits inwhich compliance with food and safety legislations are also addressed.Where relevant, we monitor legislation to ensure compliance. Finally, wehave whistleblowing processes in place pursuant to which employeescan address non-compliant situations.

We give clear guidance in Refresco's Supplier Code of Conduct abouthow we expect our suppliers to act in the areas of compliance with lawsand regulations, integrity, gifts, hospitality & bribes, environment,product safety and quality, health and safety, labor conditions & humanrights, confidentiality, privacy and intellectual property.

The above table gives an overview of the risks that we believe may have an adverse impact on the Group. The table is not exhaustive. Additional risks anduncertainties of which we are not aware or that we currently believe are less material, may also adversely affect our business, financial condition, and resultsof operations.

risk managementWe believe that risk management starts with the creation of an openculture in which employees are empowered to optimize the balancebetween maximization of business opportunities and managing therisks involved. Refresco's Code of Conduct informs employeesthroughout the organization what we expect from them in terms ofethical behaviour.

Our whistleblowing procedure details the exact process to be followedif an irregularity is identified and outlines the roles andresponsibilities of the different parties involved. Both the Code ofConduct and the whistleblowing procedure are available on thecompany's website.

In addition to creating the right culture, we have a program of internalcontrol and reporting procedures. Internal audit procedures play a keyrole in providing the Operational Boards and the Management Boardan objective view on, and ongoing assurance as to, the effectivenessof risk management and related control systems throughout theGroup. By drawing up an annual Internal Audit Plan, the systematicassessment of the design and effectiveness of internal riskmanagement and control systems is ensured.

The process around letters of representation for the external auditoralso helps to increase awareness around risks and risk management.To ensure that newly acquired businesses are integrated into theseinternal control and reporting procedures, we bring them into theGroup’s governance structure as soon as is practically possible. Wetypically aim for integration to be completed by the end of the first fullyear of operations within the Group.

We also have various measures in place to mitigate operational risks.All our manufacturing sites in Europe are certified to a recognizedGlobal Food Safety Initiative Standard (GFSI) – which, depending onthe country, is Global Food Standard (BRC), FSSC 22000 or theInternational Features Standard Food (IFS Food). Furthermore, themajority of our manufacturing sites in Europe are ISO14001 certified.In North America our manufacturing sites are Safe Quality Food (SQF)certified. Our sites are also regularly audited by our retail and A-brandcustomers. Where relevant, we have taken out insurance forcustomary risks to cover for negative financial consequences of theevents insured to the maximum amount possible.

Finally, in addition to the above organizational mitigation measures,we have a strong financial position which can act as a cushion againstan economic downturn in our company due to any of the outlinedrisks materialising.



The Management Board is responsible for establishing andmonitoring the Group’s internal risk management and controlsystems. It is also responsible for identifying risks and implementingits risk management policies, internal controls and reportingprocedures.

In 2018, we discovered no major failings in the internal riskmanagement and control systems. The risk of fraud and IT securityreceived attention during the Internal Audit, but there were nomaterial risks identified.

The risk of integrating the recently acquired Cott's bottling activitiesinto the Refresco organization remains an area of attention.Integration is supported by an Integration Management Office whoreport directly into the Management Board. The process is on trackand will continue into 2019. The Management Board is satisfied withthe process.

Financial review 2018

Sunshine Mid Annual Report 2018 33 Financial review 2018

Consolidated income statementFor the extended financial period ended December 31, 2018

Sunshine Mid Annual Report 2018 34 Consolidated income statement

(x 1 million euro) Note 2017-2018Revenue from contract customer 4.2 2,963.6Other income 4.3 25.6Raw materials and consumables used 4.4 (1,767.4)Employee benefits expense 4.5 (382.5)Depreciation, amortization and impairments 4.6 (142.7)Other operating expenses 4.7 (652.4)Operating profit 44.2

Finance income 4.8 0.4Finance expense 4.8 (105.9)Net finance costs 4.8 (105.5)

Profit/(loss) before income tax (61.3)Income tax (expense) / benefit 4.9 6.0Profit/(loss) for the extended financial period (55.3)

Profit/(loss) attributable to:Owners of the Company (62.8)Non-controlling interest 7.5Profit/(loss) for the extended financial period (55.3)

The notes on page 39 to page 81 are an integral part of these consolidated financial statements.

Consolidated statement of other comprehensive incomeFor the extended financial period ended December 31, 2018

Sunshine Mid Annual Report 2018 35 Consolidated statement of other comprehensive income

(x 1 million euro) Note 2017-2018Profit / (loss) (55.3)

Items that will not be reclassified to profit or lossRemeasurements of post employment benefit obligations 5.8 1.5Income tax (expenses)/benefits 5.8 (0.7)Total 0.8

Items that may be subsequently reclassified to profit or lossCashflow hedges 5.8 (15.4)Foreign currency translation differences for foreign operations 5.8 34.9Income tax (expenses)/benefits 5.8 6.0Total 25.5

Other comprehensive income / (loss) 26.3

Total comprehensive income / (loss) (29.0)

Attributable to:Equity holders of the Company (36.1)Non-controlling interest 7.1Total comprehensive income / (loss) (29.0)


Consolidated balance sheetAs at December 31, 2018

Sunshine Mid Annual Report 2018 36 Consolidated balance sheet

(x 1 million euro) Note December 31, 2018AssetsProperty, plant and equipment 5.1 1,138.7Intangible assets 5.2 2,227.7Non-current financial assets 5.3 12.7Deferred income tax 5.4 0.3Total non-current assets 3,379.4

Inventories 5.5 396.9Derivative financial instruments 3.1/3.3 2.7Current income tax receivable 25.7Trade and other receivables 5.6 548.1Cash and cash equivalents 5.7 226.2Total current assets 1,199.6

Assets classified as held for sale 0.4

Total assets 4,579.4

EquityIssued share capital 5.8 0.0Share premium 5.8 882.2Other reserves 5.8 20.2Retained earnings -Result for the financial period (62.8)Equity attributable to equity holders of the Company 839.6Non-controlling interests 6.9Total equity 846.5

LiabilitiesLoans and borrowings 5.9 2,509.4Derivative financial instruments 3.1/3.3 10.5Employee benefits provisions 5.10 51.3Other provisions 5.11 14.0Deferred income tax 5.4 124.3Total non-current liabilities 2,709.5

Loans and borrowings 5.9 90.3Derivative financial instruments 3.1/3.3 1.9Trade and other payables 5.12 897.2Current income tax liabilities 26.2Provisions 5.11 7.8Total current liabilities 1,023.4

Total liabilities 3,732.9Total equity and liabilities 4,579.4


Consolidated statement of changes in equityFor the extended financial period ended December 31, 2018

Sunshine Mid Annual Report 2018 37 Consolidated statement of changes in equity

(x 1 million euro)Note

Issuedshare

capitalShare

premiumOther

reservesRetainedearnings

Resultfor theperiod

TotalNon

controllinginterest

TotalEquity

Balance as at October 20, 2017 - - - - - - - -Other comprehensive income / (loss) - - 26.7 - - 26.7 (0.4) 26.3Profit / (loss) - - - - (62.8) (62.8) 7.5 (55.3)Total comprehensive income / (loss) - - 26.7 - (62.8) (36.1) 7.1 (29.0)Share capital issued 5.8 - 882.2 - - - 882.2 - 882.2Dividends paid / repayment of share premium - - - - - - (20.6) (20.6)Other 5.8 - - (6.5) - - (6.5) - (6.5)Non-controlling interest arising on business combinations - - - - - - 20.4 20.4Total transactions with owners recognized directly inequity - 882.2 (6.5) - - 875.7 (0.2) 875.5

Balance as at 2017-2018 - 882.2 20.2 - (62.8) 839.6 6.9 846.5

For notes on equity a reference is made to 5.8.


Consolidated statement of cash flowsFor the extended financial period ended December 31, 2018

Sunshine Mid Annual Report 2018 38 Consolidated statement of cash flows

(x 1 million euro) Note 2017-2018Profit/(loss) after tax (55.3)

Adjustments for:Depreciation, amortization and impairments 4.6 142.7Net change in fair value derivative financial instruments 4.8 (0.8)Other net finance costs 4.8 106.3(Gain) / loss on sale of property, plant and equipment 4.3 (25.6)Income tax expense / (benefit) 4.9 (6.0)Movement in employee benefit provisions and other provisions 5.10/5.11/6.1 (16.2)Cash flow from operating activities before changes in working capital 145.1

Changes in:Inventories 5.5/6.1 31.7Trade and other receivables 5.6/6.1 16.2Trade and other payables 5.12/6.1 128.0Total change in working capital 175.9

Interest received 0.4Interest paid (81.2)Income taxes paid (24.3)Net cash generated from operating activities 215.9

Cash flows from investing activitiesProceeds from sale of property, plant and equipment 4.3/5.1 44.1Purchase of property, plant and equipment 5.1 (116.0)Purchase of intangible assets 5.2 (2.4)Proceeds non-current financial assets 5.3 15.6Acquisition of subsidiary, net cash acquired 6.1 (1,513.3)Net cash used in investing activities (1,572.0)

Cash flows from financing activitiesProceeds of new issued shares 5.8 882.2Dividend payment (20.6)Proceeds from loans and borrowings 5.9 3,029.8Repayment of loans and borrowings 5.9 (2,326.1)Financing costs 4.8 (43.6)Net cash (used in)/from financing activities 1,521.7

Net cash (used in)/from operating, investing and financing activities 165.6Translation adjustment (26.0)Movement in cash and cash equivalents 139.6

Cash and cash equivalents as at beginning 5.7 0Cash and cash equivalents as at December 31 5.7 226.2Bank overdraft as at December 31 5.7 (86.6)Cash movement 139.6

The cash flow statement is prepared according the indirect method.


Notes to the consolidated financial statements

Sunshine Mid Annual Report 2018 39 Notes to the consolidated financial statements

The consolidated financial statements of Sunshine Mid B.V.(‘Sunshine Mid’ or the ‘Company’ ) and its group companies(collectively, the 'Group') concern the extended financial period asfrom 20 October 2017 until 31 December 2018 ('financial period' or'2017-2018'). The results of Refresco were consolidated in theSunshine Mid B.V. financial information as of March 29, 2018. Theconsolidated financial statements were approved for issuance by theManagement Board on May 7, 2019.

Sunshine Mid B.V. was incorporated on October 20, 2017 anddomiciled in the Netherlands, with its registered office at PrinsBernhardplein 200, 1097 JB Amsterdam, trade register number69880697. The shareholder is Sunshine Holding B.V. and ultimatecontrolling party is Sunshine Equity B.V.

The activities of the Group consist of the manufacturing of fruit juicesand soft drinks for retailers and A-brands. Sales and production aremade both domestically and abroad, Europe and North America beingthe most important markets.

2 Significant accounting policiesThe accounting policies set out below have been applied consistentlyto all periods presented in these consolidated financial statements,and have been applied consistently by the Group.

2.1 Basis of preparationThe consolidated financial statements have been prepared inaccordance with International Financial Reporting Standards (IFRS) asendorsed by the European Union. The consolidated financialstatements have been prepared on the historical cost conventionexcept for derivative financial instruments which are measured at fairvalue. The consolidated financial statements are presented in eurosand all values are rounded to the nearest million with one decimal,unless stated otherwise. No comparative information has beenincluded, since Sunshine Mid B.V. was incorporated on 20 October2017 and this financial statements concerns the extended financialperiod as from 20 October 2017 until 31 December 2018.

The company financial statements are part of the consolidatedfinancial statements of Sunshine Mid B.V. The Company makes use ofthe option provided in section 2:402 of the Dutch Civil Code, underwhich the income statement in the company financial statements canbe simplified.

2.2 Basis of consolidationThe consolidated financial statements comprise the financialstatements of the Group and its subsidiaries as at balance sheet date.The companies in note 3.1 of the company only financial statementshave all been included in the consolidated financial statements.Control is achieved when the Group is exposed, or has rights, tovariable returns from its involvement with the investee and has theability to affect those returns through its power over the investee.

Specifically, the Group controls an investee if, and only if, the Grouphas:

• Power over the investee (i.e., existing rights that give it thecurrent ability to direct the relevant activities of the investee)

• Exposure, or rights, to variable returns from its involvement withthe investee

• The ability to use its power over the investee to affect its returns

Generally, there is a presumption that a majority of voting rights resultin control. To support this presumption and when the Group has lessthan a majority of the voting or similar rights of an investee, the Groupconsiders all relevant facts and circumstances in assessing whether ithas power over an investee, including:• The contractual arrangement with the other vote holders of the

investee• Rights arising from other contractual arrangements• The Group’s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if factsand circumstances indicate that there are changes to one or more ofthe three elements of control. Consolidation of a subsidiary beginswhen the Group obtains control over the subsidiary and ceases whenthe Group loses control of the subsidiary. Assets, liabilities, incomeand expenses of a subsidiary acquired or disposed of during thefinancial period are included in the consolidated financial statementsfrom the date the Company gains control until the date the Groupceases to control the subsidiary.

Profit or loss and each component of other comprehensive income(OCI) are attributed to the equity holders of the parent of the Groupand to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary,adjustments are made to the financial statements of subsidiaries tobring their accounting policies into line with the Group’s accountingpolicies.

A change in the ownership interest of a subsidiary, without a loss ofcontrol, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognizes therelated assets (including goodwill), liabilities, non-controlling interestand other components of equity while any resultant gain or loss isrecognized in profit or loss. Any investment retained is recognized atfair value.

The Group uses the acquisition method of accounting to account forbusiness combinations. The consideration transferred for a subsidiaryis the fair value of the assets transferred, the liabilities incurred andthe equity interests issued by the Group.

The consideration transferred includes the fair value of any asset orliability resulting from a contingent consideration arrangement.Acquisition-related costs are expensed as incurred. Identifiableassets acquired and liabilities and contingent liabilities assumed in abusiness combination are measured initially at their fair values at theacquisition date.



Intra-group balances and transactions, and any unrealized incomeand expenses arising from intra-group transactions, are eliminated inpreparing the consolidated financial statements. Unrealized lossesare eliminated in the same way as unrealized gains, but only to theextent that there is no evidence of impairment.

2.3 Foreign currency

Functional and presentation currencyThe Group’s consolidated financial statements are presented in euros,which is also the Sunshine Mid B.V. functional currency. For eachentity, the Group determines the functional currency and itemsincluded in the financial statements of each entity are measuredusing that functional currency which is the Euro, except for UK (GBP),US (USD), Canada (CAD), Poland (PLN) and Mexico (MXN).

Transactions and balances in foreign currencyTransactions in foreign currencies are translated into the respectivefunctional currencies of Group entities at the exchange rates at thedates of the transactions.

Monetary assets and liabilities denominated in foreign currencies aretranslated at the functional currency spot rates of exchange at thereporting date.

Differences arising on settlement or translation of monetary items arerecognized in profit or loss with the exception of monetary items thatare designated as part of the hedge of the Group’s net investment of aforeign operation. These are recognized in OCI until the netinvestment is disposed of, at which time, the cumulative amount isreclassified to profit or loss. Tax charges and credits attributable toexchange differences on those monetary items are also recorded inOCI.

Non-monetary items that are measured in terms of historical cost in aforeign currency are translated using the exchange rates at the datesof the initial transactions. Non-monetary items measured at fair valuein a foreign currency are translated using the exchange rates at thedate when the fair value is determined. The gain or loss arising ontranslation of non-monetary items measured at fair value is treated inline with the recognition of the gain or loss on the change in fair valueof the item i.e. translation differences on items whose fair value gainor loss is recognized in OCI or profit or loss are also recognized in OCIor profit or loss, respectively.

Foreign operationsThe assets and liabilities of foreign operations, including goodwilland fair value adjustments arising on acquisition, are translated intoEuros at the exchange rate at the reporting date. The income andexpenses of foreign operations are translated into Euros at theexchange rates at the dates of the transactions (or at an average rateif this is not an unreasonable approximation).

Foreign currency differences arising thereon are recognized, in othercomprehensive income, in the foreign currency translation reserve.

When a foreign operation is disposed of, either in part or in full, theassociated cumulative amount in the foreign currency translationreserve is transferred to profit or loss as an adjustment to the profit orloss on disposal.

Foreign exchange gains and losses arising on a monetary itemreceivable from or payable to a foreign operation, the settlement ofwhich is neither planned nor likely in the foreseeable future, areconsidered to form part of the net investment in the foreign operationand are recognized in other comprehensive income in the foreigncurrency translation reserve.

2.4 Revenue from contracts with customers

Products soldRevenue from the sale of products is recognized at an amount thatreflects the consideration to which The Group expects to be entitled inexchange for transferring goods to customers, net of returns, tradediscounts and volume rebates. The five-step model of IFRS 15 isapplied for revenue arising from contracts with customers. Revenue isrecognized when both parties have approved the contract, the Groupcan identify each party's rights regarding the goods or services to betransferred, the Group can identify the payment terms for the goods orservices to be transferred, the contract has commercial substance andit is probable that the Group will collect the consideration to which itwill be entitled in exchange for the goods or services that will betransferred to the customer.

The Group has two main revenue streams: (1) Manufacturing of goodsfor retailer brands and (2) Filling of beverages for contractmanufacturing customers.

The performance obligation identified in retailer brands contracts isthe delivery of the finished product at a specified location (e.g.distribution center or warehouse). This performance obligation(delivery of finished goods) is generally met when the goods aredelivered at the customer. At this point in time control is transferredand the customer has:• legal title to the asset;• physical possession of the asset;• significant rights and rewards of ownership of the asset;• has accepted the asset.

This is also the moment revenue is recognized.

The performance obligation identified in contract manufacturingcontracts is the filling of beverages. This performance obligation issatisfied directly after production or at delivery, depending on what isagreed in the contract. This is also the moment the service iscompleted, control is transferred and revenue is recognized.

For both performance obligations the transaction price is allocated toindividual goods. Other performance obligations identified are notmaterial.



Contract manufacturingContract manufacturing consists of the provision of manufacturingservices and sale of the resultant product. The nature and the riskprofile of the contract with the customer are key in determiningwhether the Group is providing a manufacturing service or is selling aproduct. The revenue is recognized solely for the activities,ingredients and materials for which the Group is the principal and hasthe control.

Considerations in measurement of revenue from contracts withcustomersThe Group considers whether there are other promises in the contractthat are separate performance obligations to which a portion of thetransaction price needs to be allocated. In determining thetransaction price for products sold and contract manufacturing, theGroup considers the effects of variable consideration, the existence ofsignificant financing components, noncash consideration, andconsideration payable to the customer. In general, aforementioned isnot applicable.

The Group receives short-term advances from its customers. Using thepractical expedient in IFRS 15, the Group does not adjust thepromised amount of consideration for the effects of a significantfinancing component if it expects, at contract inception, that theperiod between the transfer of the promised good to the customerand when the customer pays for that good will be one year or less.

2.5 Segment reportingThe Group's management defines the operating segments Europe andNorth America in the context of IFRS 8. Because of the high level ofcentralization and integration within Europe, the Group considersEurope as one segment. The Group's operating segments - Europe andNorth America - engage in business activities from which they earnrevenues and incur expenses. The operating results are regularlyreviewed by the Management Board, being the Chief OperatingDecision Maker, for decisions about resource allocation and to assesssegment performance.

The core functions for Europe are performed at the headquarters inRotterdam and the Group applies the Pan European approach to itsEurope operations. Europe is centrally organized to maximizeoperational efficiencies, synergies and funding through itsheadquarters in Rotterdam.

The central activities include decisions related to allocating resources,(central) sales, operations and footprint, financing of the Group,procurement, major investments and acquisitions, human resources,treasury, reporting and ICT. In order to use its European footprint forreduction of production and transportation costs, and to be close tolocal customers, the segment Europe has eight regionally- focusedbusiness units, which focus on (local) sales and production.

The core functions for North America are performed separately fromthe Europe operations. North America is centrally organized, with the

headquarter in Tampa, Florida, United States. The focus is on (local)sales and production.

The segments’ performance is evaluated against several measures, ofwhich operating income is the most important. Intersegment sales areexecuted under normal commercial terms and conditions that wouldalso be available to unrelated third parties. Net sales are attributed togeographic regions based on the location of stores.

The segment reporting is disclosed in note 4.1 and the entity-widedisclosures have been included in note 4.1, 4.2, 5.1 and 5.2.

2.6 Government grantsGovernment grants are recognized at their fair value when it isreasonably assured that the Group will comply with the conditionsattached to them and that the grants will be received. Governmentgrants relating to property, plant and equipment are deducted fromthe carrying amount of the asset. Government grants relating toperiod costs are deferred and recognized in the income statementover the period necessary to match them with the costs they areintended to compensate.

2.7 Finance income and expenseFinance income comprises interest income on bank deposits and fairvalue gains on interest hedging instruments that are recognized inprofit or loss. Interest income is recognized in profit or loss as itaccrues, using the effective interest method. Finance expensecomprises interest expense on borrowings including derivativefinancial instruments, the unwinding of discount on provisions andfair value losses on interest hedging instruments that are recognizedin profit or loss.

2.8 Income taxIncome tax expense comprises current and deferred tax. Income taxexpense is recognized in profit or loss except to the extent that itrelates to items recognized in equity or other comprehensive incomein which case the income tax expense is also recognized in equity orother comprehensive income.

Current tax is the income tax expected to be payable on the taxableprofit for year, using tax rates enacted or substantively enacted at thereporting date, together with any adjustment to tax payable in respectof previous years.

Deferred tax is recognized using the balance sheet method, providingfor temporary differences between the carrying amounts of assets andliabilities for financial reporting purposes and the amounts used fortaxation purposes. Deferred tax liabilities are recognized for alltaxable temporary differences, except:• When the deferred tax liability arises from the initial recognition

of goodwill or an asset or liability in a transaction that is not abusiness combination and, at the time of the transaction, affectsneither the accounting profit nor taxable profit or loss

• In respect of taxable temporary differences associated withinvestments in subsidiaries, associates and interests in joint



ventures, when the timing of the reversal of the temporarydifferences can be controlled and it is probable that thetemporary differences will not reverse in the foreseeable future

Deferred tax is measured at the tax rates that are expected to beapplied to temporary differences in the reporting period they reverse,based on the laws that have been enacted or substantively enacted bythe 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 whichintend to settle current tax liabilities and assets on a net basis orthe tax assets and liabilities of which will be realizedsimultaneously

A deferred tax asset is recognized to the extent that it is probable thatfuture taxable profits will be available against which the temporarydifference can be utilized. Deferred tax assets are reviewed at eachreporting date and are reduced to the extent that it is no longerprobable that the related tax benefit will be realized.

2.9 Financial instrumentsA financial instrument is any contract that gives rise to a financialasset of one entity and a financial liability or equity instrument ofanother entity. IFRS 9 is adapted in the following accounting policies.Also refer to 2.20 new standards and interpretations.

Financial assetsFinancial assets comprise non-current financial assets, trade andother receivables and cash and cash equivalents. Financial assets areclassified, at initial recognition, as subsequently measured atamortised cost, fair value through other comprehensive income (OCI),and fair value through profit or loss.

The classification of financial assets at initial recognition depends onthe financial asset’s contractual cash flow characteristics and theGroup’s business model for managing them. With the exception oftrade receivables that do not contain a significant financingcomponent or for which the Group has applied the practicalexpedient, the Group initially measures a financial asset at its fairvalue plus, in the case of a financial asset not at fair value throughprofit or loss, transaction costs. Trade receivables that do not containa significant financing component or for which the Group has appliedthe practical expedient are measured at the transaction pricedetermined under IFRS 15. Refer to the accounting policies in sectionRevenue from contracts with customers.

In order for a financial asset to be classified and measured atamortised cost or fair value through OCI, it needs to give rise to cashflows that are ‘solely payments of principal and interest (SPPI)’ on theprincipal amount outstanding. This assessment is referred to as theSPPI test and is performed at an instrument level.

The Group’s business model for managing financial assets refers tohow it manages its financial assets in order to generate cash flows.The business model determines whether cash flows will result fromcollecting contractual cash flows, selling the financial assets, or both.

For purposes of subsequent measurement, financial assets areclassified in four categories:1. Financial assets at amortised cost (debt instruments)2. Financial assets at fair value through OCI with recycling of

cumulative gains and losses (debt instruments)3. Financial assets designated at fair value through OCI with no

recycling of cumulative gains and losses upon derecognition(equity instruments)

4. Financial assets at fair value through profit or loss

Financial assets at amortised costThe first category is the most relevant to the Group. The Group’sfinancial assets at amortised cost includes non-current financialassets and trade receivables. The Group measures financial assets atamortised cost if both of the following conditions are met:• The financial asset is held within a business model with the

objective to hold financial assets in order to collect contractualcash flows;

• The contractual terms of the financial asset give rise on specifieddates to cash flows that are solely payments of principal andinterest on the principal amount outstanding

Financial assets at amortised cost are subsequently measured usingthe effective interest (EIR) method and are subject to impairment.Gains and losses are recognised in profit or loss when the asset isderecognised, modified or impaired.

Financial assets at fair value through profit or lossFinancial assets at fair value through profit or loss include financialassets held for trading, financial assets designated upon initialrecognition at fair value through profit or loss, or financial assetsmandatorily required to be measured at fair value. Financial assetsare classified as held for trading if they are acquired for the purpose ofselling or repurchasing in the near term. Derivatives, includingseparated embedded derivatives, are also classified as held fortrading unless they are designated as effective hedging instruments.Financial assets with cash flows that are not solely payments ofprincipal and interest are classified and measured at fair valuethrough profit or loss, irrespective of the business model.Notwithstanding the criteria for debt instruments to be classified atamortised cost, as described above, debt instruments may bedesignated at fair value through profit or loss on initial recognition ifdoing so eliminates, or significantly reduces, an accountingmismatch.

Financial assets at fair value through profit or loss are carried in thestatement of financial position at fair value with net changes in fairvalue recognised in the statement of profit or loss.



DerecognitionA financial asset is primarily derecognised when:• The rights to receive cash flows from the asset have expired ; or• The Group has transferred its rights to receive cash flows from the

asset or has assumed an obligation to pay the received cashflows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Group has transferredsubstantially all the risks and rewards of the asset, or (b) theGroup has neither transferred nor retained substantially all therisks and rewards of the asset, but has transferred control of theasset

When the Group has transferred its rights to receive cash flows froman asset or has entered into a pass-through arrangement, it evaluatesif, and to what extent, it has retained the risks and rewards ofownership. When it has neither transferred nor retained substantiallyall of the risks and rewards of the asset, nor transferred control of theasset, the Group continues to recognise the transferred asset to theextent of its continuing involvement. In that case, the Group alsorecognises an associated liability. The transferred asset and theassociated liability are measured on a basis that reflects the rightsand obligations that the Group has retained.

Impairment of financial assetsThe Group recognises an allowance for expected credit losses (ECLs)for all debt instruments not held at fair value through profit or loss.ECLs are based on the difference between the contractual cash flowsdue in accordance with the contract and all the cash flows that theGroup expects to receive, discounted at an approximation of theoriginal effective interest rate. The expected cash flows will includecash flows from the sale of collateral held or other creditenhancements that are integral to the contractual terms.

ECLs are recognised in two stages. For credit exposures for whichthere has not been a significant increase in credit risk since initialrecognition, ECLs are provided for credit losses that result fromdefault events that are possible within the next 12-months (a 12-month ECL). For those credit exposures for which there has been asignificant increase in credit risk since initial recognition, a lossallowance is required for credit losses expected over the remaininglife of the exposure, irrespective of the timing of the default (a lifetimeECL).

For trade receivables and contract assets, the Group applies asimplified approach in calculating ECLs. Therefore, the Group doesnot track changes in credit risk, but instead recognises a lossallowance based on lifetime ECLs at each reporting date. The Grouphas established a provision matrix that is based on its historical creditloss experience, adjusted for forward-looking factors specific to thedebtors and the economic environment.

Financial liabilitiesInitial recognition and measurementThe Group’s financial liabilities include trade and other payables,loans and borrowings including bank overdrafts, and derivative

financial instruments. Financial liabilities are classified, at initialrecognition, as financial liabilities at fair value through profit or loss,loans and borrowings, payables, or as derivatives designated ashedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognised initially at fair value and, in thecase of loans and borrowings and payables, net of directlyattributable transaction costs. The measurement of financial liabilitiesdepends on their classification, as described below.

Financial liabilities at fair value through profit or lossFinancial liabilities at fair value through profit or loss include financialliabilities held for trading and financial liabilities designated uponinitial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they areincurred for the purpose of repurchasing in the near term. Thiscategory also includes derivative financial instruments entered into bythe Group that are not designated as hedging instruments in hedgerelationships as defined by IFRS 9. Separated embedded derivativesare also classified as held for trading unless they are designated aseffective hedging instruments. Gains or losses on liabilities held fortrading are recognised in the statement of profit or loss.

Financial liabilities designated upon initial recognition at fair valuethrough profit or loss are designated at the initial date of recognition,and only if the criteria in IFRS 9 are satisfied. The Group has notdesignated any financial liability as at fair value through profit or loss.

Loans and borrowingsThis is the category most relevant to the Group and applies to interest-bearing loans and borrowings. After initial recognition, interest-bearing loans and borrowings are subsequently measured atamortised cost using the EIR method. Gains and losses are recognisedin profit or loss when the liabilities are derecognised as well asthrough the EIR amortisation process.

Amortised cost is calculated by taking into account any discount orpremium on acquisition and fees or costs that are an integral part ofthe EIR. The EIR amortisation is included as finance costs in thestatement of profit or loss.

DerecognitionA financial liability is derecognised when the obligation under theliability is discharged or cancelled or expires. When an existingfinancial liability is replaced by another from the same lender onsubstantially different terms, or the terms of an existing liability aresubstantially modified, such an exchange or modification is treated asthe derecognition of the original liability and the recognition of a newliability. The difference in the respective carrying amounts isrecognised in the statement of profit or loss.

Offsetting financial instrumentsFinancial assets and liabilities are offset and the net amount reportedin the consolidated balance sheet when there is a legally enforceable



right to offset the recognized amounts and there is an intention tosettle on a net basis or realize the asset and settle the liabilitysimultaneously.

Derivative financial instruments and hedging accountingThe Group holds derivative financial instruments (interest rate swaps,commodity hedges and forward exchange contracts) to hedge itsforeign currency, commodity and interest rate risk exposures. TheGroup seeks to apply hedge accounting in order to minimize theeffects of fluctuations of foreign currencies and interest rates in theprofit or loss.

Derivative financial instruments are initially recognized at fair valueon the date a derivative contract is entered into and are subsequentlyre-measured at fair value. The method of recognizing the resultinggain or loss depends on whether the derivative financial instrument isdesignated as a hedging instrument, and if so, the nature of the itembeing hedged. The Group applies cash flow hedge accounting.

At the inception of a hedge relationship, the Group formallydesignates and documents the hedge relationship to which it wishesto apply hedge accounting and the risk management objective andstartegy for undertaking the hedge.

The effective portion of changes in the fair value of derivative financialinstruments that are designated and qualify as cash flow hedges isrecognized in other comprehensive income. The gain or loss relatingto the ineffective portion is recognized in the income statementimmediately.

When the hedged item is a non-financial asset, the amountrecognized in other comprehensive income is transferred to thecarrying amount of the asset when it is recognized. In other cases theamount recognized in other comprehensive income is transferred tothe same line of profit or loss in the same period that the hedged itemaffects profit or loss. Where the financial instruments are held tohedge 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.

If the hedging instrument no longer meets the criteria for hedgeaccounting, expires or is sold, terminated or exercised, then hedgeaccounting is discontinued. The cumulative unrealized gain or losspreviously recognized in other comprehensive income and presentedin the hedging reserve in equity, is recognized in profit or lossimmediately, or when a hedging instrument is terminated. If thehedged transaction is still expected to occur, the cumulative gain orloss at that point remains in other comprehensive income and isrecognized in accordance with the above-mentioned policy when thetransaction occurs.

The fair values of various derivative instruments used for hedgingpurposes are disclosed in note 3.3. Movements of the hedging

reserve in other comprehensive income are shown in note 5.8. The fullfair value of a hedging derivative is classified as a non-current asset orliability when the remaining maturity of the hedged item is more than12 months and as a current asset or liability when the remainingmaturity of the hedged item is less than 12 months.

Trade and other payablesTrade and other payables are obligations to pay for goods or servicesthat have been acquired in the ordinary course of business fromsuppliers.

Accounts payable are classified as current liabilities if payment is duewithin one year or less (or in the normal operating cycle of thebusiness if longer). If not, they are presented as non-currentliabilities.

Trade and other payables are recognized initially at fair value andsubsequently measured at amortized cost using the effective interestmethod.

2.10 Property, plant and equipment

Recognition and measurementItems of property, plant and equipment are measured at cost lessaccumulated depreciation and accumulated impairment losses. Costincludes expenditure that is directly attributable to the acquisition ofthe asset. The cost of self-constructed assets includes the cost ofmaterials and direct labor, any other costs directly attributable tobringing the assets to a condition suitable for their intended use, andthe costs of dismantling and removing the items and restoring of thesite on which they are located. Borrowing costs that are directlyattributable to the acquisition or construction of a qualifying asset areallocated to the assets when incurred.

When elements of an item of property, plant and equipment havedifferent useful lives, they are accounted for as separate items (majorcomponents) of property, plant and equipment.

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

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



DepreciationDepreciation is recognized in profit or loss on a straight-line basisover 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 areas follows:• Buildings : 25 years• Machinery and equipment : 5-10 years• Other fixed assets : 3-10 years

Depreciation methods, useful lives and residual values are reviewedat each reporting date. An asset’s carrying amount is written downimmediately to its recoverable amount if the asset’s carrying amountis greater than its estimated recoverable amount.

2.11 Intangible assets

Business combinations and goodwillBusiness combinations are accounted for using the acquisitionmethod. The cost of an acquisition is measured as the aggregate ofthe consideration transferred, which is measured at acquisition datefair value, and the amount of any non-controlling interests in theacquiree. For each business combination, the Group elects whether tomeasure the non-controlling interests in the acquiree at fair value orat the proportionate share of the acquiree’s identifiable net assets.Acquisition-related costs are expensed as incurred and included inadministrative expenses. When the Group acquires a business, itassesses the financial assets and liabilities assumed for appropriateclassification and designation in accordance with the contractualterms, economic circumstances and pertinent conditions as at theacquisition date. Any contingent consideration to be transferred bythe acquirer will be recognised at fair value at the acquisition date.

Goodwill is initially measured at cost (being the excess of theaggregate of the consideration transferred and the amount recognisedfor non-controlling interests and any previous interest held over thenet identifiable assets acquired and liabilities assumed). If the fairvalue of the net assets acquired is in excess of the aggregateconsideration transferred, the Group re-assesses whether it hascorrectly identified all of the assets acquired and all of the liabilitiesassumed and reviews the procedures used to measure the amounts tobe recognised at the acquisition date. If the reassessment still resultsin an excess of the fair value of net assets acquired over the aggregateconsideration transferred, then the gain is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less anyaccumulated impairment losses. For the purpose of impairmenttesting, goodwill acquired in a business combination is, from theacquisition date, allocated to each of the Group’s cash-generatingunits that are expected to benefit from the combination, irrespectiveof whether other assets or liabilities of the acquiree are assigned tothose units.

Where goodwill has been allocated to a cash-generating unit (CGU)and part of the operation within that unit is disposed of, the goodwillassociated with the disposed operation is included in the carryingamount of the operation when determining the gain or loss ondisposal. Goodwill disposed in these circumstances is measuredbased on the relative values of the disposed operation and theportion of the cash-generating unit retained.

The Group assesses, at each reporting date, whether there is anindication that an asset may be impaired. If any indication exists, orwhen annual impairment testing for an asset is required, the Groupestimates the asset’s recoverable amount. An asset’s recoverableamount is the higher of an asset’s or CGU’s fair value less costs ofdisposal and its value in use. The recoverable amount is determinedfor an individual asset, unless the asset does not generate cashinflows that are largely independent of those from other assets orgroups of assets. When the carrying amount of an asset or CGUexceeds its recoverable amount, the asset is considered impaired andis written down to its recoverable amount.

Impairment losses of continuing operations are recognised in theincome statement in expense categories consistent with the functionof the impaired asset, except for properties previously revalued withthe revaluation taken to OCI. For such properties, the impairment isrecognised in OCI up to the amount of any previous revaluation.

Other intangiblesSoftware acquired by the Group is measured at cost less accumulatedamortization and accumulated impairment losses. Subsequentexpenditure is capitalized only to the extent that it increases thefuture economic benefits embodied in the specific asset to which itrelates. All other expenditure, including expenditure on internallygenerated goodwill and brands, is recognized in profit or loss asincurred. Amortization is recognized in the income statement on astraight-line basis over the estimated useful lives, generally 3 years.

Brands acquired, separately or as part of a business combination, arecapitalized if they meet the definition of an intangible asset and therecognition criteria are satisfied. Brands acquired as part of abusiness combination are valued at fair value based on the relief fromroyalty method. Brands are amortized on an individual basis over theestimated useful life of the brand.

Customer and sales channel-related and contract-based intangiblesare capitalized if they meet the definition of an intangible asset andthe recognition criteria are satisfied. The relationship between brandsand customer and sales channel-related intangibles is carefullyconsidered so that brands and customer and sales channel-relatedintangibles are not both recognized on the basis of the same cashflows. Customer and sales channel-related and contract-basedintangibles acquired as part of a business combination are valued atfair value and amortized over the period of the contractualarrangements or the remaining useful life of the customerrelationships.



2.12 Leased assetsThe Group leases certain property, plant and equipment. Leases inwhich a significant portion of the risks and rewards of ownership areretained by the lessor are classified as operating leases. Paymentsmade under operating leases (net of any incentives received from thelessor) are charged to the income statement on a straight-line basisover the period of the lease. Lease incentives received are recognized,as an integral part of the total lease expense, over the term of thelease.

Leases of property, plant and equipment where the Group hassubstantially all the risks and rewards of ownership are classified asfinance leases. The main estimates and assumptions relate toresidual values, applicable interest rates, economic lifetime of theassets and determination of the minimum lease payments. Financeleases are capitalized at commencement of the lease at the lower ofthe fair value of the leased property and the present value of theminimum lease payments. The property, plant and equipmentacquired under finance leases is depreciated over the shorter of theuseful life of the asset and the lease term. Minimum lease paymentsmade under finance leases are apportioned between the financeexpense and the reduction of the outstanding liability. The financeexpense is allocated to each period of the lease term so as to producea constant periodic rate of interest on the remaining balance of theliability. Contingent lease payments are expensed as occurred. Thecorresponding rental obligations, net of finance charges, are includedin loans and borrowings.

Refer to the disclosure on IFRS 16 in note 2.20.

2.13 Impairment of non-financial assetsThe carrying amounts of non-financial assets, other than inventoriesand deferred tax assets are reviewed at each reporting date todetermine whether there is any indication of impairment. If any suchindication exists, then the asset’s recoverable amount is estimated.For goodwill and intangible assets that have indefinite lives or that arenot yet available for use, the recoverable amount is estimatedannually.

The recoverable amount of an asset or cash-generating unit is thegreater of its value in use and its fair value less costs of disposal. Inassessing value in use, the estimated future cash flows arediscounted to their present value using a pre-tax discount rate thatreflects current market assessments of the time value of money andthe risks specific to the asset. For the purpose of impairment testing,assets are grouped at the lowest levels for which there are separatelyidentifiable cash inflows from continuing use that are largelyindependent of the cash inflows of other assets or groups of assets(the ‘cash-generating units’).

For the purpose of impairment testing, the goodwill acquired in abusiness combination is allocated to cash-generating units that areexpected to benefit from the synergies of the combination.

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

An impairment loss in respect of goodwill is not reversed. In respect ofother assets, impairment losses recognized in prior periods areassessed at each reporting date for indications that the loss hasdecreased or no longer exists. An impairment loss is reversed if therehas been a change in the estimates used to determine the recoverableamount.

An impairment loss is reversed only to the extent that the asset’scarrying amount does not exceed the carrying amount that would havebeen determined, net of depreciation or amortization, if noimpairment loss had been recognized.

2.14 InventoriesInventories are measured by cost or net realizable value, dependingon which is lower. The cost of inventories is based on the first-in first-out method, and includes expenditure incurred in acquiring theinventories, production and conversion costs and other costs incurredin bringing them to their existing location and condition. The cost offinished goods and work in progress includes an appropriate share ofproduction overheads based on normal operating capacity. Netrealizable value is the estimated selling price in the ordinary course ofbusiness, less the estimated costs of completion and sellingexpenses.

2.15 Assets classified as held for sale and discontinued operationsThe Group classifies non-current assets (or disposal groups) as heldfor sale when the carrying amounts will be recovered principallythrough a sale transaction and a sale is highly probable. Immediatelybefore classification as held for sale, the assets are re-measured inaccordance with the accounting policies of the Group. Thereafter theassets are generally measured at the lower of their carrying amountand fair value less costs to sell. Impairment losses on initialclassification as held for sale and subsequent gains or losses on re-measurement are recognized in profit or loss. Gains are notrecognized in excess of any cumulative impairment loss.

Property, plant and equipment and intangible assets are notdepreciated or amortized once classified as held for sale.

Assets and liabilities classified as held for sale are presentedseparately in the statement of financial position.

A disposal group qualifies as discontinued operation if it is acomponent of an entity that either has been disposed of, or isclassified as held for sale, and:• Represents a separate major line of business or geographical

area of operations



• Is part of a single coordinated plan to dispose of a separatemajor line of business or geographical area of operations; or

• Is a subsidiary acquired exclusively with a view to resale

Discontinued operations are excluded from the results of continuingoperations and are presented as a single amount as profit or loss aftertax from discontinued operations in the statement of profit or loss.

2.16 Issued share capitalIssued share capital is classified as equity. Incremental costs directlyattributable to the issue of ordinary shares are recognized as adeduction from equity, net of any tax effects.

2.17 Non-controlling interestThe Group recognizes any non-controlling interest in the acquiree onan acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognized amountsof acquiree’s identifiable net assets.

Subsequently profits are allocated to non-controlling interest basedon their net effective interest in the subsidiary.

2.18 Employee benefitsThe Group operates various post-employment schemes, includingboth defined benefit and defined contribution pension plans.

Defined contribution plansA defined contribution plan is a pension plan under which the Grouppays fixed contributions into a separate entity. The Group has no legalor constructive obligations to pay further contributions if the funddoes not hold sufficient assets to pay all employees the benefitsrelating to employee service in the current and prior periods.

For defined contribution plans, the Group pays contributions topublicly or privately administered pension insurance plans on amandatory, contractual or voluntary basis. The Group has no furtherpayment obligations once the contributions have been paid.

The contributions are recognized as employee benefit expense whenthey are due. Prepaid contributions are recognized as an asset to theextent that a cash refund or a reduction in the future payments isavailable.

Defined benefit plansA defined benefit plan is a pension plan that is not a definedcontribution plan. Typically defined benefit plans define an amount ofpension benefit that an employee will receive on retirement, usuallydependent on one or more factors such as age, years of service andcompensation.

The liability recognized in the balance sheet in respect of definedbenefit pension plans is the present value of the defined benefitobligation at the end of the reporting period less the fair value of planassets. The defined benefit obligation is calculated annually byindependent actuaries using the projected unit credit method.

The present value of the defined benefit obligation is determined bydiscounting the estimated future cash outflows using interest rates ofhigh-quality corporate bonds that are denominated in the currency inwhich the benefits will be paid, and that have terms to maturityapproximating to the terms of the related pension obligation.

In countries where there is no deep market in such bonds, the marketrates on government bonds are used.

For pension plans whereby a limit on the employer’s futurecontribution to the pension plans exist, the Group will reflect this limitin its calculations. For these plans the Group will apply a liability capin case the present value of the future service cost exceeds thepresent value of the future maximum employer contributions and thedefined benefit obligation exceeds the asset value. The liability capdoes not exceed the difference between the defined benefit obligationand the asset value.

Actuarial gains and losses arising from experience adjustments andchanges in actuarial assumptions are charged or credited in othercomprehensive income in the period in which they arise.

Past-service costs are recognized immediately in income.

Multi-employer plansThe Group also facilitates multi-employer plans, in which variousemployers contribute to one central pension union.

In accordance with IAS 19R, as the pension union managing the planis not able to provide the Group with sufficient information to enablethe Group to account for the plan as a defined benefit plan, the Groupaccounts for its multi-employer defined benefit plan as if it were adefined contribution plan.

Other long term employee benefitsThe net obligation in respect of long term employee benefits otherthan pension plans is the amount of future benefit that employeeshave earned in return for their service in the current and prior years;that benefit is discounted to determine its present value, and the fairvalue of any related assets is deducted. The discount rate is the yieldat the reporting date on AA credit-rated bonds that have maturitydates 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 periodin which they arise.

Termination benefitsTermination benefits are employee benefits provided in exchange forthe termination of an employee’s employment as a result of either anentity’s decision to terminate an employee’s employment before thenormal retirement date; or an employee’s decision to accept an offerof benefits in exchange for the termination of employment. A liabilityis recognized at the earlier of the following dates: when the entity canno longer withdraw the offer of those benefits; and when the entity



recognizes costs for a restructuring and involves the payment oftermination benefits.

Short term benefitsShort term employee benefit obligations are measured on anundiscounted basis and are expensed as the related service isprovided. A liability is recognized for the amount expected to be paidunder short term cash bonus or profit-sharing plans if the Group has alegal or constructive obligation to pay this amount as a result of pastservice provided by the employee and the obligation can be reliablyestimated.

2.19 Other provisionsA provision is recognized if, as a result of a past event, the Group hasa legal or constructive obligation that can be reliably estimated and itis probable that an outflow of economic benefits will be required tosettle the obligation. Provisions are determined by discounting theexpected future cash flows at a pre-tax rate that reflects currentmarket assessments of the time value of money and the risks specificto the liability

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

2.20 New standards and interpretations

New standards and amendments effective as of 1 January 2018The following new standards and amendments became effective as of1 January 2018:• IFRS 9 Financial Instruments (issued in 2014)• IFRS 15 Revenue from Contracts with Customers, including

amendments to IFRS 15: Effective date of IFRS 15 andClarifications to IFRS 15 Revenue from Contracts with Customers

• Amendments to IFRS 2 Share-based Payment - Classification andMeasurement of Share-based Payment Transactions

• Amendments to IFRS 4 Insurance Contracts - Applying IFRS 9Financial instruments with IFRS 4 Insurance Contracts

• Amendments to IAS 40 Investment Property - Transfers ofInvestment Property

• IFRIC 22 Foreign Currency Transactions and AdvanceConsideration

• Annual Improvements Cycle - 2014-2016

These standards and amendments do not have a material impact onthe Group’s consolidated financial statements.

IFRS 9IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments:Recognition and Measurement for annual periods beginning on orafter 1 January 2018, bringing together all three aspects of theaccounting for financial instruments: classification and measurement;impairment; and hedge accounting. During 2018, the Group has

performed an impact assessment of all three aforementioned aspectsof IFRS 9. The Group applied IFRS 9 retrospectively, with an initialapplication date of 1 January 2018. Differences arising from theadoption of IFRS 9 would have been recognised directly in retainedearnings and other components of equity. However, the impact of IFRS9 is close to nill and therefore no adjustments have been recorded.

The classification and measurement requirements of IFRS 9 did nothave a significant impact to the Group. Under IFRS 9, debtinstruments are subsequently measured at fair value through profit orloss, amortised cost, or fair value through OCI. The classification isbased on two criteria: the Group’s business model for managing theassets; and whether the instruments’ contractual cash flowsrepresent ‘solely payments of principal and interest’ on the principalamount outstanding. The assessment of the Group’s business modelwas made as of the date of initial application, 1 January 2018. Theassessment of whether contractual cash flows on debt instrumentsare solely comprised of principal and interest was made based on thefacts and circumstances as at the initial recognition of the assets.Trade and other receivables and other non-current financial assetsclassified as other investments at 31 December 2017 are held tocollect contractual cash flows and give rise to cash flows representingsolely payments of principal and interest. These are classified andmeasured as Debt instruments at amortised cost beginning 1 January2018. Furthermore, the group continues to measure derivativefinancial assets at fair value with changes in fair value recognized inprofit and loss as they arise and applies hedge accounting. Finally,the Group has not designated any financial assets and liabilities as atfair value through profit or loss. There are no changes in classificationand measurement for the Group’s financial liabilities.

The adoption of IFRS 9 has changed the Group’s accounting forimpairment losses for financial assets by replacing IAS 39’s incurredloss approach with a forward-looking expected credit loss (ECL)approach. IFRS 9 requires the Group to recognise an allowance forECLs for all debt instruments not held at fair value through profit orloss and contract assets. The impact on the allowance for doubtfuldebts is close to nill since the credit risk is limited given thecustomers of the Group. The Group has analyzed the past threefinancial years and concluded that the incurred loss due to the creditrisk is close to nill. In addition, the customer base of Refresco isstable and no credit risk is expected for the coming years. Therefore,upon adoption of IFRS 9 the Group did not recognize additionalimpairment on the Group’s Trade receivables.

At the date of initial application, all of the Group’s existing hedgingrelationships were eligible to be treated as continuing hedgingrelationships.

IFRS 15IFRS 15 supersedes IAS 11 Construction Contracts, IAS 18 Revenueand related Interpretations and it applies, with limited exceptions, toall revenue arising from contracts with customers. IFRS 15 establishesa five-step model to account for revenue arising from contracts withcustomers and requires that revenue be recognised at an amount that



reflects the consideration to which an entity expects to be entitled inexchange for transferring goods or services to a customer. IFRS 15requires the Group to exercise judgement, taking into considerationall of the relevant facts and circumstances when applying each step ofthe model to contracts with their customers. The standard alsospecifies the accounting for the incremental costs of obtaining acontract and the costs directly related to fulfilling a contract.

The Group adopted IFRS 15 using the modified retrospective methodof adoption with the date of initial application of 1 January 2018.Under this method, the standard can be applied either to all contractsat the date of initial application or only to contracts that are notcompleted at this date. The Group elected to apply the standard to allcontracts as at 1 January 2018.

In the context of IFRS 15, the Group recognized revenue to depict thetransfer of promised goods or services to customers in an amount thatreflects the consideration to which the Group expects to be entitled inexchange for those goods or services. The Group has reviewedcustomer contracts, identified the separate performance obligations,determined the transaction price, allocated the transaction price anddetermined when a performance obligation has been satisfied.Contracts were reviewed for presence of variable considerations suchas discounts, rebates, refunds, credits, price concessions, incentives,performance bonuses, penalties and/or any other compensationsreceived from clients. Based on the analysis, the Group concludedthat this standard has no significant impact on the financialstatements.

Given the Group is using the modified retrospective method, thecomparative information was not restated and continues to bereported under IAS 11, IAS 18 and related Interpretations.

New standards and amendments not yet effectiveBelow the standards and interpretations that are issued, but not yeteffective as of 31 December 2018. The Group intends to adopt thesestandards and interpretations, if applicable, when they becomeeffective:• IFRS 16 Leases, effective 1 January 2019• Amendments to IFRS 9 Financial Instruments - Prepayment

Features with Negative Compensation, effective 1 January 2019• Amendments to IAS 28 Investments in Associates and Joint

Ventures - Long-term Interests on Associates and Joint Ventures,effective 1 January 2019

• Amendments to IAS 19 Employee Benefits - Plan Amendment,Curtailment or Settlement, effective 1 January 2019

• IFRIC 23 Uncertainty over Income Tax Treatments, effective1 January 2019

• Annual Improvements Cycle – 2015-2017, effective 1 January2019

• IFRS 17 Insurance Contracts, effective 1 January 2021

The Group is reviewing the impact of these standards andamendments on the Group’s consolidated financial statements.

IFRS 16IFRS 16 was issued in January 2016 and it replaces IAS 17 Leases,IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15Operating Leases-Incentives and SIC-27 Evaluating the Substance ofTransactions Involving the Legal Form of a Lease. IFRS 16 sets out theprinciples for the recognition, measurement, presentation anddisclosure of leases and requires lessees to account for all leasesunder a single on-balance sheet model similar to the accounting forfinance leases under IAS 17. The standard includes a recognitionexemption for lessees – leases of ’low-value’ assets (e.g., personalcomputers) and short-term leases (i.e., leases with a lease term of 12months or less). At the commencement date of a lease, a lessee willrecognise a liability to make lease payments (i.e., the lease liability)and an asset representing the right to use the underlying asset duringthe lease term (i.e., the right-of-use asset). Lessees will be required toseparately recognise the interest expense on the lease liability andthe depreciation expense on the right-of-use asset.

Lessees will be also required to remeasure the lease liability upon theoccurrence of certain events (e.g., a change in the lease term, achange in future lease payments resulting from a change in an indexor rate used to determine those payments). The lessee will generallyrecognise the amount of the remeasurement of the lease liability asan adjustment to the right-of-use asset.

IFRS 16, which is effective for annual periods beginning on or after1 January 2019, requires lessees to make more extensive disclosuresthan under IAS 17. The Group plans to adopt IFRS 16 using themodified retrospective method. The Group will elect to grandfather theleases that were previously identified as leases applying IAS 17 andIFRIC 4.

The Group will elect to use the exemption proposed by the standardon lease contracts for which the underlying asset is of low value. TheGroup has leases of certain office equipment (i.e., personalcomputers, printing and photocopying machines) that are consideredof low value. In addition, the Group will elect not to use the short termlease exemption and the transition exemption for short term leases.The Group applies the following practical expedients:• not to separate non-lease components from lease components;• to exclude initial direct costs from the measurement of the right-

of-use asset at January 1, 2019;• to rely on a previous assessment of whether leases are onerous

in accordance with IAS 37 Provisions, Contingent Liabilities andContingent Assets immediately before the date of initialapplication as an alternative to performing an impairmentreview; and

• to use hindsight in determining the remaining lease term as perJanuary 1, 2019 if the contract contains options to extend orterminate the lease.

The implementation of the software required to perform the IFRS 16calculations has been completed per the date of publication of thesefinancial statements. The final review of data based on the firstcalculations of the software is ongoing. Due to the adoption of IFRS



16, the Group’s operating profit will improve, while its interestexpense and depreciation will increase. This is due to the change inthe accounting for expenses of leases that were classified asoperating leases under IAS 17. The impact is not expected to have animpact on financing arrangements. The preliminary estimate of theimpact of IFRS 16 on the 2019 numbers is in a range of 340 million(+/-10%) for the right of use asset and lease liability as per January 1,2019. The preliminary estimate of the EBITDA improvement is in arange of 74 million (+/-10%). These estimates are based on thecontract portfolio as per January 1, 2019.

2.21 Use of estimates and judgmentsThe preparation of financial statements in conformity with IFRS asadopted by the European Union requires management to makejudgments, estimates and assumptions that affect the application ofaccounting policies and the reported amounts of assets, liabilities,income and expenses, especially the periodical review of useful livesand residual values of property plant and equipment. Estimates andunderlying assumptions are reviewed on an ongoing basis. Revisionsto accounting estimates are recognized in the period in which theestimates are revised and in any subsequent periods affected.

Estimates and judgments are continually evaluated and are based onhistorical experience and other factors, including expectations offuture events that are believed to be reasonable under thecircumstances.

In the process of applying the Group’s accounting policies,management has not identified significant judgements. The resultingaccounting estimates will, by definition, seldom equal the relatedactual results. The estimates and assumptions that have a significantrisk of causing a material adjustment to the carrying amounts ofassets and liabilities within the next financial year are addressedbelow.

SegmentationThe Group's management defines the operating segments Europe andNorth America in the context of IFRS 8. Because of the high level ofcentralization and integration within Europe, the Group considersEurope as one segment. The core functions for Europe are performedat the headquarters in Rotterdam and the Group applies the PanEuropean approach to its Europe operations. The core functions forNorth America are performed in Tampa (US).

Contract manufacturingContract manufacturing consists of the provision of manufacturingservices and sale of the resultant product. The nature and the riskprofile of the contract with the customer are key in determiningwhether the Group is providing a manufacturing service or is selling aproduct. The revenue is recognized solely for the activities,ingredients and materials for which the Group is the principal.

Estimated goodwill and impairment of goodwillThe group estimates the fair values of assets and liabilities acquiredby acquisitions. This measurement is provisional and can be adjusted

within 12 months after the date of each acquisition. The acquisitionsare recorded in note 6.1.

The Group tests annually whether goodwill has suffered anyimpairment, in accordance with the accounting policy stated in note2.13.

The recoverable amounts of cash-generating units have beendetermined based on value-in-use calculations and are recorded innote 5.2. These calculations require the use of estimates.

Income taxesThe Group is subject to income taxes in numerous jurisdictions.Significant judgment is required in determining the provision forincome taxes. The Group recognizes liabilities for anticipated taxaudit issues based on estimates of whether additional taxes will bedue. Where the final tax outcome of these matters is different from theamounts that were initially recorded, such differences will impact thecurrent and deferred income tax assets and liabilities in the period inwhich such determination is made.

Fair value of derivatives and other financial instrumentsThe fair value of financial instruments that are not traded in an activemarket (for example, over-the-counter derivatives) is determined byusing valuation techniques. The Group uses its judgment to select avariety of methods and make assumptions that are mainly based onmarket conditions existing at the end of each reporting period.Additional information is disclosed in note 2.9.

Pension benefitsThe present value of the pension obligations depends on a number offactors that are determined on an actuarial basis using a number ofassumptions. The assumptions used in determining the net cost(income) for pensions include the discount rate. Any changes in theseassumptions will impact the carrying amount of pension obligations.The Group determines the appropriate discount rate at the end ofeach year. This is the interest rate that should be used to determinethe present value of estimated future cash outflows expected to berequired to settle the pension obligations. In determining theappropriate discount rate, the Group considers the interest rates ofhigh-quality corporate bonds that are denominated in the currency inwhich the benefits will be paid and that have terms to maturityapproximating the terms of the related pension obligation. Other keyassumptions for pension obligations are based in part on currentmarket conditions. Additional information is disclosed in note 5.10.

Information for other areas of estimation and critical judgment used inapplying accounting policies can be found in the following notes:• Note 2.12: Leased assets• Note 3: Financial risk management• Note 5.1: Property plant and equipment• Note 5.2: Intangible assets• Note 5.11: Other provisions


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 valueinterest rate risk, cash flow interest rate risk and price risk). The Group’s overall risk management program focuses on the unpredictability offinancial markets and seeks to minimize potential adverse effects on the Group’s financial performance. The Group uses derivative financialinstruments to hedge certain risk exposures.

The Management 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 andcontrols, and to monitor risks and adherence to limits. All derivative activities for risk management purposes are carried out by specialist teamsthat have appropriate skills, experience and supervision. It is the Group's policy that no trading in derivatives for speculative purposes might beundertaken. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and in the activities of theGroup.

Through its training program and its management standards and procedures, the Group aims to develop a disciplined and constructive controlenvironment in which all employees understand their roles and responsibilities.

3.1.1Credit riskCredit risk represents the risk that counter parties fail to meet their contractual obligations, leading to a financial loss. It arises principally in thereceivables from customers, cash and cash equivalents, derivative financial instruments and deposits with banks and financial institutions. Inorder to reduce the exposure to customer credit risk, the Group carries out ongoing credit evaluations of the financial position of customers, butgenerally does not require collateral. Use is made of a combination of independent ratings and risk controls to assess the credit quality of thecustomer, taking into account its financial position, past experience and other factors. Sales are subject to payment conditions which arecommon practice in each country. The Group evaluates the concentration of risk with respect to trade receivables as low, as its customers arelocated in various countries and operate in largely independent markets.

Credit risk from balances with banks and financial institutions is managed by the Group's treasury departent in accordance with the Group'spolicy. The banks and financial institutions used as counterparty for holding cash and cash equivalents and deposits and in derivativetransactions 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 oflosses arising from credit risk is remote, particularly in the light of the diversification of activities.

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

(x 1 million euro) Carrying amountNote December 31, 2018

Non-current investments 5.3 12.7Trade and other receivables 5.6 548.1Derivative financial instruments (current assets) 5.3 2.7Cash and cash equivalents 5.7 226.2

789.7



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

(x 1 million euro) Carrying amountDecember 31, 2018

Euro-zone countries (EUR) 289.5UK (GBP) 127.4Poland (PLN) 13.7Mexico (MXN) 3.4Canada (CAD) 15.9US (USD) 98.2

548.1

Ageing trade and other receivables and impairment losses:

(x 1 million euro) 2017-2018Gross Impairment

Not past due 462.8 -Past due 0 - 30 days 56.8 -Past due 31 - 60 days 11.6 -Past due more than 60 days 17.7 0.8

548.9 0.8

The movements in the impairment loss in respect of trade and other receivables during the extended financial period as follows:

(x 1 million euro) 2017-2018October 20, 2017 -Impairment loss recognized 0.8Write-off -December 31, 2018 0.8

The Group determines the expected credit 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 further impairment loss has occurred in respect of trade receivables not past due orpast due by up to 60 days.

3.1.2Liquidity 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 managingliquidity risk is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and moreextreme conditions, without incurring unacceptable losses or risking damage to the reputation of the Group. The Group has a clear focus onfinancing long term growth as well as current operations. Strong cost and cash management and controls over working capital and capitalexpenditure 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, ifapplicable, are as shown in the following table. As far as these cash flows depend on future floating interest rates, which were unknown on thebalance sheet date, the cash flows have been estimated on the basis of rates prevailing on the balance sheet date.



December 31, 2018

(x 1 million euro)Carryingamount

Contractualcash flows

6 monthsor less

6-12months

1 – 2years

2 – 3years

3– 4years

4 – 5years

> 5years

Non-derivative financial liabilitiesSyndicated loan 1,981.9 2,482.7 40.1 40.1 80.2 80.2 80.2 80.2 2,081.7High Yield Bonds 445.0 657.4 14.5 14.5 28.9 28.9 28.9 28.9 512.8Shareholder Loan 100.0 173.9 4.0 4.0 8.0 8.0 8.0 8.0 133.9Mortgage 19.3 23.7 1.6 1.6 3.2 3.2 3.2 3.2 7.7Revolving credit facility - 13.2 1.1 1.1 2.1 2.1 2.1 2.1 2.6Capitalized finance costs (39.0) - - - - - - - -Finance lease and other loans 5.9 5.9 0.8 0.7 1.4 1.6 0.6 0.5 0.3Trade and other payables 897.2 897.2 897.2 - - - - - -Current income tax liabilities 26.2 26.2 26.2 - - - - - -Provisions 7.8 7.8 7.8 - - - - - -

3,444.3 4,288.0 993.3 62.0 123.8 124.0 123.0 122.9 2,739.0Derivative financial liabilitiesInterest rate swaps 10.5 24.5 4.3 4.3 7.1 5.1 2.0 1.5 0.2Aluminium swaps 1.9 39.1 18.0 19.3 1.9 - - - -

12.4 63.6 22.3 23.6 9.0 5.1 2.0 1.5 0.2

The Group has an undrawn revolving credit facility (RCF) maturing in 2024 of EUR 200.0 million (EUR 90.0 million was drawn and re-paid duringthe financial period). The contractual cash flows for the revolving credit facility relate to the commitment fee of the revolving credit facility ofEUR 200.0 million. The cash flows for the syndicated loan relate to the repayment of Term loans and Senior Notes, which together with the RCFis reffered to as Senior Facilities Agreement dated 28 March 2018.

3.1.3Market riskMarket risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Marketrisk comprises of three types of risk: foreign currency risk, interest rate risk and price risk.

Foreign 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 itsforeign currency exposure on contracted forecasted purchases. The Group uses currency option contracts and forward exchange contracts tohedge its currency risks, most of which have a maturity date of less than one year from the reporting date. When necessary, foreign currencycontracts 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 anacceptable 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 Group applies cash flow hedge accounting. Theeffectiveness of the hedge relationship is measured based on changes in intrinsic value of options and fair value of forward contracts. Per year-end the cash flow hedge accounting relationships were fully effective. There are no forecasted transactions for which hedge accounting hasbeen applied, but which are no longer expected to occur. The fair value of foreign currency instruments per reporting date is EUR 2.7 milliondebit.

The Group records a hedge reserve of EUR 1.2 million gain net of deferred taxes in equity relating to the effective part of the intrinsic valuechanges of the foreign currency option contracts and the fair value of the forward contracts. During the financial period, no amounts wererecorded in raw material costs due to ineffectiveness.

The amounts deferred in equity at year-end are expected to occur and to affect profit or loss for majority in 2018. All of the resulting fair valueestimates are included in Level 2.

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



(x 1 million euro) 2017-2018

USD USD USD USD USD EUR EUR EUREUR/USD GBP/USD PLN/USD CAD/USD Total USD GBP/EUR PLN/EUR Total EUR

Trade payables 187.2 16.0 0.2 10.1 213.5 14.5 3.1 17.6Estimated forecastpurchases 58.6 67.8 8.4 - 134.8 68.2 14.4 82.6

Gross exposure 245.8 83.8 8.6 10.1 348.3 82.7 17.5 100.2Forward exchangecontracts / Currencyoption contracts

(54.2) (60.3) (6.0) - (120.6) (71.5) (11.4) (82.9)

Net exposure 191.6 23.5 2.6 10.1 227.7 11.2 6.1 17.3

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

The following significant exchange rates were applied during the financial period:

Average Year-endValue of EUR 1 2018 2018USD 1.18 1.14GBP 0.89 0.90PLN 4.26 4.30CAD 1.53 1.56MXN 22.69 22.46

Sensitivity analysisA 10% strengthening or weakening of the EUR against the USD, the GBP against the USD, the GBP against the EUR, the Zloty against the USD,the Zloty against the EUR, the CAD against the USD, the CAD against the EUR, the MXN against the USD and the MXN against the EUR atreporting date would have changed equity and profit or loss by the amounts shown below.

December 31, 2018(x 1 million euro) EUR/USD GBP/USD GBP/EUR

10% strength 10% weak 10% strength 10% weak 10% strength 10% weakProfit/(loss) Profit/(loss) Profit/(loss)

Trade payables 14.9 (18.2) 1.3 (1.5) (1.5) 1.5Foreign currency hedgeinstruments (0.8) 1.0 (1.4) 1.7 1.7 (2.1)

Effect Profit/(Loss) gross oftax 14.1 (17.2) (0.1) 0.2 0.2 (0.6)

OCI debit/(credit) OCI debit/(credit) OCI debit/(credit)Foreign currency hedgeinstruments 2.6 (3.1) 2.6 (3.1) (3.6) 4.4

Effect OCI net of tax 2.6 (3.1) 2.6 (3.1) (3.6) 4.4

December 31, 2018(x 1 million euro) PLN/USD PLN/EUR CAD/USD

10% strength 10% weak 10% strength 10% weak 10% strength 10% weakProfit/(loss) Profit/(loss) Profit/(loss)

Trade payables - - (0.3) 0.3 (0.9) 0.9Foreign currency hedgeinstruments 0.1 (0.1) 0.2 (0.2) - -

Effect Profit/(Loss) gross oftax 0.1 (0.1) (0.1) 0.1 (0.9) 0.9

OCI debit/(credit) OCI debit/(credit) OCI debit/(credit)Foreign currency hedgeinstruments (0.3) 0.4 (0.6) 1.3 - -

Effect OCI net of tax (0.3) 0.4 (0.6) 1.3 - -

The impact on CAD/EUR, MXN/USD and MXN/EUR are not material.



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 atvariable rates. On fixed interest receivables and liabilities, it is exposed to market value fluctuations. The Group manages its interest rate risk byhaving a balanced portfolio of fixed and variable rate loans and borrowings. For certain variable interest rate long term liabilities, the Group hasentered into interest rate swap agreements through which the Group effectively pays fixed interest rates on these liabilities.

The Group applies cash flow hedge accounting to offset the profit or loss impact resulting from timing differences between variable interest rateliabilities and the interest rate swap. Throughout the financial period as well as per year-end the cash flow hedge accounting relationships wereeffective.

The fair value of interest rate swaps per reporting date is EUR 10.5 million credit. The effective part of the fair value changes of the interest rateswaps amounts to EUR 6.2 million loss net of deferred taxes in Other comprehensive income.

In the financial period no amounts were moved from the hedge reserve to financing costs. The amounts deferred in equity at year-end areexpected to affect financing costs within the coming seven years. All of the resulting fair value estimates are included in Level 2.

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

(x 1 million euro) Note Carrying amountDecember 31, 2018

Variable rate instrumentsSyndicated term loan 5.9 1,981.9Mortgage loan 5.9 19.3Non-current investments 5.3 (12.7)Net cash as per December 31 5.7 (139.6)

1,848.9

Notional amount interest rate swaps per year-end (floating to fixed) (1,796.4)Net position including cash 52.5

As at balance sheet date, interest rates were fixed on approximately 97.2% of the financial liability positions including the cash position as perbalance date. The Group policy is to hedge 80 to 100% of the forecasted net interest rate risk, including a forecasted cash position. Per end of2018 the forecasted position is in line with this policy.

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 notdesignate derivatives (interest rate swaps) as hedging instruments under a fair value hedge accounting model. Therefore a change in interestrates 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 tablebelow. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

December 31, 2018(x 1 million euro) Profit/(loss) OCI Debit/(Credit)

100 basispoints increase

100 basispoints decrease

100 basispoints increase

100 basis pointsdecrease

Net Interest (paid)/received on variable rateinstruments (6.9) 0.7 - -

Change fair value interest rate swaps 0.6 (0.6) (36.2) 36.6Total (6.3) 0.1 (36.2) 36.6

Price riskThe Group is exposed to commodity price risks. To manage these risks procurement operates within the framework of centrally specifiedpolicies 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 coveredback-to-back. The Group centralizes the procurement of raw materials, packaging materials and indirect spend for Europe and the US. Authoritylevels of local management have been shifted towards the Group central procurement organization which is executing and monitoring the maincontracts 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 Management Board. Existing contract positions are closely monitored and,when necessary, corrective actions are evaluated and implemented.

To enable the Group to stay ahead of the current situation in the raw materials markets and maintain its gross margins, it implements pass-onclauses into sales contracts with customers. In parallel, the quality of management information has been enhanced by the development of anetwork enabling knowledge of markets, suppliers and conditions of raw materials to be shared at Group level. The Group hedges the rawmaterial aluminum through derivatives.

The fair value of this raw material derivative is recognized in profit and loss. The fair value per reporting date is EUR 1.9 million credit.

3.2 Capital managementThe policy of the Group is to maintain a sufficient capital base to maintain investor, creditor and market confidence, to sustain futuredevelopment of the business and to maintain an optimal capital structure to reduce the cost of capital.

For the purpose of the Group’s objective to maintain a sufficient capital base, the Group manages the Net debt ratio calculated as the Net debtdivided by the adjusted EBITDA. We emphasize that the EBITDA below includes nine months of Refresco rather than twelve months due to theacquisition in March 2018.

(x 1 million euro) Note 2017-2018Interest-bearing loans and borrowings long term 5.9 2,509.4Interest-bearing loans and borrowings short term 5.9 90.3Less: cash and short-term deposits 5.7 (226.2)Net debt 2,373.5Equity 5.8 846.5

Operating result (EBIT) 44.2Depreciation, amortization and impairments PP&E & IFA 142.7EBITDA 186.9Exceptional cost adjustment 91.9Adjusted EBITDA 278.8

The exceptional cost adjustment for the financial period relates to costs to realize synergies as result of the Cott acquisition and one-off costsrelating to restructuring and plant closures. These cost are excluded from the Adjusted EBITDA and net debt ratio.

The Senior Facilities Loan agreement requires in relation to the revolving credit facility only, that this net debt ratio (net secured leverage ratio)will not exceed 8.62 :1 in each relevant period. The actual net debt ratio in accordance to the financing documentation is 6.1.

The Group manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of thefinancial covenants. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital toshareholders or issue new shares. No changes were made in the objectives, policies or processes for managing capital during the reportingperiod. There have been no breaches of the capital requirements during the financial period.

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



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 valueof property is the estimated amount for which a property would likely be exchanged on the date of valuation between a willing buyer and awilling seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and withoutcompulsion. The market value of items of machinery and equipment and other fixed assets is based on the quoted market prices for similaritems.

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 fairvalue 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 ofbusiness less the estimated costs of completion and sale and less a reasonable profit margin based on the effort required to complete and sellthe inventories.

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

Levels of 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)

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 isestimated by calculating the present value of future principal and interest cash flows, discounted at the market rate of interest at the reportingdate. For finance leases the market rate of interest is determined by reference to similar lease agreements.

Fair valuesThe carrying amounts of other financial assets and liabilities approximate their fair value as they have variable interest rates and the impact ofdiscounting is therefore not significant.

The following table presents the Group’s financial assets and liabilities, measured at fair value as at balance sheet date.

December 31, 2018(x 1 million euro) Level 1 Level 2 Level 3 TotalFX instruments (debit) - 2.7 - 2.7Commodity swaps (credit) - (1.9) - (1.9)Interest rate swaps (credit) - (10.5) - (10.5)Total - (9.7) - (9.7)

Interest rates used for determining fair valueThe interest rates used to discount estimated cash flows of derivative financial instruments, where applicable, are based on Eonia curve at thereporting date. The implicit interest rate used for the finance leases is 7.3% for the financial period.

3.4 Offsetting financial assets and financial liabilitiesThe Group uses a cash pool structure to facilitate the central cash management function. The Group has the intention and the legal right tosettle cash on a net basis.



December 31, 2018

(x 1 million euro)

Gross carryingamounts

Gross amountsoffset

Net amountpresented instatement of

financial position

Amounts availableto be offset inbankruptcy or

defaultNet Exposure

Financialinstruments Collateral

AssetsCash and cash equivalents 315.2 (89.0) 226.2 - - 226.2Liabilities (89.0) 89.0 - - - -Total 226.2 - 226.2 - - 226.2

For the financial assets and liabilities subject to enforceable master netting arrangements or similar arrangements above, each agreementbetween the Group and the counterparty allows for net settlement of the relevant financial assets and liabilities when either elect to settle on anet basis. In the absence of such an election, financial assets and liabilities will be settled on a gross basis; however, each party to the masternetting agreement will have the option to settle all such amounts on a net basis in the event of default of the other party.

4 Notes to the consolidated income statement

4.1 Segment reportingThe Group's operations are presented in the reportable segments Europe and North America. Corporate activities are in the table below separately disclosed to distinguish from the operating segments. These activities are related toholding activities and do not generate revenues. The accounting policies used for the segments are the same as the accounting policies usedfor the consolidated financial statements as described in note 2.



(x 1 million euro) Note December 31, 2018Europe North America Corporate Sunshine Mid BV

Consolidated income statementRevenue 4.2 1,957.6 1,006.0 - 2,963.6Other income 4.3 25.4 0.2 - 25.6Raw materials and consumables used 4.4 (1,161.8) (605.6) - (1,767.4)Employee benefits expense 4.5 (223.0) (154.7) (4.8) (382.5)Depreciation, Amortization and impairments 4.6 (90.5) (52.2) - (142.7)Other operating expenses 4.7 (428.5) (209.2) (14.7) (652.4)Operating profit 79.2 (15.5) (19.5) 44.2Net finance costs (13.6) (40.5) (51.4) (105.5)Profit/(loss) before income tax 65.6 (56.0) (70.9) (61.3)Income tax (expense) / benefit (26.2) 15.9 16.3 6.0Profit/(loss) for the financial period 39.4 (40.1) (54.6) (55.3)

Total asset value1 1,560.9 856.6 3,465.0 4,579.4Total liabilities2 1,575.0 852.6 2,608.4 3,732.9

Additions and business combinationsAdditions to property, plant and equipment,investment property, and intangible assets 81.5 36.4 0.6 118.5

Property, plant and equipment and intangibleassets acquired through business combinations(excluding Goodwill)

1,180.2 534.4 - 1,714.6

Goodwill 1,084.1 583.4 - 1,667.5

Depreciation, amortization and impairmentsDepreciation of property, plant and equipment 66.2 38.2 - 104.4Amortization of intangible assets 24.2 12.2 - 36.4Impairment on tangible fixed assets - 2.0 - 2.0Impairments on intangible assets - - -Depreciation, amortization and impairments 90.4 52.4 - 142.8

1 The total asset value of Europe, North America and Corporate includes intercompany loans and reclassifications of EUR 1,303.1 million.2 The total liabilities of Europe, North America and Corporate includes intercompany loans and reclassifications of EUR 1,303.1 million.

The total revenue of the country of domicile amounts to EUR 670.9 million. The total non-current assets of the country of domicile amounts toEUR 1,927.6 million. The entity wide disclosures have been included in note 5.1 and 5.2.

4.2 RevenueThe revenue by location of sales are set forth in the tables below.

(x 1 million euro) Retailer brands Contractmanufacturing 2017-2018

Europe 1,408.3 549.3 1,957.6North America 760.6 245.4 1,006.0Total Group 2,168.9 794.7 2,963.6

In the context of IFRS 8.34 the company identified one single client (Walmart) for the financial period generating annual revenue ofEUR 389.0 million being 13.1% of total revenue.



(x 1 million euro) 2017-2018Benelux 483.9Germany 306.2France 251.3Iberia 96.2Italy 149.5UK 568.6Other 101.9Total Europe 1,957.6North America 1,006.0Total Group 2,963.6

The liters by location of sales are set forth in the table below.

(x 1 liters million) 2017-2018Europe 5,581.9North America 3,031.1Total Group 8,613.0

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

4.4 Raw materials and consumables used(x 1 million euro) 2017-2018Raw materials and consumables 1,245.8Packaging materials 508.9Product tax 12.7

1,767.4

4.5 Employee benefits expense(x 1 million euro) Note 2017-2018Wages and salaries 316.1Compulsory social security contributions 56.9Pension contributions to defined contribution schemes 9.2Pension costs of defined benefit schemes 5.10 0.3

382.5

During the financial period the average number of fixed employees in the Group, in full-time equivalents (‘FTEs’), was 8,902 of which 8,005were employed outside the Netherlands.

4.6 Depreciation, amortization and impairments(x 1 million euro) Note 2017-2018Depreciation of property, plant and equipment 5.1 104.4Amortization of intangible assets 5.2 36.3Impairment on tangible fixed assets 5.1 2.0

142.7

In 2018 the impairment on tangible assets is related to Land & Buildings as a result of a plant closure in the US.



4.7 Other operating expenses(x 1 million euro) 2017-2018Freight charges 111.4Other cost of sales 61.7Promotion costs 9.3Temporary staff 42.3Other personnel costs 20.5Rent and leasing of machinery and equipment 26.7Maintenance 80.2Energy 63.2Advice and legal costs 55.9Housing costs, including rental of buildings 44.4Storage costs 53.9Other operating costs 82.9

652.4

Advice and legal cost includes EUR 35.5 million relating to the acquisition of Refresco Group N.V. as disclosed in note 6.1 and EUR 6.9 millionrelating to the business acquisitions as disclosed in note 7.3.

4.8 Net finance costsNet finance costs recognized in the income statement.(x 1 million euro) 2017-2018Interest income 0.4Finance income 0.4

Interest expense on financial liabilities measured with effective interest method (102.1)Cost of borrowings (4.6)Change in fair value of derivatives recognized in profit and loss 0.8Finance costs (105.9)Net finance costs (105.5)

The net change in fair value of derivative financial instruments of EUR 0.8 million relates to changes in the fair value of the interest rate swapsconcluded by the Group to hedge the external financing with variable interest rates. The amount reflects the change in fair value of interest rateswaps for which no hedge accounting is applied and/or the releases from other comprehensive income.

The cost of borrowing relates to the financing costs which were capitalized in the aggregate amount and the effective interest method isapplied.

(x 1 million euro) 2017-2018Initial capitalized amountSenior facilities agreement 2018 43.6Total 43.6

Capitalized amountFinancing costs capitalized as at October 20, 2017 -Financing costs senior facilities agreement 2018 43.6Amortization (4.6)Financing costs capitalized as at December 31 39.0



Finance income and costs recognized in other comprehensive income(x 1 million euro) 2017-2018Foreign currency translation differences for foreign operations 34.9Effective portion of changes in fair value of cash flow hedges (7.0)Tax effect 6.8Net finance income/(costs) recognized in other comprehensive income, net of tax 34.7

Recognized in:Translation reserve 39.9Hedging reserve (5.2)Net finance income/(costs) recognized in other comprehensive income, net of tax 34.7

4.9 Income tax expense(x 1 million euro) 2017-2018Current tax expenseCurrent income tax (22.6)Current income tax previous years 0.3Other taxes (1.9)Withholding taxes (0.2)

(24.4)Deferred tax expensesDeferred income tax current year 28.4Deferred income tax previous years 2.0

30.4Total income tax (expense) / benefit 6.0

Reconcilliation of effective tax rate(x 1 million euro) 2017-2018

%Result before income tax (61.3)Income tax based on the Group's blended tax rate 12.1 19.7%

Non-deductible operational expenses (1.0) -1.6%Investment allowances 0.1 0.2%Notional interest deduction 1.2 2.0%Non-deductible M&A related expenses (6.6) -10.8%Participation related results 1.6 2.6%Tax rate change impact 1.1 1.8%(De)recognition (un)recognized deferred tax assets (2.3) -3.8%Other taxes (1.8) -2.9%Prior period taxes (1.7) -2.8%Movement uncertain tax provision 2.9 4.7%Other reconciling items 0.4 0.7%Total income tax (expense) / benefits 6.0 9.8%

The effective tax rate is 9.8%, which is lower than the blended Group tax rate of 19.7%. The effective tax rate is mainly impacted by the non-deductibility of transaction costs relating to the Cott acquisition and the delisting from the Amsterdam stock exchange.

Furthermore, the non-deductible operational costs in all jurisdictions have a negative impact on the effective tax rate. In addition, other taxescharged in France and Italy and non-taxable participation related results increased the effective tax rate. On the positive side, notional interestdeduction in Belgium and Italy. Furthermore, investment allowances in several jurisdictions and the decrease in uncertain tax provisions havelowered the effective tax rate. Finally, the effective tax rate is impacted by the difference between the initial provision and the actual tax returnfiled.



Income tax recognized in other comprehensive income(x 1 million euro) 2017-2018Changes in tax on currency translation adjustment 5.0Changes in tax on hedging reserve foreign currency and interest hedge instruments 1.0Changes in tax on actuarial gains and losses in OCI (0.7)Total income tax (expense)/benefit in other comprehensive income 5.3


Notes to the consolidated balance sheet


5.1 Property, plant and equipment

(x 1 million euro) Note Land andbuildings

Machinery andequipment Other fixed assets Under

construction Total

Cost

October 20, 2017 - - - - -Acquired through businesscombinations 438.9 610.7 33.4 51.5 1,134.6

Additions 1.6 16.2 1.9 96.4 116.0Reclassifications 14.8 48.4 - (63.2) -Transfer to assets held forsale (0.5) - - - (0.5)

Disposals (17.1) (20.9) (2.9) - (40.9)Effect of movements inexchange rates 2.0 12.5 1.1 1.2 16.8

December 31, 2018 439.8 666.9 33.5 85.9 1,226.1

Deprecation and impairmentlosses

October 20, 2017 - - - - -Depreciation for the extendedfinancial period 4.6 (15.1) (84.2) (5.0) - (104.4)

Impairment 4.6 (2.0) - - - (2.0)Transfer to assets held forsale 0.2 - - - 0.2

Disposals - 20.1 2.6 - 22.7Effect of movements inexchange rates (1.0) (2.4) (0.6) - (4.0)

December 31, 2018 (17.9) (66.5) (3.0) - (87.5)

Carrying amountsOctober 20, 2017 - - - - -December 31, 2018 421.8 600.4 30.5 85.9 1,138.7

Impairment lossesImpairment was booked relating to the announced closing of one plant in the US .

Financial leasesThe Group leases production equipment under a finance lease agreement secured on the underlying leased asset (reference is made to note5.9). As at balance sheet date, the carrying amount of leased plant and machinery was EUR 3.0 million.

CollateralCollateral on the land and buildings in Bridgwater in the UK is given for the mortgage loan for an amount of EUR 51,053,918 .

ReclassificationThe reclassification relates to a transfer of amounts to the correct assets classes.

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



The entity-wide disclosures for property, plant and equipment(x 1 million euro) 2017-2018Benelux 126.7Germany 136.3France 130.6Iberia 70.2Italy 105.9UK 171.2Other 56.2Total Europe 797.1North America 341.6Total Group 1,138.7

5.2 Intangible assets

(x 1 million euro) Note Goodwill Brands and saleschannels Other Under

construction Total

CostOctober 20, 2017 - - - - -Acquisitions throughbusiness combinations 1,667.5 564.7 13.4 1.9 2,247.5

Additions - - 0.2 2.2 2.4Disposals - - (0.6) - (0.6)Reclassifications - - 0.8 (0.8) -Effect of movements inexchange rates - 14.4 0.7 - 15.1

December 31, 2018 1,667.5 579.1 14.5 3.3 2,264.4

Amortization and impairmentlosses

October 20, 2017 - - - - -Amortization for the financialperiod 4.6 - (32.4) (3.9) - (36.3)

Impairment losses 4.6 - - - - -Disposals - - 0.6 - 0.6Reclassifications - - - -Effect of movements inexchange rates - (1.0) - - (1.0)

December 31, 2018 - (33.4) (3.3) - (36.7)

Carrying amountsOctober 20, 2017 - - - - -2017-2018 1,667.5 545.7 11.2 3.3 2,227.7

The reclassifications relates to assets which were classified as assets under construction in intangible fixed assets.

Impairment testing for cash-generating units containing goodwillFor the purpose of impairment testing, goodwill is preliminary allocated to the cash generating units of the Group. This is the lowest level atwhich goodwill is monitored for internal management purposes within the Group.



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

(x 1 million euro) 2017-2018Benelux 357.6Germany -France 277.0Iberia -Italy 76.3UK 358.2Poland -Finland 15.0Total Europe 1,084.1North America 583.4Total Group 1,667.5

The goodwill concerns mainly the public to private transaction in March 2018 as disclosed in note 6.1, and includes the Cott acquisitionfinalized by Refresco in January 2018 as disclosed in note 7.3. No goodwill is allocated to Iberia, Poland and Germany.

The recoverable amounts of the cash-generating units are based on value-in-use calculations. Value in-use was determined by discounting thefuture pre-tax cash flows generated from the continuing use of the unit using a pre-tax discount rate and was based on the following keyassumptions:• Cash flows were projected based on the numbers of budget 2019 as a starting point. Projection for 2020-2021 is based on 3-year business

plan assessment of the businesses. Future cash flows beyond this period were extrapolated using a growth rate which is based on thegrowth expectations of the local market. These growth expectations are retrieved from research by independent external sources. Thegrowth rates are in a range of 1.0% to 2.0% and are considered appropriate taking into account the expected retailer brands marketdevelopment. The company takes into account production efficiency improvements, waste reduction and the cost reduction programswhich are anticipated to contribute positively to the future cash flows.

• A pre-tax discount rate is based on credit risk per country, a weighted average cost of capital applicable to the industry and the applicabletax rate per cash generating unit.

Pre-tax discount rate (%) 2017-2018Benelux 9.5Germany 9.9France 10.7Italy 11.2UK 9.3Finland 9.4US 11.8

The values assigned to the key assumptions represent management’s assessment of future trends in the industry and are based on bothexternal and internal sources (historical data). The recoverable amounts of the units were determined to be higher than their carrying values forall cash generating units.

Sensitivity analysisA sensitivity analysis of a 100 basis points adverse change in key assumptions (lower growth rates or higher discount rates respectively) did notresult in a different outcome of the impairment test for the cash-generating units for which no impairment is recognized.

Other intangible assets per unitThe entity -wide disclosures for brands and sales channels, other and assets under construction are as follows:



(x 1 million euro) 2017-2018Benelux 141.4Germany 1.0France 97.1Iberia 0.1Italy 9.6UK 90.2Other 10.7Total Europe 350.1North America 210.1Total Group 560.2

5.3 Other investments(x 1 million euro) 2017-2018Non-current investmentsDeposits and other financial fixed assets 12.7

12.7

The exposure to credit, currency and interest rate risks related to other investments is disclosed in note 3.1.1.

5.4 Deferred income tax assets and liabilitiesThe deferred tax assets and liabilities are related to the following account balances

(x 1 million euro) Assets Liabilities Net2017-2018 2017-2018 2017-2018

Property, plant and equipment 0.1 (205.1) (205.0)Intangible assets 1.2 (27.4) (26.2)Inventories 8.0 - 8.0Trade and other receivables 3.3 - 3.3Loans and borrowings 9.9 (1.4) 8.5Derivatives 2.7 (0.2) 2.5Employee benefits provision 7.6 - 7.6Other provisions 7.8 (0.1) 7.7Current liabilities 2.7 (1.4) 1.3Tax loss carry forward 68.3 - 68.3Deferred tax assets / (liabilities) 111.6 (235.6) (124.0)

Deferred tax asset on balance sheet - - 0.3Deferred tax liability on balance sheet - - (124.3)Net deferred tax assets / (liabilities) - - (124.0)

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



December 31, 2018

(x 1 million euro)October 20,

2017

Reported inprofit and

loss accountReported inequity / OCI

Acquired inbusiness

combinations

Effect ofmovement in

exchangerates

Othermovements 2017-2018

Property plant and equipment - (27.7) - (173.1) (4.2) - (205.0)Intangible assets - 10.1 - (34.1) (2.2) - (26.2)Inventories - 2.5 - 4.5 0.3 0.7 8.0Trade and other receivables - 1.2 - 1.2 0.1 0.8 3.3Loans and borrowings - 2.8 6.9 (1.2) - - 8.5Derivatives - (0.2) 0.1 2.6 - - 2.5Employee benefits provision - 0.4 (1.3) 8.7 (0.2) - 7.6Other provisions - 0.7 (0.1) 6.9 0.2 - 7.7Current liabilities - (16.4) 3.0 8.4 2.8 3.5 1.3Tax loss carry-forwards - 56.7 - 13.2 2.3 (3.9) 68.3Deferred tax assets / (liabilities) - 30.1 8.6 (162.9) (0.9) 1.1 (124.0)

Tax losses carry-forwardsThe Group recognizes deferred tax assets on loss carry forwards to the extent future taxable profits are expected and can be offset with theselosses. These loss carry forwards amount to EUR 258.7 million as at balance sheet date, for which a deferred tax asset is recognized forEUR 68.4 million. The deferred tax assets relating to loss carry forwards expire in the following years:

(x 1 million euro) 2017-2018After 2020 but not unlimited 20.1Unlimited 49.5Total 69.6

Recognized as deferred tax assets 68.4Unrecognized 1.2

Unrecognized tax loss carry forwards relate to tax losses that we do not expect to be utilized in the near future. Furthermore, the unrecognizedtax losses have a limited carry forward period.

5.5 Inventories(x 1 million euro) 2017-2018Stock of raw materials and consumables 231.4Stock of finished goods 165.5

396.9

Inventory is shown net of a provision for obsolescence of EUR 45.1 million.

5.6 Trade and other receivables(x 1 million euro) 2017-2018Trade receivables 466.3Other receivables, prepayments and accrued income 53.6Other taxes and social security premiums 28.2

548.1

Non-current -Current 548.1

The exposure to credit and currency risks and impairment losses related to trade and other receivables is disclosed in note 3.1.1.



5.7 Cash and cash equivalents(x 1 million euro) 2017-2018Bank balances 226.2Cash and cash equivalents 226.2Bank overdrafts (included in loans and borrowings) (86.6)Cash and cash equivalents in the consolidated cash flow statement 139.6

The total amount blocked for bank guarantees and issued letters of credits is EUR 38.1 million. All other cash amounts are available for use bythe group.

The exposure to interest rate risk and the sensitivity analysis for financial assets and liabilities are disclosed in note 3.1.3.

5.8 Equity

Share capitalShare capital as at balance sheet date consists of 100 ordinary shares of one class with a nominal value of EUR 0.01 each.

(x 1 million euro) 2017-2018Share capital as at October 20, 2017 0.0Share capital as at December 31, 2018 0.0



Share premiumAs at balance sheet date, the share premium consists of ordinary shares only.

(x 1 million euro) 2017-2018Share premium as at October 20, 2017 -Increase share premium 882.2Share premium as at December 31, 2018 882.2

Other reservesThe other reserves consist of translation reserves, hedging reserves and actuarial gains and losses. The translation reserve comprises foreigncurrency differences arising from the translation of the financial statements of foreign operations of the Group. The hedging reserve comprisesthe effective portion of the cumulative net change in the fair value of cash flow hedging instruments where the hedged transaction has not yetoccurred. Actuarial gains and losses reserve comprises of movement in pension liability due to change in actuarial assumptions.

The movement of the other reserves is as follows:

(x 1 million euro)

Hedge reserveInterest rate

swapsHedge reserve FX

instrumentsCurrency

translation reserveActuarial gains

and losses onpensions

Other Total

Balance as at October 20,2017 - - - - - -

Changes in cashflow hedge (7.0) (8.4) - - - (15.4)Translation results - - 34.9 - - 34.9Employee benefits mutation - - - 1.5 - 1.5Other - - - - (6.5) (6.5)OCI minority share - - (0.2) 0.6 - 0.4Tax 1.8 (0.8) 5.0 (0.7) - 5.3Balance as at December 31,2018 (5.2) (9.2) 39.7 1.4 (6.5) 20.2

Legal reservesWithin the other reserves the hedge reserve interest rate swap, hedge reserve FX instruments and currency translation reserve are legalreserves. Within these legal reserves the negative amount for hedge reserve interest rate swap should be taken into account for dividenddistribution.

Non controlling interestThe non controlling interests relate to 49% of the shares in North East Retailer Brands LLC (US) and 10% of the shares in Refresco DeutschlandHolding GmbH (Germany).

5.9 Loans and borrowingsThe interest-bearing loans and borrowings are recognized at amortized cost. The exposure to interest rate, foreign currency and liquidity risks isdisclosed in note 3.1. The movement of the capitalized finance costs is disclosed in note 4.8.

Non-current

(x 1 million euro) 2017-2018Syndicated term loan 1,981.9High Yield bonds 445.0Intercompany Loan Sunshine Holding 100.0Mortgage loan 16.5Other long term loans 3.0

2,546.4Capitalized finance costs (39.0)Finance lease liabilities 2.0

2,509.4

The face value of the syndicated term loan is EUR 1,943.8 million.



The movement of the syndicated term loan, High Yield bonds and shareholder loan is as follows:

(x 1 million euro) 2017-2018October 20, 2017 -Business combinations 1,812.2Proceeds 3,029.8Repayment (2,326.1)Reclassed to short term (1.7)Translation results 32.2December 31, 2018 2,546.4

Current

(x 1 million euro) Notes 2017-2018Current portion of mortgage loan 2.8Current portion of other loans 0.1Current portion of finance lease liabilities 0.8

3.7Bank overdrafts 5.7 86.6

90.3

The terms and conditions of the outstanding loans and notes are as follows:

(x 1 million euro) Currency Nominal interestrate % Repayment Face value

2017-2018Carrying amount

2017-2018Syndicated term loan EUR 3M EURIBOR + 3.25% 2025 1,217.0 1,217.0Syndicated term loan USD 3M LIBOR + 3.25% 2025 503.7 542.0Syndicated term loan GBP 3M LIBOR + 4.0% 2025 228.6 222.9High Yield bonds EUR 6.5% 2026 445.0 445.0Intercompany loan EUR 8.0% 2028 100.0 100.0Capitalized finance costs EUR (43.6) (39.0)Mortgage loan GBP 3M GBP LIBOR + 0.75% 2026 38.5 19.3Other long term loans EUR 1.037% 2024 3.8 3.0Finance lease liabilities Various Various Various 12.9 2.9Total interest-bearingliabilities 2,505.9 2,513.1

The capitalized finance costs relate to transaction costs made for the refinancing in March for the acquisition of Refresco Group.

Mortgage loanThe Group has a mortgage loan from HSBC Bank Plc for construction of the production site in Bridgwater (UK). The real estate of the productionsite in Bridgwater (UK) is pledged as collateral. A fixed quarterly payment of GBP 0.7 million consists of interest of 3 months GBP Libor plus0.75% plus MLA costs and the remaining part is redemption. The final repayment date of the mortgage is 2036, but with current forwardinterest rate the mortgage will be repaid in 2026.

Finance lease liabilitiesFinance lease liabilities relate mainly to production lines in the Benelux. For the nominal value and cash outflow, reference is made to note3.1.2.

5.10 Employee benefits provisionThe Group contributes to a number of defined benefit plans that provide pension benefits to employees upon retirement in the Netherlands,Belgium, Germany, Italy, UK and in US and jubilee plans in the Netherlands, Germany and France. The amount of the benefits depends on age,salary and years of service. Furthermore, the Group has an indemnity plan in France.



The amounts recognized for defined benefit plans in the balance sheet are determined as follows:

December 31, 2018

(x 1 million euro)

Pension planthe

NetherlandsPension plan

GermanyPension plan

UKPension plan

BelgiumPension plan

US Other Total

Present value of obligation 66.4 24.0 59.3 1.9 5.1 - 156.7Fair value of plan assets (66.0) (5.3) (50.9) (1.7) (4.5) - (128.4)Deficit of funded plans 0.4 18.7 8.4 0.2 0.6 - 28.3Present value of unfunded obligations 1.1 13.8 - - - 8.1 23.0Present value of net obligations 1.5 32.5 8.4 0.2 0.6 8.1 51.3Impact of minimum fundingrequirement / asset ceiling - - - - - - -

Present value of net obligations 1.5 32.5 8.4 0.2 0.6 8.1 51.3

Plan assets can be detailed as follows:

(x 1 million euro) 2017-2018Equity instruments 10.8Debt instruments 13.5Assets held by insurance companies 10.0Derivatives 1.6Investment funds 11.7Cash and cash equivalents 3.5Other 77.3

128.4

The debt instruments are plan assets with a quoted market price. The pension plan assets do not include the company’s own shares or notes.The category Other consists of the value of qualifying insurance policies.



Movements in the present value of the defined benefit obligations and plan assetsDecember 31, 2018

(x 1 million euro)

Defined Benefitobligation Plan assets Total

Impact ofminimum funding

requirement /asset ceiling

Total

Defined benefit obligations as at October 20,2017 - - - - -

Current service costs 0.7 - 0.7 - 0.7Interest expense/(income) 3.1 (2.6) 0.5 - 0.5Past service cost and gains and losses onsettlements (1.0) - (1.0) - (1.0)

Administrative expenses - 0.1 0.1 - 0.1Cost recognized in income statement 2.8 (2.5) 0.3 - 0.3

Return on plan assets - 4.1 4.1 - 4.1(Gain)/loss from change in demographicassumptions (1.0) - (1.0) - (1.0)

(Gain)/loss from change in financialassumptions (2.7) - (2.7) - (2.7)

Experience (gains)/losses (1.9) - (1.9) - (1.9)Change in asset ceiling, excluding amountsincluded in interest expense - - - - -

Total remeasurements recognized in OCI (5.6) 4.1 (1.5) - (1.5)

Benefits paid by the plan (2.6) 2.6 - - -Benefit payments from employer (1.0) 1.0 - - -Employer contributions - (2.7) (2.7) - (2.7)Effect of movements in exchange rates (1.0) 0.9 (0.1) - (0.1)Change in asset ceiling - - - - -Business combinations 187.1 (131.8) 55.3 - 55.3Defined benefit obligations as at December 31,2018 179.7 (128.4) 51.3 - 51.3

As at the last valuation date, the present value of the defined benefit obligation was comprised of approximately EUR 20.1 million related toactive employees, EUR 99.5 million related to deferred members and EUR 60.1 million related to members in retirement.

On October 26, 2018 a High Court case concluded in UK which provided a definitive answer regarding whether UK pension schemes need toequalize "GMP" benefits between men and women. This decision had financial impact on Cott Beverages Limited and Death Benefit schemeand on Histogram Limited Final Salary plan. The GMP equalization required an increase in the pension benefit obligations of the two plans with2.0%, or EUR 0.8 million which was recognized as a past service cost at the judgement date.

Due to closing of the Hamburg plant in Germany all active members in the Hamburg pension plan became inactive. This special event has beentaken into account as a curtailment. With the closure of the plant, the pension plan was closed for future benefit accrual and for new hireswhich decreased the obligation by EUR 1.8 million. This decrease in pension obligation is reported as past service credit.

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

December 31, 2018

%Netherlands Germany France Italy UK Belgium US

Discount rate as at December 31, 2018 2.1 1.9 2.0 1.6 2.8-2.9 1.6 3.8Inflation 1.8 1.8 1.8 1.8 2.0-2.5 1.8 2.0Salary growth rate 2.3-3.8 2.5 2.0-5.5 n/a n/a 2.8 n/aPension growth rate n/a 1.8 n/a n/a 3.0-3.3 n/a n/a



The assumptions regarding mortality experience are based on actuarial advice and latest available published statistics and mortality tables ineach territory. For the Netherlands this was AG Prognose table 2018, for Germany Heubeck 2018G, for France TF/TH0002, for Italy RG48, for theUK 105% S2PXA CMI 2017, for Belgium MR-5/FR-5 and for the US RP-2014/MP2018.

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is:

2017-2018Impact onDefined benefitobligation

Change inassumption (Debit/(Credit)

% x 1 million euroDiscount rate +0.25 7.6

-0.25 (8.2)Pension growth rate +0.25 (5.3)

-0.25 1.9Salary growth rate +0.25 (0.3)

-0.25 0.3

Life expectancyIncrease by 1

year (1.5)

Decrease by 1year 1.5

The above sensitivity analyses are based on a change in an assumption while holding all other assumptions constant. In practice, this isunlikely to occur, and changes in some of the assumptions may be correlated. When calculating the sensitivity of the defined benefit obligationto significant actuarial assumptions the same method (present value of the defined benefit obligation calculated with the projected unit creditmethod at the end of the reporting period) has been applied as when calculating the pension liability recognized within the statement offinancial position.

The Group expects that contributions to the defined benefit plans will be EUR 3.7 million for 2019. The weighted average duration of thedefined benefit obligation is 17.8 years.

Expected maturity analysis of undiscounted pension and other defined benefits:

(x 1 million euro) Less than one year Year 2 Year 3 up to andincluding year 5

Year 6 up to andincluding year 10 Total

Pensions & other 5.2 5.2 16.7 32.0 59.1

Through its defined benefit pension plans, the Group is exposed to a number of risks, the most significant of which are detailed below:• Asset volatility: The plan liabilities are calculated using a discount rate set with reference to corporate bond yields; if plan assets under

perform this yield, this will create a deficit. The plan in the UK holds investments in asset classes, such as equities, which have volatilemarket values and while these assets are expected to provide real returns over the long term, the short term volatility can cause additionalfunding to be required if deficits emerge.

• Changes in bond yields: The plan’s liabilities are assessed using market yields on high quality corporate bonds to discount the liabilities.As the plan holds assets such as equities the value of the assets and liabilities may not move in the same way. A decrease in corporatebond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings.

• Inflation risk: Some of the Group pension obligations are linked to inflation, and higher inflation will lead to higher liabilities (although inmost cases, caps on the level of inflationary increases are in place to protect the plan against extreme inflation or inflation increases areonly possible after excessive returns on assets).

• Life expectancy: The majority of the plans’ obligations are to provide benefits for the life of the member, so increases in life expectancy willresult in an increase in the plans’ liabilities.

• The Group operates unfunded pension and jubilee plans, where the company meets the benefit payment obligation as it falls due. Futurepayments depend on salary developments, changes in life expectancy and turnover rates which might result in fluctuations in cash flows.



Multi-employer planThe Group's employees participate in three multi-employer defined benefit plans: "Stichting Bedrijfsakpensioenfonds voor de Drankindustrie"(an industry-wide plan in the Netherlands), Teamsters Canadian Pension Plan Local 1999 (in Canada) and Teamsters Negotiated Pension PlanLocal 688 (in US). These schemes are defined benefit but the Company accounts for the multi-employer plans as if they were definedcontribution. This is due to the fact that pension funds are not able to provide the Company with the required Company-specific information toallow the assets and liabilities to be separately identified. Every company participating in the multi-employer plans contribute premiumcalculated as a percentage of its total pensionable salaries. The Company's pension expense for the multi-emaployer plan for the fiscal periodis equal to the required contribution for that period. In case of a shortfall (or surplus) the Company has no obligation to pay (or receive) anysupplementary contributions other than possibly higher (lower) future premiums. The pension rights of each employee are based upon theemployee's salary during employment.

5.11 Other provisions(x 1 million euro) Restructuring Other Total 2017-2018October 20, 2017 - - -Business combinations 10.3 25.2 35.5Provisions made during the financial period 5.5 (8.2) (2.7)Provisions reclassed during the financial period - (0.4) (0.4)Provisions used during the financial period (9.3) (2.3) (11.6)Provisions reversed during the financial period - (0.2) (0.2)Effect of movements in exchange rates - 1.2 1.2December 31, 2018 6.5 15.3 21.8

Non-current 0.3 13.7 14.0Current 6.2 1.6 7.8

The restructuring provision is mainly related to the closure and sale of Hamburg plant (Germany) and integration of the Cott entities. There areno significant uncertainties about the amount or timing of outflow of resources.

5.12 Trade and other payables(x 1 million euro) 2017-2018Trade accounts payable 556.8Other taxes and social security premiums payable 50.8Other payables, accruals and deferred income 289.6

897.2

The exposure to liquidity and foreign currency risks on trade and other payables is disclosed in note 3.1.2.

6 Supplementary notes

6.1 Acquisitions of subsidiaries and non-controlling interestOn March 29, 2018 PAI Partners SAS ("PAI") and Cubalibre Holdings Inc., being part of a group led by the British Columbia InvestmentManagement Corporation ("bcIMC"), acting jointly through Sunshine Investments B.V. completed the acquisition of Refresco Group N.V.(Refresco) transfering the Company from publicly to privately owned. The acquisition price amounts to EUR 20 per share being EUR 1.623 billionin total. During the acceptance phase approximately 97.4% of all company issued and outstanding share capital was tendered with aggregatevalue of approximately EUR 1.581 billion. During sqeeze-out period the remaining shares were purchased for total purchase price ofEUR 42 million. The acquisition price was funded by a new syndicated bank loan (EUR 1.217 billion, GBP 200 million, USD 620 million) ,issuance of Senior Notes of EUR 445 million, and a shareholder loan of EUR 100 million.

(x 1 million euro) Refresco Group N.V.Acquisition price 1,623.2Consideration paid in cash 1,623.2

Less: cash and cash equivalent balances acquired (109.9)Net movement in cash 1,513.3



The following table summarizes the consideration paid for the acquisitions and the fair value of assets and liabilities acquired at theacquisition dates (provisional purchase price allocation). If estimates of fair values of assets and liabilities will change materially becauseadditional information becomes available within 12 months after the acquisitions, the Group will adjust the carrying amounts and adjust thecorresponding goodwill.

(x 1 million euro) Refresco Group N.V.Values as per March 28, 2018Non-current assetsProperty, plant and equipment 1,123.7Intangible assets 585.5Financial fixed assets 28.3Deferred income tax 15.8

Current assetsInventories 428.6Current income tax receivable 28.3Trade and other receivables 564.3Cash and cash equivalents 109.9

Non-current liabilitiesLoans and borrowings (1,804.6)Derivative financial instruments (4.4)Employee benefits provisions (55.8)Other provisions (21.0)Deferred income tax (190.0)

Current liabilitiesLoans and borrowings ST (3.8)Derivative financial instruments (liab) (7.5)Trade and other payables (769.1)Current income tax liabilities (39.3)Provisions (12.5)

Minority interest (20.4)

Fair value of identifiable net assets acquired (44.0)

The values of assets, liabilities, and contingent liabilities recognized on acquisition date are their estimated fair values, if applicable, translatedinto the respective functional currency of the Group at exchange rates at the dates of acquisitions. The goodwill recognized is expected to bedeductible for income tax. The transaction costs related to the acquisition of Refresco Group are EUR 79.1 mln.

(x 1 million euro) Refresco Group N.V.Consideration transferred 1,623.2Less: fair value of identifiable net assets acquired (44.0)Goodwill arising on acquisition 1,667.2

Impact of acquisition on the results of the GroupThe results of Refresco are consolidated in the results of the Group as from March 29, 2018. The revenue as at balance sheet date includesEUR 2,963.6 million in respect of Refresco. The result of the Group as at balance sheet date includes a loss of EUR 13.9 million in respect ofRefresco. Refer to Note 7 for pro-forma financial information.



6.2 Commitments and contingent liabilitiesOperating lease and rental obligations(x 1 million euro) 2018Less than one year 72.7Between one and five years 193.8More than five years 127.8

394.3

The Group leases office buildings, warehouses, machinery and equipment and cars. The lease arrangements do not contain any contingent rentor any restrictions related to other financing activities of the Group. During the financial period, EUR 55.6 million was recognized as expense inthe income statement in respect of operating leases and rentals.

Purchase and investment commitments(x 1 million euro) Total 2018 Less than one year One to five years More than five

yearsProperty, plant and equipment 51.8 51.8 - -Raw materials, packaging and utilities 527.4 512.7 14.7 -

579.2 564.5 14.7 -

Contingent liabilitiesBanks have issued guarantees to suppliers and customers on behalf of the Group in the aggregate amount of EUR 36.3 million.

The Group has several facilities for issuing letters of credit and local overdraft facilities for cash pool purposes. As at balance sheet date, therewas EUR 1.8 million in open letters of credit.

The Company forms a fiscal unity for income tax purposes with Sunshine Top B.V., Sunshine Holding B.V., Sunshine Investments B.V., RefrescoGroup N.V., Refresco Holding B.V., Refresco Europe B.V., Refresco Benelux B.V., DIS B.V and Refresco Americas B.V. The Company also forms afiscal unity for VAT purposes with Sunshine Top B.V., Sunshine Holding B.V., Sunshine Investments B.V., Refresco Group N.V., Refresco HoldingB.V. and Refresco Europe B.V. In accordance with the standard conditions. The Company and the subsidiaries that are part of the fiscal unity arejointly 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 ofthese disputes cannot be predicted with any certainty, it is expected – partly on the basis of legal advice – that these will not have anysignificant impact on the Company’s financial position.

6.3 Related parties

Identification of related partiesSunshine Equity B.V., Sunshine Top B.V.,Sunshine Holding B.V. and the subsidiaries included in note 3.1 of the company financial statementsare considered to be related parties. Other identified related parties are senior management of the Group and members of Management Board.The transactions with these related parties relate primarily to the shareholding and remuneration. Refer to further disclosure below.

Personnel compensation and transactions with Management Board

Key Management Personnel compensation and transactionsIn accordance with the terms of the plan, the Key Management Personnel retire at age 67.



Compensation of Key Management Personnel comprised the following:

(x 1 thousand euro) J.H.W. Roelofs A.C. Duijzer V. Deloziere B. Goist Total2018 2018 2018 2018 2018

Short termBase salary 603.8 388.1 345.0 236.7 1,573.6Short term incentive 166.0 106.7 94.9 134.9 502.5Long term incentive - - 38.8 127.4 166.2Retention incentive - - - 192.3 192.3Other bonus 685.0 685.0 343.0 129.0 1,842.0Social charges 8.0 8.0 156.4 17.3 189.7Expenses 3.2 2.4 - 9.6 15.2Total 1,466.0 1,190.2 978.1 847.2 4,481.5

Post employmentPension cost 89.1 61.7 53.4 1.5 205.7Total 89.1 61.7 53.4 1.5 205.7Total compensation 1,555.1 1,251.9 1,031.5 848.7 4,687.2

The other bonus relates to an investment matching scheme in Sunshine Equity B.V. under which the investments of individual managers areincreased for a certain percentage by the company. This increase is in the form of a bonus.

Transactions with related parties

(x 1 million euro) Transaction value Balanceoutstanding

2018 December 31, 2018Increase of shareholders' equity/financingBCI 0.2 0.2Shareholder loan 100.0 100.0Interest on Shareholder loan 6.1 6.1Payable to Shareholder 3.0 3.0Total 109.3 109.3

ReceivableOkil Holding 2 B.V. 15.2 -Total 15.2 -

Next to the share premium contributions and the public to private transaction, an EUR 100 million shareholder loan has been provided bySunshine Holding B.V. to the Company. Also, a 10% share in Refresco Deutschland Holding GmbH was transferred to Okil Holding 2 B.V. prior tothe acquisition of Refresco Group. The amount of EUR 15.2 million was received before 31 December 2018.

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



6.4 Subsequent events

Acquisition of concentrate manufacturing business ColumbusOn 8 February 2019, Refresco has acquired Cott’s concentrate manufacturing business in Columbus, Georgia, US, for a consideration paid ofUSD 50 million. This follows our successful acquisition of Cott’s bottling business one year ago. The acquired business includes a research anddevelopment facility as well as a beverage concentrate plant. The branded activities were an additional part of the acquisition which wesimultaneously divested and sold to an external party, providing continuity to the brand. The PPA adjustments are not yet determined and willfollow due course.

7 Pro-forma financial informationAs disclosed in note 6, Refresco Group has been consolidated by Sunshine Mid B.V. as from acquisition date 29 March 2018. To illustrate theeffects of the acquisition to the results of operations and financial positions of Sunshine Mid B.V. and to facilitate the comparability of theconsolidated financial statements, Sunshine Mid B.V. has prepared the following pro forma financial information.

7.1 Consolidated income statement - pro-formaAudited Unaudited Audited

2017-20181 2017-20182 December 31, 20173

(x 1 million euro) Pro formaRevenue 2,963.6 3,737.1 2,268.8Other income 25.6 25.7 0.7Raw materials and consumables used (1,767.4) (2,232.9) (1,277.2)Employee benefits expense (382.5) (493.2) (285.5)Depreciation, amortization and impairments (142.7) (173.9) (96.3)Other operating expenses (652.4) (834.6) (515.6)Operating profit 44.2 28.2 94.9

Finance income 0.4 0.4 0.3Finance expense (105.9) (160.9) (24.4)Net finance costs (105.5) (160.5) (24.1)

Profit/(loss) before income tax (61.3) (132.4) 70.8Income tax (expense) / benefit 6.0 25.7 (17.4)Profit/(loss) for the financial period (55.3) (106.7) 53.4

Profit/(loss) attributable to:Owners of the Company (62.8) (115.2) 53.4Non-controlling interest 7.5 8.5 -Profit/(loss) for the financial period (55.3) (106.7) 53.4

1 This column includes the audited consolidated income statement of Sunshine Mid B.V. for the financial period October 20, 2017 till December 31, 20182 This column includes the unaudited consolidated income statement of Sunshine Mid B.V. for the financial period October 20, 2017 till December 31, 2018, including 12 months of

Refresco Group. The results of the acquisition of Cott's bottling activities by Refresco Group are included as from January 30, 2018. For notes on this acquisition, reference is madeto 7.3

3 This column includes the audited consolidated income statement of Refresco Group for the period January 1, 2017 till December 31, 2017



7.2 Consolidated balance sheet - pro-formaAudited Audited

2017-20181 December 31,20172

(x 1 million euro)AssetsProperty, plant and equipment 1,138.7 623.7Intangible assets 2,227.7 540.4Other investments 12.7 3.0Deferred income tax 0.3 3.9Total non-current assets 3,379.4 1,171.0

Inventories 396.9 232.8Derivative financial instruments 2.7 3.9Current income tax receivable 25.7 0.5Trade and other receivables 548.1 374.0Cash and cash equivalents 226.2 145.7Total current assets 1,199.6 756.9

Assets classified as held for sale 0.4 -

Total assets 4,579.4 1,927.9

EquityIssued share capital 0.0 9.7Share premium 882.2 533.0Other reserves 20.2 (28.2)Retained earnings - (12.0)Result for the financial period (62.8) 53.4Equity attributable to equity holders of the Company 839.6 555.9Non-controlling interests 6.9 -Total equity 846.5 555.9

LiabilitiesLoans and borrowings 2,509.4 735.0Derivative financial instruments 10.5 7.0Employee benefits provisions 51.3 46.0Other provisions 14.0 1.1Deferred income tax 124.3 10.7Total non-current liabilities 2,709.5 799.8

Loans and borrowings 90.3 3.4Derivative financial instruments 1.9 2.6Trade and other payables 897.2 544.2Current income tax liabilities 26.2 9.1Provisions 7.8 12.9Total current liabilities 1,023.4 572.2

Total liabilities 3,732.9 1,372.0Total equity and liabilities 4,579.4 1,927.9

1 This column includes the audited consolidated balance sheet of Sunshine Mid B.V. as per December 31, 20182 This column includes the audited consolidated balance sheet of Refresco Group as per December 31, 2017



7.3 Acquisitions of subsidiaries and non-controlling interestBefore Refresco Group N.V. was acquired via Sunshine Investments B.V. by Sunshine Mid B.V., Refresco Group N.V. completed the acquisition ofCott's bottling activities on January 30, 2018, creating the world's largest independent bottler with leading position across Europe and NorthAmerica. Cott's bottling activites consist of 24 production sites in North America and 5 in the UK. The acquisition price amounts toEUR 1,254.3 million and was financed by a new syndicated bank loan.

Company income statementFor the year extended financial period ended December 31, 2018

Sunshine Mid Annual Report 2018 82 Company income statement

(x 1 million euro) Note December 31, 2018Profit/(loss) before income tax (2.2)

Income tax (expense) / benefit 0.6Share in results from participation interest after taxation 3.1 (61.2)

Profit/(loss) for the financial period (62.8)

Company balance sheetAs at December 31, 2018(Before appropriation of result)

Sunshine Mid Annual Report 2018 83 Company balance sheet

(x 1 million euro) Note December 31, 2018AssetsFinancial fixed assets 3.1 823.9Loans to group companies 3.2 545.0Total non-current assets 1,368.9

Receivables from group companies 13.0Current income tax receivable 0.6Cash and cash equivalents 5.8Total current assets 19.4

Total assets 1,388.3

EquityIssued share capital 0.0Share premium 3.3 882.2Legal reserves 3.1 20.2Result for the financial period (62.8)Total equity attributable to equity holders of the company 3.3 839.6

LiabilitiesLoans and borrowings 3.4 538.7Total non-current liabilities 538.7

Trade and other payables 10.0Current income tax liabilities -Total current liabilities 10.0

Total equity and liabilities 1,388.3

Notes to the company financial statements

Sunshine Mid Annual Report 2018 84 Notes to the company financial statements

The financial statements of Sunshine Mid B.V. or ‘the Company’ are included in the consolidated financial statements of the Group.

2 Significant accounting policiesThe Company makes use of the option provided in section 2:362 (8) of the Dutch Civil Code Title 9, Book 2, under which the principles for therecognition and measurement of assets and liabilities and for determination of the result of the Company financial statements are the same asthose applied for the consolidated financial statements (hereinafter referred to as principles for recognition and measurement). In theseseparate financial statements investments in subsidiaries are accounted for using the equity method. The consolidated financial statementsare prepared according to the standards laid down by the International Accounting Standards Board and adopted by the European Union. Theseprinciples are set out in the consolidated financial statements.

Participating interests over which control is exercised are carried on the basis of net asset value. The share in the result of participatinginterests 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 intereststhemselves. The Company makes use of the option to eliminate intercompany expected credit losses against the book value of loans andreceivables to Group companies, instead of elimination against the investments in group companies.

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 companieswere as follows:

(x 1 million euro) 2018October 20, 2017 -Share premium contribution 876.9Share in result of participating interests (61.2)Share premium repayment (12.0)Reserves 20.2Dividend -December 31, 2018 823.9



Sunshine Mid B.V. owns directly or indirectly the following subsidiaries as at balance sheet date:Company Statutory seat Note Ownership interest

2018Consolidated companies

Sunshine Investments B.V. Amsterdam (TheNetherlands) 1 100%

Refresco Group B.V. (previous Refresco Group N.V.; merged into Refresco Holding B.V.) Rotterdam (TheNetherlands) 2 Merged

Refresco Holding B.V. Rotterdam (TheNetherlands) 2 100%

Refresco Europe B.V. Rotterdam (TheNetherlands) 2 100%

Refresco Americas B.V. Rotterdam (TheNetherlands) 2 100%

Refresco Benelux B.V. Maarheeze (TheNetherlands) 2 100%

Refresco N.V. Ninove (Belgium) 100%

DIS B.V. Sittard (TheNetherlands) 2 100%

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

Verwaltungsgesellschaft EMIG mbH Rellingen(Germany) 100%

Refresco Deutschland Services & IT GmbH & Co KG Mönchengladbach(Germany) 100%

Refresco Deutschland Holding GmbH Mönchengladbach(Germany) 90%

Refresco Hamburg GmbH Mönchengladbach(Germany) 90%

EMIG GmbH Mönchengladbach(Germany) 90%

Refresco Deutschland GmbH Mönchengladbach(Germany) 90%

Logico GmbH & Co KG Mönchengladbach(Germany) 90%

Refresco Finland Holding O.Y. Kuopio (Finland) 100%Refresco Finland O.Y. Kuopio (Finland) 100%Ferskur France S.A.S. Marges (France) 100%Refresco France S.A.S. Marges (France) 100%

Refresco Le Quesnoy SAS (merged into Refresco France S.A.S.) Valenciennes(France) Merged

Pride Foods Ltd. Bridgwater (UK) 100%Quantock Properties Ltd. Bridgwater (UK) 100%Refresco Beverages UK Ltd. Bridgwater (UK) 100%Gerber Emig Group Ltd. Bridgwater (UK) 100%Yorkshire Spring Mineral Water Holdings Ltd. Bridgwater (UK) 100%Yorkshire Spring Mineral Water Company Ltd. Bridgwater (UK) 100%Refresco Financing UK 001 Ltd. Bridgwater (UK) 100%Refresco Financing UK 002 Ltd. Bridgwater (UK) 100%Refresco Drinks UK Ltd. (previous Cott Beverages Ltd.) Kegworth (UK) 100%Refresco Nelson (Holdings) Ltd. Kegworth (UK) 100%Refresco Developments Ltd. Kegworth (UK) 100%Refresco Private Label Ltd. Kegworth (UK) 100%Cott Retail Brands Netherlands B.V. Kegworth (UK) 100%Refresco (Nelson) Ltd. Kegworth (UK) 100%Cooke Bros Holdings Ltd. Kegworth (UK) 100%Mr. Freeze (Europe) Ltd. Kegworth (UK) 100%Cooke Bros (Tattenhall) Ltd. Kegworth (UK) 100%Refresco Ventures Ltd. Kegworth (UK) 100%Calypso Soft Drinks Ltd. Kegworth (UK) 100%Jay Juice Ltd. Kegworth (UK) 100%TT Calco Ltd. Kegworth (UK) 100%Tip Top Soft Drinks Ltd. Kegworth (UK) 100%



Company Statutory seat Note Ownership interest2018

Consolidated companiesRefresco Poland Sp. z o.o. Kety (Poland) 100%Refresco Sp. z o.o. Kety (Poland) 100%Refresco Italy S.p.A. Cadorago (Italy) 100%Spumador S.p.A. Cadorago (Italy) 100%Recoaro S.p.A. Cadorago (Italy) 100%

Refresco US Holding Inc. Tampa, Florida(US) 100%

Northeast Retailer Brands LLC Tampa, Florida(US) 51%

Refresco US Inc. Tampa, Florida(US) 100%

Refresco Beverages US Inc. Tampa, Florida(US) 100%

Cliffstar LLC Tampa, Florida(US) 100%

Pri-Pak Inc. Tampa, Florida(US) 100%

Refresco Canada Inc.Mississauga,Ontario(Canada)

100%

RG Refresco Group Holding SA de CV Puebla (Mexico) 100%

RG Refresco Embotelladora Mexico SA de CV Ciudad deMexico (Mexico) 100%

RG Refresco Maquinaria y Equipo SA de CV (merged into RG Refresco EmbotelladoraMexico SA de CV)

Ciudad deMexico (Mexico) Merged

Mexico Bottling Services SA de CV (merged into RG Refresco Embotelladora Mexico SAde CV) Puebla (Mexico) Merged

Servicios Gerenciales de Mexico SA de CV Puebla (Mexico) 100%

Non- consolidated companies

Entsorgungsgesellschaft mbH Neues Land Calvörde(Germany) 1 40%

Genprobio SrL Cadorago (Italy) 1 20%

1) The Non-consolidated companies are not material for the financial statements of Sunshine Mid B.V.

3.2 Loans to Group companies(x 1 million euro) 2018October 20, 2017 -Loans granted 545.0December 31, 2018 545.0

The loans granted are in euro. Interest charged is based on interest costs of the High Yield Bonds and intercompany loan, as disclosed in note3.4, with a markup for handling fee. The interest is accumulated and presented under current assets. The maturity of the High Yield Bonds isMay 15, 2026 and maturity intercompany loan is March 26, 2028.

3.3 EquityFor details on equity, a reference is made to note 5.8 of the consolidated financial statements.



3.4 Loans and borrowings(x 1 million euro) 2018Non-current liabilitiesHigh Yield Bonds 445.0Shareholder loan 100.0

545.0Capitalized Finance costs (6.3)

538.7

The repayment of the High Yield Bonds is in euro, nominal interest rate is 6.5% and maturity is May 15, 2026.

The repayment of the intercompany loan is in euro, the nominal interest rate is 8.0% and maturity is March 26, 2028.

3.5 RemunerationFor the remuneration to the Management Board a reference is made to note 6.3 of the consolidated financial statements. The company does notemploy personnel.

3.6 Independent auditor's feesWith reference to Section 2.382a(1) and (2) of the Dutch Civil Code, the following fees for the year have been charged by Ernst & YoungAccountants LLP (EY LLP) and their network inside and outside the Netherlands to the Company, its subsidiaries and other consolidatedentities:

(x 1 million euro) 2017-2018EY LLP Network Total

Statutory audit of financial statements (0.5) (1.3) (1.8)Other audit services 0.0 0.0 0.0

(0.5) (1.3) (1.8)

3.7 Proposal for appropriation of resultThe net result (loss) will be deducted from the retained earnings.

Rotterdam, May 7, 2019

Management BoardJ.H.W. Roelofs – Chief Executive Officer A.C. Duijzer – Chief Financial Officer

Other informationStatutory provision with respect to appropriation of result

Sunshine Mid Annual Report 2018 88 Statutory provision with respect to appropriation of result

The General Meeting has the authority to allocate the profits determined by adoption of the annual accounts.

Other information

Independent auditor’s report

Sunshine Mid Annual Report 2018 89 Independent auditor’s report

Report on the audit of the financial statements 2018included in the annual reportTo: the shareholders of Sunshine Mid B.V.

Our opinionWe have audited the financial statements 2018 of Sunshine Mid B.V.based in Rotterdam. The financial statements include theconsolidated financial statements and the company financialstatements.

In our opinion:• The accompanying consolidated financial statements give a true

and fair view of the financial position of Sunshine Mid B.V. as at31 December 2018 and of its result and its cash flows for theperiod 20 October 2017 - 31 December 2018 in accordance withInternational Financial Reporting Standards as adopted by theEuropean Union (EU-IFRS) and with Part 9 of Book 2 of the DutchCivil Code

• The accompanying company financial statements give a true andfair view of the financial position of Sunshine Mid B.V. as at31 December 2018 and of its result for the period 20 October2017 - 31 December 2018 in accordance with Part 9 of Book 2 ofthe Dutch Civil Code

The consolidated financial statements comprise:• The consolidated balance sheet as at 31 December 2018• The following statements for the period 20 October 2017 –

31 December 2018: the consolidated income statement, theconsolidated statements of other comprehensive income,changes in equity and cash flows

• The notes comprising a summary of the significant accountingpolicies and other explanatory information

The company financial statements comprise:• The company balance sheet as at 31 December 2018• The company income statement for the period 20 October 2017 –

31 December 2018• The notes comprising a summary of the accounting policies and

other explanatory information

Basis for our opinionWe conducted our audit in accordance with Dutch law, including theDutch Standards on Auditing. Our responsibilities under thosestandards are further described in the “Our responsibilities for theaudit of the financial statements” section of our report.

We are independent of Sunshine Mid B.V. in accordance with the Wettoezicht accountantsorganisaties (Wta, Audit firms supervision act),the Verordening inzake de onafhankelijkheid van accountants bijassurance-opdrachten (ViO, Code of Ethics for ProfessionalAccountants, a regulation with respect to independence) and otherrelevant independence regulations in the Netherlands. Furthermorewe have complied with the Verordening gedrags- en beroepsregelsaccountants (VGBA, Dutch Code of Ethics).

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

MaterialityMateriality € 18 million

Benchmarkapplied

1.5 per cent of consolidated gross margin

Explanation Based on our professional judgment we haveconsidered earnings-based measures, such as grossmargin, as an appropriate benchmark to determinemateriality. We believe gross margin is a suitablebasis, as gross margin is an important measure of thecompany’s performance.

We have also taken misstatements into account and/or possiblemisstatements that in our opinion are material for the users of thefinancial statements for qualitative reasons.

We agreed with the management board that misstatements in excessof € 900,000, which are identified during the audit, would be reportedto them, as well as smaller misstatements that in our view must bereported on qualitative grounds.

Scope of the group auditSunshine Mid B.V. is at the head of a group of entities. The financialinformation of this group is included in the consolidated financialstatements of Sunshine Mid B.V.

Our group audit included almost all components making up theSunshine Mid B.V., with the exception of Refresco US Inc. (formerWhitlock) and several US and UK entities without any significantoperations during the year. Based on our assessment of the completeset of financial information for each component, we obtained a 98%coverage over the group total assets, 94% of revenues and 99% of netprofit.

All components are audited by EY and its international network,whereby the responsible partner of Sunshine Mid B.V. is alsoresponsible for the Dutch component. The group audit team provideddetailed instructions to all component auditors, that coveredsignificant audit areas including the relevant risks of materialmisstatement, and set out the information required to be reportedback to the group audit team. The group audit team visited certaincomponent auditors, based on a rotation scheme. In addition thegroup audit team attended all closing meetings of the componentaudit teams during the hard close and the year-end audit. Duringthese visits and calls, the findings and observations reported to thegroup audit team were discussed in more detail. Any further workdeemed necessary by the group audit team was subsequentlyperformed. The group audit team performed audit procedures withrespect to certain accounts on the consolidated level, such as theaccounting treatment of acquisitions and valuation of goodwill.

Other information


By performing the procedures mentioned above at group entities,together with additional procedures at group level, we have been ableto obtain sufficient and appropriate audit evidence about the group’s

financial information to provide an opinion about the consolidatedfinancial statements.

Our key audit mattersKey audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements. Wehave communicated the key audit matters to the management board. The key audit matters are not a comprehensive reflection of all mattersdiscussed.

These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon, and we donot provide a separate opinion on these matters.

Risk Our audit approach Key observations

The measurement of revenue: Refer to note 2.4 (Revenue from contracts with customers) , note 2.20 (New standards and interpretations; IFRS15) and note 4.2 (Revenue)

Sunshine Mid B.V. has individualcontracts with clients which are uniquefor its co-packing and private labelbusinesses. The uniqueness is borne bye.g. different delivery terms and rebates.Furthermore, 2018 is the first year inwhich IFRS 15 is adopted. Consequently,we have considered revenue recognitionas significant to our audit.

In our audit we have applied a mix of control-based audit proceduresand substantive audit procedures on the revenue and revenue relatedaccounts such as cost of goods sold, inventory and rebate accruals.These procedures, among others, consist of a detailed assessment ofsales contracts, credit notes, detailed analytical reviews, cut offtesting in order to verify that sales have been recorded in the correctyear, attendance of inventory counts in order to verify the existenceand valuation of inventory and detailed testing of revenue relatedrebate accruals. We also tested manual journal entries around year-end to ensure that revenue journals were approved and supportedwith underlying documentation. Furthermore, we assessed the natureof transactions and impact analysis related to the first year ofadoption of IFRS 15. We also focused on the adequacy of thecompany’s disclosures in respect of IFRS 15.

We did not identifyevidence of materialmisstatement in therevenue recognized in theyear.

Valuation of goodwill: Refer to note 2.11 (Intangible assets; business combinations and goodwill), note 2.13 (Impairment of non-financialassets), note 2.21 (Use of estimates and judgments; estimated goodwill and impairment of goodwill) and note 5.2 (Intangible assets)

Sunshine Mid B.V. has a significantamount of goodwill on its balance sheetamounting to € 1.6 billion. In accordancewith EU-IFRS, Sunshine Mid B.V. isrequired to perform a goodwillimpairment test on an annual basis. Thegoodwill is allocated to nine CashGenerating Units (CGUs). The annualgoodwill test was performed on31 December 2018, and Sunshine MidB.V. concluded that there is noimpairment.

These impairment tests are significant toour audit because the assessmentprocess is complex and requiresmanagement judgment, and is based onassumptions that are affected byexpected future market conditions.

As part of our audit procedures we focused on the assumptions andmethodologies used by the company, and also on the robustness ofthe planning process to evaluate whether the company is able toprepare reliable estimates. Given the complexity around this topic, wehave used an EY valuation specialist to assist us in evaluating theassumptions and methodologies. The company uses assumptionswith respect to Weighted Average Cost of Capital, future market andeconomic conditions such as expected inflation rates, economicgrowth rates, volumes, gross margin and expenses. In order to assessthe reasonability of input data, the valuation model and the WeightedAverage Cost of Capital we have, among others, compared the datawith external data such as expected inflation rates, external marketgrowth expectations and by analyzing sensitivities in the company’svaluation model. With regard to the sensitivities we specificallyfocused on the available headroom present in the CGUs and whethera reasonable possible change in assumptions (assumed to be 1%),such as the discount rate and the growth rate could cause thecarrying amount to exceed its recoverable amount. We also focusedon the adequacy of the company’s disclosures regardingassumptions.

We considermanagement’s keyassumptions andestimates to be within theacceptable range and weassessed the disclosure(Note 5.2) in the financialstatements beingappropriate.

Other information


Risk Our audit approach Key observations

Accounting treatment acquisitions: Refer to note 2.11 (Intangible assets; Business combinations and goodwill), note 2.21 (Use of estimatesand judgments; Estimated goodwill and impairment of goodwill) and note 6.1 (Acquisition of subsidiaries and non-controlling interest)

In 2018 Sunshine Mid B.V. completed theacquisition of Refresco Group N.V. As of31 December 2018, the companycompleted the acquisition accounting.

We focused on this transaction because itis material to the consolidated financialstatements as a whole. In addition,determining the assumptions thatunderlie the initial acquisition accountingand the useful lives associated with theacquired tangible and intangible assetsinvolves significant managementjudgment.

We evaluated management’s process and methodology appliedrelating to the purchase price allocation. Given the complexity aroundthis topic, we have used an EY valuation specialist to assist us inevaluating the assumptions and methodology. We have tested theallocation against the applicable IFRS standards and purchaseagreements, assessed whether the correct accounting treatment hasbeen applied. We have assessed the valuation and accounting for theconsideration paid. We have audited the identification and fair valuesof the assets and liabilities acquired and assessed the valuationassumptions such as discount and growth rates. In addition, we havetested the supporting calculations for mathematical accuracy. Wealso evaluated the adequacy of the disclosure (note 6.1) of thisacquisition in the financial statements.

We considermanagement’s keyassumptions andestimates to be within theacceptable range andwe assessed thedisclosure (Note 6.1) inthe financial statementsbeing appropriate.

Report on other information included in the annualreportIn addition to the financial statements and our auditor’s reportthereon, the annual report contains other information that consists of:• The management board report• Other information pursuant to Part 9 of Book 2 of the Dutch Civil

Code• Additional information

Based on the following procedures performed, we conclude that theother information:• Is consistent with the financial statements and does not contain

material misstatements• Contains the information as required by Part 9 of Book 2 of the

Dutch Civil Code

We have read the other information. Based on our knowledge andunderstanding obtained through our audit of the financial statementsor otherwise, we have considered whether the other informationcontains material misstatements. By performing these procedures, wecomply with the requirements of Part 9 of Book 2 of the Dutch CivilCode and the Dutch Standard 720. The scope of the proceduresperformed is substantially less than the scope of those performed inour audit of the financial statements.

Management is responsible for the preparation of the otherinformation, including the management board report in accordancewith Part 9 of Book 2 of the Dutch Civil Code and other informationpursuant to Part 9 of Book 2 of the Dutch Civil Code.

Report on other legal and regulatory requirements

EngagementWe were engaged as auditor of former Refresco Group N.V. as of theaudit for the year 2014 and appointed as auditor of Sunshine Mid B.V.as of the audit for the year 2018.

Description of responsibilities for the financialstatements

Responsibilities of management and the supervisory board for thefinancial statementsManagement is responsible for the preparation and fair presentationof the financial statements in accordance with EU-IFRS and Part 9 ofBook 2 of the Dutch Civil Code. Furthermore, management isresponsible for such internal control as management determines isnecessary to enable the preparation of the financial statements thatare free from material misstatement, whether due to fraud or error.

As part of the preparation of the financial statements, management isresponsible for assessing the company’s ability to continue as a goingconcern. Based on the financial reporting frameworks mentioned,management should prepare the financial statements using the goingconcern basis of accounting unless management either intends toliquidate the company or to cease operations, or has no realisticalternative but to do so. Management should disclose events andcircumstances that may cast significant doubt on the company’sability to continue as a going concern in the financial statements.

Our responsibilities for the audit of the financial statementsOur objective is to plan and perform the audit engagement in amanner that allows us to obtain sufficient and appropriate auditevidence for our opinion.

Our audit has been performed with a high, but not absolute, level ofassurance, which means we may not detect all material errors andfraud during our audit.

Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably beexpected to influence the economic decisions of users taken on thebasis of these financial statements. The materiality affects the nature,

Other information


timing and extent of our audit procedures and the evaluation of theeffect of identified misstatements on our opinion.

We have exercised professional judgment and have maintainedprofessional skepticism throughout the audit, in accordance withDutch Standards on Auditing, ethical requirements and independencerequirements. Our audit included among others:• Identifying and assessing the risks of material misstatement of

the financial statements, whether due to fraud or error, designingand performing audit procedures responsive to those risks, andobtaining audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting amaterial misstatement resulting from fraud is higher than for oneresulting from error, as fraud may involve collusion, forgery,intentional omissions, misrepresentations, or the override ofinternal control

• Obtaining an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate inthe circumstances, but not for the purpose of expressing anopinion on the effectiveness of the company’s internal control

• Evaluating the appropriateness of accounting policies used andthe reasonableness of accounting estimates and relateddisclosures made by management

• Concluding on the appropriateness of management’s use of thegoing concern basis of accounting, and based on the auditevidence obtained, whether a material uncertainty exists relatedto events or conditions that may cast significant doubt on thecompany’s ability to continue as a going concern. If we concludethat a material uncertainty exists, we are required to drawattention in our auditor’s report to the related disclosures in thefinancial statements or, if such disclosures are inadequate, tomodify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor’s report.However, future events or conditions may cause a company tocease to continue as a going concern

• Evaluating the overall presentation, structure and content of thefinancial statements, including the disclosures

• Evaluating whether the financial statements represent theunderlying transactions and events in a manner that achieves fairpresentation

Because we are ultimately responsible for the opinion, we are alsoresponsible for directing, supervising and performing the group audit.In this respect we have determined the nature and extent of the auditprocedures to be carried out for group entities. Decisive were the sizeand/or the risk profile of the group entities or operations. On thisbasis, we selected group entities for which an audit or review had tobe carried out on the complete set of financial information or specificitems.

We communicate with the management board regarding, among othermatters, the planned scope and timing of the audit and significantaudit findings, including any significant findings in internal controlthat we identify during our audit.

We provide the management board with a statement that we havecomplied with relevant ethical requirements regarding independence,and to communicate with them all relationships and other mattersthat may reasonably be thought to bear on our independence, andwhere applicable, related safeguards.

From the matters communicated with the management board, wedetermine the key audit matters: those matters that were of mostsignificance in the audit of the financial statements. We describethese matters in our auditor’s report unless law or regulationprecludes public disclosure about the matter or when, in extremelyrare circumstances, not communicating the matter is in the publicinterest.

Rotterdam, May 7, 2019

Ernst & Young Accountants LLP

Signed by M. Bangma-Tjaden

Additional informationContact us

Sunshine Mid Annual Report 2018 93 Contact us

HEAD OFFICE

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

BENELUXRefresco Benelux B.V.Oranje Nassaulaan 446026 BX MaarheezeThe NetherlandsT +31 495 596 111E [email protected]

FINLANDRefresco Finland OYSuurahontie 170460 KuopioFinlandT +358 17 5858190E [email protected]

FRANCERefresco France S.A.S.2885, Route de Pagnons26260 MargèsFranceT +33 475 45 4444E [email protected]

GERMANYRefresco Deutschland GmbHSpeicker Straße 2-841061 MönchengladbachGermanyT +49 21 61 29 410E [email protected]

IBERIARefresco Iberia S.A.Ctra. N-332, Km 206, 946780 Oliva (Valencia)SpainT +34 96 285 0200E [email protected]

ITALYSpumador SpAVia alla Fonte, 1322071 CadoragoCaslino al Piano (CO)ItalyT +39 031 886 111E [email protected]

NORTH AMERICARefresco North America8112 Woodland Center Blvd.Tampa, FL 33614USAT +1 813 313 800E [email protected]

POLANDRefresco Sp. z o.o.ul. Fabryczna 832-650 KêtyPolandT +48 33 845 11 56E [email protected]

UNITED KINGDOMRefresco Beverages UK LimitedSide LeyKegworth, DerbyDE74 2FJUnited KingdomT +44 1509 674915E [email protected]

Photography in this report: Refresco, Shutterstock

http://www.refresco.com/

mailto:[email protected]










Additional information

Sunshine Mid Annual Report 2018 94 Contact us

our manufacturing locations

united states• Brocton, NY• Carlisle, OH• Dunkirk, NY• Concordville, PA• East Freetown, MA• Fontana, CA• Fort Gibson, OK• Fort Worth, TX• Fredonia, NY• Greer, SC• Joplin, MO• Kennewick, WA• Lakeland, FL• North East, PA• San Antonio, TX• Sikeston, MO• Springville, UT• St. Louis, MO• Tampa, FL• Walla Walla, WA• Wharton, NJ• Wilson, NC

canada• Calgary, AB• Mississauga, ON• Pointe-Claire, QC• Surrey, BC

mexico• Puebla, MX

benelux• Bodegraven• Hoensbroek• Maarheeze• Ninove• Sittard

germany• Calvörde• Erftstadt• Grünsfeld• Herrath

france• Le Quesnoy• Margès• Nuits St. Georges• St. Alban

united kingdom• Bondgate• Bridgwater• Kegworth• Macduff• Nelson• Wrexham

iberia• Alcolea• Marcilla• Oliva

italy• Caslino al Piano• Recoaro• Spinone al Lago• Sulmona• Quarona Sesia

poland• Kety• Kozietuly• Slemien

finland• Kuopio

Additional information

Sunshine Mid Annual Report 2018 95 Glossary and forward-looking statements

Adjusted EBITDAOperating profit before depreciation, amortization and impairments(=EBITDA), excluding exceptional items related to acquisitions,refinancing and other one-off items.

Adjusted net profitNet profit excluding the effects of certain exceptional items. Suchadjustments relate primarily to substantial one-off restructurings,costs relating to acquisitions or disposals, refinancing and related taxeffects.

Capital employed excluding goodwillCapital employed excluding goodwill is calculated as the total non-current assets excluding goodwill plus the working capital minus theEmployee benefits provision.

EBITDAOperating profit before depreciation, amortization and impairments.

Great Place to WorkThis is a methodology process adopted by businesses to measureemployee engagement.

Gross profit margin per literGross profit margin per liter produced divided by volume. The grossmargin used for calculation includes freight charges and other cost ofsales.

Net debtDefined as long-term borrowings plus short term borrowings less cashand cash equivalents.

Operating cash flowWe use operational cash flow to monitor cash generation. It is definedas operating income excluding depreciation and amortization,adjusted for the change in operating working capital and capitalexpenditures.

Operating incomeOperating income is defined in accordance with IFRS and includes therelevant exceptional items.

RefrescoIn this Annual report Sunshine Mid B.V. and its subsidiaries arecollectively referred to as Refresco or the company or the Group.

VolumeVolume is defined as number of liters sold.

Non-IFRS measures are provided because they are closely tracked bymanagement to evaluate Refresco’s operating performance and tomake financial, strategic and operating decisions.

Forward-looking statementsCertain statements in this document are not historical facts and are orare deemed to be ‘forward-looking’. The company’s prospects, plans,financial position and business strategy, and statements pertaining tothe capital resources, future expenditure for development projectsand results of operations, may constitute forward-looking statements.In addition, forward looking statements generally can be identified bythe use of forward-looking terminology including, but not limited to;‘may’, ‘expect’, ‘intend’, ‘estimate’, ‘anticipate’, ‘plan’, ‘foresee’,‘will’,‘could’, ‘may’, ‘might’, ‘believe’ or ‘continue’ or the negatives ofthese terms or variations of them or similar terminology. Although thecompany believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance thatthese expectations will prove to be correct. These forward-lookingstatements involve a number of risks, uncertainties and other factsthat may cause actual results to be materially different from thoseexpressed or implied in these forward-looking statements becausethey relate to events and depend on circumstances that may or maynot occur in the future and may be beyond the company’s ability tocontrol or predict. Forward- looking statements are not guarantees offuture performances.

Factors, risk and uncertainties that could cause actual outcomes andresults to be materially different from those projected include, but arenot limited to, the following: risks relating to changes in political,economic and social conditions; future prices and demand for thecompany’s products and demand for the group’s customers’products; future expansion plans and capital expenditures; thegroup’s relationship with, and conditions affecting, the group’scustomers; competition; weather conditions or catastrophic damage;and risks relating to global economic conditions and the globaleconomic environment. Forward-looking statements speak only as ofthe date of this document.

The company expressly disclaims any obligation or undertaking torelease, publicly or otherwise, any updates or revisions to anyforward- looking statement contained in this report to reflect anychange in its expectations or any change in events, conditions,assumptions or circumstances on which any such statement is basedunless so required by applicable law.

REFRESCO JV2018 Omslag-A4.indd 4 29-01-19 10:51

Annual Report 2018

Sunshine Mid b.v.www.refresco.comFascinatio Boulevard 270p.o. Box 86653009 ar RotterdamThe Netherlandst +31 10 440 [email protected]

Sunshine Mid b.v.

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