Untitled

A-0

Consolidated annual report 2020 
Table of contents 
 
 
  
 
A-1 
 
 
A.  BOARD OF DIRECTORS REPORT ...................................................................................................................................... A-0 
  KOFOLA AT A GLANCE ............................................................................................................................................... A-4 
  CHAIRMAN´S STATEMENT ........................................................................................................................................ A-9 
  KOFOLA GROUP ...................................................................................................................................................... A-10 
3.1.  Kofola ČeskoSlovensko .................................................................................................................................. A-10 
3.2.  Kofola Group ................................................................................................................................................. A-10 
3.3.  Group structure ............................................................................................................................................. A-11 
3.4.  Successes and Awards in 2020 ...................................................................................................................... A-12 
  BUSINESS OVERVIEW AND OTHER MATTERS ......................................................................................................... A-13 
4.1.  Business overview ......................................................................................................................................... A-13 
4.2.  Auditors remuneration.................................................................................................................................. A-23 
4.3.  Intellectual property and licences ................................................................................................................. A-23 
4.4.  Research and development and other information ...................................................................................... A-24 
4.5.  Technology and production and other non-current assets ........................................................................... A-24 
4.6.  Additions to property, plant and equipment and intangibles and their condition ....................................... A-24 
4.7.  Capital sources .............................................................................................................................................. A-25 
4.8.  Regulatory environment ............................................................................................................................... A-25 
4.9.  COVID-19 ....................................................................................................................................................... A-25 
4.10.  Subsequent events ........................................................................................................................................ A-26 
  RISK MANAGEMENT ............................................................................................................................................... A-27 
5.1.  Principal risks faced by the Group ................................................................................................................. A-27 
5.2.  Approach to market trends and development .............................................................................................. A-34 
  NON-FINANCIAL INFORMATION ............................................................................................................................. A-35 
6.1.  Non-financial information ............................................................................................................................. A-35 
  CORPORATE GOVERNANCE .................................................................................................................................... A-50 
7.1.  Shares and shareholders ............................................................................................................................... A-50 
7.2.  Information pursuant to Capital Markets Act section 118.5a-k .................................................................... A-51 
7.3.  Corporate governance code .......................................................................................................................... A-55 
7.4.  Statutory bodies ............................................................................................................................................ A-55 
7.5.  Description of diversity policy applied to governance bodies ....................................................................... A-66 
7.6.  Financial reporting process ........................................................................................................................... A-67 
  REPORT ON RELATIONS .......................................................................................................................................... A-68 
8.1.  Structure of relations between related parties and the description of the entities ..................................... A-68 
8.2.  Structure of relations and ownership interests between related entities as at 31 December 2020 ............ A-70 
8.3.  Role of the controlled entity in the organisational structure ........................................................................ A-70 
8.4.  Method and means of control ...................................................................................................................... A-70 
8.5.  List of acts with value exceeding 10% of equity of controlled entity ............................................................ A-71 
8.6.  List of mutual contracts between controlled entity and controlling entity or between controlled entities . A-71 
8.7.  Assessment of whether the controlled entity suffered a loss and of its settlement ..................................... A-75 
8.8.  Assessment of advantages and disadvantages arising from relations between related entities .................. A-75 
  STATUTORY DECLARATION ..................................................................................................................................... A-76 
  INDEPENDENT AUDITOR´S REPORT ........................................................................................................................ A-77 
   

Consolidated annual report 2020 
Table of contents 
 
 
  
 
A-2 
 
B.  CONSOLIDATED FINANCIAL STATEMENTS ...................................................................................................................... B-0 
  CONSOLIDATED FINANCIAL STATEMENTS ................................................................................................................ B-1 
1.  Consolidated statement of profit or loss ........................................................................................................ B-1 
2.  Consolidated statement of other comprehensive income .............................................................................. B-2 
3.  Consolidated statement of financial position ................................................................................................. B-3 
4.  Consolidated statement of cash flows ............................................................................................................ B-4 
5.  Consolidated statement of changes in equity ................................................................................................. B-5 
  GENERAL INFORMATION .......................................................................................................................................... B-7 
1.  Corporate information .................................................................................................................................... B-7 
2.  Group structure ............................................................................................................................................... B-8 
  SIGNIFICANT ACCOUNTING POLICIES ....................................................................................................................... B-9 
1.  Statement of compliance and basis of preparation ........................................................................................ B-9 
2.  Functional and presentation currency ............................................................................................................ B-9 
3.  Foreign currency translation ........................................................................................................................... B-9 
4.  Consolidation methods ................................................................................................................................. B-10 
5.  Accounting methods ..................................................................................................................................... B-12 
6.  New and amended standards adopted by the Group ................................................................................... B-22 
7.  Significant estimates and key management judgements .............................................................................. B-23 
8.  Standards issued but not yet effective .......................................................................................................... B-23 
9.  Approval of consolidated financial statements ............................................................................................. B-23 
  NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ...................................................................................... B-24 
1.  Segment information (Continuing operations) ............................................................................................. B-24 
2.  Revenue (Continuing operations) ................................................................................................................. B-28 
3.  Expenses by nature (Continuing operations) ................................................................................................ B-28 
4.  Other operating income (Continuing operations) ......................................................................................... B-29 
5.  Other operating expenses (Continuing operations) ...................................................................................... B-29 
6.  Finance income (Continuing operations) ...................................................................................................... B-29 
7.  Finance costs (Continuing operations) .......................................................................................................... B-30 
8.  Income tax (Continuing operations) .............................................................................................................. B-30 
9.  Earnings per share ......................................................................................................................................... B-32 
10.  Property, plant and equipment ..................................................................................................................... B-32 
11.  Intangible assets............................................................................................................................................ B-35 
12.  Investment in equity accounted investee ..................................................................................................... B-38 
13.  Inventories .................................................................................................................................................... B-40 
14.  Trade and other receivables.......................................................................................................................... B-40 
15.  Cash and cash equivalents ............................................................................................................................ B-41 
16.  Equity ............................................................................................................................................................ B-41 
17.  Provisions ...................................................................................................................................................... B-43 
18.  Bank credits and loans .................................................................................................................................. B-43 
19.  Trade and other payables ............................................................................................................................. B-45 
20.  Future commitments, contingent assets and liabilities ................................................................................ B-45 
21.  Leases ............................................................................................................................................................ B-46 
22.  Legal and arbitration proceedings................................................................................................................. B-47 
23.  Related party transactions ............................................................................................................................ B-48 
24.  Financial risk management ........................................................................................................................... B-49 
25.  Capital management ..................................................................................................................................... B-52 
26.  Financial instruments .................................................................................................................................... B-54 
27.  Headcount ..................................................................................................................................................... B-55 
28.  Acquisition of subsidiaries ............................................................................................................................. B-55 
29.  Discontinued operations ............................................................................................................................... B-57 
30.  COVID-19 ....................................................................................................................................................... B-58 
31.  Subsequent events ........................................................................................................................................ B-59 
   

Consolidated annual report 2020 
Table of contents 
 
 
  
 
A-3 
 
C.  SEPARATE FINANCIAL STATEMENTS ............................................................................................................................... C-0 
  SEPARATE FINANCIAL STATEMENTS ......................................................................................................................... C-1 
1.  Separate statement of profit or loss ............................................................................................................... C-1 
2.  Separate statement of other comprehensive income .................................................................................... C-1 
3.  Separate statement of financial position ........................................................................................................ C-2 
4.  Separate statement of cash flows ................................................................................................................... C-3 
5.  Separate statement of changes in equity........................................................................................................ C-4 
  GENERAL INFORMATION .......................................................................................................................................... C-5 
1.  Corporate information .................................................................................................................................... C-5 
2.  Group structure ............................................................................................................................................... C-6 
  SIGNIFICANT ACCOUNTING POLICIES ....................................................................................................................... C-7 
1.  Statement of compliance and basis of preparation ........................................................................................ C-7 
2.  Functional and presentation currency ............................................................................................................ C-7 
3.  Foreign currency translation ........................................................................................................................... C-7 
4.  Accounting methods ....................................................................................................................................... C-8 
5.  New and amended standards adopted by the Company .............................................................................. C-17 
6.  Significant estimates and key management judgements .............................................................................. C-17 
7.  Standards issued but not yet effective .......................................................................................................... C-18 
8.  Approval of separate financial statements ................................................................................................... C-18 
  NOTES TO THE SEPARATE FINANCIAL STATEMENTS ............................................................................................... C-19 
1.  Segment information .................................................................................................................................... C-19 
2.  Revenue ........................................................................................................................................................ C-19 
3.  Expenses by nature ....................................................................................................................................... C-19 
4.  Other operating income ................................................................................................................................ C-20 
5.  Other operating expenses ............................................................................................................................. C-20 
6.  Finance income ............................................................................................................................................. C-20 
7.  Finance costs ................................................................................................................................................. C-20 
8.  Income tax ..................................................................................................................................................... C-21 
9.  Earnings per share ......................................................................................................................................... C-22 
10.  Investments in subsidiaries ........................................................................................................................... C-23 
11.  Property, plant and equipment ..................................................................................................................... C-25 
12.  Intangible assets............................................................................................................................................ C-26 
13.  Trade and other receivables.......................................................................................................................... C-28 
14.  Cash and cash equivalents ............................................................................................................................ C-28 
15.  Equity ............................................................................................................................................................ C-29 
16.  Provisions ...................................................................................................................................................... C-30 
17.  Bank credits and loans .................................................................................................................................. C-30 
18.  Trade and other payables ............................................................................................................................. C-32 
19.  Future commitments, contingent assets and liabilities ................................................................................ C-32 
20.  Leases ............................................................................................................................................................ C-33 
21.  Financial risk management ........................................................................................................................... C-34 
22.  Financial instruments .................................................................................................................................... C-37 
23.  Related party transactions ............................................................................................................................ C-37 
24.  Cash and non-cash financing activities .......................................................................................................... C-41 
25.  Acquisition of subsidiaries ............................................................................................................................. C-41 
26.  COVID-19 ....................................................................................................................................................... C-43 
27.  Subsequent events ........................................................................................................................................ C-44 
 
 

Consolidated annual report 2020

Kofola at a glance

A-4

one of top producers of branded non-alcoholic beverages in Central and Eastern Europe

CZK 6.2 BN 2020

REVENUES

PRODUCTION PLANTS

2,042

EMPLOYEES

LISTED ON

PRAGUE STOCK EXCHANGE

Consolidated annual report 2020

Kofola at a glance

A-5

Grey chart represents share of ONDRÁŠOVKA and Karlovarská Korunní.

* LTM EBITDA includes pre-acquisition results of recent subsidiaries, i.e. all entities with LTM effect (incl. ONDRÁŠOVKA and Karlovarská Korunní for 1Q20)

The results and ratios above are based on adjusted results. For details on financial performance and reconciliation of

reported and adjusted results refer to section 4.1.

Consolidated annual report 2020

Kofola at a glance

A-6

Consolidated annual report 2020

Kofola at a glance

A-7

Grey chart represents share of ONDRÁŠOVKA and Karlovarská Korunní.

The results and ratios above are based on adjusted results. For details on financial performance refer to section 4.1

Consolidated annual report 2020

Kofola at a glance

A-8

Consolidated annual report 2020

Chairman´s statement

A-9

Dear investors,

The following pages contain information about all important events

that the Kofola Group was involved in during 2020. Facts, figures, and

lots of other data. Before I get to the numbers and the pandemic,

I would like to highlight a few things that brought me a bit of joy in the

previous year.

The first is the confirmation that our clients and consumers are simply

great. They love Kofola and enjoyed the summer with us to the full.

Thank you all.

Last year, we finished the diversification of the Group´s portfolio. Our

water segment currently represents around one third of our revenue,

thanks to Ondrášovka and Korunní. This is very important to us, mainly

as it reduces our dependence on sugar. In our portfolio, to be local and

healthy is of increasing importance.

We haven’t stopped our work on environmental projects, quite the

opposite. We are continuing with creating the Rajec valley habitat, our

pilot project for production plants, which we would also like to spread

to the other areas we operate in. We supported the planting of 20,000

trees in Slovenia and Croatia. Finally, we continually revise our products

and their packaging to minimise their impact on the environment.

Sustainability, for us, represents profitability in the long term.

I am glad that we have a strong relationship with our financing banks,

which were a great support in 2020 as well. Our cashflow was strong

and enabled us to pay a standard dividend of 13.5 CZK per share,

despite the fact that after the acquisition of Korunní and Ondrášovka our debt was more than 3.5 times EBITDA.

Our employees, our Kofola people, achieved the impossible - the record-breakingly fast integration of new acquisitions and the smooth

restructuring, necessitated by the current situation. It was pretty much all down to them. All companies in the Group had to take unpopular

steps, including redundancies. Employees on all levels have had to work even harder than ever during these difficult months. Our thanks to

them all.

So what is the outcome of the previous year? Our revenue fell by 3.7%, which may look insubstantial due to the circumstances. However, if

we don´t count our new acquisitions, our traditional business was hit by 164 million CZK on the EBITDA level. A significant part of this loss

happened in the second and fourth quarter, during the restaurant closure in all markets. The contribution of Korunní and Ondrášovka,

together with our successful summer season, helped to limit the fall in EBITDA to an acceptable 89 million CZK.

Our flagship – Kofola – was especially successful on the CzechoSlovak market during the main season. Moreover, we were very pleased with

our ‘reborn’ mineral water brand Kláštorná Kalcia with sales of above 90 million CZK.

The Adriatic region suffered from the lack of tourists on the Croatian coast. On the other hand, we were able to finish rebuilding our plant in

Lipik, which should bring considerable operational savings. We entered the very strong category of instant drinks in this region by introducing

Oraketa, a brand of powder drink.

LEROS, a company specializing in products from medicinal herbs, finished its merger with Espresso, thereby fully integrating coffee into its

portfolio. We introduced a new brand of coffee – Trepallini – to the market, but the pandemic slowed down our expansion into the coffee

segment. Nevertheless, we believe in the future of this segment and you are sure to hear a lot more about aromatic Leros products.

UGO went through a very difficult year, especially due to the forced closure of its branches for a significant part of it. We had to close some

of them permanently and more will follow. We still see a future for this segment in general, with its positive impact on health – which

continues to grow in importance in the eyes of consumers.

Finally, I would like to thank everybody once again who accompanied us through 2020. I believe that this difficult year has made us stronger

and that 2021 will put us back on the track of stable and long-term growth.

Jannis Samaras

Chairman of the Board of Directors

Kofola ČeskoSlovensko a.s.

Consolidated annual report 2020

Kofola Group

A-10

Kofola ČeskoSlovensko a.s. (“the Company”) is a joint-stock company and was registered on 12 September 2012. Its registered

office is Nad Porubkou 2278/31a, Ostrava, 708 00, Czech Republic and the identification number is 24261980. The Company

is recorded in the Commercial Register kept by the Regional Court in Ostrava, section B, Insert No. 10735. The Company´s

websites are http://www.firma.kofola.cz and the phone number is +420 595 601 030. LEI: 3157005DO9L5OWHBQ359.

Kofola ČeskoSlovensko a.s. is part of the Kofola Group, one of the leading producers and distributors of

non-alcoholic beverages in Central and Eastern Europe that belongs to the top players in CzechoSlovakia.

The Group produces its products with care and love in eleven main production plants located in

the Czech Republic (six plants), Slovakia (two plants), Slovenia (one plant), Croatia (one plant) and Poland (one plant).

The Group distributes its products using a wide variety of packaging, including kegs that are used in

the HoReCa channel to serve our widely popular drink „Kofola Draught" distributed in KEG which is considered as one of our

most environmentally friendly packaging. The Group distributes its products through Retail, HoReCa and Impulse channels.

Key own brands include carbonated beverages Kofola and Vinea, waters Radenska, Studenac, Rajec, Ondrášovka, Korunní

and Kláštorná Kalcia, syrup Jupí, beverages for children Jupík, Semtex energy drink, UGO fresh juices and salads, Leros teas

and coffee brand Café Reserva. In selected markets, the Group distributes among others Rauch, Evian, Badoit, Vincentka or

Dilmah products and under the licence produces Royal Crown Cola, Orangina, Rauch or Pepsi. The Group also produces and

distributes water, carbonated and non-carbonated beverages and syrups under private labels for third parties, mostly big

retail chains.

Despite the fact that the Group’s portfolio includes more than 30, mostly well-established and recognisable brands with

a wide market, the Group's key brand is Kofola.

Main brands by categories are shown in the visualisation below:

Consolidated annual report 2020

Kofola Group

A-11

Name of entity

Place of business

Segment

(Note B 4.1)

Principal activities

Ownership interest and

voting rights

31.12.2020

31.12.2019

Holding companies

Kofola ČeskoSlovensko a.s.

Czech Republic

CzechoSlovakia

top holding company

Alofok Ltd

Cyprus

n/a

holding

100.00%

Production and trading

Kofola a.s.

Czech Republic

CzechoSlovakia

production and distribution of

non-alcoholic beverages

100.00%

Kofola a.s.

Slovakia

CzechoSlovakia

production and distribution of

non-alcoholic beverages

100.00%

UGO trade s.r.o.

Czech Republic

Fresh & Herbs

operation of Fresh bars chain,

production of salads

90.00%

RADENSKA d.o.o.

Slovenia

Adriatic

production and distribution of

non-alcoholic beverages

100.00%

Studenac d.o.o.

Croatia

Adriatic

production and distribution of

non-alcoholic beverages

100.00%

Radenska d.o.o.****

Croatia

Adriatic

liquidated

n/a

100.00%

Premium Rosa Sp. z o.o.

Poland

Fresh & Herbs

production and distribution of

syrups and jams

100.00%

LEROS, s.r.o.

Czech Republic

Fresh & Herbs

production and distribution of

products from medicinal plants and

quality natural teas

100.00%

Leros Slovakia, s.r.o.

Slovakia

Fresh & Herbs

distribution of products from

medicinal plants and quality natural

teas

100.00%

Espresso s.r.o.**

Czech Republic

Fresh & Herbs

distribution of high-quality coffee and

teas

n/a

100.00%

F.H.Prager s.r.o.*

Czech Republic

CzechoSlovakia

production and distribution of ciders

100.00%

n/a

Minerálka s.r.o. - in liquidation

Slovakia

CzechoSlovakia

in liquidation

100.00%

ONDRÁŠOVKA a.s.***

Czech Republic

CzechoSlovakia

production and distribution of

non-alcoholic beverages

100.00%

n/a

Karlovarská Korunní s.r.o.***

Czech Republic

CzechoSlovakia

production and distribution of

non-alcoholic beverages

100.00%

n/a

Transportation

SANTA-TRANS s.r.o.

Czech Republic

CzechoSlovakia

road cargo transport

100.00%

* Acquired on 7 January 2020. ** Merged to LEROS, s.r.o. on 15 April 2020. *** Acquired on 15 April 2020. **** Liquidated on 28 August 2020.

Consolidated annual report 2020

Kofola Group

A-12

PROKOP 2019 - First prize in corporate communication for

the Kamilka Project.

Randstad Award - 3rd place for Kofola in the complete

ranking of the most attractive employers in

the Czech Republic, 1st place in FMCG category.

Mediář - 2 TV spots (Royal Crown Cola and Kofola) placed in

TOP 10 of TV Advertisements in 2019.

Zlatá pecka - Best of Best from Association of Czech

Advertising Agencies and Marketing Communication

(Acra-mk) for the legendary Christmas TV Kofola

Advertisement.

Zlatý středník - 1st place in the category Rebranding and

relaunch for Kláštorná Kalcia.

Global Water Drinks Awards - 1st place in the category Best

PET for Kláštorná Kalcia.

Nejdůvěryhodnější značka - Kofola brand became the most

trusted brand in the Czech Republic in the category

Carbonated Soft Drinks.

Agra - Radenska received one gold and one silver medal for

Radenska with mango and lime from international agri-food

fair Agra in Gornja Radgona.

Effie Awards Czech Republic – The gold medal for

communication of Royal Crown Cola brand and the campaign

Slow is the way to go and bronze for the campaign of energy

drink Semtex called Choose your energy.

Czech Marketing society awarded Kofola for the Christmas

TV campaign which has been broadcasted for 17 years.

Legendary TV Add got the special prize Zlatá pecka.

Honorable mention "Heroes in the fight against COVID-19"

awarded by CZECH TOP 100 for companies that selflessly

helped in times of crisis.

Consolidated annual report 2020

Business overview and other matters

A-13

Year 2020 will be written-down in history as a year of COVID-19 pandemic. Since March 2020, the lives of all people around

the world have changed significantly and we are still witnessing the impacts of the pandemic on both personal and business

daily operations.

As a result of above described, the Group year over year sales fell down even after the significant 2020 acquisitions of

ONDRÁŠOVKA and Karlovarská Korunní. This is mainly due to significant drop in the HoReCa distribution channel which has

been closed for almost half of the year. In the language of numbers, total Group sales amounted to

CZK 6,171.5 million which represents a decrease of CZK 238.0 million (3.7%), the sales decreased by 12.0% without

the acquisitions effect.

Revenue in the CzechoSlovakia business segment, when adjusted for the acquisition effect, decreased by 9.8%. As visible,

the percentage is lower than for the whole Group. This is due to the historically highest revenue in the summer period when

the segment was able to demonstrate a strength of its brands and which revealed a loyalty of its customers to traditional and

well-known brands.

Adriatic region was impacted by the COVID-19 pandemic to a bigger extent as it is more dependent on tourism (especially

Croatia). As such, the segment’s revenue decreased by 13.1%.

The total sales of CzechoSlovakia and Adriatic segments represented 90.7% of total Group sales (88.8% in 2019).

The significant revenue decline of 20.4% in the Fresh & Herbs segment is attributable to UGO which was hit by the COVID-19

related governmental precautions the most. This is due to fact that its stores are mostly located in the shopping centers.

Presented below is a description of the financial performance and financial position of Kofola Group in 2020. It should be

read along with the financial statements and with other financial information contained in the attached consolidated financial

statements. The Board of Directors is presenting and commenting on the consolidated financial results adjusted for one-off

events in the following sections of part A. Please note that due to the sale of Hoop Polska in 2019, the income statement

effects attributable to this former subsidiary are presented within discontinued operations. As a part of discontinued

operations are presented also transactions related to Megapack due to its sale in December 2019.

Consolidated annual report 2020

Business overview and other matters

A-14

Adjusted consolidated financial results

2020

One-off

adjustments

2020

adjusted

CZK´000 000

Revenue

6,171.5

Cost of sales

(3,349.5)

Gross profit

2,822.0

Selling, marketing and distribution costs

(2,041.7)

Administrative costs

(425.7)

Other operating income/(costs), net

(61.4)

117.0

55.6

Operating profit/(loss)

293.2

117.0

410.2

Depreciation and amortisation

632.5

(12.4)

620.1

EBITDA

925.7*

104.6

1,030.3**

Finance costs, net

(101.4)

0.1

(101.3)

Income tax

(126.0)

(1.5)

(127.5)

Profit/(loss) for the period (continuing operations)

65.8

115.6

181.4

Profit/(loss) for the period (discontinued operations)

Profit/(loss) for the period (continuing + discontinued operations)

65.8

115.6

181.4

- attributable to owners of Kofola ČeskoSlovensko a.s.

80.5

115.6

196.1

* EBITDA refers to operating profit/(loss) plus depreciation and amortisation.

** Adjusted EBITDA refers to EBITDA adjusted for the effects of events and transactions that are non-recurring, extraordinary or unusual in nature, including in particular results from

the sale of non-current assets and financial assets, costs not arising from ordinary operations, such as those associated with the impairment of non-current assets, financial assets,

goodwill and intangible assets, relocation costs and the costs of Group layoffs.

The result of the Kofola Group for the 12-month period ended 31 December 2020 was affected by the following one-off items:

In Other operating income/(costs), net – Continuing operations:

• The impairment of CZK 35.5 million related to the production of UGO bottles (mainly the production line) and of

CZK 8.8 million related to Grodzisk Wielkopolski plant (Fresh & Herbs segment).

• Restructuring costs (mainly payroll expenses) in CzechoSlovakia segment of CZK 33.0 million and in

Fresh & Herbs segment of CZK 4.4 million.

• Advisory costs – CzechoSlovakia segment incurred costs of CZK 13.9 million.

• Costs arising on integration of newly acquired subsidiaries of CZK 7.4 million (CzechoSlovakia segment).

• Costs for support of the parties impacted by COVID-19 of CZK 6.0 million, e.g. #zlasky (CzechoSlovakia segment).

• Costs connected with the maintenance of closed Grodzisk Wielkopolski plant of CZK 16.2 million (Fresh & Herbs

segment).

• Costs arising on merger between LEROS and Espresso (Fresh & Herbs segment) of CZK 1.5 million.

• Net gain on sold items of Property, plant and equipment of CZK 9.7 million recognized in all business segments

(mainly CzechoSlovakia).

Consolidated annual report 2020

Business overview and other matters

A-15

Adjusted consolidated financial results

2019

One-off

adjustments

2019

adjusted

CZK´000 000

Revenue

6,409.5

Cost of sales

(3,344.9)

Gross profit

3,064.6

Selling, marketing and distribution costs

(2,090.5)

Administrative costs

(453.8)

Other operating income/(costs), net

19.5

29.7

49.2

Operating profit/(loss)

539.8

29.7

569.5

Depreciation and amortisation

562.3

(12.4)

549.9

EBITDA

1,102.1*

17.3

1,119.4**

Finance costs, net

(141.0)

Income tax

(146.1)

2.9

(143.2)

Profit/(loss) for the period (continuing operations)

252.7

32.6

285.3

Profit/(loss) for the period (discontinued operations)

23.4

9.9

33.3

Profit/(loss) for the period (continuing + discontinued operations)

276.1

42.5

318.6

- attributable to owners of Kofola ČeskoSlovensko a.s.

284.4

42.5

326.9

* EBITDA refers to operating profit/(loss) plus depreciation and amortisation.

** Adjusted EBITDA refers to EBITDA adjusted for the effects of events and transactions that are non-recurring, extraordinary or unusual in nature, including in particular results from

the sale of non-current assets and financial assets, costs not arising from ordinary operations, such as those associated with the impairment of non-current assets, financial assets,

goodwill and intangible assets, relocation costs and the costs of Group layoffs.

The result of the Kofola Group for the 12-month period ended 31 December 2019 was affected by the following one-off items:

In Other operating income/(costs), net – Continuing operations:

• Costs connected with the maintenance of closed Grodzisk Wielkopolski plant of CZK 20.1 million (Fresh & Herbs

segment).

• Gain on sold items of Property, plant and equipment (mainly machines) of CZK 6.1 million recognized in the Adriatic

segment.

• Gain on sold items of Property, plant and equipment of CZK 9.0 million recognized in the CzechoSlovakia segment.

• Advisory costs – CzechoSlovakia segment incurred costs of CZK 21.5 million, business category Other incurred costs

of CZK 0.3 million.

• Severance costs in LEROS (Fresh & Herbs segment) of CZK 2.9 million.

In Profit/(loss) for the period – Discontinued operations:

• Gain on sale of Hoop Polska of CZK 8.0 million.

• Gain of CZK 81.4 million arising from the release of the cumulated foreign currency translation reserve related to

the historical consolidation of the disposed subsidiary Hoop Polska.

• Gain on sale of Megapack of CZK 19.1 million.

• Loss of CZK 118.4 million arising from the release of the cumulated foreign currency translation reserve related to

the historical equity accounting of the disposed investment in Megapack.

Consolidated annual report 2020

Business overview and other matters

A-16

Adjusted consolidated financial results

2020

2019

Change

CZK´000 000

Revenue

6,171.5

6,409.5

(238.0)

(3.7%)

Cost of sales

(3,349.5)

(3,344.9)

(4.6)

0.1%

Gross profit

2,822.0

3,064.6

(242.6)

(7.9%)

Selling, marketing and distribution costs

(2,041.7)

(2,090.5)

48.8

(2.3%)

Administrative costs

(425.7)

(453.8)

28.1

(6.2%)

Other operating income/(costs), net

55.6

49.2

6.4

13.0%

Operating profit/(loss)

410.2

569.5

(159.3)

(28.0%)

EBITDA

1,030.3

1,119.4

(89.1)

(8.0%)

Finance costs, net

(101.3)

(141.0)

39.7

(28.2%)

Income tax

(127.5)

(143.2)

15.7

(11.0%)

Profit/(loss) for the period (continuing operations)

181.4

285.3

(103.9)

(36.4%)

Profit/(loss) for the period (discontinued operations)

0.0

33.3

(33.3)

(100.0%)

Profit/(loss) for the period (continuing + discontinued operations)

181.4

318.6

(137.2)

(43.1%)

- attributable to owners of Kofola ČeskoSlovensko a.s.

196.1

326.9

(130.8)

(40.0%)

Group’s revenue decreased as a result of significant impact of COVID-19 pandemic and related governmental measures on

HoReCa distribution channel. Total decrease was partially compensated by the acquisition effect of CZK 530.4 million.

The following table sets forth revenue split by business segments for 2020 and 2019.

2020

2019

Change

Business segments

Revenue

CZK´000 000

CzechoSlovakia

4,507.1

73.0%

4,434.4

69.2%

72.7

1.6%

Adriatic

1,093.7

17.7%

1,258.0

19.6%

(164.3)

(13.1%)

Fresh & Herbs

570.7

9.3%

717.1

11.2%

(146.4)

(20.4%)

Total

6,171.5

100.0%

6,409.5

100.0%

(238.0)

(3.7%)

CzechoSlovakia segment sales grew mainly due to acquisition of ONDRÁŠOVKA and Karlovarská Korunní in April 2020.

Without the acquisition effect, the segment revenue decreased by CZK 433.7 million (9.8%).

Sales realized by the Adriatic segment were impacted by the COVID-19 pandemic even more as these are countries dependant

to a bigger extent on tourism.

Fresh & Herbs segment was impacted the most, which is mainly due to closed UGO stores.

The following table sets forth sales split by category of products for 2020 and 2019.

2020

2019

Change

Product lines

Revenue

CZK´000 000

Carbonated beverages

2,384.5

38.6%

2,671.7

41.7%

(287.2)

(10.7%)

Waters

2,013.3

32.6%

1,759.4

27.4%

253.9

14.4%

Non-carbonated beverages

570.8

9.2%

681.3

10.6%

(110.5)

(16.2%)

Syrups

494.3

8.0%

466.5

7.3%

27.8

6.0%

Fresh bars & Salads

236.4

3.8%

420.8

6.6%

(184.4)

(43.8%)

Other

472.2

7.8%

409.8

6.4%

62.4

15.2%

Total

6,171.5

100.0%

6,409.5

100.0%

(238.0)

(3.7%)

The activities of the Group concentrate on the production of beverages in four market categories: carbonated beverages

(including cola beverages), non-carbonated beverages, types of bottled water and syrups. Together these categories

accounted for 88.4% of the Group’s revenue in 2020 (in 2019: 87.0%).

Water segment increased due to the acquisition of ONDRÁŠOVKA and Karlovarská Korunní. Increase in Other is mainly

attributable to the acquisition effect of Espresso (acquired in July 2019). Syrups demonstrated increase as this is a typical

Retail category consumed at home.

Consolidated annual report 2020

Business overview and other matters

A-17

The following table contains information about the geographical areas.

2020

2019

Change

Sales by countries (per end customer)

Revenue

CZK´000 000

Czech Republic

3,330.2

54.0%

3,307.1

51.6%

23.1

0.7%

Slovakia

1,636.1

26.5%

1,723.8

26.9%

(87.7)

(5.1%)

Slovenia

713.9

11.6%

799.6

12.5%

(85.7)

(10.7%)

Croatia

300.8

4.9%

371.2

5.8%

(70.4)

(19.0%)

Poland

78.4

1.3%

65.8

1.0%

12.6

19.1%

Other

112.1

1.7%

142.0

2.2%

(29.9)

(21.1%)

Total

6,171.5

100.0%

6,409.5

100.0%

(238.0)

(3.7%)

The allocation of revenue to a particular country segment is based on the geographical location of customers.

Czech Republic sales increased due to the acquisition of ONDRÁŠOVKA and Karlovarská Korunní.

Poland revenue is represented mainly by Premium Rosa which produces and distributes syrups and jams from fruits and

herbs. These products support the healthy lifestyle and as such were subject to increased demand. We are also successfully

developing own brands business in Poland.

Group’s Cost of sales remained relatively flat which is mainly due to newly acquired subsidiaries ONDRÁŠOVKA and

Karlovarská Korunní.

Gross profit margin decreased significantly mainly due to outage of HoReCa revenue which in general bears higher sales

margin than Retail revenue.

Selling, marketing and distribution costs decreased mainly due to lower logistic costs (lower sales) and marketing expenses.

There were also savings in personnel expenses resulting from Group’s reaction to pandemic situation.

Administrative costs decreased mainly due to savings in personnel expenses (including option scheme that ended in 2019).

Savings in selling, marketing, distribution and administrative costs were outweighed by significant loss of gross profit due to

COVID-19 pandemic. As a result, Group’s operating profit decreased by CZK 159.3 million (28.0%).

The following table sets forth information regarding adjusted EBITDA for 2020 and 2019.

Adjusted EBITDA

2020

2019

CZK´000 000/%

EBITDA*

1,030.3

1,119.4

EBITDA margin**

16.7%

17.5%

* EBITDA refers to operating profit/(loss) plus depreciation and amortisation.

** Calculated as (EBITDA/Revenue)*100%.

The following table sets forth information regarding adjusted EBITDA split by business segments for 2020 and 2019.

2020

2019

Change

Adjusted EBITDA by business segments

EBITDA

EBITDA margin

EBITDA

EBITDA margin

CZK´000 000

CzechoSlovakia

949.5

21.1%

913.2

20.6%

36.3

4.0%

Adriatic

131.5

12.0%

191.3

15.2%

(59.8)

(31.3%)

Fresh & Herbs

(49.8)

(8.7%)

15.8

2.2%

(65.6)

(415.2%)

Other

(0.9)

n/a

(0.9)

n/a

Total

1,030.3

16.7%

1,119.4

17.5%

(89.1)

(8.0%)

Consolidated annual report 2020

Business overview and other matters

A-18

Adjusted EBITDA in the CzechoSlovakia business segment increased due to the acquisition effect. Without the acquisition

effect, the decrease was the smallest across Group’s segments due to great results in summer.

Performance in the Adriatic was impacted very significantly as it is a segment dependant also on tourism.

The unfavourable adjusted EBITDA of the Fresh & Herbs segment is mainly a result of closed UGO stores.

Better financial result was influenced by the unrealized FX gains from EUR receivables and lower market interest rates that

decreased Group’s interest expense.

Lower income tax is a result of lower taxable profits.

Group’s saving precautions and positive impact from FX changes lead to a significant compensation of loss on the Group’s

Gross profit level, however they couldn’t outweigh the significant negative impact of COVID-19 pandemic which lead to

overall decrease of Group’s Profit for the period.

Adjusted consolidated financial results

4Q20

4Q19

Change

CZK´000 000

Revenue

1,338.1

1,516.2

(178.1)

(11.7%)

Cost of sales

(786.8)

(818.1)

31.3

(3.8%)

Gross profit

551.3

698.1

(146.8)

(21.0%)

Selling, marketing and distribution costs

(514.2)

(503.6)

(10.6)

2.1%

Administrative costs

(109.3)

(122.9)

13.6

(11.1%)

Other operating income/(costs), net

27.8

47.3

(19.5)

(41.2%)

Operating profit/(loss)

(44.4)

118.9

(163.3)

(137.3%)

EBITDA

124.5

259.2

(134.7)

(52.0%)

Finance costs, net

(69.9)

(49.5)

(20.4)

41.2%

Income tax

(17.5)

(28.8)

11.3

(39.2%)

Profit/(loss) for the period (continuing operations)

(131.8)

40.6

(172.4)

(424.6%)

Profit/(loss) for the period (discontinued operations)

5.8

(5.8)

(100.0%)

Profit/(loss) for the period (continuing + discontinued operations)

(131.8)

46.4

(178.2)

(384.1%)

- attributable to owners of Kofola ČeskoSlovensko a.s.

(126.8)

48.8

(175.6)

(359.8%)

Percentage difference between the decrease in Revenue and Cost of sales is caused mostly by the acquisition effect. Selling,

marketing and distribution costs increased mainly as a result of loss allowances to receivables.

Mainly as a result of worse Gross profit, the adjusted Operating result for 4Q20 amounted to loss which, after adjustment for

deprecation, represented also a decrease of the Group’s EBITDA. Despite the fact that EBITDA decrease was slightly above

50%, this result was better than expected due to short period of release of governmental precautions at the end of the year

(Czechia).

Increase in net Finance costs was mainly a net effect of higher net exchange losses (CZK 26.7 million) and lower interest

expense from bank loans (CZK 8.6 million).

Lower Income tax is a result of lower taxable profits in Group companies.

Consolidated annual report 2020

Business overview and other matters

A-19

The following table sets forth revenue split by business segments for 4Q20 and 4Q19.

4Q20

4Q19

Change

Business segments

Revenue

CZK´000 000

CzechoSlovakia

1,001.2

74.8%

1,056.9

69.7%

(55.7)

(5.3%)

Adriatic

195.2

14.6%

248.9

16.4%

(53.7)

(21.6%)

Fresh & Herbs

141.7

10.6%

210.4

13.9%

(68.7)

(32.7%)

Total

1,338.1

100.0%

1,516.2

100.0%

(178.1)

(11.7%)

Revenue decrease in 4Q is fully attributable to the impacts of COVID-19 related business restrictions. CzechoSlovakia sales

dropped by 18.4% after adjustment for the acquisition effect.

The following table sets forth sales split by category of products for 4Q20 and 4Q19.

4Q20

4Q19

Change

Product lines

Revenue

CZK´000 000

Carbonated beverages

500.8

37.4%

632.2

41.7%

(131.4)

(20.8%)

Waters

402.9

30.1%

357.4

23.6%

45.5

12.7%

Non-carbonated beverages

127.9

9.6%

159.9

10.5%

(32.0)

(20.0%)

Syrups

127.6

9.5%

118.7

7.8%

8.9

7.5%

Fresh bars & Salads

36.0

2.7%

111.2

7.3%

(75.2)

(67.6%)

Other

142.9

10.7%

136.8

9.1%

6.1

4.5%

Total

1,338.1

100.0%

1,516.2

100.0%

(178.1)

(11.7%)

The only growing categories (after the adjustment for the acquisition effect) were Syrups, typically consumed at home, and

Other, thanks to increased sales of Leros teas.

The following table contains information about the geographical areas.

4Q20

4Q19

Change

Sales by countries (per end customer)

Revenue

CZK´000 000

Czech Republic

737.7

55.1%

820.1

54.1%

(82.4)

(10.0%)

Slovakia

367.0

27.4%

408.9

27.0%

(41.9)

(10.2%)

Slovenia

133.9

10.0%

168.1

11.1%

(34.2)

(20.3%)

Croatia

46.7

3.5%

66.4

4.4%

(19.7)

(29.7%)

Poland

29.5

2.2%

21.8

1.4%

7.7

35.3%

Other

23.3

1.8%

30.9

2.0%

(7.6)

(24.6%)

Total

1,338.1

100.0%

1,516.2

100.0%

(178.1)

(11.7%)

Development of revenue divided by countries is in line with the information already presented above.

Adjusted EBITDA

4Q20

4Q19

CZK´000 000/%

EBITDA*

124.5

259.2

EBITDA margin**

9.3%

17.1%

* EBITDA refers to operating profit/(loss) plus depreciation and amortisation.

** Calculated as (EBITDA/Revenue)*100%.

The following table sets forth information regarding adjusted EBITDA split by business segments for 4Q20 and 4Q19.

4Q20

4Q19

Change

Adjusted EBITDA by business segments

EBITDA

EBITDA margin

EBITDA

EBITDA margin

CZK´000 000

CzechoSlovakia

142.4

14.2%

220.2

20.8%

(77.8)

(35.3%)

Adriatic

(8.9)

(4.6%)

15.1

6.1%

(24.0)

(158.9%)

Fresh & Herbs

(8.5)

(6.0%)

24.3

11.5%

(32.8)

(135.0%)

Other

(0.5)

n/a

(0.4)

n/a

(0.1)

(25.0%)

Total

124.5

9.3%

259.2

17.1%

(134.7)

(52.0%)

COVID-19 pandemic had a pervasive impact for the major part of 4Q which resulted in the above stated decreases. Decreases

were also influenced by the loss allowances for receivables booked at the end of 2020.

Consolidated annual report 2020

Business overview and other matters

A-20

Consolidated statement of financial position

31.12.2020

31.12.2019

Change

CZK´000 000

Total assets

7,537.3

6,916.4

620.9

9.0%

Non-current assets

5,683.6

4,394.0

1,289.6

29.3%

Property, plant and equipment

3,448.6

3,127.0

321.6

10.3%

Intangible assets

1,339.2

956.8

382.4

40.0%

Goodwill

647.0

105.5

541.5

513.3%

Deferred tax assets

40.1

38.9

1.2

3.1%

Other

208.7

165.8

42.9

25.9%

Current assets

1,853.7

2,522.4

(668.7)

(26.5%)

Inventories

519.2

485.3

33.9

7.0%

Trade and other receivables

783.4

1,247.0

(463.6)

(37.2%)

Cash and cash equivalents

543.9

774.5

(230.6)

(29.8%)

Other

7.2

15.6

(8.4)

(53.8%)

Total equity and liabilities

7,537.3

6,916.4

620.9

9.0%

Equity

1,307.2

1,513.6

(206.4)

(13.6%)

Non-current liabilities

3,993.3

2,842.5

1,150.8

40.5%

Bank credits and loans

3,252.2

2,229.2

1,023.0

45.9%

Lease liabilities

322.4

314.4

8.0

2.5%

Deferred tax liabilities

286.0

190.9

95.1

49.8%

Other

132.7

108.0

24.7

22.9%

Current liabilities

2,236.8

2,560.3

(323.5)

(12.6%)

Bank credits and loans

685.2

783.8

(98.6)

(12.6%)

Lease liabilities

132.4

105.4

27.0

25.6%

Trade and other payables

1,320.9

1,497.0

(176.1)

(11.8%)

Other

98.3

174.1

(75.8)

(43.5%)

Property, plant and equipment increased mainly due to additions (including lease additions and additions from acquisition of

subsidiaries) of CZK 921.7 million and significant upward FX revaluation of foreign Group entities’ assets being higher than

depreciation charge of CZK 553.6 million and the net book value of disposed assets. The most significant additions realized

by the Group in 2020 were represented by new acquisitions (CZK 355.5 million), investments into the production machinery,

warehouse, returnable packages and assets arising as a result of the lease capitalization. The impairment in the amount of

CZK 35.5 million was charged to the items of Property, plant and equipment related to the production of UGO bottles (mainly

the production line).

Intangible assets increased mainly as a result of assets (mostly brands) arising on acquisition of subsidiaries

(CZK 442.3 million). Increase of Goodwill also results from the acquisition of subsidiaries (CZK 541.4 million).

Other non-current assets contain mainly government grant, advances, principals and purchased bonds. Increase is

attributable mostly to reclassification of current part of government grant due to postponed investment into new

administrative premises.

Inventories increased as a result of acquisitions.

Trade and other receivables decreased mainly due to collection of the receivable from the sale of Hoop Polska

(CZK 142.4 million), collection of the receivable from the sale of Megapack (CZK 115.7 million) and lower trade receivables

due to COVID-19 pandemic.

Consolidated annual report 2020

Business overview and other matters

A-21

Bank credits and loans increased mainly as a result of financing of ONDRÁŠOVKA a.s. and Karlovarská Korunní s.r.o.

acquisitions, the Group has drawn a loan in the amount of CZK 1,138 million in April 2020.

Deferred tax liabilities increased mainly as a result of acquisition of subsidiaries.

Trade and other payables decreased due to lower purchases (COVID-19) and lower payables from capital expenditures.

The Group´s provisions decreased by CZK 44.2 million to CZK 108.2 million, which is mainly thanks to decreased provisions

for annual employee bonuses at the end of 2020 due to COVID-19 pandemic, when compared to 2019.

The Group’s consolidated net debt (calculated as total non-current and current liabilities relating to credits, loans, leases and

other debt instruments less cash and cash equivalents) amounted to CZK 3,848.3 million as at 31 December 2020, which

represents an increase of CZK 1,190.0 million compared to CZK 2,658.3 million as at 31 December 2019. Increase is

attributable mainly to the new loan drawn on acquisition of subsidiaries.

The Group´s consolidated net debt / Adjusted LTM EBITDA as at 31 December 2020 was of 3.7 (as of 31 December 2019: 2.4).

Cash flows from operating activities decreased mainly as a result of worse operating result due to COVID-19 pandemic.

Main cash flow transactions were connected with the acquisitions in 2020. The Group has also received payments for the sale

of Hoop Polska and Megapack.

From the total balance of Repayment of loans and bank credits presented within the Consolidated statement of cash flows,

amount of CZK 130.5 million represents the decrease of Group’s overdraft. Due to COVID-19, Kofola ČeskoSlovensko has

utilized government moratorium on its bank loans. Planned repayments of CZK 108.8 million in 2Q20 and CZK 108.8 million

in 3Q20 were postponed by 6 months.

CzechoSlovakia segment will continue to build and further enhance its competence of being comprehensive supplier with

the complete offer of beverages. In the Retail channel, CzechoSlovakia segment will mainly support its most significant brands

Kofola, Rajec, Jupí and others while the focus will also be given on the further development of mineral waters Ondrášovka,

Korunní and Kláštorná. In the HoReCa channel, the priority will again be given to draught Kofola, further support of latest

portfolio additions Café Reserva and F.H.Prager ciders and also brand new innovations such as Trepallini coffee and

Targa Florio lemonade. Mainly the HoReCa channel will still face the COVID situation and as such the revenue from this

channel will be lower compared to preCOVID times, however it is still very important channel where the aim is to continuously

increase market share, presence and visibility. CzechoSlovakia segment will gain cost synergies from already fully integrated

Ondrášovka and Korunní and will also benefit from other antiCOVID cost savings introduced in 2020.

In the Adriatic region, our key goal remains to increase the market share, especially on Croatian market in the water category.

We will continue with the distribution of our new niche in Slovenia, instant vitamin powder, where we are entering the Retail

channel with a new format. In relation to COVID, we are prepared to recover our business in the HoReCa channel with

E-platform digitization project. Care about the environment is still our priority, we are continuing with various sustainability

projects (planting of trees, rPET, returnable glass bottles etc.).

LEROS will continue in increasing sales on the Retail market (tea and coffee). Trepallini brand for Retail was introduced at

the beginning of April (exclusivity for Globus), Leros cosmetics will add 11 new products. We are well prepared for the start,

once the Gastro segment is opened.

Premium Rosa will continue in developing its own brand business in Poland both on traditional and modern trade markets.

Furthermore, it will focus on the penetration of the pharmacy market and boosting exports.

In UGO, we will focus on take away delivery and E-commerce growth in our QSR segment. UGO is also continuing to develop

further cooperation in Private Label production for the biggest retail concepts to support UGO branded healthy and fresh

drinks (juices, smoothies, lemonades, vitamin water) and salads in all types of Retail (Supermarkets, Shops, E-shop, Trains,

Gas stations etc.). Production plants are optimally equipped and we will continue in supplying of our customers with high

quality products.

Consolidated annual report 2020

Business overview and other matters

A-22

We will further continue in our significant contributions to the environmental protection. We plan to further support

the development of our own brands and also the distribution of our partners’ brands with focus on CEE region.

We will be also further dealing with the continuing impacts of COVID-19 pandemic situation, as outlined within section

4.9 Subsequent events.

Even though ESMA (European Securities and Markets Authority) does not require a reconciliation of Alternative Performance

Indicators (APM) to financial statements if the APM can be defined from the financial statements, we add such a reconciliation

for better understanding of our calculation of EBITDA and Net Debt.

Definition and reconciliation of APM to the financial

statements (FS)

Line in FS

Revenue

Statement of Profit or Loss

Revenue

Cost of sales

(B)

Statement of Profit or Loss

Cost of sales

Gross profit

A+B=C

Statement of Profit or Loss

Gross profit

Selling, marketing and distribution costs

(D)

Statement of Profit or Loss

Selling, marketing and distribution

costs

Administrative costs

(E)

Statement of Profit or Loss

Administrative costs

Other operating income/(costs), net

Statement of Profit or Loss

Other operating income +

Other operating expenses

Operating profit/(loss)

C+D+E+F=G

Statement of Profit or Loss

Operating profit/(loss)

Depreciation and amortisation

Statement of Cash Flows

Depreciation and amortisation

EBITDA

G+H=I

Bank credits and loans

Statement of Financial Position

Bank credits and loans*

Lease liabilities

Statement of Financial Position

Lease liabilities*

Cash and cash equivalents

Statement of Financial Position

Cash and cash equivalents

Net debt

J+K-L =M

Net debt/EBITDA

M/I

* In both current and non-current liabilities.

The Company uses EBITDA because it is an important economic indicator showing a business’s operating efficiency

comparable to other companies, as it is unrelated to the Company’s depreciation and amortisation policy, capital structure

and tax treatment. EBITDA indicator is also treated as a good approximation for operating cash flow. Additionally, it is one of

the fundamental indicators used by companies worldwide to set their key financial and strategic objectives.

The Company uses EBITDA indicator also in budgeting process, benchmarking with its peers and as a basis for remuneration

for key management staff. Such indicator is also used by stock exchange and bank analysts.

The Company uses Net debt indicator because it shows the real level of a Company’s financial debt, i.e. the nominal amount

of debt net of cash, cash equivalents, and highly liquid financial assets held by the Company. The indicator allows assessing

the overall indebtedness of the Company.

The Company uses Net debt/EBITDA indicator because it indicates a Company’s capability to pay back its debt as well as its

ability to take on additional debt to grow its business. Additionally, the Company uses this indicator to assess the adequacy

of its capital structure and stability of its expected cash flows. Such indicator is also used by stock exchange and bank analysts.

Initial application of IFRS 16 standard didn’t have any impact on the calculation of particular APMs.

On General Meeting held on 21 June 2017, the Company announced the change in the dividend policy with the aim of

distributing of a dividend to the shareholders of Kofola of at least 60% of its consolidated net profit achieved in each financial

Consolidated annual report 2020

Business overview and other matters

A-23

year from 2017 until 2020, subject to sufficient distributable profits. Updated dividend policy for 2021 and following years

will be approved on the annual General Meeting which is planned in the second quarter of 2021.

The Group was for the year ended 31 December 2020 audited by KPMG (for the year ended 31 December 2019 by KPMG).

No other than audit services have been provided by KPMG. The following amounts were charged by professional advisors

and auditors in 2020:

Auditors’ remuneration

Charged to

the Company

Charged to other

Group entities

Total

CZK´000 000

Audit (KPMG)

0.8

2.1

2.9

Audit (Other companies)

1.0

Tax services (Other companies)

2.3

1.6

3.9

Total

3.1

4.7

7.8

Tax services include mainly advisory relating to preparation of corporate income tax returns, personal income tax for expats

and various consultations in complex tax areas.

The Group relies on the strength of its brands which are registered trademarks protected by local legislation in its countries

of operation. The Group has also registered a number of industrial designs (drink bottles and other beverage packaging).

Kofola ČeskoSlovensko a.s. owns the most licenses, trademarks for branded beverages and similar copyrights, for the use of

which the other Group companies pay royalties. The Vinea and Kláštorná Kalcia trademarks are the exception and are owned

by Kofola a.s. (SK). Slovenian brands Radenska and Ora are owned by RADENSKA d.o.o. and are mainly sold in the Adriatic

region. Café Reserva is owned by LEROS, s.r.o. (after merger with Espresso s.r.o.).

Some of the key trademarks and industrial designs are also protected at international level as (i) Community Trade Marks

(CTMs) (e.g. the Kofola, Rajec and Vinea trademarks) or Registered Community Designs (RCDs), which are registered through

EUIPO and protected in the EU as a whole, or (ii) international trademarks (IRTs) (e.g. the Jupík, Vinea trademarks), which are

registered through WIPO and protected in a number of other specific export countries (e.g. Ukraine, Russia, Switzerland).

The Group uses a number of registered Internet domains, including "kofola.cz", "jupik.com", "rajec.com", "ugo.cz",

"radenska.si", "ondrasovka.cz" or "korunni.cz".

The Group entered into the following main licensor and distribution agreements:

• distribution agreements under which the Group has the exclusive right to distribute Rauch's products in the territory

of the Czech Republic and Slovakia,

• distribution agreement under which the Group has the exclusive right to distribute Evian and Badoit products (water)

in the territory of the Czech Republic and Slovakia,

• distribution agreement under which the Group has the exclusive right to distribute Vincentka (natural mineral water)

in the territory of the Czech Republic,

• licensor agreement under which the Group has the exclusive right to purchase beverage concentrates to manufacture,

bottle and sell carbonated beverage RC Cola,

• licensor agreement under which the Group has the exclusive right to purchase beverage concentrates to manufacture,

bottle and sell carbonated beverage Orangina,

• licensor and distribution agreement under which the Group has the exclusive right to produce and distribute

the PepsiCo portfolio products in the Slovenian market and since January 2016 also in the Croatian market.

In the Company´s opinion, there are no other patents or licences, industrial, commercial or financial contracts or new

manufacturing processes which would be material to the Company´s or the Group's business or profitability and which are

not included in the annual report.

Consolidated annual report 2020

Business overview and other matters

A-24

In 2020, the Group carried out research and development activities and incurred costs of CZK 6.7 million

(2019: CZK 8.2 million).

The Company does not operate an organisational unit abroad.

The Group manufactures its products in eleven main production plants located in the Czech Republic (six plants – Krnov,

Mnichovo Hradiště, Strážnice, Jažlovice, Ondrášov and Stráž nad Ohří), Slovakia (two plants - Rajecká Lesná, Kláštor pod

Znievom), Poland (one plant - Zlotoklos), Slovenia (one plant - Radenci) and Croatia (one plant - Lipik).

The Group uses state-of-the-art, modern production equipment. Total CAPEX (excluding acquisitions, including lease

addition) in the last 3 years amounted to CZK 1,881.7 million. The Group has also invested substantial amounts in equipment

used in the HoReCa distribution channel, supporting further growth in this channel (kegs, fridges etc.). As a consequence,

the Group's manufacturing facilities do not need major investments in the next few years. In addition, the Group has spare

production capacities that allow, if necessary, quickly increase its production. Production lines are constructed by renowned

producers such as Sidel, KHS and Kronnes. The Group has implemented modern management methodologies: WCM (World

Class Management), SPC (Statistics Process Control) and TPM (Total Productive Maintenance).

In addition, the Group's production plants are used as main logistic centres for distribution. Distribution is realised partly by

external logistic providers, but also by our own logistic company SANTA-TRANS s.r.o., which operates approximately 100

trucks and vans.

The Group's material assets are primarily production, distribution and storage facilities. Accordingly, the Group's material

assets consist primarily of buildings, warehouses and other constructions, as well as real estate properties (plots of land) on

which these constructions are located and machinery and equipment in these constructions (e.g. production lines).

The Group finances its operations by cash flows from its operating activity, long- and short-term loans and leases.

Additions of Property, plant, equipment (PPE) and Intangible assets (IA)*

2020

2019

CZK´000 000

Land

9.7

12.0

Buildings and constructions

131.2

315.6

Plant and equipment

228.7

312.9

Vehicles

49.4

132.0

Leasehold improvement

18.0

9.6

Returnable packages

66.5

34.5

Other non-current assets

0.4

0.3

Non-current assets under construction, Prepayments for PPE

62.3

58.3

Goodwill

0.0

0.2

Patents, licences

0.1

Software

16.2

13.3

Trademarks and other rights

0.5

0.3

Intangible assets under development, Prepayments for IA

1.0

4.3

Total

584.0

893.3

* excluding acquisitions, including lease additions

Allocation of Property, plant, equipment and Intangible assets additions*

2020

2019

CZK´000 000

Czech Republic

319.4

556.2

Slovakia

165.5

189.1

Slovenia

53.0

67.1

Croatia

45.6

77.7

Poland

0.5

3.2

Total

584.0

893.3

* excluding acquisitions, including lease additions

Consolidated annual report 2020

Business overview and other matters

A-25

Condition of Group’s assets is in line with their useful life, they are subject to regular maintenance and replacement at the end

of their useful life.

Future investments are expected to be on the similar level as in prior periods and will comprise mainly investments into

the production and sales support equipment.

Group's activities are financed through various sources of capital as presented within the statement of financial position.

Particular material balances are further described in part B and part C of this report. Bank credits and loans represent

the significant source of finance to both Company and Group and payment schedules of already provided bank loans are

dependent on Group’s fulfilment of specified financial indicators (covenants).

The Group produces and distributes non-alcoholic beverages in many countries. As a consequence, the Group’s operations

are subject to the regulation of various legal systems. In particular, this refers to taxation (including VAT rates), labour law,

social insurance regulations, matters relating to the granting of licences and permits, advertisement regulation, beverage

industry regulations, etc.

Since the Company´s shares have been admitted to trading on the Prague Stock Exchange, the shareholders have certain

disclosure requirements arising from the provisions of the Czech Capital Markets Act. The financial statements have to be

prepared in line with International Financial Reporting Standards (“IFRS”) and the interpretations issued by the International

Financial Reporting Interpretations Committee (“IFRIC”).

The Company is also subject to supervision of relevant regulatory authorities (such as Czech National Bank). Moreover,

the Company is subject to certain aspects of the European Union regulations.

The ESEF (European Single Electronic Format) Regulation requires that all issuers with securities listed on an EU regulated

market prepare their annual financial reports in xHTML and mark-up the IFRS consolidated financial statements contained

therein using XBRL tags and the iXBRL technology. However, the users will be still able to find also standard pdf format version

of this annual report on the Company’s website http://investor.kofola.cz.

Even after more than one year, we are still witnessing the pervasive impacts of COVID-19 which prohibit the operation of

restaurants and hotels and also limit the free cross-border travelling. This emergency situation impacts mostly Group’s sales

in the HoReCa segment and also sales in UGO salateries and freshbars, which in 2019 represented approximately 40% of

Group’s revenue. In 2020, the Group´s revenue share in HoReCa is lower, thanks to successful acquisition of companies

ONDRÁŠOVKA and Karlovarská Korunní.

The Group has established a team that involves also Group’s top management which holds regular meetings oriented to

minimize the negative impacts on Group’s employees and results. The team has already set plenty of measures and also

successfully implemented external requirements on employees regular testing.

HoReCa segment was closed for whole 1Q 2021 (except for Croatia) and the opening date is not yet determined. We however

remain optimistic because of increasing number of vaccinated people which should lead to a herd immunity once

the estimated percentage is achieved.

As of the date of this report, the production is in operation, we have continuing supplies of materials (we are in close contact

with our key suppliers), we have increased hygienic precautions in our production plants where we have forbidden any visits,

our administrative employees work from home, we perform regular COVID-testing of our employees. The Group is using

modern technology for distant access and videoconferences which enables us to protect the health of our employees. There

already were necessary savings in CAPEX and OPEX and we plan to continue in this trend also in the upcoming period.

After a one year of experience, we can confirm that our suppliers (even foreign) are able to supply us with material in these

difficult times with limitations set on the free movement of people. Our long-term strategy to utilize local sources and

suppliers, if possible, remains and is perceived as an advantage under current circumstances.

Consolidated annual report 2020

Business overview and other matters

A-26

It is possible that, based on above stated, the Group won’t be able to fulfil some of bank loan covenants in 2021. The Group

believes to have sufficient resources from current cash balance, undrawn credit lines and overdrafts. We have an open and

long-term relationship with our supportive banking group to whom we communicate our business outlook regularly.

Development around COVID-19 lead to the impairment of assets related to company UGO trade s.r.o. It however didn’t lead

to impairments of Goodwill or trademarks with indefinite useful life. Impairment tests are sensitive mainly to changes of

discount rates, but these should remain rather the same in the upcoming period as, we believe, the COVID crisis is slowly

coming to its end. Outage of sales in 1Q 2021 doesn’t have significant impact on performed impairment tests.

We expect further compensations from particular governments and are ready to fully utilize all available forms of support,

as we did in 2020. The Group is able to continue in its business activity even without the state support, compensations

however alleviate the adverse financial impacts on the Group.

The Group’s financial results for Q1 2021 are not favourable because the HoReCa segment was closed for the whole period.

However, it is worth to be noted that the first quarter is for the Group the least significant time of the year in terms of EBITDA.

We cannot comment any further, our future results will be most probably affected by the speed and effectiveness of

the vaccination.

Based on the above analysis and assumptions, including the severe but plausible scenarios, management concluded that

the Group will have sufficient resources to continue its business for a period of at least 12 months from the reporting date.

Management concluded that the range of possible outcomes considered at arriving at this judgment does not give rise to

material uncertainties related to events or conditions that may cast significant doubt on the Group’s ability to continue as

a going concern.

In 2021, the management has decided not to utilize the existing entitlement from the government grant in relation to new

administrative premises. However, the management still plans to continue with the project. Balances related to

the government grant are non-current and are presented in sections B 4.14 and B 4.19.

Jannis Samaras and his wife have together purchased a 32% share in the company TIERRA VERDE s.r.o.

Kofola ČeskoSlovensko a.s. has purchased 29,126 shares of its own shares (which represents 0.13% of the Company´s share

capital) in the total value of CZK 7,456 thousand (CZK 256 per share) from RADENSKA d.o.o. in March 2021. The individual

share price was determined based on the price quoted at Prague Stock Exchange. As such, the contract was concluded at

market terms. The shares have nominal value of CZK 50 per individual share. The sole purpose of the acquisition of own

shares by the Company was to meet obligations arising from share option programmes, or other allocations of shares, to

employees or to members of the administrative, management or supervisory bodies of the Company or of an associate

company. Shares have been transferred to option scheme participants in March 2021.

No other events have occurred after the end of the reporting period that would require disclosures in the Board of directors’

report.

Consolidated annual report 2020

Risk management

A-27

Activities of the Group companies, their financial position and financial performance are subject to and may in the future be

subject to negative changes as a result of the occurrence of any of the risk factors described below. Occurrence of even some

of these risk factors may have a materially adverse effect on the business, financial position and financial performance of

the Company or the Group as a whole, and in consequence the trading price and liquidity of the shares may decline.

The factors presented below represent the key risks. Most of those risk factors are of contingent nature and may or may not

occur and the Company is not able to express its view on their probability of occurrence. The order in which they are

presented is not an indication as to their significance, or probability of occurrence or of the potential impact on the Group.

Other risks, factors and uncertainties than those described below, including also those which the Group is not currently aware

of or which are considered to be minor, may also have an important negative impact on the Group's operations, financial

position and financial performance in future.

Key risks are monitored. The Board is ultimately responsible for the effective risk management and internal control system.

For these risks, preventive actions are taken to reduce their vulnerability and reduce their potential impact on the Group.

The Group operates mainly in the non-alcoholic beverages industry where the major part of its revenues come from, mainly

in the Czech Republic, Slovakia, Slovenia and Croatia, which, apart from certain exceptions, are markets where

the non-alcoholic beverages industry has been stagnant and where both multinational and local producers compete against

each other by offering a wide range of products. This creates a risk of decreasing selling prices and/or a possibility of losing

market share in the individual product categories or in the overall soft drinks market and may lead to a decrease in

the Group's sales and could have an adverse effect on the Group's financial condition and the result of operations.

Key mitigations:

The Group protects itself against this type of risk primarily by building a strong brand loyalty of its end consumers and by

introducing new products in the market. Additionally, the Group mitigates this risk by increasing the percentage share of

sales in the HoReCa sector (that is less prone to promotions), as well as by promoting impulse products (with higher margins)

or introducing new products, for which no aggressive pricing promotions have to be used (thanks to absence of competitor’s

products). The Group also eliminates this risk by investing into new businesses not dependent on the soft drinks’ categories.

In recent years, there have been changes in the shopping habits of end consumers. Retail discounter changed their behaviour

and changed consumers’ habits and very effectively made themselves a more attractive place to shop. This has redirected

trading volumes to the fast-developing discount chains, which diminishes the significance of independent convenience stores.

In addition, large retail chains tend to put pressure on prices and resist price increases. There is a risk of an inability to transfer

increases in raw materials´costs to end consumers.

Key mitigations:

The companies from the Kofola Group try to minimise this risk by negotiations with major customers about price increases,

adjusting its cost structure, implementing innovations leading to higher margins and by proper packing and sale channel

tactics. The Group also invested into our own retail chain through UGO Freshbars & Saladbars. The Group entered a whole

new distribution channel of Pharmacies via the company LEROS.

Changes in the prices of raw materials may have an effect on the costs of raw materials purchased by the Group and, as

a consequence, on the margins earned on the sale of products. In addition, the costs of production and the delivery of

the Group's products depend to a certain extent on the prices of commodities such as fuel and electricity. This may have

a material adverse effect on the Group's business, financial condition and the results of operations.

Key mitigations:

When it is effective, the Group’s central purchasing department aims to sign mid-term contracts with the key suppliers, which

helps to guarantee purchase prices. However, in the case of some commodities, agreeing a purchase price is only possible

for relatively short terms. Therefore, the Group maintains multiple sources of supply with robust suppliers’ strategy,

Consolidated annual report 2020

Risk management

A-28

selection, monitoring and management processes. The Group closely monitors and analyses the trends and prices of the key

raw materials to understand the cost drivers.

Intentional or unintentional product contamination or defectiveness may result in a loss of reputation of a brand or

manufacturer which, in consequence, may adversely impact the sales of such a brand or, in extreme case, all products

manufactured by that manufacturer in the particular market leading to a necessity to recall the products from the market.

Moreover, product contamination or defectiveness may lead to personal injuries of end consumers and, as a consequence,

liability claims against the Group. In addition, product liability claims could result in negative publicity that could materially

affect the Group’s sales.

Key mitigations:

The Group protects itself against this risk by performing detailed controls of raw materials, suppliers´ assurance and by regular

controls of the production processes by Group´s laboratories. Product recall procedures are tested regularly.

Unfavourable changes to the applicable laws and regulations may affect various aspects of the Group's operations and results

and/or cause an increase in the costs of the Group. Future changes may cause the Group to incur compliance costs or

otherwise negatively affect its operations.

Key mitigations:

These affect all companies in the sector and do not severely affect competition. The Group monitors the changes in legal

regulations and adapts to them in advance. Group works closely with external advisors and trade and industry associations

regarding current and future legislation changes with impact upon the business and is an active member of various legislation

processes as commenting authority.

The Group relies on IT systems for a variety of functions. Despite the implementation of security and back-up measures,

the IT systems used by the Group may be vulnerable to physical or electronic intrusions, computer viruses, hacker attacks

and/or other disruptions.

Key mitigations:

The Group protects against this type of risk by establishing back data centre, daily backups, disks in mirroring and continued

articulation and implementation of information security policies. Disaster recovery plans are tested on regular basis. Central

IT governance and decision-making process exists for system changes. IT security standards are closely monitored to protect

systems and information.

If the Group is unable to identify and acquire businesses, brands or products to support its growth in accordance with its

strategy, or if the Group is unable to successfully integrate acquisitions, or if a failure by the acquired company to comply

with the law or to administer good business practice and policies prior to an acquisition has a material adverse effect on

the value of such an acquired company, the Group may not be able to obtain the advantages that the acquisitions were

intended to create.

Key mitigations:

The Group has a solid acquisition strategy and limits this risk by continued monitoring of progress against the integration

plan, including frequent and regular tracking of key performance indicators and senior leadership involved in monitoring

progress and in making key decisions. The Group has a track of successful acquisitions within the last years and cooperates

with advisors on a long-term basis which gives them good knowledge about sectors where The Group operates. Additionally,

proven integration processes, procedures and practices are applied to ensure delivery of expected returns.

Consolidated annual report 2020

Risk management

A-29

More than half of the raw materials (mostly sugar) used by the Group for production are purchased in EUR or in local

currencies but with the pricing derived from EUR. As significant share of the countries where the Group operates are not in

the Euro zone, most of the Group's income is denominated in local currencies other than EUR. Therefore, the results of

the Group are subject to fluctuations in the foreign exchange rates of EUR against the local currencies. The Group might not

be able to mitigate all the currency risks, in particular over longer periods. Additionally, the Group uses external financing

facilities to finance its long-term assets and working capital needs. Most of those facilities are at variable interest rates. As

a consequence, the Group is exposed to the risk of negative interest rate fluctuations.

Key mitigations:

The Group closely monitors its results and cash flows to ensure sufficient amount of money necessary for its business

activities in both short and long-term. To limit the exposure to adverse movements in interest rates, the Group concluded

interest rate swaps for selected bank debts with longest maturity.

The Group generates sufficient financial resources to be able to finance its standard daily operations, capital expenditures,

loan repayments and dividends. It however sometimes needs also external resources to finance bigger and one-off

expenditures like acquisitions of subsidiaries. As a result, it is subject to risk of inability to obtain such resources from banks

and other external parties. Payment schedules of already provided bank loans are dependent on Group’s fulfilment of

specified financial indicators (covenants) and in case of breach of these covenants the financing bank can request earlier

repayment of provided loans.

Key mitigations:

The Group closely monitors its business results and cash flows and on regular basis prepares both short and long-term

financial projections to prevent any liquidity issues or breach of covenants. The Group has also available undrawn credit line

in case of need of extra ad hoc financing.

There are pending denationalisation proceedings with respect to denationalisation claims of the legal successors of

the former owners of RADENSKA. The legal outcome of these proceedings remains unclear and uncertain.

Key mitigations:

RADENSKA intensively defends against any claims of former owners. Current situation is described in section B 4.22.

In Slovakia, a national discussion about sugar tax started and in Croatia a change to the current sugar tax system was

introduced in 2020. There is a risk that the tax will be paid by producers and that the Group is not able to pass these costs to

end customers.

Key mitigations:

At the moment, we do not know when the sugar tax is implied and who will bear the tax in Slovakia. The Group is prepared

for the Croatian system changes. The Group continuously reformulates the products to have lower sugar content as well as

focuses on water based soft drinks. The Group opened new categories through acquisitions – tea & coffee – outside

the traditional soft drinks business, that are not subjects to sugar tax. We have also spread our Waters portfolio through

the acquisition of ONDRÁŠOVKA and Karlovarská Korunní. Share of total revenue generated from the sale of Waters has in

2020 increased to 32.6% (in 2019: 27.4%).

In Slovakia, PET and aluminium bottles deposit system is to start in 2022. There is a risk that part of the cost will be carried

by producers and the Group is not able to pass these costs to end customers.

Key mitigations:

The Group monitors the progress and actively participates in the system building process.

Consolidated annual report 2020

Risk management

A-30

The world as we know it today is changing. Environmental pollution is being discussed on all levels and climate change is

rather a fact than an ecological fiction. One of the negative symbols of this movement is plastic material. Because the Group

uses a lot of plastic material in various formats (PET bottles, single use packaging in our UGO operations), it may be strongly

affected not only by regulations but also by a change in consumer behaviour.

Key mitigations:

The Group is monitoring and thoroughly analysing all movements and is deeply immersed into this matter. The Group

believes, that plastic is very relevant material and there is no better solution at this moment. The Group will be an active

member on industrial activities educating consumers about this matter. Nevertheless, The Group also focuses on other

packaging formats to be in line with the anti-plastic trend, such as drafted products, syrups and returnable glass bottles.

The Group also invests into non-plastic businesses – tea & coffee segment.

Water pollution is one of the key topics of today. Agriculture is using chemical fertilizers and pesticides, that negatively affect

water sources and there is a risk that in a decade most of the surface water and some of the spring waters will no longer

meet the limits for drinking water.

Key mitigations:

The Group is actively cooperating with the state authorities and agricultural segment, so that our spring water sources will

not be affected. We believe that our sources are in well preserved localities so that we can protect them effectively.

There is risk of draughts leading to higher costs from water consumption.

Key mitigations:

The Group mitigates the risk by building own water wells and takes deep care of current water sources it manages.

Because climate change and environmental issues are now very trendy and there is significant demand from customers and

consumers, the Group might be forced to proceed with some ecological measures to remain competitive. Implementation of

this policy is rather expensive with a longer payback period.

Key mitigations:

The Group monitors the market and tries to proactively apply steps, that are easy to proceed with high impact on

the environment. In general, we closely focus on the ratio between effectiveness and financial demands so that the outcome

of our projects is both cost effective and environmentally friendly. It is an integral part of our capex policy to have all new

projects validated through the eco-friendly criteria. We also work on educating our consumers to better understand our

perspective.

With the Group´s approach to deliver to consumers best quality products from authentic ingredients, it could happen that

there will be no ingredients of such quality or that their price will be tremendously unaffordable. There is also possible rise

of costs for laboratories for quality tests.

Key mitigations:

The Group´s quality standards are already above legal requirements. The Group has started to cooperate with local farmers,

local authorities and other stakeholders to produce authentic ingredients for affordable price and to build good, valuable and

healthy relationships that all parts can benefit from. This cooperation brings added value to all parts of the supply chain and

is real example of circular economy. The Group also cooperates intensively with testing institutes and cooperates with proven

suppliers with quality certificates.

Consolidated annual report 2020

Risk management

A-31

End consumer preferences, tastes and behaviours are evolving over time. If the Group does not successfully anticipate these

changing end consumer preferences or fails to address them by swiftly developing new products or product extensions

through innovation, the Group's sales could be negatively affected.

Key mitigations:

The Group diversifies this risk through acquisitions, that are organic part of its strategy to have a wide range of products, not

only on the soft drinks market, but also in the field of tea & coffee. In the soft drinks sector, the Group offers a broad range

of products with different flavours and in various packaging formats which offers a choice to the end consumer. The Group

closely monitors consumer trends in order to anticipate changes in preferences and offers diversified portfolio of its products.

The Group regularly develops its products to be able to meet consumer needs.

One of the social issues of today is definitely, whether soft drinks as such could be an integral part of healthy lifestyle. There

are very strong movements against the intake of sugar. Non-alcoholic beverages are named as one of the significant donors

to the rise in obesity of population. The soft drinks companies are blamed for influencing researches about the correlation

between soft-drinks drinking and obesity. This might lead to negative social image of the Group´s products as well as legal

restrictions, which could mean a significant drop in the sale of soft drinks with added sugars.

Key mitigations:

The Group takes this issue very seriously and proactively self-regulates itself to prevent official regulations. The Group has all

various beverages in its portfolio – from no sugar to soft-drinks with 12g of sugar in 100ml. Our key brand is Kofola, that has

already by third less sugar than average cola beverage. We cannot alter original recipes of our traditional drinks. Where it is

possible and does make sense, we create limited editions of our traditional drinks or no sugar versions. With other products,

where the taste profile permits, we reformulate the amount of sugar. We offer a wide range of water-based products and

also focus on small packaging, that means smaller amount of sugar in one portion. We do not support or initiate any study

proving that drinking soft drinks does not affect obesity because we believe, that any drink can be part of healthy lifestyle if

drunk in a moderate way. The Group supports many events with physical activity (running, cycling) especially in connection

to its spring/mineral water brands (Rajec, Radenska, Studena, Ondrášovka).

There are attempts on national, but also on the EU level to regulate the sale of specific product ranges of drinks to children

or teenagers, especially energy drinks or other soft drinks that contain caffeine or high amount of added sugar. There is also

a trend to prohibit the sale of these products in schools. The risk of implementing such regulations on some markets is not

negligible.

Key mitigations:

The Group closely monitors this issue especially through its memberships in various professional organisations. As

a responsible producer, we also naturally self-regulate our operations in this matter. We do not promote soft-drinks with

higher amount of added sugar (above 4g/100ml) or caffeine to children and we do not sell them in schools in shops or vending

machines. The regulation of sale of soft drinks with higher than 5g/100ml sugar content was already implemented in Czechia

and the Group´s sales of restricted product groups were not affected by this law. We do not promote our products with

higher amount of added sugar to kids in any of our markets. We also don´t promote our energy drinks to teenagers and do

not sample these products to children or teenagers. We never promote drinking energy drinks with alcohol. If any regulation

of the sale of drinks steps into force, the Group is not likely to be affected because according to its strategy of comprehend

portfolio, it has a wide range of drinks that comply with above mentioned regulations. However, we are certain that there is

no regulation needed and we proactively act and cooperate with state authorities to prevent any restrictions taking place.

European Food Safety Authority (EFSA) is re-evaluating the current recommended daily amount of harmless preservatives

intake and there is a reasonable assumption that there might be further restriction in the use of preservatives in beverages

that might affect the Group´s beverages recipes.

Consolidated annual report 2020

Risk management

A-32

Key mitigations:

It is in the Group´s strategy to limit the use of preservatives to technological minimum. The Group only cooperates with

proven suppliers to have good quality raw materials with detailed content sheet. Since 2010, the Group has invested

a significant amount of money into technologies to produce soft drinks without preservatives (i.e., hot fill, pascalization and

aseptic line). Nevertheless, the number of used conservatives in the Group´s products, where it is not at the moment

technologically possible to produce without preservatives, is in minimal amounts far from recommended daily maximum

intake, so that it will not be affected by reasonable tightening of the limits.

The Group's future success will also depend on its continuing ability to attract, retain and motivate highly qualified sales,

production, technical, customer support, financial, accounting, marketing, promotional and managerial personnel. The Group

may be unable to retain or attract the necessary personnel.

Key mitigations:

The Group limits this risk by sustaining a strong culture of accountability, empowerment, benefit scheme and personal

development as well as by building the Group’s leadership talent pipeline through strategic people resourcing. The Group

continuously tracks the conditions within but also outside the company on the labour market and acts promptly according to

the situation. The Group structures its compensation packages in a manner consistent with the market standard.

Because of very low unemployment rate, the Group will be facing rising personal costs and might get into the price/wage

spiral.

Key mitigations:

The Group works on this matter very deeply. The Group implemented segmented reward system as well as individual

approach to wages based on employee's role and competence, without flat levelling. The Group invests into labour market

data and works with those intensively to carefully benchmark itself with the labour market. The Group regularly optimizes

the systemisation of jobs and also works on robotization and automation of activities.

The employees cultural and age diversity could lead to various problems, that could lead to higher fluctuation and lower

employee satisfaction, which could cause lower productivity of the Group.

Key mitigations:

In all countries and companies that belong to the Group, we try to be as local as possible with respect to local culture and

environment. We support the diversity and healthy self-confidence of our employees. We have and cherish our open

multicultural (especially in the Adriatic region) and age diversive environment that does not limit or discriminate individuals

by gender, age, race, or any handicap. We take care of the individual's life and personal situation and the needs of our

employees. We seek for talents in our employees and push them forward. We support internal promotions and career

changes of our employees, especially with expats programme, management positions replacements, new projects and

acquisitions, where we fully rely on our well experienced staff. We are developing our people individually through programs

and activities.

There might be some discrimination acts in the workplace or some employees might be corrupted and act against

the company.

Key mitigations:

The Group believes in its own people. In the unlikely event of discrimination all employees are informed who to turn to. We

have an open-door policy in this matter. All employees can refer to any member of management with any request and they

will be treated with respect and nothing is forgotten or left unsolved. We also have a very strict policy regarding not accepting

bribes or other special benefits by our employees. When selecting business partners, we follow procurement policy, when

there are always at least 2 members of our staff and we do not favour anyone and decide honestly and transparently

according to predetermined factors and rules. All money transfers are carefully monitored and need to be multi-stage

approved. All our employees need to go through various trainings and are repeatedly informed about above mentioned.

Consolidated annual report 2020

Risk management

A-33

On 11 March 2020, the World Health Organization declared the coronavirus outbreak a pandemic, and the Czech government

declared a state of emergency on 12 March 2020. Responding to the potentially serious threat the COVID – 19 presents to

public health, the Czech government authorities have taken measures to suppress the outbreak, including introducing

restrictions on the cross-borders movement of people, entry restrictions on foreign visitors and the ‘lock-down’ of certain

industries, pending further developments. In particular, airlines and railways suspended international transport of people,

schools, universities, restaurants, cinemas, theatres and museums and sport facilities, retailers excluding food retailers,

grocery stores and pharmacies were closed. Significant part of Group sales is attributable to HoReCa segment which was

impacted due to government restrictions (such as closures of pubs and restaurants).

Key mitigations:

As a reaction to COVID-19 virus situation, the Group has established a team that involves also Group’s top management which

holds regular meetings to minimize the negative impacts on Group’s employees and results. The team has already set plenty

of measures and regularly continues in these activities. The Group will have sufficient resources to continue its business for

a period of at least 12 months from the reporting date. Management concluded that the range of possible outcomes

considered at arriving at this judgment does not give rise to material uncertainties related to events or conditions that may

cast significant doubt on the Group’s ability to continue as a going concern.

Consolidated annual report 2020

Risk management

A-34

The following part summarizes the main market trends identified by the Group and the steps the Group takes as a response

to these trends.

• gradual conversion of products to preservative-free, healthy innovations,

• promotion of healthy life style,

• reformulation – process of changing the sugar content of a product (Rajec flavoured),

• more healthy beverages (water, children’s beverages) with lower sugar content compared to other competitors and

beverages with herbs and tree extracts (UGO juices, Rajec flavoured, fresh drinks),

• first drinks with stevia (natural sweetener - without calories) - Kofola bez cukru (Sugar free), Jupík with stevia,

• hot filling and aseptic line allowing the new products without preservatives (for example: high fruit content drinks,

functional drinks),

• use of high-pressure technology (pascalisation) - all nutritional values of fruit and vegetables in our 100% juices are

retained,

• water category and small packaging focus to naturally eliminate sugar intake for consumers,

• nutritionally rich products,

• entering new segment of herbs, tea & coffee mixtures.

• carbon footprint elimination (green energy, CNG trucks, CO

offset project), towards carbon neutrality in 2030,

• water sources protection,

• energy saving policies,

• afforestation,

• cooperation with suppliers, especially local farmers,

• 100% recyclability and biodegradability of packaging and Eco modulation,

• packaging elimination (drafted products, syrup category focus, big volume packaging, reusable returnable packaging),

• green offices and operations policy application,

• single use packaging elimination.

• focus on impulse products (portfolio enhancement),

• development of the impulse channels,

• development of cooperation with hotels, restaurants and cafés (HoReCa),

• entrance to the impulse market (kiosks, vending machines, gyms, schools, work places etc.),

• increasing share of small formats in the product portfolio (most of the new formats are up to 0.5 litre),

• increasing number of supplied restaurants (direct distribution in Slovakia since 2009, in the Czech Republic since 2014),

• dedicated sales team for HoReCa clients in the Czech Republic.

• strengthening brands to be more important for retailers,

• focus on terms and conditions with retailers,

• proper pack/channel tactics,

• operational excellence,

• opening own retail chain of UGO Freshbars & Saladbars,

• e-commerce focus,

• entering new market of pharmacies via LEROS.

• rollout of successful brands to other markets where the Group companies operate,

• purchasing and/or creation of brands with functional/emotional features,

• using production/distribution licenses, introduction of global brands (Rauch, Orangina, Royal Crown Cola, Evian),

• engaging the customers in the promotion of positive emotions related to the Group’s brands.

Consolidated annual report 2020

Non-financial information

A-35

The Company and also all the Group companies are very well aware of the increasing importance of the non-financial

information as a part of the reporting process. We can proudly say that the related topics were embedded in our culture

since our beginning and are not only a question of compliance but rather separate comprehensive areas covered by individual

departments. It is a natural element of our DNA.

The Kofola Group is a leading producer of branded non-alcoholic beverages in Central and South Europe. Key own brands on

the Czechoslovakian market include traditional carbonated beverages Kofola and Vinea, mineral and spring waters Rajec and

Kláštorná Kalcia, syrups Jupí, beverages for children Jupík, energy drinks Semtex, UGO fresh juices, Fresh/Salad bars and

herbal teas LEROS and coffee bean mixtures Café Reserva. In 2020 we have acquired F.H. Prager ciders and fermented

lemonades and traditional Czech mineral waters Ondrášovka and Korunní. On the Polish market we operate the Premium

Rosa company, producer of high-quality herbal and fruit products and in the Adriatic, there are traditional brands of mineral

waters Radenska, Lipički Studenac, spring water Studena, carbonated drinks Ora, Oaza, Nara, Inka and syrups Voćko.

As such, the portfolio is broad and satisfies the demand of various groups of consumers and offers drinks for all opportunities

in many options of packaging. And that not only through ready to drink products, but also through “dry” drinks as tea or

coffee mixtures or instant vitamin drinks. We operate on 5 markets and also cooperate with other suppliers with exclusive

distribution contracts (such as Danone for both Czechoslovakia and Adriatic, Pepsico for the Adriatic region and Rauch for

Czechoslovakia).

Key goal of the Company and Group is not only to increase market share and EBITDA to bring the value for shareholders, but

also to bring quality products with added value to our consumers and be a valuable partner for our customers. Our traditional

drinks are also part of the national heritage. We believe that being responsible is an answer to the needs of all of the Group’s

stakeholders, in particular when it comes to generating returns for shareholders while maintaining our values.

Our CSR and sustainable activities are not a matter of last few years. They are dated back to times long before these became

a fashionable thing. We are proud to support local communities, through which we could become successful. Acting locally

and circular economy in its pure meaning are values we believe in and they are important parts for the Group´s future

operations. Sustainability gives authenticity and justifies our everyday business.

The world we see today has been changing tremendously. With the millennial generation, ethical and environmental issues

became very important and raised the importance of producers themselves and brand values. Growing concern for personal

wellbeing and the environment is putting air quality in the spotlight. Businesses are facing pressures to devise and implement

solutions that safeguard the environment and consumers from the effects of poor air quality.

Last year, 2020, was a year of the unknown. Globalized world became a threat and state borders became important again.

The COVID-19 pandemic brought very uncertain times with a lot of changes to our everyday lives. There the Group was in

a huge advantage due to its local structure, management and operations. We could react promptly and were not dependent

on distant suppliers and customers. It speeded up IT processes and e-commerce projects. The business was affected by this

unprecedented situation, but our agenda, that is described in this chapter, was not vastly affected. Because it is an integral

part of our existence, we believe that even in difficult times it is important to take care about our surroundings and about

the people, because only together we can overcome challenges and come out of it with new knowledge, experience and

stronger.

The Group is in terms of approach to sustainability divided into 4 business segments (CzechoSlovakia, Adriatic, UGO and

LEROS), that are locally managed with respect to the Group strategy.

According to the trends, the company brand image will have the same importance as the drinks´ brands in our portfolio, from

the point of transparency, honesty, attitude to environment and key values. Consumers are retreating from globalisation and

hyper-consumption and moving towards buying fewer, higher-quality products while shopping in and supporting local

neighbourhoods. There will be a significant growth in preference of healthy, good quality products and products with

transparent background and added value, produced in an eco-friendly way with respect to people and nature.

As a responsible company, we deeply follow these trends and seek the opportunities to be at least one step ahead to be well

prepared for these new conditions. We know we cannot predict the future but it is about getting as close as possible and be

ready for challenges, which we believe we are.

Consolidated annual report 2020

Non-financial information

A-36

The Group faces many challenges, that are mainly considered as opportunities rather than threats to the Group´s business.

They are summed up in risk management segment above in this annual report (section 5). For our approach to current market

challenges see the “Approach to market trends and development”.

In the time of Social Media and overflowing spread of information it is very important to keep good image. Unfortunately,

this is very often more important to the public, than the facts. We know that if we want to be competitive and preferred by

our customers and consumers, we need to be a respected manufacturer of food and beverages with a positive aura around

everything we do. We need to be authentic and transparent.

We regularly conduct a corporate survey on our key Czechoslovakian market, where Kofola is continuously stated as the most

known producer of non-alcoholic beverages with 99% knowledge (compared to 91% in 2010). Our key perceived values

according to this survey are transparency, traditional recipes, innovations and positive energy. We were declared

as a company that inspires others. These are the bases that we want to build on in our future corporate communication and

company brand building.

As one of the key beverage producers we follow the recipients of our products not only in the context of trends, reflecting

their needs and preferences, but also the structure of outlets in which we can meet them. We know how important it is to

maintain the balance between sales in the traditional and modern channels. To achieve this, we build a wide distribution, we

design dedicated support and competitive price offers. Transparency and fairness of our business is one of our key values.

We are very proud, that the Kofola Group and its subsidiaries have very positive image in the markets they operate.

Kofola ČeskoSlovensko is among the most admired companies in the Czech Republic according to the Czech Top 100 Awards

(in TOP 5 companies since 2007), but also in terms of media image. Out of all soft drinks’ producers, the Group by far is

the winner in media coverage on the Czechoslovakian market. In 2020, there was a slight decrease in publicity, but the

relevant one rose by 19%, there were only 0.2% of negative media placements (in comparison to other producers it is

significantly lower), out of which the most were generally about the number of plastics the company produces and sugar in

drinks, taking some of our brands as an example. The positive publicity doubled its share in 2020 to 18% of all media

placements about the Group. Most of the placements are connected to company´s business results, acquisitions and

traditional products. Also, sustainability topics were strongly covered by the media, especially our activities in

Rajecká dolina (SK). The Group´s proactivity in the Slovak Republic in 2019 and 2020 lead to a rise in number of relevant

media placements.

With more active communication about sustainable commitments, Radenska further strengthened its reputable brand media

position in the turbulent year 2020. Strong communication campaigns, such as #ZASKUPAJ (helping HoReCa sector to revive

after first COVID-19 wave), For Greener Slovenia (planting trees) and, of course, the introduction of 100% recycled rPET

Radenska Naturelle, successfully won placements in the media and reached an enviable volume. In these contexts, Radenska

was presented positively, equipped with visual elements and a well-visible logo. Additional emphasis on the positive media

image of Radenska in 2020 was added by socially responsible activities such as donations to health care institutions, which

strengthened its role of one of the strongest brands in Slovenia. Due to the epidemic situation, the cancellation of

the traditional Three Hearts Marathon was not presented in the media as in past, but nevertheless Radenska ended the year

2020 with an increase in media appearances or placements. Relations with media houses strengthened during the year, and

a regular frequency of publications and contacts was established, also at the level of product content, which is otherwise

difficult to place through PR. A good example of this is the launch of Oraketa.

Our acquisitions – UGO, LEROS & Espresso – are very positively perceived as trendsetters and businesses of tomorrow and

are bringing positive attention to the whole Group.

In terms of non-financial topics, that are important to the Group´s business, we see these as most relevant to remain

sustainable and bring values to the stakeholders:

Consolidated annual report 2020

Non-financial information

A-37

1) Environmental issues.

2) Social issues – with special focus on:

o products benefits,

o healthy lifestyle,

o transparency and responsible marketing.

3) Our people (employment issues).

4) Human rights & Anticorruption issues.

5) Respect to local tradition & environment.

The Group´s business model is very simple – delivering high quality products to consumers in the best packaging for a relevant

price. With steadily more and more consumers around the world worried about climate change, eco-anxiety is affecting

shopping decisions, with a shift towards sustainable products that allow for a guilt-free shopping experience. Eco-anxiety is

creating greener expectations. We live in a world mindful of our environment with a growing interest in reducing our

footprint. Plastic pollution and packaging waste are an important part of the driving force to reuse to keep waste out of

landfills and the natural environment.

Even in 2020, despite COVID-19 pandemic, environmental issues had their important role. On the one hand there was a lot

less travelling (for example the Group had 15% less fuel consumption in personal cars) which positively affected our impact

on the planet, but on the other hand the situation pushed everyone to use more single use products. The need for

environmentally friendly behaviour didn´t disappear and we believe that it will get into the public discussion even more as

soon as the situation would be turning back into the “former normal”.

We are fully aware of the possible impact of our business to the environment and we take this issue very seriously.

The question the whole beverage industry is looking for today is how to find a balance between business sustainability and

its environmental impact. That means, how to produce products that consumers like, their packaging will be as

environmentally friendly as possible while maintaining product quality and consumer convenience. We are dealing intensively

with this issue in cooperation with the key stakeholders for our business and our approach you can see below.

Our employees feel responsibility for environmental issues. According to a survey, that we conducted in the whole Group at

the end of 2020, 95% of our employees take current environmental problems seriously and over 90% of them feel that every

individual can influence the change for the better. Over 90% of our employees states that there is an environmentally friendly

company culture and almost 100% consider the Group as a responsible and sustainable company. These are very clear

outcomes with a very strong message that is an obligation for the Group Board for our next steps.

With regard to environmental protection, we focus on investments in modern technologies and production lines that increase

efficiency and thus minimise the use of energy and water. We invest in our water intakes to ensure that it is of the highest

quality and protected against any contamination. Our goal is to maintain what is the best, what comes straight from nature,

and provide all of our consumers with a unique natural experience.

Future development is very difficult to predict, but it will definitely play an important role in everyone´s daily life. If we don´t

act quickly and effectively, the environment will change irreversibly. Everyone needs to do the most possible and change all

matters that can affect climate change and mitigate it. Aim of the Group is to eliminate its CO

emission to minimum and

offset the rest, in long term horizon up to being 100% carbon neutral from its operations (presumably by 2030).

The biggest challenges that the Group deals with can be divided into 5 sectors, that we describe below:

• carbon footprint,

• packaging,

• waste reduction,

• water protection,

• biodiversity and conservation.

Consolidated annual report 2020

Non-financial information

A-38

KEY PERFORMANCE INDICATORS FOR ENVIRONMENTAL ISSUES (further explanations in the according section)

CARBON FOOTPRINT

Carbon neutrality by 2030

We have analysed key factors for carbon

footprint of the Group and we are working on

strategy how to meet this ambitious target by

reducing the amount of produced CO

and

offsetting the rest.

PACKAGING

100% recyclable/biodegradable packaging by

2025

In 2020, this was met by 95% and we are

continuously working on improvements.

20% of products in returnable multi-use

packaging by 2025

In 2020, despite the closed HoReCa, where

the returnable packaging is mostly used,

overall number of returnable packaging used

for soft drinks was 16%, as it was in 2019.

WASTE REDUCTION

Reducing single used plastic in UGO

production plants by 15 tons in 2020

(compared to 2018)

We have met this target already in 2019,

doubling this target in 2020 was

unfortunately disabled by the lockdown due

to COVID-19 pandemic.

Carbon footprint

Climate change is an important issue that could seriously affect the Group´s business and therefore the Group undertakes

self-regulating measures, that are not requested by law, but very important on the way to carbon neutrality.

The base year for determining greenhouse gas emissions is 2015, when the initial calculation of greenhouse gas emissions

was performed. The ratio of Scope 1 and 2 related to the number of products in 2019 is lower by 4.3% compared to the base

year 2015.

The CO

footprint analysis in 2019 consists of these operations: Kofola ČeskoSlovensko offices (Ostrava, Praha), production

plants in Krnov, Mnichovo Hradiště, Strážnice, Rajecké Lesná, ZLotoklos, Radenci, Studenac, UGO trade operations of

restaurants and fresh bars in Czechoslovakia and the Group´s transport company Santa Trans.

In 2019, the overall carbon footprint of the Group was 155,933 t CO

. The ratio of CO

emissions was 6.3% Scope 1

(emissions from sources that are owned or controlled by the organization – mostly the use of natural gas and fuel), 8.3%

Scope 2 (emissions from the consumption of purchased electricity, steam, or other sources of energy (e.g., chilled water)

generated upstream from the organization) and 85.4% Scope 3 (emissions that are a consequence of the operations of

an organization, but are not directly owned or controlled by the organization).

Because the CO

footprint topic is very complex and not all factors have the same importance, the Group has identified 12

most important ones, that have the biggest impact and where the ratio of effort into reduction to the outcome is the most

effective. We monitor these, analyse and take into consideration in building our Carbon Footprint Reduction Strategy.

86%

The Group´s carbon footprint in 2019 (t CO

)

Scope 1

Scope 2

Scope 3

Consolidated annual report 2020

Non-financial information

A-39

Here are the TOP 5 key CO

footprint factors and the Group´s strategic approach to these topics with listed outcomes so far:

UGO raw materials

Because this is a new addition to the carbon footprint calculation, we need to further

analyze this section to consider all possible options for its CO

footprint reduction.

Electric energy

We focus on electricity use reduction in our premises and also on the use of Green

Energy – for 2019 and 2020 we managed to ensure 100% green energy that we use

in Slovakia and 20% green energy for the Czech market, for 2021 we also plan green

energy for Slovenia.

Fuel consumption

We also limit contamination caused by fumes generated by our vehicles.

We have a system of fuel consumption monitoring of cars and we will run

programmes for our employees regarding this topic. We have a large fleet of shared

pool cars and we support traveling by other means of transport – mass

transportation, especially trains.

Our transportation company SANTA-TRANS s.r.o. has the largest fleet of CNG run

lorries in central Europe, that cut the CO2 emission by quarter, and we even invested

in own CNG station in Krnov, Czech Republic which we also opened to public. We

have almost doubled the number or CNG run lorries in 2020.

Sugar & isoglucose supply

We will cooperate with our suppliers to use local sugar production and more

eco-friendly transport.

PET preforms supply

We closely cooperate with our main supplier to use more eco-friendly transportation.

In 2019, we started to use 50% rPET in Kláštorná Kalcia, that cut the CO

emission

significantly. In 2020, we have even risen the rPET to 100% for this product and also

started to use 100% rPET in Radenska Naturelle.

The Group also focuses on non-plastic packaging – especially drafted products, syrup

category and returnable glass (see further below).

Packaging

As the business model of the Group is also about packaging of products, that after consuming becomes waste, it is this issue

that we give the most attention at the moment. In today´s atmosphere packaging is one of the most discussed topics

worldwide and one of the key risks for the beverage industry. The whole food industry is searching for optimal ways, how to

get the products to consumers in a convenient way and meet all hygiene standards and on the other hand be sustainable and

eco-friendly. Plastic packaging seems to be the optimal answer at the moment for many products. The solution is by closing

the loop to use the material again, upcycling but even downcycling in other than food industry, to save raw materials and

prevent waste.

To fully apply circular economy, all our packaging needs to be 100% recyclable. In 2020 we managed to have absolute majority

of our products (over 95%) in fully recyclable packaging. On top of that, we are processing many changes in terms of eco

modulation to have better recyclability of the products packaging for better future use of the material. We also run a constant

process of packaging leigh weighting.

However, we believe that the best packaging is no packaging at all. We apply to the “RE” policy – reduce, reuse, recycle,

where according to this sustainable order, saving material is better than recycling existing one. Our key focuses in terms of

saving plastic PET packaging materials are:

Consolidated annual report 2020

Non-financial information

A-40

“ZERO WASTE” PACKAGING

Focus on drafted products, by which we annually save over 75 mil. 0.5l PET bottles.

Drafted soft drinks are our signature products on the home Czechoslovakian market.

In 2020 we have introduced Rajec spring water in drafted version, that only in UGO

bars saves up to 0.25 mil. bottles annually. It will also be widely used on outdoor

events, such as running events or music festivals.

SAVING PACKAGING

Focus on the syrup category, by which we save 247 mil. bottles compared to

the situation, if we had sold ready to drink beverages instead of syrups.

It is our goal to decrease weight of the majority of PET bottles, thanks to which we

can lower usage of granules and thus decrease negative environmental impact. For

example, in Radenska we have lowered the used plastic by 2g per bottle in 2020

compared to 2017.

In 2020 we have entered a new category with Oraketa – instant vitamin drinks, where

we see a lot of potential and only in 2020, we have saved 4.5 mil. plastic bottles.

In Czechoslovakia we have introduced a new category of cold brew herbal teas, which

are an alternative to ready-to-drink ice teas without the need to transport the final

bottled product.

RETURNABLE BOTTLES

Increased environmental awareness is driving the reuse trend, especially for younger

generations. This is creating sustainable business opportunities.

The Kofola Group has over 16% of soft drinks sold in returnable packaging and our

aim is to get this number to 20% in 2025.

In 2020 we have turned all Radenska 0.25l glass bottles into returnable version, by

which we increased the quantity of returnable bottles in the Adriatic portfolio by 20%

to 95% in total. This major step saves about 2,000 tons of glass just within next 3

years!

We have also turned all F.H. Prager glass bottles into returnable as soon as we

acquired this producer and introduced a Kláštorná mineral water in its returnable

glass version for the HoReCa segment.

Strong part of our business activity are LEROS herbal tea mixtures, where the ratio between waste and final liquid is the most

favourable in the Group´s portfolio. On top of that, we implemented in 2019 new tea production line for non-metal ways of

closing the teabags, by which we annually save 768 km of aluminium wire. The majority of our teabags are compostable and

we actively search for replacement for the rest non-biodegradable materials. Our aim is to hear towards full recyclability and

degradability. Our target is to have all bags degradable by 2022. In LEROS we also use transport boxes with very little printing

for their better recyclability. In 2021 we will introduce new technology, which enables protection of the content without

the need of overall plastic coating.

Waste reduction

The Kofola Group takes care of its surroundings and the environment is very important to us. We are aware of the impact

that our business can have in the case of irresponsible waste management and we are ready to take part in the discussion

and search for options for better back collection of packaging recovery and protection of littering.

We are one of the biggest donors to the EPR (Extended Producer Responsibility) systems in all markets we operate. We

participate on programs that ensure consumers to have good conditions for separating waste and teach how to sort waste

properly. We know we belong to the biggest producers of PET bottles, which represent a serious amount of waste. However,

we believe that waste could be a valuable source in terms of circular economy, especially if it is PET material.

The fact that the EU takes the issue of waste responsibly and sets goals for collecting beverage packaging we perceive as

a positive step. The targets are very challenging but from our perspective it is possible to meet them. We will support

collecting systems that make sense and are overall sustainable. In Slovakia, the deposit system is going to be implemented in

January 2023. We are an active member in building this system and we believe, that it will have no negative impact on our

business. In the Czech Republic and Slovenia, we are among leading manufacturers in the discussions of setting proper

collecting system. The overall aim of every stakeholder should be that the chosen system for the sorting and recycling of

plastic waste is as efficient as possible, and of course not only for the producers but also in terms of the overall impact on

society and the environment.

In our UGO Salateries and Freshbars, we reduce single use plastics by investing into multi-use glasses, porcelain plates and

metal cutlery for in-house dining. By this we expected to save at least 32 tons of plastic waste by 2020 (cumulatively from

2018), but this goal was postponed to 2021 due to the pandemic situation and closed restaurants. Alongside we are

motivating our customers to bring their own cups or lunchboxes to reduce usage of single use plastics and in 2020 we have

launched our own range of tumblers and lunchboxes for takeaway orders. We have changed the takeaway plastic cups so

that there is no need to use a straw.

Consolidated annual report 2020

Non-financial information

A-41

In our production plants we use innovative technologies and innovative solutions, implementing a modern recycling program

that combines ecological and economic efficiency. We recycle waste generated in our plants, according to the sorting

standards for preparation for recycling. We intensively cooperate with local entrepreneurs and our employees about using

packaging materials, that we don´t have use for anymore to avoid waste and find use for these no longer needed materials

and packaging to prolong their lifecycle.

In the past two years we focused on “ZERO WASTE” policy in our office buildings. We have changed all single use condiments

(especially milk, sugar and cups) to bigger volume and more sustainable solutions and implemented waste-sorting systems

to all offices to eliminate general waste to minimum. Part of this is also implementing battery reduction measures (for

example elimination of wireless computer mice). In our premises in Prague and Ostrava we have implemented

vermicomposters (decomposition process of organic waste processed by specific species of worms). In Radenska we hereby

lowered the general waste from the offices by 10t in 2020 compared to 2019.

All our electrical waste is disposed accordingly. We have a cooperation with the company REMOBIL, that dispose all mobile

phones by dismantling them, which enables secondary use of valuable raw materials. All the profit goes to charity.

We are very proud that we have very responsible employees. In average 90% of them separate waste (mostly plastic, paper

and glass), 80% of them in the Adriatic even collect waste while walking in the nature and over 70% try to prevent food waste.

Water protection

As our business is very dependent on water resources, is this issue vital for our future development. In our production plants

we monitor the use of water per one litre of produced drink and we are proud to say, that this number is constantly decreasing

(for example in Radenska we managed to reduce processed water by 10% in 2020). Our goal is to protect the water resources

on maximum and prevent the desiccation of nature. In the following years, we would like to contribute to keeping water in

the nature by finding a relevant project, that we could actively support.

Another key water issue is water protection from agricultural impact. In this matter, we cooperate with best hydrogeologists

and government authorities, but also with local agricultural stakeholders. It is in our greatest interests to protect the sources

that we manage and use for our products in wider matter than is required by law, not only for our sake, but also for the whole

mankind. In the Rajecká dolina (Rajec water source) we have managed to prepare this region to “BIO-ORGANIC” certification,

which was granted in 2020 for wild plants and herbs. That is perfect opportunity not only to protect our water source but

also for our LEROS business with herbs and authentic plants (both wildly grown & planned planting).

In our portfolio we have various spring and mineral waters from different parts of the countries we operate. It is a natural

thing for us to protect these sources more than we are obliged by law and concessions, because we want to keep this valuable

natural resource for future generations in the highest quality by maintaining its key benefits. We stress out in our marketing

campaigns that we do not have “just” general water, but that we provide under surface spring or mineral water with added

value to the customer´s health.

Biodiversity and Conservation

Our business stands on good quality ingredients, without them our products wouldn´t meet our quality requirements. Our

vision is to replace all no name raw materials for the ones with known and local origin, and by known we mean a specific

farmer and location. Knowing the story of ingredients and guarantee the quality of our products from the seed is our key goal

and target, that we will be heading for in the nearest future.

We discovered a whole new dimension in the care of raw materials with the LEROS herbal tea mixtures manufacturer, which

we bought in 2018. Standards for operation and tea content are set very high there, because it is a certified pharmaceutical

operation. We really care for authentic and perfect quality raw materials. In 2019, we bravely decided to take a step further.

We started to grow our own herbs. Together with our brand of spring water Rajec marketing team we ourselves started

planting herbs, that are manually collected and used in our herbal flavoured Rajec spring water. The herbs are grown in

Rajecká dolina, without preservatives, from pure natural ingredients, which became a springboard for broader cooperation

with local farmers and for fulfilling long-term efforts to develop organic farming in the region. In 2020 Slovakian

Rajecká dolina was granted a BIO-certification for wildly grown plants and herbs and now we actively work on

BIO-certification also for planted herbs.

Cooperation with farmers is also crucial for our fresh business in UGO. Already today on the pascalized bottles of UGO juices

you can see where the ingredients come from and our vision is to have “birth certificate” for all our fresh ingredients. For our

salads we already cooperate with local farmers, so that we do not use no-name ingredients. In a long term we would like to

have a BIO-certified apple tree plantation.

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In Radenska we had a massive campaign to support trees planting and education about the importance of trees via our

platform #srcnozajutri (#Heartlyforthefuture). We have financed 20,000 trees to be planted in Slovenia and Croatia and also

240 trees were planted by our own employees on their gardens to fight against climate change and deforestation.

We also value the biodiversity all over the planet and we put high standards on raw materials we use. In our purchasing

process we strictly check all our suppliers to have guarantee, that the materials were grown in a sustainable way.

The Group´s business model, as stated above, has a strong impact in society in terms of bringing staple food to the market

and also being a trendsetter in lifestyle attitude.

The biggest risk of this issue is paradoxically being ahead of the major consumer. Some people are very conservative and ask

for a completely different type of products than customers, that therefore naturally are very concerned about their food

intake. According to some studies taken by the UNESDA organization, it takes at least 5 years for the consumers to change

taste preferences, for example sweetness acceptance as sugar is the bearer of taste. There is only minority of consumers that

prefer nutritional value over taste.

In our policy we invest significant part of our turnover in new product development and new technologies. We want to have

products for all consumer groups, and especially towards the less concerned part of our consumers to be two steps ahead of

them and nicely push them further so that they hopefully eventually aspire to drink/eat healthier. We show responsible

behaviour in schools by no advertising, always have clear information about energy value on our products and offer

full-portfolio including healthy choice and various formats of all products. We strongly focus on improving healthy properties

of our products. Whenever we prepare an innovation, we always try to bring a better or healthier product to the consumer.

But keeping in mind, that we should have also alternatives for more conservative consumers.

Unlike our competition, we do not believe that future lies in substituting sugar with other artificial sweetener by keeping

the sweetness. We believe, that the trends will face towards healthier products with natural ingredients and reducing

the amount of sugar. The taste buds of our consumers will change and they will no longer request and long for sweet taste

as the main benefit of beverage, but that they will get used to less sweet but richer natural taste from used ingredients. We

follow this trend also by expanding our offer with new products, that are not dependent on used sweetener – such as herbal

products, tea and coffee mixtures.

By entering the new category of herbal mixtures with the acquisition of LEROS, we have added a whole new “chapter” to our

social responsibility. People perceive herbs as natural alternatives to medical drugs. They don´t drink herbal teas because of

the taste, but mostly because of its function. Also, within the ubiquitous stress and fast lifestyle, it is a step out. A completely

new need has opened to be oneself as a part of nature, where the herbal teas are valid as a mediator. We have the expertise

and LEROS has an ambition to educate the customers to understand the herbs and their functions, teach them how to

recognize good quality herbs and to demand that, how to enjoy the herbs at their best. Our aim is to shorten the way between

nature and final consumer.

We have internally divided social impacts of our business into three clusters that we focus on: Product benefits, healthy

lifestyle, transparency and responsible marketing.

KEY PERFORMANCE INDICATORS FOR SOCIAL ISSUES (further explanations in the according section)

SUGAR

Added sugars reduction in the Group´s soft

drinks by 10% by 2020 (compared to 2015).

For the Adriatic region this 10% reduction

commitment is planned for comparison

between 2017-2022.

Because we have added two big water brands

to our portfolio in 2020, we have met this

target in Czechoslovakia (from 99g/l in 2015

to 76g/l in 2020). However, we will still

continue in the sugar reduction process in

the following years.

PRESERVATIVES

No preservatives where technologically

possible by 2025.

We do not have exact data (analysis to be

done in 2021).

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Product benefits

Best quality products made out of authentic ingredients in the most natural way are one of the Group´s most valuable stakes

in its business model that needs to be respected. According to a survey from 2018, the sweetener used in drinks is important

for more than a fifth of respondents. For the sake of interest, the traditional recipes and the naturalness of the beverage

were named in the first place of importance in the purchase decision making.

In our processes we do our best to make our beverages in the healthiest form and to follow the latest trends in used raw

materials. Our key products, however, are traditional beverages, which have kept the same recipe for decades and for obvious

reasons we cannot change that. As we are constantly looking for new ways, we are preparing limited editions of our

traditional products that allow us to use less sugar to alter the original recipe where possible.

In other products where it makes sense, and it is not a defect in the taste profile of the beverage, we adjust the amount of

sugar. For example, reducing sugars in children's drinks. We first came up with water-based children drinks that have 50%

less sugar than traditional fruit drinks for children. We have even reduced the caloric value of fruit kids drinks by 40% due to

the use of stevia sweetener. In 2018, we cut the amount of sugar in all our flavoured waters Rajec by 20%. The reduction by

half, that we tested in 2019, was not positively accepted by consumers.

In Radenska we increased the share of sugar-free products by 5% in 2020. In the coming years every third CSD product we

will offer to the market will be with “low energy value” (<20 kcal/100 ml) or will be completely sugar free.

According to the above mentioned, we have identified these areas and targets, on which we focus intensively:

SUGAR INTAKE REDUCTION

According to the European soft drinks industry (UNESDA), soft drinks represent less than 3% of

calories intake in the average European diet. Nevertheless, UNESDA and its members have

announced they will reduce added sugars in their products by 10% by 2020 (compared to 2015).

This initiative responds to changing consumer preferences regarding sugar. The sector will

innovate, reformulate, increase the availability of smaller pack sizes to allow portion control and

moderation and encourage consumer choice towards low and no calorie drinks to achieve its

ambitious target. Even though we are not directly an official member of the UNESDA

organisation, we feel solidarity for this commitment and we met this target in 2020.

In the Czechoslovakian region we have managed to reduce the sugar amount from 99g/litre

sold in 2015 to 76g/l in 2020 (in the Adriatic region it was 22g/l in 2020). As for the increased

availability of smaller pack size that naturally comes from our focus on our Impulse portfolio,

year by year the ratio of sold small pack sized drinks rises. In 2020 the ratio of drinks sold in up

to 1l format was 42% in Czechoslovakia and 49% in the Adriatic region.

PRESERVATIVES

Our aim is to have all products on the Czechoslovakian market without preservatives by 2021,

except for products, where it is due to technological reasons impossible. In the Czech Republic,

we operate a PET line with “Hot Filling” technology. For our flavoured waters we use aseptic

lines. We use high pressure technology (pascalisation) thanks to which all nutritional values of

fruit and vegetables in our 100% UGO juices are retained. For the Adriatic region, we will

prepare a plan to reduce all preservatives by 2025, where technologically possible.

NATURAL INGREDIENTS

We systematically don´t use artificial sweetener aspartame in our products and we continuously

question our soft drinks recipes to exchange all artificial colourings and aromas for those

prepared on natural basis so that we can be sure, that there are only natural ingredients and

only those ingredients, that are needed and nothing more.

In 2019, we launched a range of single-type BIO teas LEROS, both in the form of infusion bags

and loose. But here we have to say that BIO quality is not the only quality criteria for our teas.

Our best-selling teas are approved by the Czech State Institute for Drug Control (SUKL), which

has very strict criteria that each herb must meet. We check herbs several times during

production.

TRADITION

As a proud owner of many local traditional soft drinks, we strictly need to cherish the brands

and follow original recipes to keep these national heritages in unchanged state to future

generations.

TRACEABLE INGREDIENTS

Knowing the story of ingredients and guarantee the quality of our products from the seed is one

of our key goals and targets, that we will be heading for in the nearest future. Already today on

the bottles of UGO you can see where the ingredients come from and our vision is to have “birth

certificate” for all our fresh ingredients.

In LEROS the traceability of ingredients is 100%, out of which 80% are from middle Europe. We

acquire 20% of herbs via our redemption points. We would like to higher this percentage up to

60-80% in the following years.

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Healthy lifestyle

Sugar intake from soft drinks is sometimes considered as the most important factor of increasing obesity of population. We

do not fear this risk. Even though we are one of the biggest producers of soft drinks, that contain a considerable amount of

sugar, we believe, that our drinks can also be part of a healthy lifestyle, if they are consumed moderately and this

consumption is accompanied by adequate physical activity. Since the very beginning of the existence of the Group we have

actively supported free time activities for kids and adults.

In the Group, we realize that in addition to reducing the energy intake of the organism, regular physical activity is also

important for healthy life. Therefore, we support numerous sporting events and local sports associations and of course

encourage active and healthy lifestyle with our employees and the wider local environment. If we want to inspire, we have

to set an example ourselves. Within the Group, we are organizing running/cycling activities where all employees can attend

and annually, we have hundreds of participants. In 2020 the situation was very different, because due to the COVID-19

pandemic most of the organized events were cancelled. However, we supported activities despite the specific condition. We

have filmed videos “how to do exercise in quarantine” in Radenska, that was sent to our employees. Our employees in

CzechoSlovakia ran/cycled together 160 thousand km in 6 months (measured with the App Endomondo). With our newly

acquired brand Ondrášovka we have organized “Ondrášovka Cup”, football competition for 16 thousand players among 8-13

years. We are also a proud partner of Sokol, that brings sport for everyone, regardless of age and income. It supports and

develops the physical fitness of its 160 thousand members and inspire others. Due to the COVID-19 pandemic the 40th Three

Hearts Marathon in Radenci couldn´t take place. Nevertheless, we had hundreds of participants, that attended our online

marathon challenge.

For the UGO brand, sugar is not an issue. Our aim is a nutritional balanced policy and natural sugar is a coherent part of fresh

products made of fruits and vegetables and it goes along with fibre and vitamins. All UGO communication aims on healthy

lifestyle and is promoting recommended responsible behaviour. We are the biggest operator of fresh/juice bars in central

Europe with annually approximately 5 mil. visiting customers and since 2017, thanks to Titbit acquisition, we massively

extended the offer of fresh salads and snacks also for the retail segment. In our QSR restaurants and freshbars, we have

product portfolio designed by professional chefs as well as nutritional specialists to deliver tasty healthy products to our

customers. Healthy lifestyle is in DNA of the UGO brand and in marketing communication we are promoting not just our

products but healthy lifestyle itself as well.

Responsible consumption support means taking an active part in various organisations, such as Food Chambers and Soft Drink

Producers´ associations, where our employees hold leading positions. Our key principle is to develop various initiatives

relating to healthy living, as well as educate consumers with regard to proper consumption of beverages and leading healthy

lifestyle.

With the LEROS brand we would like to educate our consumers about the power of natural treatments and helpfulness of

herbs in terms of prevention of good health and also in the field of herbology (planting, collecting, processing and use of

herbs).

Transparency and responsible marketing

Transparency is one of the key values that we stand for and that our consumers connect with our company. The Group is one

of the most transparent companies on the markets, it operates. As the only Prague stock exchange listed food and beverages

company, we provide various information about our business that is exceeding the market standards. We also provide full

information about our products, especially about nutritious values, stating all ingredients transparently and honestly. We do

not mislead our customers and consumers in any way.

We are also aware of our role in development in children and feel strongly about the need of educating children.

The European soft drinks industry, represented by UNESDA, has pledged in 2006 not to sell soft drinks with added sugars in

primary schools nor advertise any soft drinks to children under 12. This commitment was later expanded (2017) also to

secondary schools. The Group despite not being member of the UNESDA applies to this pledge and doesn´t advertise nor sells

drinks with more than 4g/l sugar content to children at schools. In terms of kids’ education, we are members of various

associations and programmes that have children´s education on healthy living in their scope of work.

More than 60% of our beverage marketing investments is intended for products from the category of natural mineral waters

and flavoured waters to support healthy drinks in our portfolio.

We support transparent consumer information on product labels. By 2021, most of our soft drinks in the Adriatic region will

have calorie markings on the front of the packaging (FOP). That way, consumers will be able to make their buying decision

accordingly to their needs and desires.

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Our business model is built on potential and engagement of our employees. The most important areas for our employment

strategy are:

• Good employee experience with the Group as an employer (healthy and safe work environment, strong

employer branding and reputation).

• Alignment with the mission and vision of the Group.

• Attractive product portfolio, that our employees can identify with.

• Family company culture.

• Personal and professional development and education.

• Support of our employees in need.

The biggest future challenges on the labour market and our measures to use these challenges as our opportunity are:

ATTRACTING AND KEEPING

SUFFICIENT NUMBER OF WELL

QUALIFIED AND TRAINED STAFF

Health & safety at work is one of our key values. We have invested into workspace

improvement and branding, so that our employees feel comfortable and well treated

at work. Over 60% of our employees are willing to participate in improvement of

the working environment.

We regularly organize prophylactic examinations and provide in-depth (theoretical

and practical) trainings in the field of work and fire safety. We broadly promote

healthy lifestyle.

We have an indiscriminatory and transparent reward system and benefit

programmes. We offer a wide range of benefits for all employees, such as product

benefits from our comprehensive portfolio, Christmas presents, retirement bonus,

personal jubilee bonuses, gifts for children of our employees, New Year´s meetings

or open-door days and sporting benefits. In 2019, we have implemented a system of

individualised benefits in the Czech Republic. Where possible, we compensate for

different legislation requirements and benefits within our business units (Czech

Republic + Slovakia, Slovenia + Croatia).

We care about the individual personal situation and needs of our employees and

support them. We support talents of our employees and provide opportunities for

their personal development. We encourage internal promotions and career changes

of our employees, especially with expats contracts, management rotation, new

projects and acquisitions, where we fully rely on our well experienced people.

We create an open and flexible working environment and motivating working

conditions. We have a structure of internal communication that reaches everyone

through internal magazines, notice boards, intranet, regular with management and

the board members, where our employees can openly discuss their questions and

requirements and many more.

We are developing our people individually through different programmes and

activities. We support blended learning, and in 2018 we have implemented LMS

(Learning Management System). We have personal development programmes like

Kofola Leadership, Kofola Management, Diverse Kofola, Internal Coaching, Kofola

Sales Academy and Team Development. We also provide individual coaching

sessions.

In Radenska Adriatic we introduced e-education as a more modern form of acquiring

knowledge, that attended 249 employees in 2020. With help of EU funding, we have

implemented a new educational system, that included over 130 employees.

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DEMOGRAPHIC DEVELOPMENT

OF WORKING POPULATION

To engage qualified and motivated employees, we actively cooperate with schools

and develop our relationship (for example in our “Kofola Kreaton” event, where we

organize a contest for teams from high schools and universities to create product

innovations). Our experts are also giving lectures regularly on the universities not

only to share knowledge, but also to attract university graduates.

In UGO we started targeted cooperation with secondary schools in 2020. Within our

High Potential program, in which we select and subsequently train employees from

ordinary positions to operational management positions, high school students are

our target group. In 2020, we hereby acquired 4 new Store Managers.

We take special care about young employees with little work experience, that are

more likely to leave companies because of better financial conditions of some

international companies or even opportunities abroad. We try to build appealing

working conditions for them and pay special attention to their needs.

MULTIGENERATIONAL AND

MULTICULTURAL WORKING

TEAMS

We support the diversity and healthy self-confidence of our employees. We have and

cherish our open multicultural (especially in the Adriatic region) and age diverse

environment that does not limit or discriminate individuals by gender, age, race, or

any other difference. We take care of fair work environment that prohibits any form

of discriminatory behaviour at the workplace.

Attitude to diversity support does not differ with the level of management,

non-discriminatory behaviour is an inherent part of our corporate culture.

We try to bridge generational differences through education and various measures;

within the framework of cooperation with educational institutions, we take care of

upgrading the professional education of our employees and offer professional

practices and mentoring to generation that is just entering the labour market.

LEGISLATION AND SOCIAL,

LABOUR AND TAX POLICY IN

THE COUNTRIES WE OPERATE

We have a team of trained professionals that follow all legislative processes and

prepare our companies for changes in advance. We also tend to balance differences

between countries´ legislative frames (CR – SR, SI – HR) to have the best possible

compromise for all employees in one business unit.

COVID PANDEMIC

In 2020 we have experienced an unprecedented situation, that has never been here

before. Because of social distancing due to the widespread of COVID-19 pandemic,

there were limited personal contacts, what could have a negative impact on working

relationship. But we had very well-developed IT support which from the first moment

helped to continue working efficiently under new conditions.

Employees were dealing with increased stress and insecurity issues. We have

provided the biggest care of our employees, secured protective equipment and

provided education about distant work and team leading. We promptly reflected all

measures introduced by state governments as well as our own system of precaution

measures, especially in the production plants.

Employees from highly affected segments were helping in other parts of the company

or doing voluntary work supported by the Group.

As we do not use agency workers and very little frontier workers, we were not

affected by the border closure in terms of losing employees for our production plants.

We have offered support to all our employees in case they got into existential crisis

due to pandemic situation.

This is going to be an issue in 2021 as well, but we have experienced we are well

prepared.

The long-term goal of the Kofola Group is providing a healthy and motivating environment for the professional and personal

development and training of our employees. We involve our employees as our ambassadors on various occasions. They

appreciate the founders of the Company remain majority owners of the Group and stay active in the management.

We take care of the ethical and non-corruption behaviour. All our HR processes are very transparent. It is important to act as

a responsible company that treats its employees fairly and equitably, we support their creativity and innovativeness in various

programmes, where they can create innovations of daily routine, processes or also of our products.

We made some active steps in the Adriatic region to higher the number of employed women with a very successful outcomes

– from 2015 we have managed to increase the number of women by 6%.

In Slovenia, we have obtained the Family Friendly Company Certificate in 2019. It represents one of the various possibilities

of a socially responsible acting and balancing professional and private lives of employees. Behind the success of the company,

there are not only managers, but also employees that are crucial in the key working process. For the successful development

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and growth, their satisfaction and adherence are of key importance, which is also a key objective of the Family Friendly

Certificate. In 2020 we agreed on 13 different measures within the Family Friendly Company, which support the idea of

a suitable life balance and family-friendly work (e.g., the right to disconnect, psychological counselling and assistance,

assistance to parents in raising a child, participation of relatives in occasional work etc.) In 2017 we started a very successful

project KofoMami in CzechoSlovakia, that is focused on our employees on parental leave and which is integrating them more

deeply into the daily life of the Company. According to the latest survey, 75% of mothers/fathers are willing to have contact

with the Company even on parental leave, out of which 97% are satisfied with the KofoMami project (that associates parents

and keeps the connection between the company and parents on the parental leave).

We do our best to make our employees our Companies´ and brands´ ambassadors. In 2019, we conducted an employee

experience survey in our CzechoSlovak business pillar followed with a survey in 2020 in the Slovenian part of the Group with

very interesting outcomes:

• There is growing satisfaction of employees in Czechoslovakia with experience in working at Kofola compared

to 2015.

• In CzechoSlovakia 85% employees are satisfied with their work environment and over 66% are satisfied with

their rewards. In Slovenia over 80% employees are satisfied with employer reputation and loyalty,

relationships at work and with their superiors and 65% are satisfied with the reward system.

• If the company ended our employees would then miss mostly the colleagues, while Radenska employees

would miss even being part of an important brand.

• According to our employees the public would mostly miss our traditional products,

• 5 words, that define our company in CzechoSlovakia are drinks, love, emotions, tradition and people, while in

Slovenia it is honesty, heart, unity, creativity and flexibility.

• The rate of recommendation to work in our company (Net Promoter Score) is 7.4/10 in CzechoSlovakia. In

Slovenia 86% of employees consider Radenska as a good employer and are proud to work here.

• 76% of people rate Kofola as employer with the best or the second-best brand.

We are very proud to say that these are highly satisfactory outcomes and our goal is to improve the experience of our

employees to get even higher rating in two years’ time period. In 2021 we will conduct similar survey in Croatia.

These experience survey outcomes are also underlined by our internal “hard data”:

• Despite of essential organizational and job market changes connected with the COVID-19 pandemic we

manage keep the employees turnover close to our excellent results from previous 2 years.

• We have less costs for recruiting and onboarding of new employees.

• Our operations are not dependent on the agency workers.

• We are the third most attractive employer according to the Randstad Awards 2020 in the Czech Republic and

the most attractive employer in FMCG sector).

KEY PERFORMANCE INDICATORS FOR EMPLOYMENT ISSUES

EMPLOYER BRAND

Internal survey – over 80% employees

satisfied

85% employees satisfied with their work

environment in 2019 in CzechoSlovakia.

Overall satisfaction in Slovenia is 3,2 (on the

scale from 1 to 4, where 4 is top).

EMPLOYEES

TURNOVER

Limit the employee’s turnover to 15%

We have cut employees fluctuation in

the previous 2 years from 24% to 17%, and

keep it close to this level despite of the

turbulent 2020.

Our business model is based on respect to everyone under any circumstances. We are very grateful that we live in one of

the most stable and peaceful parts of the world. In the Global Peace Index by Institute for Economics & Peace for 2020 the

Czech Republic is on 8

, Slovenia on 11

, Slovakia on 25

, Croatia on 26

and Poland on 29

place out of 163 world countries.

Human Rights are truly integrated part of our national legislations and any violation is strictly penalized. That is also stated in

all our job contracts and there is no one who would anyhow question this principle.

We have an open-door policy. All employees can refer to any member of management with any requests and they will be

treated with respect. Nothing is forgotten or left unsolved. As a result over 90% of our employees stated, that they feel

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confident that they can refer to their superiors and that the problem will be treated. Over 95% of our employees stated, that

they know, who to go to in case a problem appears, which we understand outstanding and above average numbers.

We also treat all our suppliers as partners and deal with them with respect according to local highest business standards. We

are transparent and opened company.

Even though we prefer local suppliers, it is inevitable to cooperate with suppliers from other countries and sometimes even

continents as well. However, we cooperate only with proven suppliers that can guarantee, that the whole Supply Chain

adheres to generally accepted principles of advanced civilizations, especially in term of respect to human rights. Even though

we do this from our nature, we do not have it written in our purchasing standards. Therefore, in the nearest future these

principles will be strictly stated in our procurement policy as a significant part of our suppliers screening.

According to the Corruption Perception Index compiled by the Transparency International are “our” countries below

the average of EU. Even though we never had to face corruption ourselves, we feel it is a nuisance and needs to be publicly

condemned.

We also have a strict policy regarding not accepting bribes or other special benefits by our employees. When selecting

business partners, we follow procurement policy, when there are always at least 2 members of our staff and we do not favour

anyone and decide honestly and transparently according to predetermined factors and rules. All money transfers are carefully

monitored and need to be multi-stage approved.

All our employees need to go through various trainings and are repeatedly informed about above mentioned.

According to our survey 95% of our employees’ value and respect their superior. Our people trust our management.

Managers set a very good example to our employees and built good and transparent company culture, where all human

rights are treated with respect and there is no room for corruption and bribes.

Shoppers are more discerning about where they buy. More than 27% of global respondents on average try to shop in locally

owned stores, according to Euromonitor International’s Lifestyles Survey 2019. This reflects a subtle but significant shift away

from international retail chains and a return to community roots. Taking pride in and supporting local communities is

an enduring feature of the consumer landscape.

In our business model, we built on local brands and understanding local culture. By buying local brands and building positive

emotions and experiences around them, we make it possible to maintain the cultural heritage on the markets in which we

operate. We act with respect to local traditions and environment. Our portfolio includes more than 30 brands ranging from

traditional, through licensed to newly created products. During more than 25 years of our existence, we have managed to

resurrect forgotten traditional brands.

We built personal relationships with our local suppliers and the whole regions and work intensively on our cooperation. We

believe that from close local cooperation can benefit the whole community and it is then more resistant to macro economical

or global economy excesses. Thanks to this local policy the COVID-19 pandemic precaution measures and “closing” of

the globalised world did not affect us as it did to some international companies. We were a member of several activities to

support local gastronomy and tourism. By inviting our customers to visit restaurants and get our products for free, organizing

cinemas outside our gastro customers or creating a special commemorative touristic stamp, we have cooperated and

invested into our customers to widespread good mood and start the local economy, which brought the best summer revenues

in the history of Kofola.

With the LEROS company, we have acquired a whole new portfolio of herbal products as well as new ways of getting natural

raw materials. We would like to increase the percentage of herbs bought from local farmers tremendously. We have our own

network of herbs redemption points, where anyone can bring and sell herbs to us. We opened one new point in 2018 in

Rajecká Lesná and more are planned for 2021. By this way we would like to increase the amount of acquired herbs from 20%

in 2020 to 60-80% in the following years. We would also like to expand our BIO organic line of herbal products. We support

regional farmers of herbs and treat them fairly and responsibly, so that together we can improve our businesses and benefit

on both sides of this partnership.

In cooperation with farmers in Rajecká dolina (Slovakia) we have certified the surrounding areas as a “BIO region” for wildly

grown herbs, which not only helps production of BIO herbs, but also protects the Rajec water source. We have BIO bee hives

on spot which give us BIO honey for use in our products, but also helps growing the herbs. In the following years we would

like to plant fruit trees, not only to gain BIO quality ingredients, but also for supporting and development of our beehives.

We would like to create an “ecosystem” of businesses, farmers and local authorities and other stakeholders, that would

cherish and further develop the valley and support local agriculture and business. In our long-term vision, we would like to

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be the bearer and creator of this idea also in Ondrášov (region of our production plant for Ondrášovka mineral water),

Stráž nad Ohří (source of Korunní) and Radenci (Radenska mineral water region).

One of the most important aspects for the Group is to be a “good neighbour”. This is why we have developed a whole series

of projects that support regions in which we operate, from the construction of play grounds, through the development of

communications infrastructure or support of local non-government organisations. In 2020 this cooperation gained in

importance. We provided local municipalities with our drinks and also 80 thousand bottles to use for disinfection, that was

originally supplied only in tanks. We massively supported workers in the health system with our products. We stopped many

of our marketing activities and donated the money where it was needed – in total it was almost 10 mil. CZK.

In Slovenia and Croatia, we have on national level a project where RADENSKA as brand is donating strollers for parents who

gave life to three hearts – triplets. In 2020 we have supported children´s hospitals, where the company doubled the amount,

that our employees gathered – over 30 thousand EURO in total.

Not only is important where our Company is placed, but we also value the surrounding environment of our employee’s

homes. That was the driving motor for our internal project “Give happiness”, that we started in 2016 and since then we tend

to repeat it annually and roll it to all companies we operate. The basic principles are very simple – every employee can suggest

a project, that he would like to support and then a jury of employees selects, which projects we should as a Company support.

It gives them a lesson about the difficulty of picking the most needed activities and letting go the others. This year it was

a little bit different – the top management of the Group and CzechoSlovakian business pillar donated a significant amount of

their annual bonuses and this money was used for this donation project. By this we could support 36 projects with more than

1 mil. CZK.

According to the employees’ survey, conducted at the end of 2020, the employees are aware of the importance of local

support and cooperation and they are widely willing to be part of our activities – mainly afforestation, collecting waste in

nature, sport activities and supporting healthy lifestyle.

We believe that future lies in close cooperation within regions among all stakeholders. If we build a strong local economy,

we will be a lot less dependent on the development in the world and therefore be more durable in case of any economic

crisis.

The above-mentioned topics are very relevant and important to the Group and are treated with respect and get continuously

more attention in the managing of the Group. Sustainability is no modern trend or CSR project. Sustainability is authenticity,

that makes the business real. It should be an integral part of all processes and activities in all companies. If we want to have

a proper marketing, we shouldn´t only create stories, we should live them accordingly!

The most important issues for our employees are using of the rPET, protection of water sources, wider use of returnable glass

bottles, lower use of sweeteners, CO

footprint minimalization, region support and healthy lifestyle support. As you could

read in this chapter, those are exactly the activities, that we widely implement, process and monitor.

The biggest challenge we deal with is how to implement all above stated issues into our daily routine and into all employees´

minds. From the stated above we believe that we are on a good track to become one of the most sustainable and respected

companies in our region.

Results of our activities are sometimes more sometimes less palpable. We however monitor the expenses connected with

the above-mentioned topics and set budgets for the respective activities that allow us not only to be compliant but also to

move things forward. However, these issues are very complex and are not isolated from our daily business. Our every activity

and therefore also its cost should pass through our principles and goals that we have stated above and be part of our

sustainable future.

Consolidated annual report 2020

Corporate governance

A-50

As at 31 December 2020, the registered share capital of Kofola ČeskoSlovensko a.s. totalled CZK 1,114,597,400

(as at 31 December 2019: CZK 1,114,597,400) and comprised 22,291,948 (as at 31 December 2019: 22,291,948) common

registered shares with a nominal value of CZK 50 (as at 31 December 2019: CZK 50) each, issued as book-entry shares under

Czech law in particular under the Czech Companies Act, with the ISIN CZ0009000121.

The Share capital of the Company is fully paid up. The shares have been admitted for trading on the Prague Stock Exchange.

The General Meeting held outside of the meeting during 2 – 18 November 2020 has approved a distribution of dividends in

the amount of CZK 13.5 per share, i.e. CZK 300,941 thousand (CZK 285,902 thousand in Group financial statements due to

shares owned by RADENSKA).

On 5 June 2019, the General meeting has approved a distribution of dividends in the amount of CZK 13.5 per share, i.e.

CZK 300,941 thousand (CZK 285,901 thousand in Group financial statements due to shares owned by RADENSKA).

Share capital structure

31.12.2020

31.12.2019

Name of entity

Number of

% in share

capital

% in voting

rights

Number of

% in share

capital

% in voting

rights

AETOS a.s.

14,984,204

67.22

70.75

14,984,204

67.22

70.75

RADENSKA d.o.o.

1,113,977

5.00

0.00

1,114,010

5.00

0.00

Others

6,193,767

27.78

29.25

6,193,734

27.78

29.25

Total

22,291,948

100.00

22,291,948

100.00

On 9 July 2020, 33 shares have been granted from own shares (in possession of RADENSKA) to the external provider as

a compensation for services provided by this external party. These shares were originally purchased by RADENSKA in a public

tender offer on the stock market mainly from CED GROUP S.à r.l. with an individual share price of CZK 440.

On 14 August 2019, 99 shares have been granted from own shares (in possession of RADENSKA) to the external providers as

a compensation for services provided by these external parties. These shares were originally purchased by RADENSKA in

a public tender offer on the stock market mainly from CED GROUP S.à r.l. with an individual share price of CZK 440.

On 26 March 2019, AETOS a.s. sold 175,000 shares of the Company to a Czech investor at a price per share of CZK 311.

The free float increased to 27.78%.

Each share in the Company ranks pari passu in all respects with all other shares. The same rights are incorporated into all

the Company's shares including the right to attend the General Meeting, to require and receive explanations of matters

concerning the Company that are part of the agenda of the General Meeting, to submit proposals and counterproposals, and

to receive a dividend and share in the liquidation surplus. In compliance with the relevant legal provisions, the voting rights

attached to the shares owned by RADENSKA d.o.o. and by the Company itself cannot be exercised.

The rights attached to the shares arise from the provisions of Czech Companies Act and Company´s articles of association.

Since the Company´s shares have been admitted to trading on the Prague Stock Exchange, the shareholders have certain

disclosure requirements arising from the provisions of the Czech Capital Markets Act.

The Company didn’t issue any convertible or other shares of similar kind. Company has only concluded a program for

long-term remuneration of senior managers of the Group, as described in the section 7.2 (k).

Consolidated annual report 2020

Corporate governance

A-51

Shares in possession of persons with executive authority

31.12.2020

pcs

Members of the Board of Directors

15,036,072

Members of the Supervisory Board

7,025

Other persons with executive authority

13,903

Persons related to those with executive authority

Total

15,057,000

On General Meeting held on 21 June 2017, the Company announced the change in the dividend policy with the aim of

distributing of a dividend to the shareholders of Kofola of at least 60% of its consolidated net profit achieved in each financial

year from 2017 until 2020, subject to sufficient distributable profits. Updated dividend policy for 2021 and following years

will be approved on the annual General Meeting which is planned in the second quarter of 2021.

(a) Figures and information about the structure of the equity

The equity structure is as follows:

Equity structure

31.12.2020

CZK´000

Equity attributable to owners of Kofola ČeskoSlovensko a.s.

1,338,391

Share capital

1,114,597

Share premium and capital reorganisation reserve

(1,962,871)

Other reserves

2,449,921

Foreign currency translation reserve

60,067

Own shares

(490,151)

Retained earnings/(Accumulated deficit)

166,828

Equity attributable to non-controlling interests

(31,199)

Total equity

1,307,192

As at 31 December 2020, the share capital of Kofola ČeskoSlovensko a.s. totalled CZK 1,114,597,400 and comprised

22,291,948 common registered shares with a nominal value of CZK 50 each, issued as book-entry shares under Czech law in

particular under the Czech Companies Act, with the ISIN CZ0009000121.

The Share capital of the Company is fully paid up. The shares have been admitted for trading on the Prague Stock Exchange.

During March 2020, the Company acquired on the stock market through share buy-back programme in total 19,759 treasury

shares for the total value of CZK 4,410 thousand (average price 221.51 CZK per share). Majority of treasury shares has been

used within the management incentive programme. The Company as at 31 December 2020 held 11 pieces of its own shares

in total nominal value of CZK 550 (31 December 2019: 0). No purchases of treasury shares occurred in the financial year 2019.

RADENSKA d.o.o. as at 31 December 2020 owned 1,113,977 (as at 31 December 2019: 1,114,010) shares of the Company

(which represented 5.00% of the Company´s share capital as at 31 December 2020 and 31 December 2019) in total value

as at 31 December 2020 of CZK 490,150 thousand (as at 31 December 2019: CZK 490,164 thousand). The shares were

purchased by RADENSKA d.o.o. in a public tender offer on the stock market mainly from CED GROUP S.à r.l. for the total value

of CZK 490,208 thousand (CZK 440 per share). At the date of acquisition, the shares had nominal value of CZK 100 each.

Nominal value of shares owned by RADENSKA d.o.o as at 31 December 2020 was CZK 55,699 thousand

(as at 31 December 2019: CZK 55,701 thousand).

Part of the shares owned by RADENSKA is intended for the management incentive programme.

In compliance with the relevant legal provisions, the voting rights attached to the treasury shares and shares owned by

RADENSKA d.o.o. cannot be exercised.

Consolidated annual report 2020

Corporate governance

A-52

(b) Information about limitations on the transferability of securities

The shares issued by the Company are transferable without any restrictions pursuant to Article 5 par. 5.3 of the Company´s

Articles of Association.

Significant shareholders as at 31 December 2020:

Significant shareholders (all with direct participation)

Proportion of

the voting rights

Participation

percentage

AETOS a.s.,

Nad Porubkou 2278/31a, Poruba, 708 00 Ostrava,

identification No. B10942

70.75%

67.22%

RADENSKA, družba za polnitev mineralnih voda in brezalkoholnih pijač, d.o.o.

Boračeva 37, 9252 Radenci, Republic of Slovenia

registration No. 5056152000

0.00%

5.00%

Total

70.75%

72.22%

Significant shareholders as at 31 December 2019:

Significant shareholders (all with direct participation)

Proportion of

the voting rights

Participation

percentage

AETOS a.s.,

Nad Porubkou 2278/31a, Poruba, 708 00 Ostrava,

identification No. B10942

70.75%

67.22%

RADENSKA, družba za polnitev mineralnih voda in brezalkoholnih pijač, d.o.o.

Boračeva 37, 9252 Radenci, Republic of Slovenia

registration No. 5056152000

0.00%

5.00%

Total

70.75%

72.22%

The above-mentioned entities dispose of the rights of the qualified shareholders arising from Section 365 and foll. of the Act

No. 90/2012 Coll., Business Corporations Act, especially of the right to request convocation of the general meeting of

the Company for discussion of the items proposed by them, request inclusion of the item determined by them on the agenda

of the General Meeting, request the Supervisory Board to review the exercise of powers by the Board of Directors in

the matter specified in the request as well as file a shareholder action on behalf of the Company.

The structure of the significant direct participation in the voting rights of the Company as at 31 December 2020 is known to

the Company only in the case of the controlling entities AETOS a.s. and the controlled company RADENSKA d.o.o. and is

described within the Report on relations between the controlling entity and the controlled entity and between the controlled

entity and other entities controlled by the same controlling entity for the year 2020. As for the other entities, their direct and

indirect participation and shares in their possession are based on the notification delivered to the Czech National Bank as

follows:

- on 10 January 2020, the company NN Group N.V. notified that its proportion of the voting rights has decreased

from 1.07% to 0.78%.

- on 7 October 2019, the company ConsilEng s.r.o. notified that its portion of the voting rights reached 1.03%.

Until the end of the year 2020 and throughout the year 2021 (until the cut-off date of the annual report), the Company has

not been informed about any other change of participation in the voting rights that would have met the legislative limits for

the reporting.

Except for the above mentioned natural and legal persons, the Company is not aware of any other significant direct and

indirect participation in the Company´s voting rights or of any Company´s shareholders whose participation in the Company´s

voting rights reached at least 1%.

The controlled company RADENSKA is entitled to exercise rights of the qualified shareholder but not the voting rights

attached to the shares of the Company.

(d) Information about the owners of securities with special rights, including the description of such rights

There are not any special rights attached to the securities issued by the Company.

Consolidated annual report 2020

Corporate governance

A-53

(e) Information about limitations on voting rights

The voting rights attached to the Company´s shares may only be limited or excluded where stipulated by law. According to

the legal provisions, the voting rights attached to 11 treasury shares and to the 1,113,977 shares owned by the controlled

company RADENSKA cannot be exercised. The Company is not aware of any other restrictions on or exclusions of the voting

rights attached to the shares issued by the Company.

(f) Information about agreements between the shareholders that may reduce the transferability of shares or

the transferability of the voting rights, if known to the issuer

The Company is not aware of any agreements between the shareholders of the company that may reduce the transferability

of shares of the Company or of the voting rights attached to the shares of the Company.

(g) Information about special rules regulating election and recalling of members of the statutory body and changes to

the Articles of Association of the issuer

The statutory body of the Company is six-member Board of Directors. The members of the Board of Directors are elected and

recalled pursuant to Article 15 par. 15.5 of the Article of Association of the Company by the Supervisory Board.

The Supervisory Board of the Company has 4 members. The Supervisory Board has the quorum if majority of its members is

present or otherwise takes part in a meeting. The Supervisory Board takes a decision by a majority of votes of present or

otherwise participating members. In case of equality of votes the vote of a chairman of the Supervisory Board is decisive.

The Supervisory Board may also take decisions per rollam.

Approval by a majority of at least two thirds of the votes of the present shareholders at the general meeting is required to

adopt a decision amending the Articles of Association of the Company. The general meeting has the quorum if the present

shareholders hold shares with the par value exceeding 50% of the share capital of the Company. The latest amendment to

the Articles of Association of the Company was approved by the General meeting of the Company on 5 August 2020.

The reason for the amendment was to bring the Company´s Articles of Association in line with the relevant legislation, namely

the amendment of the Business Corporations Act effective as of 1 January 2021 and the effective amendment of the Act No.

256/2004 Coll., Capital Market Undertakings Act. The amended Articles of Association are effective as of 1 January 2021.

Any special rules regulating election and recalling of the members of the Board of Directors of the Company and amendments

and changes to the Articles of Association of the Company don´t apply.

(h) Information about special powers of the statutory body pursuant to the Business Corporations Act

The members of the Board of Directors of the Company do not hold any special powers. The Board of Directors takes decisions

on all Company matters unless they are reserved for the General meeting, Supervisory Board or other Company´s body.

(i) Information about significant agreements to which the issuer is a party and which will become effective, change or

cease to exist in the event of a change of control of the issuer as a result of a take-over bid, and about the effects

arising from such agreements, with the exception of agreements whose disclosure would cause harm to the issuer

The Company has not entered into any significant agreement that will become effective, change or cease to exist in the event

of a change of control of the Company as a result of a take-over bid.

(j) Information about agreements between the issuer and the members of its statutory body or employees that bind

the issuer to take on any commitments in the event of the termination of their offices or employment in connection

with a take-over bid

The Company has not entered into any agreement with the members of the Board of Directors that bind the Company to

take on any commitments in the event of the termination of their offices in connection with a take-over bid.

The Company has not entered into any agreement with any employee that bind the Company to take on any commitments

in the event of the termination of its employment in connection with a take-over bid.

(k) Information about eventual schemes on the basis of which employees and members of the statutory body of

the Company may acquire participation securities in the Company, options concerning such securities or any other

rights related to these securities, under more favourable terms, and information about how these rights are exercised

On 8 June 2017, the Company concluded a program for long-term remuneration of senior managers of the Group.

The objective of the Program was to motivate and stabilize the senior executives by the opportunity to participate in

the success of the Kofola Group.

Consolidated annual report 2020

Corporate governance

A-54

The participants were entitled to get shares of the Company free of charge based on the agreement on participation in

the program for a long-term remuneration of senior managers of the Group. The program contained of a two separate, but

nevertheless complementary plans:

1 The Share Acquisition Plan consisting in the participant´s option to buy Kofola shares on the market and, under

the fulfilment of the specified conditions, to receive for free the same number of Kofola Pair shares.

2 The Performance Shares Plan consisting in the participant´s right to receive for free, under the fulfilment of key

performance targets by the Kofola Group, the pre-determined number of Kofola shares.

Since 31 December 2019, the Program can no longer be joined. Under the Program, no Performance shares were granted. In

2020, only a part under point 1 above of the Program was in operation.

The maximum number of the eligible Investment shares could not exceed the specified annual limit - the number of shares,

which could be purchased on regulated market for 50% of the basic annual gross salary (remuneration) paid to the participant

by companies from the Group in the calendar year (i.e. from January 1, 2017 to December 31, 2017, from January 1, 2018 to

December 31, 2018 and from January 1, 2019 to December 31, 2019). If the number of Investment shares held by a participant

on December 31 of a calendar year exceeded the determined limit, the Company´s shares purchased by the participant

exceeding the stated limit were not taken into consideration for the Share Acquisition Plan and the participant could not

claim the Pair shares for these shares even though he fulfilled other conditions to constitute the claim. However, the shares

not eligible as Investment shares in one calendar year could be eligible in one of the following calendar years. A participant

could only receive pair share if they held investment shares throughout the entire relevant period (2 years following the end

of the calendar year that served as reference for the yearly limit) and, at the same time, if they were employed with

the Company or a member of a Company body throughout the entire relevant period. The participant is obliged to hold

the pair shares for at least 1 year as of their transfer to the participant. This Plan ended on 31 December 2019 but

the Company will keep transferring pair shares to participants until 2022.

Summary of effect during 2020 and as of 31 December 2020

Number of Pair shares granted in 2020 (pcs)

Total cumulated number of Pair shares granted as of 31 Dec 2020 (pcs)

71,506

Fair value of Pair shares as of grant date (CZK)

406.6

End of 3-year vesting period

31 Dec 2019

Transfer of Pair shares to participants – executed in 2020

19,748 pcs during Mar/Apr 2020

Transfer of Pair shares to participants – to be executed

31 Mar 2021, 31 Mar 2022

Total costs from equity settled transactions in 2020 (CZK thousand)

Cumulated reserve from equity settled transactions as of 31 Dec 2019 (CZK thousand)

31,345

2020 changes in reserve from equity settled transactions (CZK thousand), note B 1.5

(4,091)

Cumulated reserve from equity settled transactions as of 31 Dec 2020 (CZK thousand)

27,254

* Year 2019 was the last year of the option scheme programme.

Consolidated annual report 2020

Corporate governance

A-55

The Company is listed on the Prague Stock Exchange (“PSE”). In the Czech Republic, the Company is required to submit to

the PSE a declaration on the code of corporate governance stating that the issuer willingly or voluntarily complies with

the same form as is a part of the Company´s annual report. However, due to the fact that there was no binding corporate

governance regime in the Czech Republic, which the Company had to comply with, the Company, as at the date of the annual

report, did not commit to comply with any specific corporate governance regime in the Czech Republic.

Nevertheless, the Company and the companies within the Group are firmly committed to maintaining an effective framework

for the control and management of the Group’s business. The Company puts much emphasis on respecting all statutory rights

of shareholders, including the equal treatment of shareholders in a similar position. The Company strictly adheres to

the principle of disclosure and transparency not only in relation to convening a General Meeting but also in relation to

informing of corporate events, including financial results and relations with related parties. The members of the bodies of

the Company regularly attend the General Meetings of the Company and are available to the shareholders during

teleconferences. The Company follows in particular Business Corporations Act, Civil Code, Corporate Criminal Liability Act

and Capital Market Undertakings Act.

Information about policies and procedures, internal controls and the rules of the risks in relation to the accounting process

is contained in part 7.6. Financial reporting process.

Kofola ČeskoSlovensko a.s. had the following bodies in 2020:

• General Meeting,

• Board of Directors,

• Supervisory Board,

• Audit Committee.

The General Meeting is the supreme body of the Company. The General Meeting is, according to the Articles of Association,

authorised to:

• decide on changes of the Articles of Association, unless it is a change which occurred as a result of an increase in

the registered capital by the authorised Board of Directors or a change which occurred as a result of other legal facts,

• adopt Procedural Rules of the General Meeting, if the Company desires to provide more details on the course of

a General Meeting of the Company besides the rules stipulated by the law or the Articles of Association,

• elect and recall members of the Supervisory Board and approve their agreement on performance of office including

their remuneration,

• appoint and recall a liquidator and approve its agreement on the performance of office including its remuneration,

• approve a transfer, lease or pledge of the Company’s enterprise or such a part thereof that would imply a significant

change of the existing structure of the enterprise or a significant change of the scope of business or activity of

the Company,

• decide on matters which are submitted by the Board of Directors to the General Meeting to be resolved by the General

Meeting,

• grant instructions to the Board of Directors and Supervisory Board and approve the operating principles of the Board

of Directors and the Supervisory Board, provided that these are not contrary to the law; the General Meeting may also

prohibit a member of the Board of Directors and Supervisory Board from taking certain actions, if such a prohibition is

in the interest of the Company,

• decide on the distribution of profit, including the distribution of dividends, or of other own sources, or decide on

the settlement of loss,

• approve the Company’s auditor, and

• decide on any other issues falling under the powers of the General Meeting by virtue of the Czech Companies Act or

the Articles of Association.

Consolidated annual report 2020

Corporate governance

A-56

Pursuant to the Capital Market Undertakings Act the General Meeting is further entitled to approve a remuneration policy,

a report on remuneration and significant transaction under Section 121s et. Seq.

The General Meeting must be held at least once in a financial year of the Company, no later than six months from the last

day of the previous financial year at the request of the Board of Directors (or, in exceptional cases, also at the request of

a member of the Board of Directors, of a qualified shareholder, or at the request of the Supervisory Board).

The General Meeting is to be convened at least 30 days (if the General Meeting is not requested by a qualified shareholder

or if the General Meeting is not requested as a substitute General Meeting) before the General Meeting, by publishing

an invitation to the General Meeting on the Company’s website http://investor.kofola.cz. Sending of the invitation to

the shareholders is replaced by publishing of the invitation in the Commercial Journal. The invitation shall contain all

information required by law. If a qualified shareholder requests the Board of Directors to convene the General Meeting, it

shall be convened in a manner and period prescribed by the Czech Companies Act. If all the shareholders agree, the General

Meeting may be held without fulfilling the requirements set out by law and the Articles of Association.

Under the exception laid down in Section 19 of the Act No. 191/2020 Coll. a decision-making of the General Meeting per

rollam was allowed from 24 April till 30 December 2020.

There is no provision of the Articles of Association that would have an effect of delaying, deferring or preventing a change in

control of the Company.

Shareholders may participate in the General Meeting and exercise their voting right personally or by proxy. It is also allowed

to exercise voting right by correspondence in compliance with Article 14 par. 14.2. and following of the Articles of Association

of the Company.

Each share in the capital of the Company confers the right to cast one vote, subject to the relevant provisions of the Articles

of Association. The total number of votes in the Company is 22 291 948 votes. As the date of the annual report, the total

number of votes in the Company is 21 177 960 votes reduced by number of votes attached to the Company´s shares by which

is not possible to exercise the voting right (treasury shares and shares owned by the company RADENSKA controlled by

the Company). None of the Participating Shareholders has different voting rights.

Every holder of the Company's share(s) and every other party entitled to attend the General Meeting who derives his rights

from such share(s), is entitled to attend the General Meeting in person, or be represented by a person holding a written

power of attorney unless provided by the legal provisions or the Articles of Association of the Company otherwise, to address

the General Meeting and, as far as he/she has voting rights, to vote at the meeting. For this purpose, Czech law prescribes

a mandatory record date to establish which shareholders are entitled to attend and vote at the General Meeting.

Such record date is fixed at the seventh day before said General Meeting. The invitation to the General Meeting shall state

the record date, the place and the manner in which registration shall take place. According to Article 8 par. 8.2 of the Articles

of Association of the Company the list of shareholders is replaced by a book-entry securities register issued by the Central

Securities Depository. The book-entry securities register shall be used for identification of attendance at the General Meeting.

The Company requests an extract of book-entry securities register for such purpose.

The General Meeting constitutes a quorum if the shareholders present at the General Meeting own shares with an aggregate

face value exceeding 50% of the share capital. All resolutions are adopted by a simple majority of votes unless otherwise

specified in the legal provisions. Shareholders vote by raising a voting card indicating the number of votes pertaining to

the respective shareholder. Shareholders may also cast votes by correspondence voting. In such case, shareholders cast their

votes in writing at least one business day before a General Meeting is opened. The Company records the voting results for

each resolution adopted at a General Meeting.

Detailed information regarding participation and voting at General Meetings is being included in the invitation to

the General Meeting published in accordance with relevant Czech legislation.

Based on the exception laid down by the Capital Market Undertakings Act the Board of Directors of the Company proposed

to the shareholders to exercise of voting in writing without their personal participation of shareholders at

the General Meeting, through written submissions (ballots) delivered to the Company. Ballots could be sent by mail, data box

or via e-mail. The ballots were issued in form enabling to vote in favour or against the draft resolution. If the shareholder

failed to deliver their ballot to the Company within the set period, the shareholder was presumed to vote against the proposal.

The shareholders were advised on their rights and ways how to cast their votes in the announcement published in

the Business Bulleting and on the Company´s website on 27 October 2020. The proposal for decision-making per rollam was

Consolidated annual report 2020

Corporate governance

A-57

published in the Business Bulletin and on the Company´s website on 2 November 2020. The shareholders were entitled to

deliver their votes within a period starting from 2 November 2020 till 18 November 2020.

The General Meeting of the Company is quorate if the present shareholders hold shares the par value which exceeds 50% of

the share capital. The General Meeting adopts decision by a majority of votes of the present shareholders, unless a different

majority is required by the law. The Articles of Association do not require any majorities that differ from the majorities

required by the law.

According to the Czech Companies Act decisions made per rollam are approved by majority of all the shareholders of

the Company.

Due to the amendments to the Articles of Association of the Company approved in the year 2018, a number of

General Meetings held by the Company decreased substantially. During the year 2020, one ordinary General Meetings was

held by the Company. One General Meeting scheduled for 2 November 2020 must have been cancelled (due to COVID-19

government restrictions) and was replaced by decision-making per rollam.

On 5 August 2020, the ordinary General Meeting took place which in particular:

- decided on amendment to the Articles of Association of the Company with effect from 1 January 2021;

- heard the Report of the Board of Directors on business activities of the Company and state of its assets for the year

2019 and Summary explanatory report regarding the matters pursuant to Section 118 subsec. 5 par. a) to k) of

the Capital Market Undertakings Act and Conclusions of the Report on relations between controlling entity and

controlled entity and between controlled entity and entities controlled by the same controlling entity for the year

2019;

- heard the Report of the Supervisory Board on the results of the control activities including information about review

of the Report on relations;

- approved the financial statements of the Company for the year 2019 and consolidated financial statements of

Kofola ČeskoSlovensko Group for the year 2019;

- decided on approval of the policy of remuneration of the members of the Company bodies;

- decided on re-election of the Supervisory Board members (confirmation of the existing members in their positions).

On 2 November 2020, second ordinary General Meeting should have taken place which should have had on the agenda

the following items:

- decision on amendment to the Articles of Association of the Company (increase of number of Supervisory Board

members by 1)

- decision on appointment of a new member of the Supervisory Board;

- decision on profit distribution for the year 2019.

Due to extraordinary measures taken by the state administration the General Meeting scheduled on 2 November 2020 must

have been cancelled. Announcement of cancellation of the General Meeting was published in the Commercial Bulletin and

on the Company´s website on 27 October 2020.

By the proposal published on 2 November 2020 the Board of Directors invited the shareholders to exercise of their voting on

distribution of the profit of the Company for the year 2019 by correspondence vote without their personal participation at

the General Meeting (outside the General Meeting). Since an amendment of the Articles of Association must be certified by

a public instrument, the remaining items of the agenda of the cancelled General Meeting were postponed until a regular

in-person General Meeting. The shareholders were entitled to deliver their votes from 2 November 2020 to 18 November

2020. The shareholders approved outside the General Meeting the Board of Directors’ proposal on distribution of the profit

generated by the Company in 2019 in the total amount of CZK 472,901,000.11 in a way that a part of the profit in the amount

of CZK 300,941,298 was distributed among the shareholders as the share in profit (Dividend). The Dividend amounted to

CZK 13.50 per one share before taxation. The rest of the profit generated in 2019 in the amount of CZK 171,959,702.11 was

transferred to undistributed profit of previous years.

Consolidated annual report 2020

Corporate governance

A-58

The Board of Directors of the Company has 6 members.

The Board of Directors is responsible for the day-to-day management of the Company’s operations under the supervision of

the Supervisory Board. Status, powers, composition, decision-making and other basic rights and obligations as well as rules

of procedure are included in Art. 15 of the Articles of Associations of the Company. The Board of Directors is required to keep

the Supervisory Board informed, to consult with the Supervisory Board on important matters and to submit certain important

decisions to the Supervisory Board for its approval, as more fully described below. The members of the Board of Directors

are elected by the Supervisory Board.

A member of the Board of Directors is appointed for a period of five years. A member of the Board of Directors may be

reappointed. The Supervisory Board may also dismiss any member of the Board of Directors at any time.

The Board of Directors appoints a Chairman and two Vice-Chairs from amongst its members.

The Board of Directors constitutes a quorum if a majority of its members is present or otherwise takes part in a meeting. It

takes a decision by a majority of votes of the present or otherwise participating members. In case of a tie, the vote of

the Chairman decides. Resolutions of the Board of Directors require the approval of the General Meeting when these relate

to an important change in the identity or character of the Company or its business.

The Board of Directors acts on behalf of the Company towards third parties, in which case the Chairman of the Board of

Directors together with one member of the Board of Directors or Vice-Chair of the Board of Directors together with one

member of the Board of Directors shall act jointly.

Meetings of the Board of Directors are convened as the need arises.

As at the date of the Report, the Board of Directors is composed of six members. The table below sets forth the names,

positions, election date, and terms of office of the current members of the Board of Directors:

Members of the Board of

Directors

Position

Appointment

date

Expiration of

the office term

Janis Samaras

Chairman of the Board of Directors –

Chief Executive Officer

18 September 2015

30 June 2025

Daniel Buryš

Vice-Chair of the Board of Directors –

General Director of the Company

17 June 2015

30 June 2025

René Musila

Vice-Chair of the Board of Directors –

Chief Operations Officer of Kofola Group

16 June 2015

30 June 2025

Pavel Jakubík

Member of the Board of Directors

26 November 2018

1 April 2020

Jiří Vlasák

Member of the Board of Directors

18 September 2015

30 June 2020

Marián Šefčovič

Member of the Board of Directors –

Chief Executive Officer of Adriatic operation

21 June 2017

30 June 2025

Martin Pisklák

Member of the Board of Directors –

Chief Financial Officer of Kofola Group

1 April 2020

1 April 2025

Martin Mateáš

Member of the Board of Directors –

Chief Executive Officer of LEROS

30 June 2020

30 June 2025

Janis Samaras is the Chairman of the Board of Directors and the CEO of the Company. He received secondary education and

gained a CIMA certificate from the Czech Institute of Marketing in 2010. He was awarded Entrepreneur of the Year 2011 in

the Czech Republic. In 1991, together with his father, Mr. Samaras established a company, SANTA NÁPOJE, Krnov, a.s. that

took over the Kofola trademark in 2002. Starting from 1996, Mr. Samaras has held various managerial positions at

SANTA NÁPOJE and thereafter in the Kofola Group, including being CEO and Chairman of the Board of Directors of

Kofola a.s. (CZ), Kofola a.s. (SK), Kofola CS a.s. and KOFOLA S.A. (PL).

Consolidated annual report 2020

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Daniel Buryš is the Vice-Chair of the Board of Directors and the Chief Executive Officer for the matters of Kofola a.s. (CZ) and

Kofola a.s. (SK). In 1993, he graduated in automatic control in economy from the Technical University of Ostrava,

Czech Republic. He also completed an MBA programme at Liverpool JMU School organized by Technical University of Ostrava,

Czech Republic in 2008. Mr. Buryš joined the Kofola Group in 2010 as the CFO of Czech operations. Prior to joining

the Kofola Group, Mr. Buryš was CFO at Štěrkovny spol. s r. o. (2000-2004), Severomoravská energetika, a. s. (2004-2007) and

Elektrociepłownia Chorzów „ELCHO" S.A. (ČEZ Group).

René Musila is the Vice-Chair of the Board of Directors and the Chief Operations Officer of Kofola Group. He received

secondary education. He has been present in the beverage industry since 1993 when he started to work at SP VRACHOS,

which was taken over by SANTA NÁPOJE, the predecessor of the Kofola Group. Since 1996, he has been the Operating Director

at Kofola CS responsible for production, purchasing and quality. In the following years, he became responsible for managing

production plants, investments and new technologies in the whole Group.

Pavel Jakubík was a member of the Board of Directors until 1 April 2020.

Jiří Vlasák was a member of the Board of Directors until 30 June 2020.

Since 1999, Marián Šefčovič acted as a regional salesman in SANTA DRINKS a.s. (currently Kofola a.s. Slovakia). During

2001-2002, he was a sales manager of Kofola a.s. (SK). Between 2002-2007, he acted as a sales director of Kofola a.s. (SK)

where he was responsible for the entire sales force and sales strategy in Slovakia. During 2007-2011, he acted as general

director of Kofola a.s. (SK). Since September 2011 until April 2015, he also acted in the position of the sales director

responsible for sales in all channels of Kofola brand in the Czech Republic and Slovakia. Since March 2015, Mr. Šefčovič has

been acting as CEO of Adriatic business.

Martin Pisklák graduated in Business Finance and Accounting at Masaryk University in Brno in 2005. During his studies, he

spent one semester studying Intrnational Business Relations at the Austrian FH Burgenland. He joined Kofola in December

2010. From 2011 – 2014 he was Head of Controlling, and from 2015 – 2019 he was Chief Financial Officer and Vice Chairman

of the Board of Directors of Radenska and Studenac in the Adriatic region. Prior to joining Kofola, Martin was a transaction

advisor at PwC (2008-2010), and a financial auditor at PwC (2005-2008).

Martin Mateáš has a university degree in Management. He worked in companies ST. NICOLAUS – trade CZ and Heineken in

the past, and in 2005, he joined the Kofola Group. After his first position as a Brand manager of favourite mineral water Rajec,

he became a CMO of the whole Group. In 2010, he moved to Poland where for the next five years he led the entire Polish

branch as its General Manager. He has been LEROS CEO since 2018.

The following table sets forth the past and current directorships held by the current members of the Board of Directors in

the past five years:

Consolidated annual report 2020

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A-60

Directorships of the Board of Directors

members

Current and former directorships

Janis Samaras

Chairman of the BoD, Kofola ČeskoSlovensko a.s., since 2015

Chairman of the BoD, Kofola CS a.s., 2006-2016

Chairman of the BoD, KOFOLA S.A. (PL), 2008-2016

Statutory representative, PINELLI spol. s r.o, 2011-2016

Chairman of the BoD, Kofola a.s. (CZ), since 2011

BoD Member, Alofok Ltd, since 2012

Chairman of the BoD, Kofola a.s. (SK), since 2004 (Chairman of the BoD since 2015)

SB Member, RADENSKA d.o.o. (SI), 2015-2016

Statutory representative UGO trade s.r.o., since 2018

Chairman of the BoD, AETOS a.s., since 2017

Statutory representative and Shareholder, Palác Silesia s.r.o., since 2016

SB member, Nadační fond proti korupci, since 2012

Member of statutory body, Nadační fond Bez-DOMOVA, since 2016

Shareholder, Afton s.r.o., since 2006

Daniel Buryš

Vice-Chair of the BoD, Kofola ČeskoSlovensko a.s., since 2015 (Vice-Chair of the BoD since 2018)

SB Member, RADENSKA d.o.o. (SI), 2015-2016

BoD Member, Kofola a.s. (SK), since 2011

BoD Member, KOFOLA S.A. (PL), 2013-2016

Vice-Chair of the BoD, Kofola a.s. (CZ), since 2010 (Vice-Chair of the BoD since 2018)

BoD Member, Kofola CS a.s., 2013-2016

Statutory representative, UGO trade s.r.o., 2012-2018

Statutory representative, F.H. Prager s.r.o., since 2020

Chairman of the BoD, ONDRÁŠOVKA a.s., since 2020

Statutory representative, Karlovarská Korunní s.r.o., since 2020

Statutory representative and liquidator, Minerálka s.r.o. (SK), since 2020

Member of the SB, REMA AOS, a.s., since 2020

Pavel Jakubík

SB Member, Kofola CS a.s., 2015-2016

SB Member, Kofola ČeskoSlovensko a.s., 2015-2018

Statutory representative, Minerálka s.r.o. (SK), 2018-2020

SB member, KOFOLA S.A. (PL), 2012-2016

Member of the BoD, Kofola ČeskoSlovensko a.s., 2018-2020

René Musila

Vice-Chair of the BoD, Kofola ČeskoSlovensko a.s., since 2015 (Vice Chairman of the BoD since 2018)

SB Member, RADENSKA d.o.o. (SI), 2015-2016

Vice-Chair of the BoD, Kofola CS a.s., since 2011; 2006-2011 (BoD member)

BoD Member, KOFOLA S.A. (PL), 2008-2016

Statutory representative, SANTA-TRANS s.r.o., since 2004

Vice-Chair of the BoD, Kofola a.s. (CZ), since 2006

SB Member, Kofola a.s. (SK), 2011-2015; 2017-2018 (BoD member)

BoD Member, AETOS a.s., since 2017

Shareholder, Afton s.r.o., since 2006

Jiří Vlasák

Chairman of the BoD, Hoop Polska Sp. z o.o., 2016-2019

BoD Member, Kofola ČeskoSlovensko a.s., 2015-2020

BoD Member, Kofola a.s. (CZ), 2010-2016

Statutory representative, PINELLI spol. s r.o., 2011-2016

BoD Member, Kofola a.s. (SK), 2011-2016

BoD Member, KOFOLA S.A. (PL), 2015-2016

Statutory representative, F.H. Prager s.r.o., 2020-2020

Statutory representative, Karlovarská Korunní s.r.o., 2020-2020

Chairman of the BoD, ONDRÁŠOVKA a.s., 2020-2020

Marián Šefčovič

Vice-Chair of the BoD, Kofola a.s. (CZ), 2011-2015

BoD Member, Kofola ČeskoSlovensko a.s., since 2017

Chairman of the BoD, RADENSKA d.o.o., since 2015

BoD Member, Kofola a.s. (SK), 2007-2015

Chairman of the BoD, Studenac d.o.o., since 2016

Martin Pisklák

BoD Member, Kofola ČeskoSlovensko a.s., since 2020

BoD Member, RADENSKA d.o.o., 2015-2020

BoD Member, Studenac d.o.o., 2015-2020

BoD Member, Radenska d.o.o. (liquidated in 2020), 2015-2020

BoD Member, Sicheldorfer GmbH (liquidated in 2017), 2015-2017

Martin Mateáš

BoD Member, Kofola ČeskoSlovensko a.s., since 2020

Statutory representative (shareholder since 2014), Gnósis Trade Company s.r.o., 2014-2016

Statutory representative, Espresso s.r.o., 2019-2020

BoD Member, Kofola CS a.s., 2009-2015

Statutory representative, LEROS s.r.o., since 2018

Statutory representative (and shareholder), DENTU s.r.o. (SK), 2017-2019

Statutory representative, Leros Slovakia, s.r.o. (SK), since 2018

Statutory representative, PREMIUM FOODS s.r.o. v likvidácii (SK), since 2020

Shareholder, GAUDIN MONK s. r. o., since 2019

Above mentioned activities are considered as significant.

Consolidated annual report 2020

Corporate governance

A-61

The Supervisory Board is responsible for supervising the conduct of and providing advice to the Board of Directors and for

supervising the Company’s business generally. In performing its duties, the Supervisory Board is required to take into account

the interests of the Company’s business. Status, powers, composition, decision-making and other basic rights and obligations

as well as rules of procedure are included in Art. 16 of the Articles of Association of the Company. The members of

the Supervisory Board are not authorised to represent the Company in dealings with third parties, unless they are explicitly

appointed by the Supervisory Board to represent the Company in courts and other authorities’ proceedings against a member

of the Board of Directors of the Company. The members of the Supervisory Board are elected by the General Meeting.

A member of the Supervisory Board is appointed for a period of five years. A member of the Supervisory Board may be

reappointed. The General Meeting may elect alternate member/s for filling free posts of members of the Supervisory Board

according to the predefined order. If the alternate members are not elected, the Supervisory Board, in which the number of

members elected by the General Meeting has not decreased by more than one half, may appoint substitute member until

the next General Meeting. The term of office of a substitute member of the Supervisory Board shall not be applied towards

the term of office of a member of the Supervisory Board.

The Supervisory Board consists of four members. The Supervisory Board shall appoint a chairperson from amongst its

members. The General Meeting may at any time suspend or dismiss Supervisory Board members.

The Supervisory Board constitutes a quorum if a majority of its members is present or otherwise takes part in a meeting. It

takes a decision by a majority of votes of the present or otherwise participating members. In case of a tie the vote of

the chairman decides.

The Supervisory Board holds at least one meeting every calendar quarter. The Supervisory Board may also take decisions per

rollam.

As at the date of the Report, the Supervisory Board is composed of four members. The table below sets forth the names,

positions, election date, and terms of office of the current members of the Supervisory Board:

Members of the Supervisory Board

Position

Appointment

date

Expiration of

the office term

René Sommer

Chairman of the Supervisory Board

17 June 2015

5 August 2025

Moshe Cohen-Nehemia

Member of the Supervisory Board

15 September 2015

5 August 2025

Petr Pravda

Member of the Supervisory Board

17 June 2015

5 August 2025

Tomáš Jendřejek

Member of the Supervisory Board

30 November 2018

5 August 2025

A brief description of the qualifications and professional experience of the members of the Supervisory Board is presented

below.

René Sommer is the Chairman of the Supervisory Board of the Company. In 1992, Mr. Sommer started to cooperate with

SP VRACHOS, which was taken over by SANTA NÁPOJE, the predecessor of the Kofola Group. Mr. Sommer held many different

positions in the Group’s structures in financial, HR and legal departments. He also held the position of CEO in Kofola a.s. (CZ).

Prior to joining the Kofola Group, he worked, among others, as the Project Manager of Production for

ČKD Polovodiče Praha, a.s. (until 1990) and ran his own grocery chain (starting from 1990).

Moshe Cohen-Nehemia is a member of the Supervisory Board of the Company. He graduated from the Faculty of Economics

at the Open University in Israel in 1995 and completed an MBA program at Ben Gurion University in 2000. Mr. Cohen-Nehemia

joined the Kofola Group in 2014 as a member of the Supervisory Board of KOFOLA S.A. (PL). Mr. Cohen-Nehemia gained

professional experience in the beverages industry at Jafora Tabori (Israel) (1997-2004), RC Cola International (USA)

(2005-2018), being the Managing Director responsible for the entire commercial operation, Beverage Partners International

a global beverage company (Israel) (From 2019) as a Chief Operation Officer.

Consolidated annual report 2020

Corporate governance

A-62

Petr Pravda is a member of the Supervisory Board of the Company. He graduated from the Charles University in Prague in

biophysics in 1985. He started cooperation with the Kofola Group in 2000 when he became a quality manager at

SANTA NÁPOJE. He was promoted to the position of Director of Research and Development, Quality Control Department in

Kofola CS. Prior to joining the Kofola Group, he worked in laboratories of the agriculture industry and at a regional hygienic

authority where he became chief of laboratories analysing food, water, soils, etc.

Tomáš Jendřejek is a member of the Supervisory Board of the Company. He received secondary education and gained a CIMA

certificate from the Czech Institute of Marketing in 2010. He established his relationship with Kofola in 1994 as a Sales

representative and after several promotions he became the Sales Director in 2002. Since 2006, he has been responsible for

procurement of the Group. Before joining the Group, he had worked for eight years in the plant producing the tannery

industry machines.

The following table sets forth the past and current directorships held by the current members of the Supervisory Board in

the past five years:

Directorships of the Supervisory Board

members

Current and former directorships

René Sommer

Chairman of the SB, Kofola ČeskoSlovensko a.s., since 2015

Chairman of the SB, KOFOLA S.A. (PL), 2011-2016

Chairman of the SB, AETOS a.s., since 2017

Statutory representative, Palác Silesia s.r.o., since 2016

Chairman of the SB, REMA AOS, a.s., 2015-2020

SB Member, Kofola a.s. (CZ), since 2019

Chairman of the SB, Okresní hospodářská komora Bruntál, 2015-2018

Shareholder, Afton s.r.o., since 2006

Moshe Cohen-Nehemia

SB Member, Kofola ČeskoSlovensko a.s., since 2015

SB Member, KOFOLA S.A. (PL), 2014-2016

VP for Business Development & Marketing, RC Cola International, 2010-2017

Managing director, RC Cola International, 2017-2019

CEO, Beverage Partners International, since 2019

Tomáš Jendřejek

SB Member, Kofola ČeskoSlovensko a.s., since 2018

SB Member, Kofola a.s. (CZ), since 2015

SB Member, RADENSKA d.o.o. (SI), 2015-2016

BoD Member, KOFOLA S.A. (PL), 2008-2016

Statutory representative, UGO trade s.r.o., since 2018

Statutory representative, SANTA-TRANS s.r.o., since 2013

Member of the BoD, Kofola CS a.s., 2011-2016

Member of the BoD, Kofola ČeskoSlovensko a.s., 2015-2018

SB Member, AETOS a.s., since 2017

BoD Member, Kofola a.s. (SK), since 2018

Shareholder, Afton s.r.o., since 2006

SB Member, ONDRÁŠOVKA a.s., since 2020

Petr Pravda

SB Member, Kofola ČeskoSlovensko a.s., since 2015

SB Member, KOFOLA S.A. (PL), 2015-2016

SB member, Kofola CS a.s., 2006-2015

Chairman of the SB, Kofola CS a.s., 2015-2016

Chairman of the SB, Kofola a.s. (CZ), since 2006

SB member, Kofola a.s. (SK), since 2014

Chairman, SK REAL OPAVA, z.s., since 2019

Above mentioned activities are considered as significant.

Consolidated annual report 2020

Corporate governance

A-63

Competences of the Audit Committee are laid down by the law. The Audit Committee assists the Supervisory Board in

supervising the activities of the Board of Directors with respect to:

• recommending to the Supervisory Board the selection of an auditor of the financial statements of the Company and of

the Group companies, and of the consolidated financial statements for the previous financial year,

• monitoring the audit of the Company’s financial statements and the consolidated financial statements for the previous

financial year; becoming familiar with the details of the results of these audits at their various stages,

• presenting to the Board of Directors its findings and recommendations relating to the audit and evaluation of

the financial statements and consolidated financial statements for the previous financial year, as well as

the Board of Director’s proposed distribution of profit or coverage of loss,

• presenting to the Board of Directors its findings and recommendations on granting a discharge to the member of

the Board of Directors in charge of the economic and finance department for the duties he/she performed,

• performing other tasks determined by the Board of Directors depending on the needs arising from the Company’s

current situation,

• submitting to the Board of Directors annual reports on the Audit Committee’s operations, and

• other matters as specified in Article 41 of Directive No. 2006/43/EC passed by the European Parliament on

17 May 2006.

The members of the Audit Committee are elected by the General Meeting from among the whole Group or third parties.

As at the date of the Report, the Audit Committee is composed of three members. The table below sets forth the names,

positions, election date, and terms of office of the current members of the Audit Committee:

Members of the

Audit Committee

Position

Appointment

date

Expiration of the

office term

Petr Šobotník

Chairman of the Audit Committee

21 June 2017

21 June 2022

Zuzana Prokopcová

Member of the Audit Committee

30 November 2018

30 November 2023

Lenka Frostová

Member of the Audit Committee

30 November 2018

30 November 2023

A brief description of the qualifications and professional experience of the members of the Audit Committee is presented

below.

Petr Šobotník is the Chairman of the Audit Committee. He has more than 20 years’ experience in audit profession,

in 1995-2010 he was an audit Partner in Coopers & Lybrand and PricewaterhouseCoopers. Up to his early retirement from

PwC in 2010, he functioned in various performing positions focusing mainly on local market development. Petr Šobotník also

served as the President of the Chamber of Auditors of the Czech Republic in years 2007-2014, from 2014-2016 he was

a member of the Supervisory Board of the Chamber of Auditors of the Czech Republic.

Zuzana Prokopcová is a member of the Audit Committee. Zuzana Prokopcová graduated from the University of Economics in

Prague, Faculty of finance and accounting. She has experience as an auditor in international advisory company and in

the management of large companies. Zuzana began her professional career at the international consulting company

PricewaterhouseCoopers (PwC) in 1998, where she served as an auditor, focusing mainly on financial institutions.

Subsequently, she held the same position for one year in Russia and for two and half years in Kazakhstan, again within

the framework of her work at PwC. For 2014-2016, she was the Vice-Chairman of the Board of Directors and CFO of

Czech Aeroholding, the leading company in the field of air transport in the Czech Republic, where she was responsible for

treasury, accounting, tax, controlling, internal audit and risk management areas. In years 2017 and 2018, she worked as

a COO in Moore Stephens s.r.o. Zuzana is a Certified member of the Association of Chartered Certified Accountants.

Consolidated annual report 2020

Corporate governance

A-64

Lenka Frostová is a member of the Audit Committee. Lenka Frostová graduated from the Technical University of Ostrava with

a specialisation in management. She became a member of the Association of Chartered Certified Accountants in 2000. She

joined the Kofola Group in 2016 as Group reporting manager, and in 2018 she assumed the role of Financial manager. Previous

to joining the Kofola Group, she was an audit supervisor at Ernst & Young Audit, s.r.o. (1996-2005) and later joined OKD, a.s.

as an IFRS specialist, before becoming Accounting manager (2005-2016).

The following table sets forth the past and current directorships held by the current members of the Audit Committee in

the past five years:

Directorships of the Audit Committee

members

Current and former directorships

Petr Šobotník

Chairman of the AC, Kofola ČeskoSlovensko a.s., since 2017

Chairman of the AC, Severomoravské vodovody a kanalizace Ostrava a.s., since 2017

Chairman of the AC, ČEPRO, a.s., since 2016

Chairman of the AC, Letiště Praha, a.s., since 2014

Chairman of the AC, Československá obchodní banka, a.s., since 2016

Member of the SB, Československá obchodní banka, a.s., 2017-2018

Executive Director and Shareholder, AFITEC s.r.o. (dříve Šobotník & Partners, s.r.o.), since 2010

Member of the SB, Letiště Praha, a. s., since 2017

Member of the SB, Nadační fond Českého rozhlasu, 2014-2017

Chairman of the AC, Českomoravská stavební spořitelna, a.s., since 2019

Member of the AC, ČSOB Penzijní společnost, a. s., člen skupiny ČSOB, since 2016

Zuzana Prokopcová

AC member, Kofola ČeskoSlovensko a.s., since 2018

AC member, MONETA Money Bank, a.s., since 2017

Chairman of the SB, Sky Venture a.s., 2014-2016

Chairman of the SB, Czech Airlines Technics, a.s., 2014-2016

Vice-Chair of the BoD, Český Aeroholding, a.s., 2014-2016

Chairman of the SB, B. aircraft, a.s., 2014-2016

Chairman of the SB, Czech Airlines Handling, a.s., 2014-2016

Chairman of the SB, Whitelines Industries a.s., 2014-2016

Chairman of the SB, Realitní developerská, a.s., 2014-2016

Lenka Frostová

AC Member, Kofola ČeskoSlovensko a.s., since 2018

Above mentioned activities are considered as significant.

The Company regards as persons with executive authority those persons that are either:

• a member of the Board of Directors of the Company, or

• a member of the Supervisory Board of the Company, or

• a member of the Audit Committee of the Company, or

• a participant of the Group Share Option plan, or

• other top management members who both make decisions within the Company or Group that can affect future

development and strategy of the Company and the Group and who have an access to inside information.

The following persons qualified as persons with executive authority:

• Janis Samaras

• Daniel Buryš

• René Musila

• Martin Pisklák

• Martin Mateáš

• Marián Šefčovič

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• René Sommer

• Tomáš Jendřejek

• Petr Pravda

• Moshe Cohen-Nehemia

• Petr Šobotník

• Zuzana Prokopcová

• Lenka Frostová

Karel Hrbek was a marketing director responsible for Group activities in Czech and Slovak region till October 2019. He is

a marketing director in LEROS since November 2019. He is also a member of the Board of Directors of the Kofola a.s. (CZ) and

Kofola a.s. (SK).

Martin Pisklák was a financial director in Company’s subsidiaries RADENSKA and Studenac till March 2020.

Lubomír Surík is an operation director in Company’s subsidiaries RADENSKA and Studenac.

Jure Zrilic is a sales director in Company’s subsidiaries RADENSKA and Studenac.

René Novotný is a CEO of SANTA-TRANS s.r.o.

No person with managerial responsibilities has been convicted of crime or fraud in the past five years, they were not

connected with any proceedings of bankruptcy or liquidation, nor were they involved in any public accusation from official

authorities. No person with managerial responsibilities was rendered incapable of acting as a member of management or

supervisory bodies of any company in the past five years.

No person with managerial responsibilities is in the conflict of powers with the Group activities.

The persons with executive authority, aside from regular salaries that are based on individual employment contracts, receive

variable compensation based on the Group´s results. Remuneration for explicit work in the Board of Directors and Supervisory

Board, as well as in Audit Committee is paid only to Non-executive members. The remuneration level is given by

the General Meeting resolution. No members of the administrative, management or supervisory body of the Company or any

of its subsidiaries have any service contracts with the Company or the respective Company’s subsidiary which would provide

benefits upon termination of the member’s services with the Company or the respective Company’s subsidiary.

All members of administrative, management and supervisory bodies of the Company and of its subsidiaries work for

the Company or the respective subsidiary on the basis of standard employment contracts and the relationship between these

members and the Company or the respective Company’s subsidiary is governed by the local employment law. Accordingly,

all members of the administrative, management and supervisory bodies of the Company work on the basis of an individual

employment contract governed by the Czech law.

The remuneration of persons with executive authority consists of a fixed and a variable component related to each particular

position and the management level. Remuneration is paid in the form of salaries for work performed under employment

contracts. The level of salaries is based on qualified benchmarking studies on manager´s remuneration in the Czech Republic

and reflects both managerial and professional potential as well as competencies. The variable component amounts 0 – 100%

of the basic monthly salaries and is paid yearly in relation to the level of planned EBITDA performance. The payment execution

Consolidated annual report 2020

Corporate governance

A-66

is not a subject of any further approval of the Board of Directors, until the variable component amount exceeds the limit

stated in the Article of Association.

In addition to financial income, persons with executive authority are entitled to an income in kind, which includes:

1. right to use a business car for private purposes;

2. accommodation costs, eventual costs associated with relocation;

3. air ticket expenditures according to internal regulation;

4. fuel consumption for private purposes.

This income in kind is adjusted by the internal regulation and depends on the level of managerial position.

The remuneration system is approved by the Board of Directors. The variable component related to planned EBITDA is

amended individually for each year by the Board of Directors as well.

The Company has not entered into any work or other agreement with a person with executive authority that would grant

such person any special entitlements (e.g. severance payment), except for the ones granted by the legal provisions. According

to the Czech law, an employee is entitled to a severance payment upon termination of his/her employment (by agreement

or notice) only if:

1. the employer or a portion of the employer’s organization is dissolved or relocated, or

2. the employee becomes redundant because of a decision by the employer or the respective body to change the employer’s

tasks or technical set-up, to reduce the number of employees for the purpose of raising work productivity, or to make

other organizational changes. If one of the above conditions is met, the employee should receive from the employer

a severance payment based on his/her years of service as set out in the table below:

Duration of employment relationship

Amount of severance payment

less than 1 year

at least 1 multiple of the employee’s average monthly earnings

at least 1 year but less than 2 years

at least 2 multiples of the employee’s average monthly earnings

at least 2 years

at least 3 multiples of the employee’s average monthly earnings

If the reason for employment termination (by agreement or notice) is a work-related injury, work-related sickness or threat

of work-related sickness, the employee is then entitled to receive from the employer a severance payment in the amount of

at least 12 multiples of the employee’s average monthly earnings.

With respect to the members of the Board of Directors and the Supervisory Board the Group transfers mandatory social

security contributions being part of the national pension systems in the countries where the Group is obliged to make such

contributions. No other amounts are set aside to provide pension or retirement benefits to the members of

the Board of Directors and the Supervisory Board.

Remuneration of key management personnel of the Group and Company is described in sections B 4.23.3 and C 4.23.3.

Due to the fact that there is no binding diversity policy regime in the Czech Republic, which the Company has to comply with,

the Company, as at the date of the annual report, did not commit to comply with any specific diversity policy.

Regardless of age, gender or other indicators the Company places main emphasis on search and appointment of the most

suitable candidates into the governance bodies of the Company (Board of Directors, Supervisory Board or Audit Committee)

taking account on their background, experience and qualification for performance of the position of a member of the relevant

governance body of the Company. The Company also assess candidates´ knowledge in the business field of the Company or

nature of activities of the relevant body.

All the persons suitable for the positions in the governance bodies of the Company are chosen in a non-discriminatory

manner.

Consolidated annual report 2020

Corporate governance

A-67

Entities in the Kofola Group keep their accounting primarily in accordance with the local accounting standards. The Group

companies maintain a parallel general ledger according to International Financial Reporting Standards as adopted by

the European Union (IFRS) for consolidation purposes, as well as for the Group management who periodically evaluates IFRS

results.

Individual Group companies are reporting their statutory annual financial results according to local accounting standards,

except for Kofola ČeskoSlovensko a.s. (as the issuer of publicly traded instruments), that reports separate results annually

and consolidated results quarterly and annually based on IFRS.

The Group maintains the Group Accounting Manual that complies with IFRS that contains general principles to prepare

the consolidation packages and consolidated financial statements. All the Group entities follow the Group Accounting Manual

and as such the Group accounting policies are unified.

The accounting is partly carried out at individual entities and partly is centralised. The shared service is maintained by

Kofola ČeskoSlovensko a.s. in Ostrava.

The accounting is processed in enterprise information system SAP that is implemented in all major Group companies.

The Company and the Group follow the internal guidelines and internal directives with respect to e.g. the circulation of

accounting documents, approval processes or orders.

The approval procedures are specified in internal guidelines that specify the transaction limits that particular employees can

approve. The Group has implemented a three-way match policy to pair order, receipt note (or other confirmation of

transaction) and the invoice. The payments are made only if approved by a specified employee, the treasury function is

personally separated from accounting function.

The information system access rights are granted after approval by persons specified in internal guidelines only to authorised

employees and only to limited parts of the system valid for the employee´s job specification.

The accounting is under an oversight of controlling department that is separated from accounting department both

personally and in terms of organization structure. Also, the Group has established an internal processes review function in

order to assess and improve the design, implementation and operating effectiveness of the internal controls and processes.

The accounting is also subject to external audit, both on individual and on consolidated basis, with the Audit Committee

overseeing the audit process and findings.

Consolidated annual report 2020

Report on relations

A-68

Pursuant to Section 82 of Act No. 90/2012 Coll., on business corporations, the Board of Directors of

Kofola ČeskoSlovensko a.s., with its registered office at Nad Porubkou 2278/31a, Poruba, 708 00 Ostrava, Czech Republic,

identification number 24261980, in the Commercial Register kept by the Regional Court in Ostrava, section B, Insert No.

10735 ( „Controlled entity“ or „Company“) has prepared the following Report on relations between the controlling entity and

the controlled entity and between the controlled entity and entities controlled by the same controlling entity for

the accounting period of twelve months ended 31 December 2020 („Indicated period“).

Based on the information known to the Board of Directors of the Company acting with due care, the Company was for

the whole Indicated period part of the group controlled by AETOS a.s. („Group“). Data about the entities that were part of

the Group are valid as of 31 December 2020, based on the information known to the Board of Directors acting with due care.

Identification number: 24261980

Registered office: Nad Porubkou 2278/31a, 708 00 Ostrava, Czech Republic

Identification number: 06167446

Registered office: Nad Porubkou 2278/31a, 708 00 Ostrava, Czech Republic

Identification number: 27767680

Registered office: Za Drahou 165/1, Pod Bezručovým vrchem, 794 01 Krnov, Czech Republic

Identification number: 36319198

Registered office: súp. č. 1, 013 15 Rajecká Lesná, Slovakia

Identification number: 27772659

Registered office: Za Drahou 165/1, Pod Bezručovým vrchem, 794 01 Krnov, Czech Republic

Identification number: 25377949

Registered office: Ve Vrbině 592/1, 794 01 Krnov - Pod Cvilínem, Czech Republic

Identification number: 5056152

Registered office: Boračeva 37, 9502 Radenci, Slovenia

Consolidated annual report 2020

Report on relations

A-69

Identification number: 27005250232

Registered office: Matije Gupca 120, 34551 Lipik, Croatia

Registered office: 6, Karaiskaki Street, City House, 3032 Limassol, Cyprus

Identification number: 42128028

Registered office: Matije Gupca 120, 34551 Lipik, Croatia

Identification number: 0000295231

Registered office: ul. Św. Andrzeja Boboli 20, 05-504 Złotokłos, Poland

Identification number: 61465810

Registered office: U Národní galerie 470, 156 00 Praha 5, Czech Republic

Identification number: 36230561

Registered office: súp. č. 1, 013 15 Rajecká Lesná, Slovakia

Identification number: 50482521

Registered office: súp. č. 1, 013 15 Rajecká Lesná, Slovakia

Identification number: 26690926

Registered office: U Národní galerie 470, 156 00 Praha 5, Czech Republic

Part of the Group since 7 January 2020

Identification number: 29153379

Registered office: Za Drahou 165/1, Pod Bezručovým vrchem, 794 01 Krnov, Czech Republic

Part of the Group since 15 April 2020

Identification number: 27913805

Registered office: U Národní galerie 470, Zbraslav, 156 00 Praha 5, Czech Republic

Part of the Group since 15 April 2020

Identification number: 18226990

Registered office: č.p. 77, 363 01 Stráž nad Ohří, Czech Republic

Consolidated annual report 2020

Report on relations

A-70

AETOS a.s. holds 67.22% share in the Company, the remaining shareholdings are presented in the chart below.

The Company became part of the Group in 2015. The Company is the parent company of the Kofola Group. The main assets

of the Company are the direct and indirect shareholdings in the Group companies. Company also provides certain services

for the other companies in Kofola Group. This comprises, in particular, the provision of:

• strategic services, including: cooperation in the preparation of business, marketing, production, investment and

financing plans, management of subsidiaries, including their financing;

• services related to products (quality department), including: central product development, innovation process

management, costing and pricing, production and logistics planning, quality control;

• shared services, including: controlling and reporting, IT services, legal services, central purchasing department, back

office services, supply chain, call centre, internal audit;

• licenses and trademarks: Kofola ČeskoSlovensko a.s. owns most licenses, trademarks for branded beverages and similar

copyrights for the products distributed on the CzechoSlovak market, for which the other Group companies pay royalties.

The Company is listed at Prague Stock Exchange. A delisting from the Warsaw Stock Exchange took place in June 2017.

With the implementation of the Articles of Association of the Company dated 15 September 2015 as amended on

2 December 2015, 30 May 2016 and 20 December 2018, the control of the Company is exercised above all through decision

taken by the General Meeting of the Company, especially through appointment and removal of members of the Supervisory

Board which is according to the Articles of Association of the Company entitled to appoint and remove members of the Board

of Directors of the Company.

Consolidated annual report 2020

Report on relations

A-71

Equity value of the Company as of 31 December 2020 was CZK 1,511,484 thousand.

The Company received a dividend income from Kofola a.s. (CZ) of CZK 333,935 thousand.

The Company received a dividend income from Kofola a.s. (SK) of CZK 157,119 thousand.

The Company realized income from Alofok in relation to its continuing liquidation process of CZK 162,376 thousand.

The Company provided loans to UGO trade s.r.o. of CZK 162,500 thousand.

In the indicated period, the following contracts were concluded or amended between controlled entity and controlling entity

or between controlled entities:

• car rental agreement concluded between Kofola a.s. (CZ) and Kofola ČeskoSlovensko a.s. on 22.9.2020,

• car rental agreement concluded between Kofola a.s. (CZ) and Kofola ČeskoSlovensko a.s. on 7.10.2020,

• car rental agreement concluded between Kofola a.s. (CZ) and Kofola ČeskoSlovensko a.s. on 19.10.2020,

• car rental agreement concluded between Kofola a.s. (SK) and Kofola ČeskoSlovensko a.s. on 1.2.2020,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and F.H.Prager s.r.o. on 7.1.2020,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and F.H.Prager s.r.o. on 15.1.2020,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and F.H.Prager s.r.o. on 13.2.2020,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and F.H.Prager s.r.o. on 18.3.2020,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and Karlovarská Korunní s.r.o. on 28.4.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Karlovarská Korunní s.r.o. on 1.11.2020,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 19.9.2017, as amended on

1.1.2019 and 31.12.2020,

• general agreement on car rentals concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 1.4.2019, as

amended on 1.9.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 1.5.2020 (3x),

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 6.8.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 14.8.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 22.9.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 12.10.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 20.11.2020,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 29.1.2018, as amended on

1.1.2019 and 31.12.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 2.3.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 10.3.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 2.7.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 7.7.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 16.7.2020,

Consolidated annual report 2020

Report on relations

A-72

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 4.9.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 12.11.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 14.12.2020,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and LEROS, s.r.o. on 4.5.2018, as amended on

28.10.2018,1.1.2019,9.11.2020 and 31.12.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and LEROS, s.r.o. on 1.2.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and LEROS, s.r.o. on 1.3.2020,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and LEROS, s.r.o. on 25.3.2020, as amended on

10.7.2020 and 5.10.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and LEROS, s.r.o. on 1.7.2020,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and ONDRÁŠOVKA a.s. on 28.4.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and ONDRÁŠOVKA a.s. on 1.9.2020,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and Premium Rosa Sp. z o.o. on 9.8.2018, as amended

on 22.10.2018,1.1.2019 and 31.12.2020,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and Premium Rosa Sp. z o.o. on 4.3.2019, as amended

on 31.12.2020,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and RADENSKA d.o.o. on 1.3.2017, as amended on

7.4.2017,16.5.2017,2.8.2017,31.12.2017,1.1.2019 and 31.12.2020,

• car sale agreement concluded between Kofola ČeskoSlovensko a.s. and RADENSKA d.o.o. on 20.10.2020 (6x),

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and SANTA-TRANS s.r.o. on 28.12.2017, as amended

on 1.1.2019 and 31.12.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and UGO trade s.r.o. on 14.1.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and UGO trade s.r.o. on 1.2.2020,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and UGO trade s.r.o. on 1.4.2020, as amended on

31.10.2020,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and UGO trade s.r.o. on 1.9.2020 (2x),

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and UGO trade s.r.o. on 17.9.2020,

• car rental agreement concluded between ONDRÁŠOVKA a.s. and Kofola ČeskoSlovensko a.s. on 1.12.2020,

• car rental agreement concluded between UGO trade s.r.o. and Kofola ČeskoSlovensko a.s. on 1.3.2020,

• car rental agreement concluded between UGO trade s.r.o. and Kofola ČeskoSlovensko a.s. on 1.4.2020.

Entity providing

guarantees

Entity receiving guarantees

Currency

(CY)

Guarantee

amount

Guarantee

amount

Guarantee

period

Guarantees provided

for

Relationship

CY´000

CZK´000

Kofola

ČeskoSlovensko

a.s.

City-Arena PLUS a.s.

EUR

210

8/2025

UGO trade s.r.o.

subsidiary

UNIPETROL RPA, s.r.o.

CZK

130

Until the end

of contract

UGO trade s.r.o.

subsidiary

Fatra, a.s.

CZK

100

Until the end

of contract

UGO trade s.r.o.

subsidiary

ČSOB Leasing, a.s.

CZK

4,436

6/2023

LEROS, s.r.o.

subsidiary

Raiffeisen - Leasing, s.r.o.

CZK

1,502

1/2025

LEROS, s.r.o.

subsidiary

Consolidated annual report 2020

Report on relations

A-73

The following contracts concluded between controlled entity and controlling entity or between controlled entities were

effective in the indicated period:

• licence agreement concluded between Kofola Holding a.s. (predecessor of Kofola CS a.s.) and Kofola a.s. (CZ) on

1.11.2006,

• service agency agreement concluded between Kofola Holding a.s. (predecessor of Kofola CS a.s.) and Kofola a.s. (CZ) on

1.11.2006,

• licence agreement concluded between Kofola Holding a.s. (predecessor of Kofola CS a.s.) and Kofola a.s. (SK) on

1.11.2006,

• service agency agreement concluded between Kofola Holding a.s. (predecessor of Kofola CS a.s.) and Kofola a.s. (SK) on

1.11.2006,

• licence agreement concluded between PINELLI spol. s r.o. (successor of PINELLI spol. s r.o. after merger is

Kofola ČeskoSlovensko a.s.) and Kofola a.s. (CZ) on 16.5.2011,

• service agreement concluded between Kofola CS a.s. and Kofola a.s. (SK) on 20.1.2012,

• master inter-group service agreement concluded between Kofola CS a.s. and Radenska d.d. Radenci (original company

name of RADENSKA d.o.o.) on 18.3.2015, as amended on 31.3.2015,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 11.7.2016,

• management services agreement concluded between Kofola CS a.s. and Radenska d.d. Radenci (original company name

of RADENSKA d.o.o.) on 1.1.2016,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 25.5.2017 (2x),

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 1.6.2017,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 19.9.2017, as amended on

1.1.2019,

• agreement on the temporary assignment concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on

1.2.2017,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and Premium Rosa Sp. z o.o. on 10.7.2017, as amended

on 17.7.2017,

• agreement on the temporary assignment concluded between Kofola ČeskoSlovensko a.s. and RADENSKA d.o.o. on

1.2.2017,

• agreement on the temporary assignment concluded between Kofola ČeskoSlovensko a.s. and Studenac d.o.o. on

1.2.2017,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and UGO trade s.r.o. on 12.10.2017,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and UGO trade s.r.o. on 1.11.2017,

• car rental agreement concluded between Kofola a.s. (CZ) and Kofola ČeskoSlovensko a.s. on 1.7.2018,

• accounting services agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 2.1.2018,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 13.3.2018,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and LEROS, s.r.o. on 1.9.2018,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and RADENSKA d.o.o. on 5.12.2018 (2x),

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and SANTA-TRANS s.r.o. on 28.12.2017, as amended

on 1.1.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and SANTA-TRANS s.r.o. on 1.7.2018,

• service agreement (controlling, financial, purchasing activities) concluded between Kofola ČeskoSlovensko a.s. and

SANTA-TRANS s.r.o. on 1.12.2018,

• accounting services agreement concluded between Kofola ČeskoSlovensko a.s. and UGO trade s.r.o. on 2.1.2018,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and UGO trade s.r.o. on 1.6.2018,

Consolidated annual report 2020

Report on relations

A-74

• car rental agreement concluded between Kofola a.s. (CZ) and Kofola ČeskoSlovensko a.s. on 21.5.2019,

• car rental agreement concluded between Kofola a.s. (CZ) and Kofola ČeskoSlovensko a.s. on 1.6.2019,

• car rental agreement concluded between Kofola a.s. (CZ) and Kofola ČeskoSlovensko a.s. on 3.6.2019,

• car rental agreement concluded between Kofola a.s. (CZ) and Kofola ČeskoSlovensko a.s. on 1.7.2019,

• car rental agreement concluded between Kofola a.s. (CZ) and Kofola ČeskoSlovensko a.s. on 1.9.2019,

• car rental agreement concluded between Kofola a.s. (CZ) and Kofola ČeskoSlovensko a.s. on 1.11.2019 (2x),

• accounting, financial, administrative and management services agreement concluded between

Kofola ČeskoSlovensko a.s. and AETOS a.s. on 2.1.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 8.1.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 4.4.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 2.5.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 1.7.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 1.8.2019 (2x),

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 8.8.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 1.9.2019 (2x),

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 10.9.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (CZ) on 1.10.2019,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 27.11.2017, as amended on

1.1.2019,

• general agreement on car rentals concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 1.4.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 15.4.2019 (2x),

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 18.4.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 26.4.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 30.4.2019 (2x),

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 1.7.2019 (2x),

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 22.7.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 5.8.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and Kofola a.s. (SK) on 1.9.2019 (2x),

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and LEROS (fúze Espresso s.r.o.) on 8.7.2019,

as amended on 10.7.2019,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and LEROS, s.r.o. on 25.5.2018, as amended on

22.7.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and LEROS, s.r.o. on 24.1.2019,

• general agreement on car rentals concluded between Kofola ČeskoSlovensko a.s. and LEROS, s.r.o. on 1.4.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and LEROS, s.r.o. on 12.9.2019,

• general agreement on car rentals concluded between Kofola ČeskoSlovensko a.s. and UGO trade s.r.o. on 1.4.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and UGO trade s.r.o. on 1.4.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and UGO trade s.r.o. on 18.4.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and UGO trade s.r.o. on 1.6.2019,

• loan agreement concluded between Kofola ČeskoSlovensko a.s. and UGO trade s.r.o. on 23.9.2019,

Consolidated annual report 2020

Report on relations

A-75

• general agreement on car rentals concluded between Kofola ČeskoSlovensko a.s. and UGO trade s.r.o. organizačná

zložka on 1.4.2019,

• car rental agreement concluded between Kofola ČeskoSlovensko a.s. and UGO trade s.r.o. organizačná zložka on

15.4.2019.

All described contractual relationships between the Company and controlling entity or controlled entities were established

under standard contractual terms and conditions when the agreed and provided performance or consideration corresponded

to the conditions of a standard business relation. Some transactions were realized based on oral agreements.

The Company has not suffered loss from contracts and agreements concluded in the Indicated period between the Company

and other Group companies, or from other acts and measures that were concluded by the Company in the Indicated period

based on instruction or in the interest of other Group entities.

Controlled entity has advantages from relations with Group entities coming mainly from synergies from optimisation of

processes and costs throughout the Group and from possibility to exploit access to financial, knowledge and technical

potential of individual entities.

Controlled entity has no disadvantages from relations with Group entities.

The Company is not exposed to any specific risk from relations with Group entities except those arising from standard

participation in international business group.

In Ostrava, on 31 March 2021

René Musila

Martin Pisklák

Vice-Chair of the Board of Directors

Member of the Board of Directors

Consolidated annual report 2020

Statutory declaration

A-76

To the best of our knowledge, the consolidated annual report of Kofola ČeskoSlovensko a.s. gives a true and fair view of

the financial position, business activities and financial performance of Kofola ČeskoSlovensko a.s. and its Group for the year

2020 and of the outlook for future development of the financial position, business activities and financial performance.

14.4.2021

Janis Samaras

Chairman of the Board of

Directors

date

name and surname

position/role

signature

14.4.2021

René Musila

Vice-Chair of the Board of

Directors

date

name and surname

position/role

signature

14.4.2021

Daniel Buryš

Vice-Chair of the Board of

Directors

date

name and surname

position/role

signature

14.4.2021

Martin Pisklák

Member of the Board of

Directors

date

name and surname

position/role

signature

14.4.2021

Martin Mateáš

Member of the Board of

Directors

date

name and surname

position/role

signature

14.4.2021

Marián Šefčovič

Member of the Board of

Directors

date

name and surname

position/role

signature

Consolidated annual report 2020

Independent auditor´s report

A-77

KPMG Česká republika Audit, s.r.o., a Czech limited liability company and a member firm

of the KPMG global organization of independent member firms affiliated with KPMG

International Limited, a private English company limited by guarantee.

Recorded in the Commercial

Court in Prague, Section C,

Insert No. 24185

Identification No. 49619187

VAT No. CZ699001996

ID data box: 8h3gtra

KPMG Česká republika Audit, s.r.o.

Pobřežní 1a

186 00 Praha 8

Czech Republic

+420 222 123 111

www.kpmg.cz

Independent Auditor’s Report to the Shareholders of Kofola

ČeskoSlovensko a.s.

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the accompanying consolidated financial statements of Kofola ČeskoSlovensko a.s.

(“the Company”) and its subsidiaries (together “the Group”), prepared in accordance with International

Financial Reporting Standards as adopted by the European Union, which comprise the consolidated

statement of financial position as at 31 December 2020, and the consolidated statement of profit or loss,

the consolidated statement of other comprehensive income, the consolidated statement of changes in

equity and the consolidated cash flow statement for the year then ended, and notes to the consolidated

financial statements, including a summary of significant accounting policies and other explanatory notes.

Information about the Group is set out in Note 2 to the consolidated financial statements.

In our opinion, the accompanying consolidated financial statements give a true and fair view of the

consolidated financial position of the Group as at 31 December 2020, and of its consolidated financial

performance and its consolidated cash flows for the year then ended in accordance with International

Financial Reporting Standards as adopted by the European Union.

Basis for Opinion

We conducted our audit in accordance with the Act on Auditors, Regulation (EU) No. 537/2014 of the

European Parliament and of the Council, and Auditing Standards of the Chamber of Auditors of the

Czech Republic, consisting of International Standards on Auditing (ISAs), which may be supplemented

and amended by relevant application guidelines. Our responsibilities under those regulations are further

described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section

of our report. We are independent of the Group in accordance with the Act on Auditors and the Code of

Ethics adopted by the Chamber of Auditors of the Czech Republic, and we have fulfilled our other ethical

responsibilities in accordance with these requirements. We believe that the audit evidence we have

obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our

audit of the consolidated financial statements of the current period. These matters were addressed in

the context of our audit of the consolidated financial statements as a whole, and in forming our opinion

thereon, and we do not provide a separate opinion on these matters.

Impairment of trademarks

As at 31 December 2020, the carrying amount of Trademarks and other rights:

MCZK 1 296; related impairment loss: nil;

Refer to significant accounting policies, sections 3.5.4 and 3.5.5 and chapter 4.11 of the notes to the

consolidated financial statements.

Description of key audit matter

Included within intangible assets are trademarks with both finite and indefinite useful life (such as,

primarily, Kofola, Radenska, Vinea, ONDRÁŠOVKA, Karlovarská Korunní trademarks). Pursuant to the

relevant provisions of the financial reporting standards, annual impairment testing is required for

intangible assets with an indefinite useful life, irrespective of whether or not any impairment triggers

were identified for such assets.

In estimating the recoverable amount of the assets in question, the Group applied the relief from royalty

method to arrive at their estimated fair value. A complex model is applied in the impairment test, relying

on adjusted historical performance, and a range of internal and external sources as inputs to the

assumptions. Significant judgment is required in making key assumptions applied in the model, including

those in respect of the royalty rate, growth rate, terminal growth rate and discount rate.

Complex models using forward-looking assumptions tend to be prone to greater risk of management

bias, error and inconsistent application. In addition, significant uncertainty remains over how the

outbreak of COVID-19 will impact the Group’s business in future periods and customer demand for its

products. These conditions necessitate our additional attention in the audit, in particular to address the

objectivity of sources used for assumptions, and their consistent application.

Due to the above factors, this area required our increased attention in the audit and was considered by

us to be a key audit matter.

Our audit approach to the key audit matter

Our audit procedures in the area included, among other things:

⎯ We considered the appropriateness of the method and model applied by the Group in performing

the annual impairment test, against the relevant requirements of the financial reporting standards;

⎯ We assessed the integrity of the impairment model, including the accuracy of the underlying

calculation formulas. We also tested design and implementation of selected internal controls within

the impairment process, including those relating to the management’s review and validation of the

key assumptions underlying the impairment model and the outcome of the testing, including their

evaluation of the business/operating and liquidity risks arising from the COVID-19 outbreak, and

plans for further actions in response to the risks identified;

⎯ We assessed the appropriateness of the level (CGU vs. individual asset) at which the assets were

tested for impairment, based on our understanding of the assets in question and the Group’s

operations;

⎯ We evaluated the quality of the Group’s forecasting by comparing historical projections with current

year’s actual outcomes;

⎯ Assisted by our own valuation specialists, we challenged the Group’s key assumptions and

judgments used in estimating the assets’ recoverable amount, including:

• discount rate - by reference to publicly available market inputs, such as risk-free rate, size

premium, inflation and country premium;

• other key assumptions such as royalty rate, growth rate and perpetuity growth rate – to publicly

available market information and the Management Board-approved forecasts, challenged by us

by reference to the Group’s supporting documentation and via corroborating inquiries of the

Management Board;

• we also assessed whether the forecast revenues applied the model properly excluded the

amounts not associated with the trademarks in question.

⎯ We considered the sensitivity of the impairment model and its outcome to reasonably possible

changes in the key assumptions, such as discount rate, revenues and growth rate, to identify the

assumptions at higher risk of bias or inconsistency in application;

⎯ We assessed impairment-related disclosures in the consolidated financial statements against the

requirements of the financial reporting standards.

Impairment of the UGO trade s.r.o. cash-generating units

As at 31 December 2020, the carrying amount of all the UGO trade s.r.o. CGUs´ net assets: MCZK 200;

related impairment loss: MCZK 36;

Refer to significant accounting policies, section 3.5.5 and 3.7 and chapter 4.11.1 of the notes to the

consolidated financial statements.

Description of key audit matter

UGO trade s.r.o. is the Group’s subsidiary operating mainly in the Czech Republic in the area of

production and sale of food and drinks consisting of 3 cash-generating units (CGUs). As described in

Note 4.11.1, the entity has historically been loss-making and also incurred additional substantial losses

in 2020 (mainly as a result of the government restrictions imposed in response to the COVID-19

pandemic). In the wake of the above factors, as at 31 December 2020, the Group tested the subsidiary’s

CGUs for impairment as required by the relevant financial reporting standards. The CGUs´ recoverable

amounts were estimated as their value-in-use based on discounted free cash flows projections derived

from financial plans approved by the Board of Directors using the multiple scenarios.

Determination of the recoverable amount requires making a number of assumptions and judgments,

including those relating to discount rates applied as well as future cash flows (with key assumptions

therein about growth rates and terminal rates, as well as EBITDA margin and depreciation margin).

Due to the above factors, assessment of the carrying amounts of the CGUs for impairment required our

significant judgment and increased attention in the course of our audit. As a consequence, we consider

the area to be our key audit matter.

Our audit approach to the key audit matter

Our audit procedures in the area included, among other things:

⎯ We evaluated, against the requirements of the relevant financial reporting standards, the Group’s

accounting policy for identification of impairment, and measurement and recognition of any

impairment losses in respect of the carrying amount of the CGUs;

⎯ We tested the design and implementation of selected internal controls within the impairment

process, including those over management’s review and validation of the key assumptions

underlying the impairment model and the outcome of the testing, including their evaluation of

the business/operating and liquidity risks arising from the COVID-19 outbreak, and plans for further

actions in response to the risks identified;

⎯ Assisted by our own valuation specialists, we assessed the Group’s discounted cash flow model

against the relevant financial reporting standards, market practice and for internal consistency. Also

assisted by the specialists, we challenged the reasonableness of the Group’s key assumptions and

judgments used in estimating the CGUs´ recoverable amounts, including:

• discount rate - by reference to publicly available market inputs, such as risk-free rate, size

premium, inflation and country premium;

• other key assumptions such as the growth rate, terminal growth rate, EBITDA margin and

depreciation margin – to the Management Board-approved forecasts, challenged by us by

reference to the Group’s supporting documentation and via corroborating inquiries of the

Management Board.

⎯ We evaluated the quality of the Group’s forecasting by comparing historical projections with current

year’s actual outcomes;

⎯ We assessed the susceptibility of the impairment model and the resulting impairment conclusion to

management bias, by performing our own analysis of sensitivity of the impairment test results to

reasonably possible changes in key assumptions;

⎯ We assessed the appropriateness and completeness of impairment-related disclosures in the

consolidated financial statements.

Business combination – acquisition of ONDRÁŠOVKA a.s. and Karlovarská Korunní s.r.o.

As at 31 December 2020, the carrying amount of Trademarks and other rights: MCZK 426, and acquisition

goodwill: MCZK 538 (the acquisition-date fair value of Trademarks purchased as part of the Acquisition:

MCZK 427);

Description of key audit matter

As discussed in Note 4.28, on 15 April 2020, the Group acquired from the same counterparty, 100%

interest in ONDRÁŠOVKA a.s. and Karlovarská Korunní s.r.o., producers of mineral waters

(“Acquisition”), for a cash consideration of MCZK 1 106.

In conjunction with business acquisitions, IFRS 3 Business Combinations imposes a number of

requirements on the Group, including those to determine the acquisition consideration, identify all of the

assets acquired and liabilities assumed in the combination, and to measure and recognize the

identifiable assets and liabilities at their acquisition-date fair values.

Complying with the above requirements in the context of the Acquisition required significant judgement

and complex assumptions, in particular as regards the following:

- Identification of all of the assets acquired, with main focus on intangible assets (primarily

trademarks), and

- Measurement of the acquisition-date fair value of the main assets acquired, such as trademarks

and real estate property (buildings). For trademarks acquired, the Group applied the relief from

royalty method to determine fair value, with key assumptions such as discount rate, the growth rate

and terminal growth rate. For real estate, fair value was determined primarily under the market

approach, by reference to observable transactional prices for similar assets.

Due to the above factors and as well as the magnitude of the amounts associated with the Acquisition,

coupled with increased estimation uncertainty resulting from the COVID-19 triggered market disruption,

this area was associated with an increased risk of a material misstatement. As such, it required our

increased attention in the course of the audit and was considered by us to be a key audit matter.

Our audit approach to the key audit matter

Our audit procedures in the area included, among other things:

⎯ We tested the design and implementation of selected internal controls within the process of

accounting for business combinations, including those relating to the management’s review and

validation of the key assumptions applied in measuring the acquisition-date fair values of the

identifiable net assets acquired;

⎯ We assessed the completeness of the assets acquired and liabilities assumed as a result of the

Acquisition, based on our independent inspection of the sales and purchase agreement, our

understanding of the acquirees’ operations and inspection of the acquiree accounting records. In

our procedures, particular attention was paid to the identification of assets such as trademarks;

⎯ Assisted by our own valuation specialists, we challenged the recognized acquisition-date fair values

of significant assets acquired and liabilities assumed in the Acquisition, which included:

• assessment of the methods and models applied to fair valuations of specific assets and

liabilities, by reference to the relevant requirements of the financial reporting standards and

market practice.

• challenging the key assumptions applied in the fair value measurements of trademarks, as

follows:

o discount rate – by reference to publicly available market inputs, such as risk-free rate, size

premium, inflation and country premium;

o other key assumptions such as the growth rate, terminal growth rate – to the Management

Board-approved forecasts, challenged by us by reference to the Group’s supporting

documentation and via corroborating inquiries of the Management Board.

• challenging the key judgments and assumptions applied by the Group in the fair value

measurements of real estate, including the selection of comparable assets under the market

approach, inspecting prices in related orderly transaction, and considering any potential

adjustments required to those prices to reflect differences between the property being valued

and comparable properties;

⎯ We assessed the accuracy and completeness of the business combination-related disclosures

made in the consolidated financial statements against the relevant requirements of the financial

reporting standards.

Other Information

In accordance with Section 2(b) of the Act on Auditors, other information is defined as information

included in the consolidated annual report other than the separate and the consolidated financial

statements and our auditor’s report. The statutory body is responsible for the other information.

Our opinion on the consolidated financial statements does not cover the other information. In connection

with our audit of the consolidated financial statements, our responsibility is to read the other information

and, in doing so, consider whether the other information is materially inconsistent with the separate and

consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be

materially misstated. In addition, we assess whether the other information has been prepared, in all

material respects, in accordance with applicable laws and regulations, in particular, whether the other

information complies with laws and regulations in terms of formal requirements and the procedure for

preparing the other information in the context of materiality, i.e. whether any non-compliance with those

requirements could influence judgments made on the basis of the other information.

Based on the procedures performed, to the extent we are able to assess it, we report that:

• the other information describing matters that are also presented in the separate and the

consolidated financial statements is, in all material respects, consistent with the separate and the

consolidated financial statements; and

• the other information has been prepared in accordance with applicable laws and regulations.

In addition, our responsibility is to report, based on the knowledge and understanding of the Group

obtained in the audit, on whether the other information contains any material misstatement. Based on

the procedures we have performed on the other information obtained, we have not identified any

material misstatement.

Responsibilities of the Statutory Body, Supervisory Board and Audit Committee for the

Consolidated Financial Statements

The statutory body is responsible for the preparation and fair presentation of the consolidated financial

statements in accordance with International Financial Reporting Standards as adopted by the European

Union and for such internal control as the statutory body determines is necessary to enable the

preparation of consolidated financial statements that are free from material misstatement, whether due

to fraud or error.

In preparing the consolidated financial statements, the statutory body is responsible for assessing the

Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going

concern and using the going concern basis of accounting unless the statutory body either intends to

liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The Supervisory Board, in collaboration with the Audit Committee, is responsible for overseeing the

Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements

as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s

report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a

guarantee that an audit conducted in accordance with the above regulations will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,

individually or in the aggregate, they could reasonably be expected to influence the economic decisions

of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with the above regulations, we exercise professional judgment and

maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated financial statements,

whether due to fraud or error, design and perform audit procedures responsive to those risks, and

obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk

of not detecting a material misstatement resulting from fraud is higher than for one resulting from

error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the

override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by the statutory body.

• Conclude on the appropriateness of the statutory body’s use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty exists related

to events or conditions that may cast significant doubt on the Group’s ability to continue as a going

concern. If we conclude that a material uncertainty exists, we are required to draw attention in our

auditor’s report to the related disclosures in the consolidated financial statements or, if such

disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence

obtained up to the date of our auditor’s report. However, future events or conditions may cause the

Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements,

including the disclosures, and whether the consolidated financial statements represent the

underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or

business activities within the Group to express an opinion on the consolidated financial statements.

We are responsible for the direction, supervision and performance of the group audit. We remain

solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned

scope and timing of the audit and significant audit findings, including any significant deficiencies in

internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant

ethical requirements regarding independence, and communicate with them all relationships and other

matters that may reasonably be thought to bear on our independence, and where applicable, related

safeguards.

From the matters communicated with those charged with governance, we determine those matters that

were of most significance in the audit of the consolidated financial statements of the current period and

are therefore the key audit matters. We describe these matters in our auditor’s report unless law or

regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we

determine that a matter should not be communicated in our report because the adverse consequences

of doing so would reasonably be expected to outweigh the public interest benefits of such

communication.

Report on the Audit of the Separate Financial Statements

Opinion

We have audited the accompanying separate financial statements of Kofola ČeskoSlovensko a.s. (“the

Company”), prepared in accordance with International Financial Reporting Standards as adopted by the

European Union, which comprise the separate statement of financial position as at 31 December 2020,

and the separate statement of profit or loss, the separate statement of other comprehensive income,

the separate statement of changes in equity and the separate cash flow statement for the year then

ended, and notes to the separate financial statements, including a summary of significant accounting

policies and other explanatory notes. Information about the Company is set out in Note 2 to the separate

financial statements.

In our opinion, the accompanying separate financial statements give a true and fair view of the

unconsolidated financial position of the Company as at 31 December 2020, and of its unconsolidated

financial performance and its unconsolidated cash flows for the year then ended in accordance with

International Financial Reporting Standards as adopted by the European Union.

Basis for Opinion

We conducted our audit in accordance with the Act on Auditors, Regulation (EU) No. 537/2014 of the

European Parliament and of the Council, and Auditing Standards of the Chamber of Auditors of the

Czech Republic, consisting of International Standards on Auditing (ISAs), which may be supplemented

and amended by relevant application guidelines. Our responsibilities under those regulations are further

described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report.

We are independent of the Company in accordance with the Act on Auditors and the Code of Ethics

adopted by the Chamber of Auditors of the Czech Republic, and we have fulfilled our other ethical

responsibilities in accordance with these requirements. We believe that the audit evidence we have

obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our

audit of the separate financial statements of the current period. These matters were addressed in the

context of our audit of the separate financial statements as a whole, and in forming our opinion thereon,

and we do not provide a separate opinion on these matters.

Impairment of trademarks

As at 31 December 2020, the carrying amount of Trademarks and other rights: MCZK 282; related

impairment loss: nil;

Refer to significant accounting policies, sections 3.4.4 and 3.4.6 and chapter 4.12 of the notes to the separate

financial statements.

Description of key audit matter

Included within intangible assets are trademarks with both finite and indefinite useful life (such as,

primarily, Kofola and Semtex trademarks). Pursuant to the relevant provisions of the financial reporting

standards, annual impairment testing is required for intangible assets with an indefinite useful life,

irrespective of whether or not any impairment triggers were identified for such assets.

In estimating the recoverable amount of the assets in question, the Company applied the relief from

royalty method to arrive at their estimated fair value. A complex model is applied in the impairment test,

relying on adjusted historical performance, and a range of internal and external sources as inputs to the

assumptions. Significant judgment is required in making key assumptions applied in the model, including

those in respect of royalty rate, growth rate, terminal growth rate and discount rate.

Complex models using forward-looking assumptions tend to be prone to greater risk of management

bias, error and inconsistent application. These conditions necessitate our additional attention in the

audit, in particular to address the objectivity of sources used for assumptions, and their consistent

application. In addition, significant uncertainty remains over how the outbreak of COVID-19 will impact

the Company’s and subsidiaries´ business in future periods and customer demand for its subsidiaries´

products.

These conditions necessitate our additional attention in the audit, in particular to address the objectivity

of sources used for assumptions, and their consistent application.

Due to the above factors, this area required our increased attention in the audit and was considered by

us to be a key audit matter.

Our audit approach to the key audit matter

Our audit procedures in the area included, among other things:

⎯ We considered the appropriateness of the method and model applied by the Company in performing

the annual impairment test, against the relevant requirements of the financial reporting standards;

⎯ We assessed the integrity of the impairment model, including the accuracy of the underlying

calculation formulas. We also tested design and implementation of selected internal controls within

the impairment process, including those relating to the management’s review and validation of the

key assumptions underlying the impairment model and the outcome of the testing including their

evaluation of the business/operating and liquidity risks arising from the COVID-19 outbreak, and

plans for further actions in response to the risks identified;

⎯ We assessed the appropriateness of the level (CGU vs. individual asset) at which the assets were

tested for impairment, based on our understanding of the assets in question and the Company’s

operations;

⎯ We evaluated the quality of the Company’s forecasting by comparing historical projections with

current year’s actual outcomes;

⎯ Assisted by our own valuation specialists, we challenged the Company’s key assumptions and

judgments used in estimating the assets’ recoverable amount, including:

• discount rate - by reference to publicly available market inputs, such as risk-free rate, size

premium, inflation and country premium;

• other key assumptions such as royalty rate, growth rate and terminal growth rate – to publicly

available market information and the Management Board-approved forecasts, challenged by us

by reference to the Company’s supporting documentation and via corroborating inquiries of the

Management Board;

• we also assessed whether the forecast revenues applied in the model properly excluded the

amounts not associated with the trademarks in question.

⎯ We considered the sensitivity of the impairment model and its outcome to reasonably possible

changes in the key assumptions, such as discount rate, revenues and growth rate, to identify the

assumptions at higher risk of bias or inconsistency in application;

⎯ We assessed impairment-related disclosures in the separate financial statements against the

requirements of the financial reporting standards.

Impairment of the investment in UGO trade s.r.o.

As at 31 December 2020, the carrying amount of the investment in UGO trade s.r.o.: MCZK 186; related

impairment loss: MCZK 238;

Refer to significant accounting policies, section 3.4.5 and 3.4.6 and chapter 4.10 of the notes to the

separate financial statements.

Description of key audit matter

UGO trade s.r.o. is a subsidiary of the Company operating mainly in the Czech Republic in the area of

production and sale of food and drinks. The entity has historically been loss-making and also incurred

additional substantial losses in 2020 (mainly as a result of the government restrictions imposed in

response to the COVID-19 pandemic). In the wake of the above factors and as described in Note 4.10,

the Company tested its investment in the subsidiary for impairment as at 31 December 2020, as required

by the relevant financial reporting standards. The investment’s recoverable amount was estimated as

its value-in-use, based on discounted free cash flow projections derived from financial plans approved

by the Board of Directors using the multiple scenarios.

Determination of the recoverable amount requires making a number of assumptions and judgments,

including those relating to discount rates applied as well as future cash flows (with key assumptions

made about growth rates and terminal rates, as well as EBITDA margin and depreciation margin).

Due to the above factors, assessment of the carrying amount of the investment in the subsidiary for

impairment required our significant judgment and increased attention in the course of our audit. As a

consequence, we consider the area to be our key audit matter.

Our audit approach to the key audit matter

Our audit procedures in the area included, among other things:

⎯ We evaluated, against the requirements of the relevant financial reporting standards, the

Company’s accounting policy for identification of impairment, and measurement and recognition of

any impairment losses in respect of the investment;

⎯ We tested the design and implementation of selected internal controls within the impairment process

including those over management’s review and validation of the key assumptions underlying the

impairment model and the outcome of the testing including their evaluation of the business/operating

and liquidity risks arising from the COVID-19 outbreak, and plans for further actions in response to

the risks identified;

⎯ Assisted by our own valuation specialists, we assessed the Company’s discounted cash flow model

against the relevant financial reporting standards, market practice and for internal consistency. Also

assisted by the specialists, we challenged the reasonableness of the Company’s key assumptions

and judgments used in estimating the subsidiary’s recoverable amount, including:

• discount rate - by reference to publicly available market inputs, such as risk-free rate, size

premium, inflation and country premium;

• other key assumptions such as the growth rate, terminal growth rate, EBITDA margin and

depreciation margin – to the Management Board-approved forecasts, challenged by us by

reference to the Company’s supporting documentation and via corroborating inquiries of the

Management Board.

⎯ We evaluated the quality of the Company’s forecasting by comparing historical projections with

current year’s actual outcomes;

⎯ We assessed the susceptibility of the impairment model and the resulting impairment conclusion to

management bias, by performing our own analysis of sensitivity of the impairment test results to

reasonably possible changes in key assumptions;

⎯ We assessed the appropriateness and completeness of impairment-related disclosures in the

separate financial statements.

Responsibilities of the Statutory Body, Supervisory Board and Audit Committee for the Separate

Financial Statements

The statutory body is responsible for the preparation and fair presentation of the separate financial

statements in accordance with International Financial Reporting Standards as adopted by the European

Union and for such internal control as the statutory body determines is necessary to enable the

preparation of separate financial statements that are free from material misstatement, whether due to

fraud or error.

In preparing the separate financial statements, the statutory body is responsible for assessing the

Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going

concern and using the going concern basis of accounting unless the statutory body either intends to

liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Supervisory Board, in collaboration with the Audit Committee, is responsible for overseeing the

Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Separate Financial Statements

Our objectives are to obtain reasonable assurance about whether the separate financial statements as

a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s

report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a

guarantee that an audit conducted in accordance with the above regulations will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,

individually or in the aggregate, they could reasonably be expected to influence the economic decisions

of users taken on the basis of these separate financial statements.

As part of an audit in accordance with the above regulations, we exercise professional judgment and

maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the separate financial statements, whether

due to fraud or error, design and perform audit procedures responsive to those risks, and obtain

audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not

detecting a material misstatement resulting from fraud is higher than for one resulting from error,

as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override

of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by the statutory body.

• Conclude on the appropriateness of the statutory body’s use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty exists related

to events or conditions that may cast significant doubt on the Company’s ability to continue as a

going concern. If we conclude that a material uncertainty exists, we are required to draw attention

in our auditor’s report to the related disclosures in the separate financial statements or, if such

disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence

obtained up to the date of our auditor’s report. However, future events or conditions may cause the

Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the separate financial statements,

including the disclosures, and whether the separate financial statements represent the underlying

transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned

scope and timing of the audit and significant audit findings, including any significant deficiencies in

internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant

ethical requirements regarding independence, and communicate with them all relationships and other

matters that may reasonably be thought to bear on our independence, and where applicable, related

safeguards.

From the matters communicated with those charged with governance, we determine those matters that

were of most significance in the audit of the separate financial statements of the current period and are

therefore the key audit matters. We describe these matters in our auditor’s report unless law or

regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we

determine that a matter should not be communicated in our report because the adverse consequences

of doing so would reasonably be expected to outweigh the public interest benefits of such

communication.

Report on Other Legal and Regulatory Requirements

In compliance with Article 10(2) of Regulation (EU) No. 537/2014 of the European Parliament and of the

Council, we provide the following information in our independent auditor´s report, which is required in

addition to the requirements of International Standards on Auditing:

Appointment of Auditor and Period of Engagement

We were appointed as the auditors of the Group by the General Meeting of Shareholders on 12 February

2018 and our uninterrupted engagement has lasted for 3 years.

Consistency with Additional Report to Audit Committee

We confirm that our audit opinion on the consolidated and separate financial statements expressed

herein is consistent with the additional report to the Audit Committee of the Company, which we issued

on 9 April 2021 in accordance with Article 11 of Regulation (EU) No. 537/2014 of the European

Parliament and of the Council.

Provision of Non-audit Services

We declare that no prohibited services referred to in Article 5 of Regulation (EU) No. 537/2014 of the

European Parliament and of the Council were provided.

Except for the statutory audit we did not provide the Company and its controlled undertakings with any

other services.

Report on Compliance with the ESEF Regulation

We have undertaken a reasonable assurance engagement on the compliance of all financial statements

included in the consolidated annual report with the provisions of Commission Delegated Regulation (EU)

2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and

of the Council with regard to regulatory technical standards on the specification of a single electronic

reporting format (“the ESEF Regulation”), related to the financial statements.

Responsibilities of the Statutory Body

The Company‘s statutory body is responsible for the preparation of financial statements that comply

with the ESEF Regulation. This responsibility includes:

• the design, implementation and maintenance of internal control relevant to the application of the

ESEF Regulation;

• the preparation of all financial statements included in the consolidated annual report in the

applicable XHTML format; and

• the selection and application of XBRL mark-ups as required by the ESEF Regulation.

Auditor’s Responsibilities

Our responsibility is to express an opinion on whether the financial statements included in the

consolidated annual report comply, in all material respects, with the ESEF Regulation based on the

evidence we have obtained. We conducted our reasonable assurance engagement in accordance with

International Standard on Assurance

Engagements 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical

Financial Information (“ISAE 3000”).

The nature, timing and extent of procedures selected depend on the auditor’s judgment. Reasonable

assurance is a high level of assurance, but is not a guarantee that an assurance engagement conducted

in accordance with the above standard will always detect any existing material non-compliance with the

ESEF Regulation.

Our selected procedures included:

• obtaining an understanding of the requirements of the ESEF Regulation;

• obtaining an understanding of the Company’s internal control relevant to the application of the

ESEF Regulation;

• identifying and assessing the risks of material non-compliance with the ESEF Regulation,

whether due to fraud or error; and

• based on the above, designing and performing procedures to respond to the assessed risks and

to obtain reasonable assurance for the purpose of expressing our conclusion.

The objective of our procedures was to evaluate whether:

• the financial statements included in the consolidated annual report were prepared in the

applicable XHTML format;

• the disclosures in the consolidated financial statements as specified in the ESEF Regulation

were marked up, with all mark-ups meeting the following requirements:

o the XBRL mark-up language was used;

o the elements of the core taxonomy specified in the ESEF Regulation with the closest

accounting meaning were used, unless an extension taxonomy element was created in

compliance with the ESEF Regulation; and

o the mark-ups complied with the common rules on mark-ups specified in the ESEF Regulation.

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

conclusion.

Conclusion

In our opinion, the Company’s financial statements for the year ended 31 December 2020 included in

the consolidated annual report are, in all material respects, in compliance with the ESEF Regulation.

Statutory Auditor Responsible for the Engagement

Blanka Dvořáková is the statutory auditor responsible for the audit of the separate and the consolidated

financial statements of Kofola ČeskoSlovensko a.s. as at 31 December 2020, based on which this

independent auditor’s report has been prepared.

Prague

14 April 2021

B-0

B-1

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

for the 12-month period ended 31 December 2020 and 31 December 2019 in CZK thousand.

Consolidated statement of profit or loss

Note

2020

2019

CZK´000

Continuing operations

Revenue

4.2

6,171,455

6,409,467

Cost of sales

4.3

(3,349,540)

(3,344,886)

Gross profit

2,821,915

3,064,581

Selling, marketing and distribution costs

4.3

(2,041,718)

(2,090,502)

Administrative costs

4.3

(425,653)

(453,819)

Other operating income

4.4

84,871

75,750

Other operating expenses

4.5

(101,943)

(56,249)

Impairment

4.10.1

(44,339)

Operating profit/(loss)

293,133

539,761

Finance income

4.6

19,171

6,070

Finance costs

4.7

(120,606)

(147,083)

Profit/(loss) before income tax

191,698

398,748

Income tax (expense)/benefit

4.8

(125,899)

(146,053)

Profit/(loss) from continuing operations

65,799

252,695

Discontinued operations

Profit/(loss) from discontinued operations

4.29

23,377

Profit/(loss) for the period (continuing and discontinued operations)

1.2

65,799

276,072

Attributable to:

Owners of Kofola ČeskoSlovensko a.s.

1.5

80,518

284,396

Non-controlling interests

1.5

(14,719)

(8,324)

Earnings/(loss) per share for profit/(loss) attributable

to the ordinary equity holders of the Company (in CZK)

Basic earnings/(loss) per share (continuing operations)

4.9

3.61

11.71

Basic earnings/(loss) per share (continuing and discontinued operations)

4.9

3.61

12.76

The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.

B-2

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

for the 12-month period ended 31 December 2020 and 31 December 2019 in CZK thousand.

Consolidated statement of other comprehensive income

Note

2020

2019

(continuing and discontinued operations)

CZK´000

Profit/(loss) for the period (continuing and discontinued operations)

1.1

65,799

276,072

Other comprehensive income

Items that may be reclassified to profit or loss:

Exchange differences

27,056

22,106

Exchange differences on translation of foreign subsidiaries (continuing

operations)

27,056

(25,095)

Exchange differences on disposal of foreign subsidiaries (discontinued

operation)

4.29

(81,422)

Exchange differences on translation of foreign equity accounted investee

(discontinued operation)

10,224

Exchange differences on disposal of foreign equity accounted investee

(discontinued operation)

4.29

118,399

Derivatives accounted through Other comprehensive income

(9,325)

4,621

Derivatives - Cash flow hedges

(11,512)

5,705

Deferred tax from Cash flow hedges

4.8

2,187

(1,084)

Other comprehensive income/(loss) for the period, net of tax

17,731

26,727

Total comprehensive income/(loss) for the period

1.5

83,530

302,799

Attributable to:

Owners of Kofola ČeskoSlovensko a.s.

1.5

98,249

311,123

- from continuing operations

98,249

240,545

- from discontinued operations

70,578

Non-controlling interests

1.5

(14,719)

(8,324)

The above consolidated statement of other comprehensive income should be read in conjunction with the accompanying

notes.

B-3

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

as at 31 December 2020 and 31 December 2019 in CZK thousand.

Assets

Note

31.12.2020

31.12.2019

CZK´000

Non-current assets

5,683,537

4,393,998

Property, plant and equipment

4.10

3,448,570

3,127,018

Goodwill

4.11

647,019

105,506

Intangible assets

4.11

1,339,224

956,832

Other receivables

4.14

208,651

163,518

Other assets

2,236

Deferred tax assets

4.8

40,073

38,888

Current assets

1,853,712

2,522,440

Inventories

4.13

519,192

485,313

Trade and other receivables

4.14

783,420

1,247,034

Income tax receivables

7,211

15,598

Cash and cash equivalents

4.15

543,889

774,495

Total assets

7,537,249

6,916,438

Liabilities and equity

Note

31.12.2020

31.12.2019

CZK´000

Equity attributable to owners of Kofola ČeskoSlovensko a.s.

1.5

1,338,391

1,530,030

Share capital

1.5

1,114,597

Share premium and capital reorganisation reserve

1.5

(1,962,871)

Other reserves

1.5

2,449,921

2,463,337

Foreign currency translation reserve

1.5

60,067

33,011

Own shares

1.5

(490,151)

(490,164)

Retained earnings/(Accumulated deficit)

1.5

166,828

372,120

Equity attributable to non-controlling interests

1.5

(31,199)

(16,480)

Total equity

1.5

1,307,192

1,513,550

Non-current liabilities

3,993,268

2,842,503

Bank credits and loans

4.18, 4.25.1

3,252,207

2,229,162

Lease liabilities

4.21, 4.25.1

322,372

314,396

Provisions

4.17

41,315

37,600

Other liabilities

4.19

91,390

70,408

Deferred tax liabilities

4.8

285,984

190,937

Current liabilities

2,236,789

2,560,385

Bank credits and loans

4.18, 4.25.1

685,157

783,800

Lease liabilities

4.21, 4.25.1

132,422

105,395

Provisions

4.17

66,865

114,818

Trade and other payables

4.19

1,320,878

1,496,952

Income tax liabilities

31,467

59,420

Total liabilities

6,230,057

5,402,888

Total liabilities and equity

7,537,249

6,916,438

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

B-4

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

for the 12-month period ended 31 December 2020 and 31 December 2019 in CZK thousand.

Consolidated statement of cash flows

Note

2020

2019

CZK´000

Cash ﬂows from operating activities

Profit/(loss) before income tax

1.1

191,698

422,125

Adjustments for:

Non-cash movements

Depreciation and amortisation

4.3

632,480

565,927

Net interest

4.6, 4.7

101,886

114,267

Share of equity accounted investee result

4.12

(46,654)

Impairment of non-current assets

4.10.1

45,808

858

Change in the balance of provisions

4.17

(45,539)

37,850

Change in the balance of other impairments

64,983

9,559

(Gain)/loss on realized derivatives

4.6, 4.7

4,105

(2,661)

Realised (gain)/loss on sale of Property, plant and equipment

and Intangible assets

4.4, 4.5

(10,729)

(23,029)

Net exchange differences

(14,263)

4,475

Profit on sale of subsidiary

4.29

(7,979)

Gain on release of the foreign currency translation reserve - subsidiary

4.29

(81,422)

Profit on sale of equity accounted investee

4.29

(19,094)

Loss on release of the foreign currency translation

reserve - equity accounted investee

4.29

118,399

Other

5,546

18,763

Cash movements

Income taxes paid

(130,532)

(122,180)

Change in operating assets and liabilities

Change in receivables

196,147

25,429

Change in inventories

20,917

(65,624)

Change in payables

(277,491)

(16,696)

Net cash inflow/(outflow) from operating activities

785,016

932,313

Cash flows from investing activities

Sale of Property, plant and equipment

36,855

28,586

Acquisition of Property, plant and equipment and Intangible assets

(481,458)

(481,486)

Proceeds from sale of subsidiary, net of cash disposed

138,492

21,195

Proceeds from sale of equity accounted investee

113,899

Acquisition of subsidiaries, net of cash acquired

4.28

(1,060,700)

(74,549)

Dividends and interest received

450

37,035

Proceeds from repaid loans

306,493

Loans granted

(202,287)

Purchase of bonds from previous owner of acquired subsidiary

(103,800)

Proceeds from bonds sold

7,000

10,000

Net cash inflow/(outflow) from investing activities

(1,349,262)

(355,013)

Cash flows from financing activities

Lease payments

4.25.1

(123,995)

(109,632)

Proceeds from loans and bank credits

4.25.1

1,293,702

503,509

Repayment of loans and bank credits

4.25.1

(426,656)

(413,882)

Dividends paid to Company´s shareholders

(275,039)

(285,901)

Interest paid

(99,755)

(115,424)

Derivatives

4.6, 4.7

(4,105)

2,661

Purchase of own shares

1.5

(4,410)

Payments of acquired subsidiaries' liabilities to former owners

(27,942)

Transaction costs connected with loan financing

(4,948)

Other

(1,847)

Net cash inflow/(outflow) from financing activities

325,005

(418,669)

Net increase/(decrease) in cash and cash equivalents

(239,241)

158,631

Cash and cash equivalents at the beginning of the period

1.3

774,495

619,300

Effects of exchange rate changes on cash and cash equivalents

8,635

(3,436)

Cash and cash equivalents at the end of the period

1.3

543,889

774,495

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

B-5

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

for the 12-month period ended 31 December 2020 and 31 December 2019 in CZK thousand.

Consolidated statement of

changes in equity

Note

Equity attributable to owners of Kofola ČeskoSlovensko a.s.

Equity

attributable

to non-

controlling

interests

Total equity

capital

premium and

capital

reorganisation

reserve

Other

reserves

Foreign

currency

translation

reserve

Distribution

fund

Own

Retained

earnings/

(Accumulated

deficit)

Total

CZK´000

Balance as at 1 January 2020

1,114,597

(1,962,871)

2,463,337

33,011

(490,164)

372,120

1,530,030

(16,480)

1,513,550

Profit/(loss) for the period

1.1

80,518

(14,719)

65,799

Other comprehensive income/(loss)

1.2

(9,325)

27,056

17,731

Total comprehensive income/(loss) for

the period

(9,325)

27,056

80,518

98,249

(14,719)

83,530

Dividends

4.16.3

(285,902)

Own shares purchase

4.16.2

(4,410)

Shares transfer to option scheme

participants

4.16.2

(4,408)

4,408

Option scheme

317

Dividends not collected

Own shares transfer

Transactions with owners in their capacity

as owners

(4,091)

(285,810)

(289,888)

Balance as at 31 December 2020

1,114,597

(1,962,871)

2,449,921

60,067

(490,151)

166,828

1,338,391

(31,199)

1,307,192

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

The General Meeting held outside of the meeting during 2 – 18 November 2020 has approved a distribution of dividends in the amount of CZK 13.5 per share, i.e. CZK 285,902 thousand.

B-6

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

Consolidated statement of

changes in equity

Note

Equity attributable to owners of Kofola ČeskoSlovensko a.s.

Equity

attributable

to non-

controlling

interests

Total equity

Share capital

premium and

capital

reorganisation

reserve

Other

reserves

Foreign

currency

translation

reserve

Distribution

fund

Own

Retained

earnings/

(Accumulated

deficit)

Total

CZK´000

Balance as at 31 December 2018 -

Restated

1,114,597

(1,962,871)

2,438,776

28,954

618,331

(490,208)

(264,177)

1,483,402

(8,156)

1,475,246

Effect of initial application of IFRS 16

1,346

Balance as at 1 January 2019

1,114,597

(1,962,871)

2,438,776

28,954

618,331

(490,208)

(262,831)

1,484,748

(8,156)

1,476,592

Profit/(loss) for the period

1.1

284,396

(8,324)

276,072

Other comprehensive income/(loss)

1.2

4,621

22,106

26,727

Total comprehensive income/(loss) for the

period

4,621

22,106

284,396

311,123

(8,324)

302,799

Dividends

4.16.3

(285,901)

Option scheme

19,940

Dividends not collected

Own shares transfer

4.23.1

Transactions with owners in their capacity

as owners

19,940

(285,901)

(265,841)

Transfer to foreign currency translation

reserve

(18,049)

18,049

Transfer from the distribution fund

(332,430)

332,430

Balance as at 31 December 2019

1,114,597

(1,962,871)

2,463,337

33,011

(490,164)

372,120

1,530,030

(16,480)

1,513,550

Release of the cumulated foreign currency translation reserve is the total balance of cumulated foreign exchange differences arising on the consolidation of Hoop Polska within the Group

consolidated financial statements and on equity accounting of share in Megapack. These differences arise when the functional currency of the consolidated subsidiary or equity accounted

investment differs from the presentation currency of the consolidated financial statements. These differences are recognized since the acquisition of the subsidiary or share in equity

accounted investee within other comprehensive income and they are reclassified from equity to the profit or loss on the disposal of the subsidiary/equity accounted investee. The gain of

CZK 81,422 thousand (which compensates the loss of CZK 81,422 thousand recorded in the Other comprehensive income) related to Hoop Polska and loss of CZK 118,399 thousand related

to Megapack (which compensates the gain of CZK 118,399 thousand recorded in the Other comprehensive income) are presented under discontinued operations (see Note 4.29).

On 5 June 2019, the General meeting has approved a distribution of dividends in the amount of CZK 13.5 per share, i.e. CZK 285,901 thousand.

B-7

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

Kofola ČeskoSlovensko a.s. (“the Company”) is a joint-stock company registered on 12 September 2012. Its registered office

is Nad Porubkou 2278/31a, Ostrava, 708 00, Czech Republic and the identification number is 24261980. The Company is

recorded in the Commercial Register kept by the Regional Court in Ostrava, section B, Insert No. 10735. The Company´s

websites are https://www.kofola.cz/ and the phone number is +420 595 601 030. LEI: 3157005DO9L5OWHBQ359.

Main area of activity of Kofola ČeskoSlovensko a.s. in 2020 was holding of the subsidiaries and providing certain services for

the other companies in Kofola Group, e.g. strategic services, services related to products, shared services and holding of

licences and trademarks.

Kofola ČeskoSlovensko a.s. is the parent of the Kofola Group. Besides the traditional markets of the Czech Republic and

Slovakia, the Group is also present in Slovenia, Croatia and in Poland. The Group produces drinks in eleven production plants

and key trademarks include Kofola, Jupí, Jupík, Rajec, Radenska, Semtex energy drink, Vinea, Ondrášovka and Korunní. On

selected markets, the Group distributes among others Rauch, Evian, Badoit, Café Reserva and Dilmah products and under

the licence produces Royal Crown Cola or Orangina.

Based on the information known to the Board of Directors of the Company acting with due care, the ultimate parent of

the Company is AETOS a.s. The ownership structure is described in section 4.23.1.

Kofola ČeskoSlovensko a.s. is listed on Prague Stock Exchange (ticker KOFOL).

As at 31 December 2020, the composition of the Board of Directors, Supervisory Board and Audit Committee was as follows:

• Janis Samaras – Chairman

• René Musila – Vice-Chair

• Daniel Buryš – Vice-Chair

• Martin Pisklák (since 1 April 2020, formerly Pavel Jakubík)

• Martin Mateáš (since 30 June 2020, formerly Jiří Vlasák)

• Marián Šefčovič

• René Sommer – Chairman

• Tomáš Jendřejek

• Moshe Cohen-Nehemia

• Petr Pravda

• Petr Šobotník – Chairman

• Zuzana Prokopcová

• Lenka Frostová

B-8

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

Name of entity

Place of business

Segment

(Note 4.1)

Principal activities

Ownership interest and

voting rights

31.12.2020

31.12.2019

Holding companies

Kofola ČeskoSlovensko a.s.

Czech Republic

CzechoSlovakia

top holding company

Alofok Ltd

Cyprus

n/a

holding

100.00%

Production and trading

Kofola a.s.

Czech Republic

CzechoSlovakia

production and distribution of

non-alcoholic beverages

100.00%

Kofola a.s.

Slovakia

CzechoSlovakia

production and distribution of

non-alcoholic beverages

100.00%

UGO trade s.r.o.

Czech Republic

Fresh & Herbs

operation of Fresh bars chain,

production of salads

90.00%

RADENSKA d.o.o.

Slovenia

Adriatic

production and distribution of

non-alcoholic beverages

100.00%

Studenac d.o.o.

Croatia

Adriatic

production and distribution of

non-alcoholic beverages

100.00%

Radenska d.o.o.****

Croatia

Adriatic

liquidated

n/a

100.00%

Premium Rosa Sp. z o.o.

Poland

Fresh & Herbs

production and distribution of

syrups and jams

100.00%

LEROS, s.r.o.

Czech Republic

Fresh & Herbs

production and distribution of

products from medicinal plants and

quality natural teas

100.00%

Leros Slovakia, s.r.o.

Slovakia

Fresh & Herbs

distribution of products from

medicinal plants and quality natural

teas

100.00%

Espresso s.r.o.**

Czech Republic

Fresh & Herbs

distribution of high-quality coffee and

teas

n/a

100.00%

F.H.Prager s.r.o.*

Czech Republic

CzechoSlovakia

production and distribution of ciders

100.00%

n/a

Minerálka s.r.o. - in liquidation

Slovakia

CzechoSlovakia

in liquidation

100.00%

ONDRÁŠOVKA a.s.***

Czech Republic

CzechoSlovakia

production and distribution of

non-alcoholic beverages

100.00%

n/a

Karlovarská Korunní s.r.o.***

Czech Republic

CzechoSlovakia

production and distribution of

non-alcoholic beverages

100.00%

n/a

Transportation

SANTA-TRANS s.r.o.

Czech Republic

CzechoSlovakia

road cargo transport

100.00%

* Acquired on 7 January 2020. ** Merged to LEROS, s.r.o. on 15 April 2020. *** Acquired on 15 April 2020. **** Liquidated on 28 August 2020.

B-9

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

The consolidated financial statements have been prepared in accordance with the laws binding in the Czech Republic and

with International Financial Reporting Standards (“IFRS”), as well as the interpretations issued by the International Financial

Reporting Interpretations Committee (“IFRIC”) adopted by the European Union, published and effective for reporting periods

beginning 1 January 2020.

The consolidated financial statements have been prepared on a going concern basis and in accordance with the historical

cost method, except for financial assets and liabilities measured at fair value, employee benefits measured at fair value and

the assets, liabilities and contingent liabilities of the acquiree which are measured at their acquisition-date fair values as

required by IFRS 3.

The consolidated financial statements include the consolidated statement of the financial position, consolidated statement

of profit or loss, consolidated statement of other comprehensive income, consolidated statement of changes in equity,

consolidated statement of cash flows and explanatory notes.

The Group’s consolidated financial statements cover the period ended 31 December 2020 and contain comparatives for

the period ended 31 December 2019.

The consolidated financial statements are presented in Czech crowns (“CZK”), and all values, unless stated otherwise, are

presented in CZK thousand.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It

also requires that management exercises its judgement in the process of applying the Group’s accounting policies. The areas

involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to

the consolidated financial statements are disclosed in section 3.7.

The consolidated financial statements are presented in Czech crowns (CZK), which is the Company´s functional and

presentation currency.

The financial statements items of the Group entities are measured using their functional currency. Foreign currency

transactions are translated into the functional currency using the exchange rates at the dates of the transactions.

Monetary assets and liabilities expressed as at the balance sheet date in foreign currencies are translated using the closing

exchange rate announced by the Czech National Bank for the end of the reporting period, and all foreign exchange gains or

losses are recognized in profit or loss under:

• operating income and expense – for trading operations,

• finance income and costs – for financial operations.

Non-monetary assets and liabilities carried at historical cost expressed in a foreign currency are stated at the historical

exchange rate as at the date of the transaction. Non-monetary assets and liabilities carried at fair value expressed in a foreign

currency are translated at the exchange rate as at the date on which they were remeasured to the fair value.

The following exchange rates were used for the preparation of the financial statements:

Closing exchange rates

31.12.2020

31.12.2019

CZK/EUR

26.245

25.410

CZK/PLN

5.755

5.970

CZK/RUB

n/a*

0.363

CZK/HRK

3.477

3.414

* Megapack sold in 2019

B-10

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

Average exchange rates

1.1.2020 -

31.12.2020

1.1.2019 -

31.12.2019

CZK/EUR

26.444

25.672

CZK/PLN

5.954

5.973

CZK/RUB

n/a*

0.354

CZK/HRK

3.508

3.461

* Megapack sold in 2019

The results and financial position of foreign operations are translated into CZK as follows:

• assets and liabilities for each statement of financial position presented at closing exchange rates announced by

the Czech National Bank for the balance sheet date,

• income and expense for each statement of profit or loss at average exchange rates announced by the Czech National

Bank for the reporting period, unless this is not a reasonable approximation of the cumulative effect of the rates

prevailing on the transaction dates, in which case income and expenses are translated at the dates of

the transactions,

• the resulting exchange differences are recognised in other comprehensive income and accumulated in equity,

• cash-flow statement items at the average exchange rate announced by the Czech National Bank for the reporting

period, unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on

the transaction dates, in which case income and expenses are translated at the dates of the transactions.

The resulting foreign exchange differences are recognized under the “Effects of exchange rate changes on cash and

cash equivalents” item of the cash-flow statement.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of

the foreign operation and translated at the closing rate.

Foreign exchange gains and losses recognized in profit or loss are offset on individual company level.

Subsidiaries are those investees, including structured entities, that the Group controls because the Group (i) has power to

direct the relevant activities of the investees that significantly affect their returns, (ii) has exposure, or rights, to variable

returns from its involvement with the investees, and (iii) has the ability to use its power over the investees to affect

the amount of the investor’s returns. The existence and effect of substantive rights, including substantive potential voting

rights, are considered when assessing whether the Group has power over another entity. For a right to be substantive,

the holder must have a practical ability to exercise that right when decisions about the direction of the relevant activities of

the investee need to be made. The existence and effect of potential voting rights that are currently exercisable or convertible

are considered when assessing whether the Group controls another entity. The Group also assesses the existence of control

where it does not have more than 50% of the voting power but is able to govern the financial and operating policies by virtue

of de-facto control.

De-facto control may arise in circumstances where the size of the Group’s voting rights relative to the size and dispersion of

holdings of other shareholders give the Group the power to govern the financial and operating policies, etc.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from

the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for

the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of

the acquiree and the equity instruments issued by the Group. The consideration transferred includes the fair value of any

asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and

contingent liabilities assumed in a business combination are measured initially at their fair values as at the acquisition date.

B-11

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

The Group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value

or at the non-controlling interest’s proportionate share of the recognised amounts of the acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred.

If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity

interest in the acquiree is re-measured to fair value at the acquisition date; any gains or losses arising from such

remeasurement are recognised in profit or loss.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent

changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance

with IAS 39 in profit or loss. Contingent consideration that is classified as equity is not re-measured, and its subsequent

settlement is accounted for within equity.

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and initially recognized

non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than

the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.

Inter-company transactions, balances, income and expenses on transactions between Group companies are eliminated.

Profits and losses resulting from intercompany transactions that are recognised in assets are also eliminated. Accounting

policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that

is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid

and the relevant share of the acquired carrying value of net assets of the subsidiary is recorded in retained earnings. Gains

or losses on disposals to non-controlling interests are also recorded in equity.

When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value as at the date when

control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for

the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition,

any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group

had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other

comprehensive income are reclassified to profit or loss.

Associates are all entities over which the Group has significant influence but not control, generally accompanying

a shareholding of between 20% and 50% of the voting rights. Equity accounted investee is an investment where the Group

has a joint control over the investment. Investments are accounted for using the equity method of accounting. Under

the equity method, the investment is initially recognized at cost, and the carrying amount is increased or decreased to

recognize the investor’s share of the net assets of the investee after the date of acquisition. The Group’s investment in

associates and equity accounted investees includes goodwill identified on acquisition.

If the ownership interest is reduced but significant influence is retained, only a proportionate share of the amounts previously

recognized in other comprehensive income is reclassified to profit or loss where appropriate.

The Group’s share of post-acquisition profit or loss is recognized in profit or loss and its share of post-acquisition movements

in other comprehensive income (including the effects of translation of the financial position and results of the investment

from its functional to the Group’s presentation currency) is recognized in other comprehensive income with a corresponding

adjustment to the carrying amount of the investment. When the Group’s share of losses in an investment equals or exceeds

its interest in the investment, including any other unsecured receivables, the Group does not recognize further losses, unless

it has incurred legal or constructive obligations or made payments on behalf of the investment.

The foreign investments are retranslated using foreign exchange rate valid at the balance sheet date and any resulting

difference is recognised in Other comprehensive income.

The Group determines as at each reporting date whether there is any objective evidence that the investment is impaired. If

this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of

B-12

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

the investment and its carrying value and recognises the amount adjacent to share of profit/(loss) of investment in

the income statement.

Profits and losses resulting from upstream and downstream transactions between the Group and its investments are

recognised in the Group’s financial statements only to the extent of unrelated investor’s interests in the investments.

Unrealised gains and losses are eliminated unless the transaction provides evidence of an impairment of the asset

transferred. Accounting policies of the investments have been changed where necessary to ensure consistency with

the policies adopted by the Group.

Items of property, plant and equipment are stated at cost less accumulated depreciation and less any impairment losses.

Items acquired in a business combination are measured at their acquisition-date fair values. The costs of non-current assets

consist of their acquisition price plus all costs directly associated with the asset’s acquisition and adaptation for use. The costs

also include the cost of replacing parts of machines and equipment as they are incurred, if the recognition criteria are met.

Costs incurred after the asset is given over for use, such as maintenance and repairs, are charged to the income statement

as they are incurred.

If circumstances occurred during the preparation of the financial statements indicating that the carrying value of item of

property, plant and equipment may not be recoverable, the said asset is tested for impairment. For the purposes of assessing

impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating

units). If there are indications that impairment might have occurred, and the balance sheet value exceeds the estimated

recoverable amount, then the value of those assets or cash generating units to which the assets belong is reduced to the value

of the recoverable amount. The recoverable value corresponds to the higher of the following two values: the fair value less

costs of disposal, or the value in use. When determining value in use, the estimated future cash flows are discounted to

the present value using a post-tax discount rate reflecting the current market assessments of the time value of money and

the risk associated with the given asset component. If the asset component does not generate income sufficiently

independently, the recoverable amount is determined for the cash generating unit to which the asset belongs. Impairment

write downs are recognised in the income statement under other operating costs or in the separate row if material.

A given tangible non-current asset is derecognised from the balance sheet when it is sold or if no economic benefits are

anticipated from its continued use. All profits and losses arising from the derecognition (calculated as the difference between

the potential proceeds from the sale and the balance sheet value of a given item) are recognised in the income statement in

the period in which the derecognition was performed.

Assets under construction consist of non-current assets that are being constructed or assembled and are stated at acquisition

price or cost of production. Non-current assets under construction are not depreciated until the construction is completed

and the assets given over for use.

Returnable packages in circulation are recorded within property, plant and equipment at cost net of accumulated

depreciation less any impairment loss. Returnable packages allocated at customers are covered by advances received and

are further described in section 3.5.6. When the advances received are written-off, the respective returnable packages are

derecognized.

The balance sheet value, the useful life and the depreciation method of non-current assets are verified, and, if need to be,

adjusted, at the end of each financial year.

Items of income and expense related to sold property, plant and equipment are offset on individual company level.

B-13

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

Items of property, plant and equipment, or their significant and separate components, are depreciated using the straight-line

method to allocate their costs to their residual values over their economic useful lives. Land is not depreciated. Depreciation

of returnable packages is recorded to write them off over the course of their economic life. The Group assumes the following

economic useful lives for the following categories of non-current assets:

Asset category

Useful life

Buildings and constructions

20 – 40 years

Technical improvement on leased property

9 years in average

Plant and equipment

2 – 15 years

Vehicles

4 – 6 years

Returnable packages

2 – 10 years

Lease agreements that basically transfer to the Group all of the risks and rewards of owning the subject of the lease are

recognised in the statement of financial position at the commencement of the lease at the lower of the following two values:

the fair value of the non-current asset constituting the subject of the lease or the present value of minimum lease payments.

Financial costs are charged directly to the income statement.

Non-current assets used under leases are depreciated using the shorter of the two periods: the asset’s estimated useful life

or the lease term.

The Group has adopted IFRS 16 as of 1 January 2019 applying modified retrospective approach. Under the new standard,

a right-of-use asset (right to use leased item) and a financial liability to pay rentals are recognised. IFRS 16 lead to

a replacement of the straight-line operating lease expense with a depreciation charge (operating costs) for right-of-use asset

and an interest expense (finance costs) on lease liabilities. Although the depreciation charge is typically even, the interest

expense reduces over the life of the lease which leads into a reducing total expense as individual lease matures. IFRS 16

doesn’t impact the amount of cash transferred between the lessor and lessee, it however has an impact on the presentation

of the statement of cash flows. Cash outflows connected with the leases previously classified as operating expenses are

presented under financing activities instead of operating activities. The Group has decided to utilize the following practical

expedients allowed by the IFRS 16 standard:

• Leases of low value assets (i.e. those with value lower than CZK 80 thousand) are not accounted under the IFRS 16

lease model.

• Leases with a lease term of 12 months or less that do not contain a purchase option (i.e. short-term leases) are not

accounted under the IFRS 16 lease model.

• Leases for which the lease term ends within 12 months of the date of initial application of IFRS 16 (leases without

extension option or with an option which is not to be used) are not accounted under the IFRS 16 lease model.

• For leases commencing before 1 January 2019 and representing operating leases before that date the Group

recognized the lease liability in the amount equal to the present value of the remaining lease payments, discounted

using lessee’s incremental borrowing rate at the date of initial application. Right-of-use asset was recognized in

the amount of lease liability (adjusted by the amount of any previously recognized prepaid or accrued lease

payments relating to that lease) less impairment provision calculated under IAS 36.

• A single discount rate is applied to a portfolio of leases with reasonably similar characteristics.

• For leases commencing before 1 January 2019 the initial direct costs were excluded from the measurement of

the right-of-use asset at the date of initial application.

• Hindsight is used, such as in determining the lease term if the contract contained options to extend or terminate

the lease.

The Group’s activities as a lessor are not material and hence there wasn’t any material impact on the consolidated financial

statements.

Application of the IFRS 16 standard did not have any material qualitative impacts on the Group’s daily operations and financial

reporting process.

B-14

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

Discount rate applied for the recognition of right-of-use assets and lease liabilities as of 1 January 2019 was between

2.0% - 5.0% p.a.

The Group leases mainly the head office administrative building, premises for Fresh and Salad bars, production equipment

and vehicles. Rental contracts are typically made for fixed periods of 1 to 10 years but may have extension options. Lease

terms are negotiated on an individual basis and contain a wide range of different terms and conditions.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net

present value of the following lease payments:

• fixed payments (including in-substance fixed payments), less any lease incentives receivable,

• variable lease payment that are based on an index or a rate,

• amounts expected to be payable by the lessee under residual value guarantees,

• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and

• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s

incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain

an asset of similar value in a similar economic environment with similar terms and conditions.

Right-of-use asset is measured at cost comprising the following:

• the amount of the initial measurement of lease liability,

• any lease payments made at or before the commencement date less any lease incentives received,

• any initial direct costs, and

• restoration costs.

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis

as an expense in profit or loss.

The Group has established controls for the identification, monitoring and recording of contracts and transactions connected

with the new standard.

The Group didn't face any difficulties with the identification of leases within its contracts, application of rate implicit in

the lease, proper presentation and disclosure. If rate implicit in the lease couldn't be determined for the purpose of

measurement of lease liability, the Group has applied relevant incremental borrowing rate. The Group didn't have to make

any significant judgements or assumption during the initial and subsequent application of IFRS 16. The determined lease

terms are based on contracts and reflect the management's intentions to prolong existing contracts according to relevant

contract clauses. This is however not considered as a significant judgement or assumption because the decisions made about

utilization are based on management’s short-term and long-term business plans. The Group has applied modified

retrospective approach for the initial application of IFRS 16, as such it was not required to restate comparative information.

The Group has included Right-of-use assets in its annual impairment considerations. There was not any impairment for any

Right-of-use asset.

Goodwill is carried at cost less accumulated impairment losses, if any. The Group tests goodwill for impairment at least

annually and whenever there are indications that goodwill may be impaired. Goodwill is allocated to the cash-generating

units, or groups of cash-generating units, that are expected to benefit from the synergies of the business combination.

Such units or groups of units represent the lowest level at which the Group monitors goodwill and are not larger than

an operating segment. Any impairment of goodwill cannot be subsequently reversed.

B-15

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

Gains or losses on disposal of an operation within a cash generating unit to which goodwill has been allocated include

the carrying amount of goodwill associated with the disposed operation, generally measured on the basis of the relative

values of the disposed operation and the portion of the cash-generating unit which is retained.

Intangible assets acquired in a separate transaction are initially stated at acquisition price. The acquisition price of intangible

assets acquired in a business combination is equal to their fair value as at the date of the combination. After their initial

recognition, intangible assets are stated at their historical price or production costs less accumulated amortisation and

impairment write downs. Expenditures on internal research and development, except for capitalised development costs of

identifiable intangible assets, are not capitalised and are recognised in the income statement of the period in which they

were incurred.

The Group determines whether the economic useful life of an intangible asset is finite or indefinite. A significant part of

the Group's intangible assets constitute trademarks, for most of them the Group has determined that they have an indefinite

useful life. The Group companies are the owners of some of the leading trademarks in non-alcoholic beverages

in Central Europe. As a result, these trademarks are generating positive cash flows and the Group owns the trademarks for

the long term. The Board considered several factors and circumstances in concluding that these trademarks have indefinite

useful lives, such as size, diversification and market share of each trademark, the trademark's past performance, long-term

development strategy, any laws or other local regulations which may affect the life of the assets and other economic factors,

including the impact of competition and market conditions. The Group’s management expects that it will hold and promote

trademarks for an indefinite period through marketing and promotional support. The trademarks with indefinite useful lives

are tested for impairment at least annually. The Group has reassessed useful lives of assets with indefinite useful life and

concluded that current events and circumstances continue to support an indefinite useful life assessment.

Intangible assets with finite useful lives are amortised over the useful economic life and assessed for impairment whenever

there are impairment indicators. Useful life and method of amortisation of intangible assets with finite lives are reviewed at

least at each financial year end. Changes in the expected useful life or the expected pattern of consumption of the future

economic benefits embodied in the asset are accounted for by changing the amortisation period or method and treated as

changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the income

statement in the expense category consistent with the function of the intangible asset. Intangible assets with finite useful

lives are assessed for impairment whenever there are impairment indicators.

Intangible assets are amortised using the straight-line method over their useful lives:

Asset category

Useful life

Software licences

3 – 16 years

Computer software

3 – 6 years

Other licences

5 – 7 years

Valuable rights

5 – 10 years

The Group evaluates its assets whether indicators of impairment are present as at each balance sheet date. For goodwill and

indefinite life intangible assets, the Group performs a formal estimate of the recoverable amount annually, for remaining

assets the estimate is performed in case of presence of impairment indicators. If the carrying value of a given asset or

cash-generating unit exceeds its recoverable amount, it is considered impaired and written down to its recoverable amount.

The recoverable amount corresponds to the higher of the following two values: the fair value less costs of disposal, or

the value in use of a given asset or cash generating unit. The impairment loss recognised, except for impairment of goodwill,

may be reversed in future periods if the asset’s value recovers.

If there is any indication that an asset may be impaired, recoverable amount is estimated for the individual asset. If it is not

possible to estimate the recoverable amount of the individual asset, the recoverable amount is determined for

the cash-generating unit to which the asset belongs. If there isn’t any such cash-generating unit, as a CGU is considered

the whole entity and any impairment loss is allocated to the particular entity’s assets respecting the IFRS requirements on

order of the impairment loss allocation.

Financial instrument is any formal agreement that gives rise to a financial asset of one entity, and a financial liability or equity

instrument of another entity.

B-16

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

The most significant assets that are subject to the financial instruments accounting policies are:

• derivative instruments (swap contracts),

• other financial receivables,

• trade receivables,

• cash.

Current trade receivables are stated at amortised cost by applying the effective interest rate method, and reduced by

impairment write downs, if any.

The most significant liabilities that are subject to the financial instruments accounting policies:

• loan payables,

• derivative instruments (swap contracts),

• trade payables,

• advances received for the returnable packages,

• lease liabilities.

Trade payables are stated at amortised cost by applying the effective interest rate method.

The Group’s financial assets/liabilities are classified to the following categories:

• measured at amortized costs,

• fair value through other comprehensive income (FVTOCI), and

• fair value through profit and loss (FVTPL).

Classification is based on the nature of the asset/liabilities and management intention. The Group classifies its

assets/liabilities at their initial recognition.

Financial assets are initially recognised at fair value. Their initial valuation is increased by transaction costs, with the exception

of financial assets stated at fair value through profit or loss. The transaction costs payable in case of a possible disposal of

the asset are not deducted from subsequent measurement of financial assets. The asset is recognised in the balance sheet

when the Group becomes a party to the agreement (contract), out of which the financial asset arises.

Financial liabilities are initially recognised at fair value. Transaction costs are deducted from the amount at initial recognition,

except for financial liabilities at fair value through the profit or loss. The transaction costs payable upon a transfer of a financial

liability are not added to the subsequent valuation of financial liabilities. The financial liabilities are recognised in the balance

sheet when the Group becomes a party to the agreement, out of which the financial liability arises.

Financial assets measured at amortized costs include primarily trade receivables, bank deposits and other cash funds.

Depending on their maturity date, they are included in non-current assets (assets due in more than 1 year after the end of

the reporting period) or current assets (assets due within 1 year after the end of the reporting period). The assets included

in this category are stated at amortised cost using the effective interest method.

Financial liabilities include primarily trade payables, advances received for the returnable packages, leases and loans.

The liabilities included in this category are stated at amortised cost using the effective interest method.

The Group classifies its financial assets/liabilities as at amortised cost only if both of the following criteria are met:

• the asset/liability is held within a business model whose objective is to collect the contractual cash flows, and

• the contractual terms give rise to cash flows that are solely payments of principal and interest.

Financial liabilities include also advances received from customers for the returnable packages (e.g. bottles, crates, pallets,

KEGs). These are recognized at the same moment as the sales transactions. Such liabilities are derecognized when

the returnable packages are returned to the Group. Liabilities from advances received for the returnable packages are

payable on demand and as such are presented within current liabilities undiscounted. Some of returnable packages are never

returned to the Group and advances related to these packages are regularly written-off against profit or loss. Amount of

write-offs is based on management historical experience with the rate of return of particular types of packages.

B-17

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

Except for interest rate swaps for which the hedge accounting is applied, the Group doesn’t have any assets/liabilities

measured at fair value through other comprehensive income.

This category includes derivative instruments in the Group’s balance sheet. The Group holds derivative financial instruments

to hedge its interest rate risk exposures. Financial assets/liabilities within this category serve for the hedging of risks

associated with the cash flows of recognised assets and liabilities and highly probable forecast transactions (cash flow hedges)

and are presented within other receivables/other payables.

At the inception of the hedging relationship there is a formal designation and documentation of the hedging relationship and

the Group’s risk management objective and strategy for undertaking the hedge. The Group also documents the economic

relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of

the hedged item and hedging instrument are expected to offset each other.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently

remeasured to their fair value at the end of each reporting period through other comprehensive income.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is

recognised in the cash flow hedge reserve within equity. The gain or loss relating to the ineffective portion is recognised

immediately in profit or loss, within finance income/costs.

Amount accumulated in the hedging reserve and the cost of hedging reserve are reclassified to profit or loss in the same

period or periods during which the hedged expected future cash flows affect profit or loss.

The fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged

item is more than 1 year after the end of the reporting period.

When the financial asset/liability is derecognized, the cumulative gain or loss previously recognised in other comprehensive

income is reclassified from equity to profit or loss

This category in general includes two groups of assets: financial assets held for trading and financial assets designated initially

at fair value through profit or loss. A financial asset is included in the held for trading category if it was acquired in order to

be sold in the near term, or if it is part of a portfolio in which a pattern or short-term trading exists, or if it is a derivative

instrument with a positive fair value and not designated for hedges.

Assets classified as financial assets designated at fair value through profit or loss are stated as at each reporting date at fair

value, and all gains or losses are recognised as financial income or costs. Derivative financial instruments are stated at fair

value as at the balance sheet date and as at the end of each reporting period based on valuations performed by the banks

realising the transactions which are accepted by the management. Other financial assets designated at fair value through

profit or loss are valued using stock exchange prices, and in their absence, using appropriate valuation techniques, such as:

the use of the prices in recent transactions, comparisons with similar instruments, option valuation models. The fair value of

debt instruments represents primarily future cash flows discounted at the current market interest rate applicable to similar

instruments.

This category includes two groups of liabilities: financial liabilities held for trading and financial liabilities designated at fair

value through profit or loss. Financial liabilities held for trading are liabilities that: have been issued primarily to be transferred

or repurchased in near term or are a component of a portfolio of financial instruments that are managed together with

a purpose of generating a profit from short-term fluctuations in price or trader’s margin or constitute derivative instruments.

Financial liabilities at fair value through profit or loss are measured at their fair value at the end of each reporting period, and

all gains or losses are recognised as finance income or costs. Derivative instruments are measured at fair value at the end of

each reporting period based on valuations performed by the banks realising the transactions which are accepted by

the management. The fair value of debt instruments represents future cash flows discounted at the current market interest

rate applicable to similar instruments.

The Group recognises a loss allowance for expected credit losses (ECL) on financial assets that are measured at amortized

costs. For trade receivables the Group measures loss allowances at an amount equal to lifetime ECLs. For other financial

B-18

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

assets the Group measures loss allowances at amount equal to either 12-month ECL or lifetime ECL (when the credit risk of

an asset has increased significantly).

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when

estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue

cost or effort (mainly historical experience, credit assessment, current and forward-looking information available to

the management).

The Group assumes that the credit risk on financial assets has increased significantly if it is more than 90 days past due.

The Group considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Group

in full, without recourse by the Group to actions such as realising security (if any is held).

Lifetime expected credit losses are those that result from all possible default events over the expected life of a financial

instrument. 12-month expected credit losses constitute the portion of lifetime expected credit losses that represents

the expected credit losses that result from default events on a financial instrument that are possible within the 12 months

after the reporting date.

The Group considers a debt security to have low credit risk when its credit risk rating is equivalent to the globally understood

definition of investment grade. The Group considers this to be Ba1 or higher per rating of agency Moody's.

The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed

to credit risk.

ECLs are a probability-weighted estimates of credit losses. Credit losses are measured as the present value of all cash

shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows

that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset.

The Group derecognises financial assets when (a) the assets are redeemed or the rights to cash flows from the assets

otherwise expired or (b) the Group has transferred the rights to the cash flows from the financial assets or entered into

a qualifying pass-through arrangement while (i) also transferring substantially all risks and rewards of ownership of the assets

or (ii) neither transferring nor retaining substantially all risks and rewards of ownership but not retaining control. Control is

retained if the counterparty does not have the practical ability to sell the asset in its entirety to an unrelated third party

without needing to impose additional restrictions on the sale.

The Group derecognises financial liability (or part of a financial liability) when it extinguishes, i.e. when the obligation is

discharged, cancelled or expires. The difference between the carrying amount of a financial liability (or part of a financial

liability) extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred

or liabilities assumed, is recognised in profit or loss.

Financial assets and liabilities are offset and the net amount reported in the statement of financial position only when there

is a legally enforceable right to offset the recognised amounts, and there is an intention to either settle on a net basis, or to

realise the asset and settle the liability simultaneously. However, the offsetting is not possible if it cannot be legally enforced

in the normal course of business, in the event of default or in the event of insolvency or bankruptcy of the entity or any of

the counterparties.

Inventories are carried at the lower of cost and net realisable value. Cost of inventory is determined on the weighted average

basis. The cost of finished goods and work in progress comprises raw material, direct labour, other direct costs and related

production overheads (based on normal operating capacity). Net realisable value is the estimated selling price in the ordinary

course of business, less the estimated costs of completion and selling expenses.

Inventory is written down to bring the carrying value of inventory to the net realisable value. Inventory write downs are

recognised in the income statement under the “cost of goods sold” item. Reversals of inventory write downs are recorded as

a decrease of the cost of goods sold. The amount of a write down decreases the carrying value of the inventory.

B-19

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

Trade and other financial receivables are carried at amortised cost (i.e. present value discounted using the effective interest

rate) net of impairment write downs.

In cases when the effect of the time value of money is significant, the carrying value of a receivable is determined by

discounting the expected future cash flows to the present value, using a discounted rate that reflects the current market

assessments of the time value of money. Unwinding of the effects of discounting increasing the receivable is recorded as

finance income.

An impairment loss is recognised in profit or loss at the difference between an asset´s carrying amount and the present value

of the estimated cash flows discounted at the asset´s original effective interest rate. For the measurement of loss allowance

for financial assets refer to section 3.5.6.

Non-financial receivables are assessed at each reporting date to determine whether there is an objective evidence of

impairment. Such evidence includes:

• significant financial difficulties of the debtor,

• probability that the debtor will enter bankruptcy or financial reorganisation,

• default or delinquency by the debtor.

Cash and cash equivalents include cash at bank and in hand, as well as highly liquid investments that can be readily convertible

to known amount of cash and are subject to insignificant changes in the value.

The balance of cash and cash equivalents presented in the consolidated statement of cash flows consists of cash at bank and

in hand, as well as short-term deposits with original maturity up to 3 months.

Equity is classified by category and in accordance with binding legal regulations and the Company’s Statute.

Share capital is carried at the amount stated in the Statute and in the National Court Register.

Declared but unpaid capital contributions are recorded as unpaid share capital. Treasury shares and unpaid share capital are

deducted from the Company’s equity.

Other elements of equity are: Share premium and capital reorganisation reserve, Other reserves, Foreign currency translation

reserve, Own shares, Retained earnings and Non-controlling interest. Balance of the Foreign currency translation reserve is

adjusted for exchange differences arising from the translation of financial statements of subsidiaries with functional currency

different from Group’s presentation currency.

Own shares acquired by the Company for cancellation, in accordance with the provisions of the Business Corporation Act, are

recorded at cost as a negative amount as a separate component of equity. Own shares of the Company acquired by

RADENSKA d.o.o. are recorded at cost as a negative amount as a separate component of equity.

Retained earnings/Accumulated deficit consist of accumulated profit or uncovered loss from previous years and

the profit/loss for the period.

Dividends are recognised as liabilities in the period in which they were approved.

Distribution fund was intended for the distribution to the owners of the Company.

Non-controlling interest is measured:

• based on the share on the acquired net identifiable assets; and

• subsequently increased/decreased by non-controlling interest’s share of profit, dividends paid, share in other

comprehensive income and effects of changes in ownership.

B-20

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

At initial recognition, all bank credits and loans are recorded at their fair value, which corresponds to the received cash funds,

less the costs of obtaining the credit or loan.

After their initial recognition, interest bearing credits and loans are stated at amortised cost by applying the effective interest

rate method.

Amortised cost is determined by taking into account the costs of obtaining the credit or loan, as well as discounts and bonuses

received or settlement fees charged at the settlement of the liability.

Financial liabilities constitute a current obligation arising out of past events, the fulfilment of which is expected to result in

an outflow of cash or other financial assets.

Financial liabilities other than financial liabilities stated at fair value through profit or loss are measured at amortised cost

(i.e. discounted using the effective interest rate).

Exchange rate differences resulting from the balance sheet remeasurement of trade payables are recognised in cost of sales.

Non-financial current liabilities are measured at amounts due.

Provisions are created when the Group has a present obligation (legal or constructive) arising out of past events, and when

it is likely that the fulfilment of this obligation will result in an outflow of economic benefits, and when the amount of

the obligation can be reliably measured. If the Group expects that the costs covered by the provision will be refunded, for

example based on an insurance policy, then the refund is recognised as a separate asset, but only if it is virtually certain that

the refund will be received. The costs relating to a given provision are presented in the income statement net of any refunds.

If the time value of money is material, the carrying amount of the provision is determined by discounting the forecasted

future cash flows to their present values using a pre-tax discount rate reflecting the current market assessments of the time

value of money and any risks associated with the given obligation. Subsequent increases of the provision due to unwinding

of discount are presented as interest expense.

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity or to

a state pension plan. Obligations for contributions to defined contribution plans are expensed as the related service is

provided. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient

assets to pay all employees the benefits relating to employee service in the current and prior periods.

A defined benefit plan is a pension plan that is not a defined contribution plan. The liability recognised in respect of defined

benefit pension plans represents the amount of estimated future benefit that employees have earned in the current and

prior periods, net of the fair value of any plan assets. The defined benefit obligation is calculated annually by independent

actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by

discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in

the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the corresponding

pension obligation.

Material actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or

credited to other comprehensive income in the period in which they arise.

Past-service costs are recognised immediately in profit or loss.

B-21

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or

whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination

benefits at the earlier of the following dates:

• when the Group can no longer withdraw the offer of those benefits; and

• when the Group recognises costs for a restructuring that is within the scope of IAS 37 and the restructuring involves

the payment of termination benefits.

Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognised

as an expense, with a corresponding increase in equity, over the vesting period of the awards. The amount recognised as

an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions

are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related

service and non-market performance conditions at the vesting date. For share-based payment awards with non-vesting

conditions, the grant-date fair value of the share-based payment is measured to reflect such conditions and there is

no true-up for differences between expected and actual outcomes.

Revenue is recognised at the amount of the transaction price (which excludes estimates of variable consideration), and when

the amount of revenue can be measured reliably. Revenue is measured excluding value added tax (VAT), excise tax and

rebates (discounts, bonuses and other price reductions, i.e. possible price reductions assumed by the management).

The amount of revenue is measured at the fair value of the consideration received or receivable. Revenue is stated at net

present value when the effect of the time value of money is material (in case of payment after 360 days, such transactions

contain a significant financing component). If revenue is measured at discounted amount, the discount is recognised using

the effective interest method as an increase in receivables, and as financial income in profit or loss.

Foreign exchange rate differences resulting from the realisation or the remeasurement of trade receivables are recognised

in profit or loss.

Revenue is also recognised in accordance with the criteria specified below.

Recognition, measurement, presentation or disclosure of Group's revenue doesn't bear any significant judgements or

assumptions. Group's transactions are rather clear.

Revenue is recognised when the performance obligation is satisfied and control passes to the customer, and when

the amount of revenue may be measured reliably. The amount of revenue recognised is adjusted for expected discounts,

bonuses and other price reductions which are determined based on actual deliveries for the year and the contracted terms.

Revenue from the provision of services (mainly transportation services) is recognised when the service was performed with

reference to the percentage of completion of the service obligation.

Franchise fees are recognized on monthly basis based on contracts with franchisants. Variable part of revenue is recognized

to extend to which it is probable that the franchisant will meet the contracted turnover.

Interest income is recognised gradually using the effective interest method.

B-22

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

The Group recognises government grants once there is a reasonable assurance that the subsidy will be received and that all

of the related conditions will be complied with. Both of the above criteria must be met for a government subsidy to be

recognised.

The Group may be entitled to claim special tax deductions for investments in qualifying assets or in relation to qualifying

expenditure. The Group accounts for such allowances as tax credits, reducing the income tax payable and current tax expense.

A deferred tax asset is recognised for unclaimed tax credits.

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the extent

that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised

in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted as at the balance

sheet date in the countries where the Company and its subsidiaries operate and generate taxable income. Management

periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to

interpretation. Liabilities are recorded for income tax positions that are determined by management as more likely than not

to result in additional taxes being levied if the positions were to be challenged by tax authorities.

Deferred income tax is recognised, using the balance sheet liability method, on tax loss carry forwards and temporary

differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial

statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred

income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business

combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is

determined using tax rates (and laws) that have been enacted or substantively enacted at the balance sheet date and are

expected to apply when the temporary differences will reverse or the tax loss carry forwards will be utilised.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available

against which the temporary differences can be utilised.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries, joint ventures and equity

accounted investees, except for deferred income tax liability where the timing of the reversal of the temporary difference is

controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets

against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same

taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle

the balances on a net basis.

Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted

average number of ordinary shares in issue during the year excluding ordinary shares purchased by the Company and held as

treasury shares.

Consolidated statement of profit or loss, Consolidated statement of other comprehensive income and accompanying Notes

are divided into continuing and discontinued operations due to sale of Hoop Polska and Megapack in 2019. For more

information refer to section 4.29.

Several standards, amendments and interpretations apply for the first time in 2020, but do not have any material impact on

the Group’s financial statements.

B-23

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

Since some of the information contained in the consolidated financial statements cannot be measured precisely, the Group´s

management must perform estimates to prepare the consolidated financial statements. Management verifies the estimates

based on changes in the factors considered at their calculation, new information or past experience. For this reason,

the estimates made as at 31 December 2020 may be changed in the future. The main estimates pertain to the following

matters:

Estimates

Type of information

Section

Impairment of CGU, goodwill and

individual tangible and intangible assets

Key assumptions used to determine the recoverable amount: Impairment

indicators, used models, discount rates, growth rates.

4.10.1,

4.11.1

Useful life of trademarks

The history of the trademark on the market, market position, useful life of

similar products, the stability of the market segment, competition.

3.5.4, 4.11

Deferred tax asset from tax losses

Historical experience, current and forward-looking information available to

the management.

4.8

Income tax

Assumptions used to recognise deferred income tax assets (other than

Deferred tax asset from tax losses).

4.8

Impairment of receivables

Historical experience, credit assessment, current and forward-looking

information available to the management.

4.14

Whole Group was impacted by COVID-19 with significant negative impact mainly in 2Q20 and 4Q20. There wasn’t any impact

on the judgements applied and estimates made as of 31 December 2019. The future development however remains highly

unsure due to reasons described in the Note 4.31 (Subsequent events). Valuation of Group’s CGU and individual assets is

highly dependent on projected discount rates and business models which reflected the COVID-19 implications on the Group’s

activities. For results of impairment testing refer to Notes 4.10.1 and 4.11.1.

The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

The Board of Directors approved the present consolidated financial statements for publication on 14 April 2021.

B-24

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

The Board of Directors of Kofola ČeskoSlovensko a.s. is the chief operating decision maker (“CODM”) responsible for

operational decision-making and uses segment results to decide on the allocation of resources to the segments and to assess

segments’ performance. After the sale of Hoop Polska Sp. z o.o., management has decided to adjust the structure of segment

information. Based on this assessment, three main business segments are presented within these financial statements. These

are:

o CzechoSlovakia,

o Adratic,

o Fresh & Herbs.

Division of particular Group companies between the segments is outlined in the section 2.2.

For presented periods, the segment information contains only values related to the continuing operations.

Furthermore, CODM monitors revenue, but not a profit measure, from the following product lines:

o Carbonated beverages,

o Non-carbonated beverages (incl. UGO fresh bottles),

o Waters,

o Syrups,

o Fresh bars & Salads,

o Other (e.g. energy drinks, isotonic drinks, tea, coffee, transportation and other services).

In compliance with the relevant requirements of IFRS 8 Operating Segments, the management presents also the distribution

of revenues and non-current assets (other than financial instruments and deferred tax assets) distributed into geographical

areas.

The Group applies the same accounting methods to all segments. These policies are also in line with the accounting methods

used in the preparation of these consolidated financial statements. Transactions between segments are eliminated in

the consolidation process.

Column Other in the segment information below represents a reconciling item to get to the consolidated financial statements.

The Group did not identify any customer in the period ended 31 December 2020 and in the comparative period ended

31 December 2019 that generated more than 10% of the Group’s consolidated revenue.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-25

1.1.2020 – 31.12.2020

CzechoSlovakia

Adriatic

Fresh & Herbs

Other*

Subtotal

Consolidation

adjustments

Total

CZK´000

Revenue

4,601,994

1,094,933

599,926

6,296,853

(125,398)

6,171,455

External revenue – excl. services

4,474,945

1,079,998

556,629

6,111,572

External revenue – services

32,112

13,652

14,119

59,883

Inter-segment revenue

94,937

1,283

29,178

125,398

(125,398)

Operating expenses

(4,068,325)

(1,074,392)

(860,091)

(912)

(6,003,720)

125,398

(5,878,322)

Related to external revenue

(3,973,388)

(1,073,109)

(830,913)

(912)

(5,878,322)

Related to inter-segment revenue

(94,937)

(1,283)

(29,178)

(125,398)

125,398

Operating profit/(loss)

533,669

20,541

(260,165)

(912)

293,133

Finance income/(costs), net

(75,949)

12,670

(18,712)

817

(81,174)

(20,261)

(101,435)

- within segment

(92,958)

1,852

(11,146)

817

(101,435)

- inter-segment

17,009

10,818

(7,566)

20,261

(20,261)

Profit/(loss) before income tax

457,720

33,211

(278,877)

(95)

211,959

(20,261)

191,698

Income tax (expense)/benefit

(108,223)

(22,409)

4,733

(125,899)

Profit/(loss) for the period

349,497

10,802

(274,144)

(95)

86,060

(20,261)

65,799

EBITDA**

900,353

132,200

(106,028)

(912)

925,613

One-offs (4.25)

49,170

(744)

56,214

104,640

Adjusted EBITDA (4.25)

949,523

131,456

(49,814)

(912)

1,030,253

* Other doesn’t represent a separate segment, but reconciling item to the Consolidated statement of profit or loss.

** EBITDA refers to operating profit/(loss) plus depreciation and amortisation.

Other segment information

CzechoSlovakia

Adriatic

Fresh & Herbs

Other

Subtotal

Consolidation

adjustments

Total

CZK´000

Additions to PPE and Intangible assets*

361,207

98,628

124,173

584,008

Depreciation and amortisation

366,684

111,659

154,137

632,480

Other Impairment losses

47,320

15,088

59,882

122,290

Other Impairment losses reversals

(18,899)

(3,249)

(3,892)

(26,040)

Provisions - Increase due to creation

54,549

8,204

8,581

71,334

Provisions - Decrease due to usage/release

(95,490)

(13,315)

(8,068)

(116,873)

* excluding acquisitions, including lease additions

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-26

1.1.2019 – 31.12.2019

CzechoSlovakia

Adriatic

Fresh & Herbs

Other*

Subtotal

Consolidation

adjustments

Total

CZK´000

Revenue

4,571,010

1,261,419

723,537

6,555,966

(146,499)

6,409,467

External revenue – excl. services

4,402,203

1,250,238

689,026

6,341,467

External revenue – services

32,242

7,734

28,024

68,000

Inter-segment revenue

136,565

3,447

6,487

146,499

(146,499)

Operating expenses

(4,005,207)

(1,164,308)

(845,547)

(1,143)

(6,016,205)

146,499

(5,869,706)

Related to external revenue

(3,868,642)

(1,160,861)

(839,060)

(1,143)

(5,869,706)

Related to inter-segment revenue

(136,565)

(3,447)

(6,487)

(146,499)

146,499

Operating profit/(loss)

565,803

97,111

(122,010)

(1,143)

539,761

Finance income/(costs), net

(70)

7,129

(17,758)

(538)

(11,237)

(129,776)

(141,013)

- within segment

(127,083)

(4,428)

(8,964)

(538)

(141,013)

- inter-segment

127,013

11,557

(8,794)

129,776

(129,776)

Profit/(loss) before income tax

565,733

104,240

(139,768)

(1,681)

528,524

(129,776)

398,748

Income tax (expense)/benefit

(120,487)

(27,726)

2,160

(146,053)

Profit/(loss) for the period

445,246

76,514

(137,608)

(1,681)

382,471

(129,776)

252,695

EBITDA**

900,676

197,369

5,226

(1,143)

1,102,128

One-offs (4.25)

12,495

(6,070)

10,574

267

17,266

Adjusted EBITDA (4.25)

913,171

191,299

15,800

(876)

1,119,394

* Other doesn’t represent a separate segment, but reconciling item to the consolidated statement of profit or loss.

** EBITDA refers to operating profit/(loss) plus depreciation and amortisation.

Other segment information

CzechoSlovakia

Adriatic

Fresh & Herbs

Other

Subtotal

Consolidation

adjustments

Total

CZK´000

Additions to PPE and Intangible assets*

437,239

144,837

311,211

893,287

Depreciation and amortisation

334,873

100,258

127,236

562,367

Other Impairment losses

20,334

8,850

2,245

31,429

Other Impairment losses reversals

(16,203)

(817)

(1,437)

(18,457)

Provisions - Increase due to creation

95,866

20,175

8,069

124,110

Provisions - Decrease due to usage/release

(69,136)

(11,433)

(5,691)

(86,260)

* excluding acquisitions, including lease additions

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-27

1.1.2020 - 31.12.2020

Carbonated

beverages

Non-carbonated

beverages

Waters

Syrups

Fresh bars

& Salads

Other

Total

CZK´000

Revenue

2,384,469

570,757

2,013,318

494,332

236,403

472,176

6,171,455

External revenue – excl. services

2,384,469

570,757

2,013,318

494,332

226,778

421,918

6,111,572

External revenue – services

9,625

50,258

59,883

1.1.2019 - 31.12.2019

Carbonated

beverages

Non-carbonated

beverages

Waters

Syrups

Fresh bars

& Salads

Other

Total

CZK´000

Revenue

2,671,735

681,324

1,759,369

466,498

420,782

409,759

6,409,467

External revenue – excl. services

2,671,735

681,324

1,759,369

466,498

393,985

368,556

6,341,467

External revenue – services

26,797

41,203

68,000

1.1.2020 - 31.12.2020

Czech Republic

Slovakia

Slovenia

Croatia

Poland

Other

Total

CZK´000

Revenue

3,330,234

1,636,075

713,921

300,760

78,436

112,029

6,171,455

External revenue – excl. services

3,303,069

1,618,631

700,306

300,723

78,436

110,407

6,111,572

External revenue – services

27,165

17,444

13,615

1,622

59,883

1.1.2019 - 31.12.2019

Czech Republic

Slovakia

Slovenia

Croatia

Poland

Other

Total

CZK´000

Revenue

3,307,104

1,723,849

799,577

371,190

65,795

141,952

6,409,467

External revenue – excl. services

3,262,101

1,708,586

791,878

371,155

65,795

141,952

6,341,467

External revenue – services

45,003

15,263

7,699

68,000

Non-current assets (excluding financial assets and deferred tax assets)

Czech Republic

Slovakia

Slovenia

Croatia

Poland

Other

Total

CZK´000

31.12.2020

3,396,203

1,096,053

651,588

195,352

194,564

5,533,760

31.12.2019

2,179,259

1,008,033

644,678

191,099

235,760

4,258,829

Seasonality is associated with periodic deviations in demand and supply and has certain effect on Group’s general sales trends. Beverage sales peak appears in the 2nd and 3rd quarter of

the year. This is caused by increased drink consumption in the spring and summer months. In the year ended 31 December 2020, about 20.9% (20.1% in 2019) of revenue from continuing

operations was earned in the 1st quarter, with 23.7% (27.2% in 2019), 33.7% (29.0% in 2019) and 21.7% (23.7% in 2019) of the annual consolidated revenue earned in the 2nd, 3rd and 4th

quarters, respectively. Shares in particular quarters of 2020 were significantly influenced by COVID-19 pandemic.

The Group's results are to certain extent dependent on economic cycles, in particular on fluctuations in demand and in the prices of raw materials, so-called “commodities”.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-28

Revenue streams, Timing of revenue recognition

2020

2019

CZK´000

Revenue from contracts with customers

- Sales of finished products/goods/materials (transferred at a point in time)

6,111,572

6,341,467

- Sales of transportation services (transferred over time)

12,915

11,659

- Franchise licences (transferred over time)

9,621

27,079

- Sales of other services (transferred over time)

37,347

29,262

Total revenue

6,171,455

6,409,467

Revenue from contracts with customers is represented by finished products, goods and materials sold and is recognized at

a point of time. For further allocation between particular segments refer to section 4.1.

Loss allowances on receivables arising from contracts with customers are presented in section 4.14.

Group doesn’t have any material contract assets, contract liabilities or performance obligations satisfied (or partially satisfied)

in previous periods.

Expenses by nature

2020

2019

CZK´000

Depreciation of Property, plant and equipment and amortisation of Intangible assets

632,480

562,367

Employee benefits expenses (i)

1,320,151

1,379,637

Consumption of materials and energy, cost of goods and materials sold

2,562,300

2,635,549

Services

1,089,350

1,150,940

Rental costs

74,675

79,783

Taxes and fees

76,058

62,730

Insurance costs

16,037

12,836

Inventory write-down/(back)

9,146

1,653

Change in allowance to receivables

65,660

18,652

Change in finished products and work in progress

(19,840)

(15,556)

Other costs

3,326

11,006

Total expenses by nature*

5,829,343

5,899,597

Depreciation recognized in Other operating expenses

(12,432)

(10,390)

Reconciliation of expenses by nature to expenses by function

5,816,911

5,889,207

Cost of sales

3,349,540

3,344,886

Selling, marketing and distribution costs

2,041,718

2,090,502

Administrative costs

425,653

453,819

Total costs of products and services sold, merchandise and materials, sales costs and

administrative costs

5,816,911

5,889,207

* Excluding Other operating expenses (except for depreciation) and Impairment.

Higher depreciation and amortisation expense are connected with capital expenditures realized in 2019 and 2020, but also

with brands recognized on the acquisition of subsidiaries and depreciation and amortisation from acquired subsidiaries.

Employee benefits expenses decreased mainly due to lower provisions for bonuses, lower liabilities for untaken holiday,

savings resulting from reaction to COVID-19 and option scheme (year 2019 was the last year of the programme). Direct

material costs, costs of goods sold, energy costs and services decreased mainly due to COVID-19 pandemic situation, material

costs decreased also due to lower PET prices. Taxes and fees increased as a result of higher excise duties on sugar in

the Adriatic region. COVID-19 lead also to higher loss allowance to receivables.

(i) Employee benefits expenses

Employee benefits expenses

2020

2019

CZK´000

Salaries

984,660

1,026,475

Social security and other benefit costs (including healthcare insurance)

153,340

171,258

Pension benefit plan expenses

182,151

181,904

Total employee benefits expenses

1,320,151

1,379,637

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-29

Other operating income

2020

2019

CZK´000

Net gain from the sale of PPE and Intangible assets

10,852

23,144

Release of impairment of Property, plant and equipment

322

Income from lease

7,209

Reinvoiced payments

1,968

11,626

Subsidies, grants and government support

37,075

588

Rent discounts*

8,228

Compensation claims

6,066

5,680

Penalties and compensation for damages

2,505

615

Other tax income

3,526

3,505

Write-off of advances received for the returnable packages

1,597

9,642

Release of accruals

4,133

Other

12,732

9,608

Total other operating income

84,871

75,750

* Further information in section 4.30 (COVID-19).

In 2020, the Subsidies, grants and government support contain mainly the support related to COVID-19 pandemic situation.

Other operating expenses

2020

2019

CZK´000

Net loss from disposal of PPE and Intangible assets

123

115

Costs connected with inactive plant in Poland*

16,237

20,134

Impairment of PPE

1,469

858

Provided donations, sponsorship

4,750

4,408

Penalties and damages

1,241

811

Advisory services

13,915

21,797

Costs on integration of new subsidiaries

7,352

Restructuring costs**

37,384

Costs on support of the parties impacted by COVID-19

5,960

Other

13,512

8,126

Total other operating expenses

101,943

56,249

* Mainly depreciation expense, property taxes, consumption of energy. ** Mainly payroll expenses.

Finance income

2020

2019

CZK´000

Interest from:

– bank deposits

141

– bonds

362

2,431

– receivables

1,308

Exchange gains

17,003

312

Derivatives

2,661

Other

444

525

Total finance income

19,171

6,070

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-30

Finance costs

2020

2019

CZK´000

Interest from:

– bank loans and credits

89,812

105,018

– lease

13,621

11,110

– other

177

280

Exchange losses

2,702

17,375

Bank costs and charges

9,521

12,061

Derivatives

4,105

Other

668

1,239

Total finance costs

120,606

147,083

Main income tax elements for the twelve-month period ended 31 December 2020 and 31 December 2019 were as follows:

Income tax

2020

2019

CZK´000

Current income tax expense/(benefit)

114,541

128,818

Current income tax on profits for the year

112,186

126,816

Adjustments for current income tax of prior periods

1,073

Other

1,282

1,935

Deferred income tax expense/(benefit)*

11,358

17,235

Related to arising and reversing of temporary differences

1,701

1,178

Related to tax losses

9,657

16,057

Income tax expense/(benefit)

125,899

146,053

* Deferred tax recognized in the profit or loss statement doesn’t reconcile to the difference between the values recognized in the statement of financial position which is caused mainly

by the deferred tax arising on the business combination and foreign exchange differences arising on consolidation of foreign subsidiaries.

The income tax rate applicable to the majority of the Group’s 2020 and 2019 income is 19%.

Income tax elements for the twelve-month period ended 31 December 2020 and 31 December 2019 were as follows:

Income tax recognised directly in equity

2020

2019

CZK´000

Deferred income tax

(2,187)

1,084

Tax from Cash flow hedges

(2,187)

1,084

Income tax recognised directly in equity

(2,187)

1,084

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-31

Effective tax

2020

2019

CZK´000

Profit/(loss) before income tax

191,698

398,748

Tax at the rate of 19% valid in the Czech Republic

(36,423)

(75,762)

Tax effect of:

Non-deductible expenses

(40,633)

(33,060)

Non-recognition of deferred tax assets

(60,268)

(35,229)

Investment incentives

1,261

2,042

Non-taxable income

4,674

420

Current tax of prior periods

(1,324)

(30)

Deferred tax adjustments relating to prior periods

3,870

1,562

Previously unrecognized deferred tax asset/liability

7,354

Difference in tax rates of subsidiaries operating in other jurisdictions

(4,049)

(1,904)

Other

(361)

(4,092)

Income tax expense

(125,899)

(146,053)

Effective tax rate

65.7%

36.6%

The deferred tax asset was not recognized on tax losses for which the utilisation in future periods is not probable according

to the tax planning of the particular Group companies.

31.12.2020

Deferred tax assets and liabilities

Deferred tax

assets

Deferred tax

liabilities

Net amount

CZK´000

Temporary differences attributable to:

Property, plant and equipment and Intangible assets

(346,692)

Inventories

3,239

Receivables

13,987

Tax losses

57,605

Trade and other liabilities and provisions

20,404

Other

5,546

Deferred tax assets/(liabilities)

100,781

(346,692)

(245,911)

Presentation offsetting

(60,708)

60,708

Deferred tax assets/(liabilities)

40,073

(285,984)

(245,911)

31.12.2019

Deferred tax assets and liabilities

Deferred tax

assets

Deferred tax

liabilities

Net amount

CZK´000

Temporary differences attributable to:

Property, plant and equipment and Intangible assets

(261,814)

Inventories

1,196

Receivables

6,797

Tax losses

64,030

Trade and other liabilities and provisions

33,319

Other

4,423

Deferred tax assets/(liabilities)

109,765

(261,814)

(152,049)

Presentation offsetting

(70,877)

70,877

Deferred tax assets/(liabilities)

38,888

(190,937)

(152,049)

The deferred tax liabilities increased mainly as a result of the business combination.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-32

Based on management assessment and tax projections, the Group didn’t recognize as of 31 December 2020 the deferred tax

asset of CZK 100,605 thousand (as of 31 December 2019: CZK 78,844 thousand) that arose from tax losses. Tax losses can be

utilized up to 2025 except for RADENSKA where the tax losses can be carried into the future periods without time limitation.

The basic earnings per share ratio is calculated by dividing the profit/(loss) for the period attributable to owners of

Kofola ČeskoSlovensko a.s. by the weighted average number of ordinary shares outstanding during the period.

The diluted earnings per share ratio is calculated by dividing the profit/(loss) for the period attributable to ordinary

shareholders (after deducting the interest on redeemable preferred shares convertible to ordinary shares) by the weighted

average number of ordinary shares outstanding during the period (adjusted by the effect of diluting options and own shares

not subject to dividends). The diluted earnings per share ratio is not applicable to the Group because it didn’t issue any of

above-mentioned financial instruments.

Information used to calculate basic earnings per share is presented below:

Weighted average number of ordinary shares

2020

2019

Pcs

Weighted average number of ordinary shares for EPS calculation

22,291,948

Effect of own shares in possession of the Company

(1,280)

Weighted average number of ordinary shares used to calculate basic earnings per share

22,290,668

22,291,948

Based on the above information, the basic earnings per share amounts to:

Basic earnings per share (continuing operations)

2020

2019

Profit/(loss) for the period attributable to owners of Kofola ČeskoSlovensko a.s. (CZK´000)

80,518

261,019

Weighted average number of ordinary shares used to calculate basic earnings per share (pcs)

22,290,668

22,291,948

Basic earnings per share attributable to owners of Kofola ČeskoSlovensko a.s. (CZK/share)

3.61

11.71

Basic earnings per share (continuing and discontinued operations)

2020

2019

Profit/(loss) for the period attributable to owners of Kofola ČeskoSlovensko a.s. (CZK´000)

80,518

284,396

Weighted average number of ordinary shares used to calculate basic earnings per share (pcs)

22,290,668

22,291,948

Basic earnings per share attributable to owners of Kofola ČeskoSlovensko a.s. (CZK/share)

3.61

12.76

The additions to Property, plant and equipment were of CZK 921,704 thousand in the year ended 31 December 2020

(including the net book value of assets arising due to acquisition of subsidiaries and lease additions).

The most significant additions realized by the Group in 2020 were represented by assets arising from the acquisition of

subsidiaries – in amount of CZK 355,510 thousand and investments into the production machinery, warehouse, returnable

packages and new premises capitalized under IFRS 16 (leases).

The additions to Property, plant and equipment were of CZK 885,659 thousand in the year ended 31 December 2019

(including the net book value of assets arising due to acquisition of subsidiaries and lease additions). Main disposal consisted

of items of Property, plant and equipment attributable to Hoop Polska with the carrying amount of CZK 192,735 thousand.

The most significant additions realized by the Group in 2019 were represented by assets arising as a result of the initial

application of IFRS 16 (mostly leased premises for Fresh and Salad bars and leased administrative building), investments into

the production hall and machinery, vehicles, the returnable packages and assets acquired with Espresso s.r.o.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-33

Movements in Property, plant and

equipment (PPE)

Land

Buildings and

constructions

Plant and

equipment

Vehicles

Leasehold

improvement

Returnable

packages

Other non-current

assets

Non-current assets

under construction,

Advances

Total

1.1.2020 - 31.12.2020

CZK´000

Cost - opening

227,355

2,310,108

4,036,463

465,547

87,978

684,836

4,262

119,800

7,936,349

Acquisition of subsidiaries

30,082

404,889

278,391

57,282

32,644

49,801

853,089

Additions

54,460

225,093

2,625

17,975

66,650

428

62,370

429,692

Transfers from non-current assets

under construction

9,094

47,604

1,922

159

(58,819)

Lease additions

9,563

76,731

3,479

46,729

136,502

Other increases

4,067

Sale

(278)

(22,032)

(27,769)

(19,903)

(17,152)

(14)

(35)

(87,183)

Disposal

(13,485)

(83,837)

(26,794)

(1,685)

(44,194)

(169,995)

Reclassification to other categories

32,702

(8,924)

(23,778)

Other decreases

(2,885)

(324)

(1,235)

(3,635)

(97)

(8,176)

Exchange difference

4,783

18,202

74,569

5,020

8,492

1,216

112,326

Cost - closing

271,596

2,835,082

4,586,371

529,271

97,267

731,867

4,759

150,458

9,206,671

Accumulated depreciation - opening

(402)

(695,388)

(3,137,071)

(287,308)

(40,226)

(551,421)

(3,312)

(20,829)

(4,735,957)

Acquisition of subsidiaries

(810)

(209,740)

(228,759)

(34,378)

(23,744)

(497,431)

Depreciation charge

(972)

(125,549)

(285,341)

(70,040)

(11,029)

(60,055)

(579)

(553,565)

Sale

6,331

23,881

17,442

14,275

61,936

Disposal

6,999

83,426

24,058

1,685

42,495

158,663

Reclassification to other categories

(29,622)

8,793

20,829

Other movements

901

(504)

636

(1,097)

(64)

Exchange difference

(2)

(17,167)

(51,777)

(2,607)

(6,626)

(32)

(78,211)

Accumulated depreciation - closing

(2,186)

(1,033,613)

(3,625,767)

(352,197)

(40,777)

(586,173)

(3,916)

(5,644,629)

Impairment allowance - opening

(71,527)

(989)

(858)

(73,374)

Acquisition of subsidiaries

(148)

Impairment loss

(8,813)

(36,264)

(686)

(45)

(45,808)

Disposal

148

Release

1,787

858

2,645

Exchange difference

3,195

(130)

3,065

Impairment allowance - closing

(77,145)

(35,596)

(686)

(45)

(113,472)

Net book value - opening

226,953

1,543,193

898,403

178,239

47,752

133,415

950

98,113

3,127,018

Net book value - closing

269,410

1,724,324

925,008

177,074

56,490

145,008

843

150,413

3,448,570

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-34

Movements in Property, plant and

equipment (PPE)

Land

Buildings and

constructions

Plant and

equipment

Vehicles

Leasehold

improvement

Returnable

packages

Other non-current

assets

Non-current assets

under construction,

Advances

Total

1.1.2019 - 31.12.2019

CZK´000

Cost - opening

234,714

2,257,230

4,707,361

457,497

78,417

713,450

4,594

107,990

8,561,253

Acquisition of subsidiaries

4,682

23,326

9,107

1,507

38,622

Additions

8,420

58,390

297,045

1,096

9,645

34,502

264

57,368

466,730

Transfers from non-current assets

under construction

2,668

18,482

37,055

1,507

879

(308)

(60,283)

Lease additions

(on initial application of IFRS 16)

1,069

173,660

6,195

180,924

Lease additions (for the period)

2,546

83,472

9,627

130,942

959

227,546

Other increases

294

Sale

(2,251)

(189,866)

(45,385)

(9,749)

(247,251)

Disposal

(2,150)

(235,874)

(40,738)

(964)

(41,920)

(28)

(321,674)

Reclassification to other categories

(513)

513

Other decreases

12,491

(11,152)

(513)

(208)

(3,929)

(3,311)

Disposal of subsidiary

(19,971)

(280,843)

(583,199)

(43,202)

(7,589)

(216)

15,267

(919,753)

Exchange difference

(2,091)

(13,055)

(23,542)

(5,277)

(3,944)

(44)

921

(47,031)

Cost - closing

227,355

2,310,108

4,036,463

465,547

87,978

684,836

4,262

119,800

7,936,349

Accumulated depreciation - opening

(650,939)

(3,696,782)

(345,328)

(31,740)

(563,579)

(3,237)

(5,291,605)

Acquisition of subsidiaries

(203)

(20,377)

(7,583)

(28,163)

Depreciation charge

(403)

(89,868)

(284,664)

(60,443)

(9,340)

(47,538)

(346)

(492,602)

Depreciation charge Hoop Polska

(1.1.-18.3.2019)

(813)

(2,505)

(211)

(31)

(3,560)

Sale

1,181

182,959

44,573

9,162

237,875

Disposal

545

235,125

38,622

856

41,776

316,952

Reclassification to other categories

(17)

Other movements

(12,491)

(2,044)

144

(14,314)

Disposal of subsidiary

50,652

425,999

38,315

5,566

216

(20,829)

499,919

Exchange difference

6,548

25,201

4,687

(2)

3,079

39,541

Accumulated depreciation - closing

(402)

(695,388)

(3,137,071)

(287,308)

(40,226)

(551,421)

(3,312)

(20,829)

(4,735,957)

Impairment allowance - opening

(10,614)

(194,528)

(89,044)

(2,710)

(1,093)

(7,015)

(4,690)

(309,694)

Impairment loss

(858)

Disposal

10,052

Disposal of subsidiary

10,617

122,998

77,976

2,710

1,093

7,015

4,690

227,099

Exchange difference

(3)

Impairment allowance - closing

(71,527)

(989)

(858)

(73,374)

Net book value - opening

224,100

1,411,763

921,535

109,459

46,677

148,778

(5,658)

103,300

2,959,954

Net book value - closing

226,953

1,543,193

898,403

178,239

47,752

133,415

950

98,113

3,127,018

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-35

The impairment in the amount of CZK 35,525 thousand was charged to the items of Property, plant and equipment related

to the production of UGO bottles (mainly the production line). The recoverable amount was determined as value in use. For

the assumptions refer to section 4.11.1.

The Group has also recognized the impairment to items of Property, plant and equipment retained after the sale of

Hoop Polska (Grodzisk Wielkopolski plant) of CZK 8,814 thousand. The recoverable amount was determined as fair value less

costs of disposal.

In case of Studenac d.o.o., the value of selected items of Property, plant and equipment as of 31 December 2020 were

supported by the external valuation report issued in March 2021.

In 2019, there wasn’t charged any material impairment.

Movements in Intangible assets (IA)

1.1.2020 - 31.12.2020

Goodwill

Patents,

licenses

Software

Trademarks

and other

rights

IA under

development,

Advances

Total

CZK´000

Cost - opening

105,506

2,589

256,336

1,104,088

9,170

1,477,689

Acquisition of subsidiaries

541,373

6,304

13,429

440,107

6,252

1,007,465

Additions

137

16,164

481

1,032

17,814

Transfer from IA under development

8,367

(8,394)

Disposal

(5,464)

Other decreases

(6,900)

Exchange difference

140

(1,797)

2,530

11,063

(145)

11,791

Cost - closing

647,019

7,233

291,362

1,555,766

1,015

2,502,395

Accumulated amortisation - opening

(2,215)

(223,168)

(189,968)

(415,351)

Acquisition of subsidiaries

(6,042)

(12,959)

(4,789)

(23,790)

Amortisation charge

(113)

(16,313)

(64,276)

(80,702)

Disposal

5,464

Exchange difference

1,604

(2,310)

(1,067)

(1,773)

Accumulated amortisation - closing

(6,766)

(249,286)

(260,100)

(516,152)

Net book value - opening

105,506

374

33,168

914,120

9,170

1,062,338

Net book value - closing

647,019

467

42,076

1,295,666

1,015

1,986,243

Of which:

Goodwill

647,019

Intangible assets

1,339,224

The Goodwill consists of the goodwill from acquisition of PINELLI spol. s r.o. in April 2011, goodwill from acquisition of

production part of Klimo s.r.o. by Kofola a.s. (Czech Republic) in 2006, goodwill from acquisition of LEROS s.r.o. in March 2018,

goodwill from acquisition of Minerálka s.r.o. in June 2018, goodwill from acquisition of Espresso s.r.o. in July 2019, goodwill

from acquisition of F.H.Prager s.r.o. in January 2020 and goodwill from acquisition of ONDRÁŠOVKA a.s. and

Karlovarská Korunní s.r.o. in April 2020.

Amortisation of trademarks with finite useful lives is charged to Selling, marketing and distribution costs. The main

trademarks are not amortized – such trademarks with indefinite useful lives are tested for impairment.

The value of trademarks includes, among others, the value of such trademarks as: Kofola, Vinea, Radenska, Citrocola,

Semtex energy drink, Erektus, UGO, Premium Rosa, Leros, Café Reserva, Prager ciders and lemonades, Ondrášovka and

Korunní.

In 2020, the additions to intangible assets were of CZK 1,001,489 thousand (including the net book value of assets arising due

to acquisition of subsidiaries). The most significant additions were connected with the acquisition of subsidiaries (Goodwill

of CZK 541,373 thousand, Brands and other intangible assets of CZK 442,302 thousand) and investments to SAP.

In the year ended 31 December 2019, the additions to intangible assets were of CZK 97,378 thousand (including the net book

value of assets arising due to acquisition of subsidiaries). The most significant additions were connected with acquisition of

Espresso s.r.o. and investment to SAP.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-36

Movements in Intangible assets (IA)

1.1.2019 - 31.12.2019

Goodwill

Patents,

licenses

Software

Trademarks

and other

rights

IA under

development,

Advances

Total

CZK´000

Cost - opening

93,467

18,030

239,433

1,760,590

9,007

2,120,527

Acquisition of subsidiary

12,091

2,200

67,200

81,491

Additions

157

13,312

298

4,308

18,087

Transfer from IA under development

3,488

(3,488)

Sale

(11)

(48)

(59)

Disposal

(105)

Other decreases

(625)

Disposal of subsidiary

(15,427)

(989)

(718,699)

(27)

(735,142)

Exchange difference

(209)

(26)

(992)

(5,253)

(5)

(6,485)

Cost - closing

105,506

2,589

256,336

1,104,088

9,170

1,477,689

Accumulated amortisation - opening

(17,401)

(208,019)

(135,022)

(360,442)

Acquisition of subsidiary

(2,200)

Amortisation charge

(119)

(14,738)

(54,908)

(69,765)

Sale

Disposal

105

Disposal of subsidiary

15,266

735

16,001

Exchange difference

944

(38)

945

Accumulated amortisation - closing

(2,215)

(223,168)

(189,968)

(415,351)

Impairment allowance - opening

(85)

(135)

(611,859)

(15)

(612,094)

Disposal of subsidiary

135

611,641

611,876

Exchange difference

218

Impairment allowance - closing

Net book value - opening

93,467

544

31,279

1,013,709

8,992

1,147,991

Net book value - closing

105,506

374

33,168

914,120

9,170

1,062,338

Of which:

Goodwill

105,506

Intangible assets

956,832

In the impairment testing of trademarks and goodwill, management of the Group has decided to use value in use method.

For the purpose of market valuation, the trademark royalty’s method was used (value in use method). Due to the fact that

management is not aware of comparable market transactions, the calculation of value in use for trademarks and goodwill is

based on discounted free cash flows and estimated cash-flow projections based on financial plans approved by management

of the Group for the period until 2025.

Main assumptions used in financial plans and cash-flow projections:

The management expects the return of revenues to pre-COVID times in mid 2022 to mid 2023.

2020

Ondrášovka

Korunní

Kofola

Vinea

Radenska

Country of trademark

Czechia

Slovakia

Slovenia

Royalty rate

3.1%

2.1%

6.0%

Average revenue growth rate*

3.9%

3.8%

2.3%

2.6%

2.0%

Perpetuity growth rate

2.0%

Discount rate post-tax

7.1%

6.3%

* Growth rate used for the purpose of the impairment testing from 2023 till the end of the explicit period.

2019

Kofola

Vinea

Radenska

Country of trademark

Czechia

Slovakia

Slovenia

Royalty rate

6.0%

Average revenue growth rate*

2.5%

3.3%

Perpetuity growth rate

2.0%

Discount rate post-tax

7.4%

6.0%

6.2%

* Growth rate used for the purpose of the impairment testing from 2020 till the end of the explicit period.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-37

Czech Republic

Slovakia

Slovenia

Poland

Total

CZK´000

31 December 2020

878,223

219,382

132,147

37,476

1,267,228

31 December 2019

487,768

212,402

127,943

44,430

872,543

Value of trademarks increased as a result of acquisition of subsidiaries.

In 2020 and 2019, no impairment was charged.

Impairment indicators were identified by management only in case of UGO trade s.r.o. as remaining cash generating units

within the Group are generating sufficient cash flows. UGO trade s.r.o. has three main product lines which are

QSR (Quick Service Restaurants), FOOD (production of salads) and PET (UGO juices packed in bottles). These are for

the purpose of impairment testing considered as separate CGUs.

Current results of CGUs QSR and FOOD are expected to return to profitability in the projected explicit period (the next 5

years) and the total recoverable amounts determined as value in use exceeded the carrying amounts of these CGUs as of

31 December 2020. Therefore, no impairment was recognized in relations to these CGUs.

In case of CGU PET, the impairment of CZK 35,525 thousand was recognized because the total recoverable amount

determined as value in use didn’t exceed the carrying amount of this CGU as of 31 December 2020. The impairment was

allocated to the items of Property, plant and equipment used for the production of UGO bottles (mainly the production line).

The assumptions of the impairment tests were as follows:

QSR

FOOD

PET

WACC

6.3%

Average revenue growth rate*

10.0%

Perpetuity growth rate

2.0%

Average EBITDA margin for 2021-2025

13.1%

4.4%

4.1%

CGU carrying amount (before impairment in case of PET) in CZK thousand

140,548

30,738

63,928

* Growth rate used for the purpose of the impairment testing from 2023 till the end of the explicit period.

The management expects the return of revenues to pre-COVID times in mid 2022 to mid 2023.

WACC increased by 2.3 ppt, average EBITDA lower by 1.4 ppt, both lead to a situation when the recoverable amount is equal

to the carrying amount. When calculated the sensitivity analysis, only 1 parameter is changed.

WACC increased by 3.3 ppt, average EBITDA lower by 1.2 ppt, both lead to a situation when the recoverable amount is equal

to the carrying amount. When calculated the sensitivity analysis, only 1 parameter is changed.

In 2019, impairment indicators were identified by management only in case of cash generating units UGO trade s.r.o. and

Studenac d.o.o., as other cash generating units within the Group were generating sufficient cash flows. However, actual

results of these cash generating units were expected to return to profitability in the projected explicit period (the next 5

years) and the total recoverable amounts determined as value in use as of 31 December 2019 exceeded the carrying amounts

of respective assets. Therefore, no impairment was recognized in the financial statements of the Group. Total value of CGU

UGO trade s.r.o. as of 31 December 2019 was CZK 199,826 thousand.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-38

The assumptions of the impairment test model of CGU UGO trade in 2019 were as follows:

• WACC: 6.6%,

• Perpetuity growth rate: 2.0%,

• Average EBITDA margin for 2020-2024: 13.2%.

The impairment test based on above mentioned assumptions resulted in no impairment charge. Sensitivity analysis was

performed - WACC increased by 1.5 ppt, average EBITDA lower by 1.1 ppt, both lead to a situation when the recoverable

amount is equal to the carrying amount. When calculated the sensitivity analysis, only 1 parameter is changed.

The Goodwill arose on acquisition of PINELLI spol. s r.o., Klimo s.r.o., LEROS, s.r.o., Minerálka s.r.o, Espresso s.r.o.,

F.H.Prager s.r.o., ONDRÁŠOVKA a.s. and Karlovarská Korunní s.r.o. Goodwill on acquisition of LEROS, s.r.o. of

CZK 2,865 thousand and Goodwill on acquisition of Espresso s.r.o. of CZK 12,091 thousand relate to Fresh & Herbs business

segment. The remaining amount of Goodwill presented in the Consolidated statement of financial position relates to

the CzechoSlovakia business segment. The Goodwill is monitored by the management at the segment level. Table below

summarizes the key inputs for impairment testing in relation to Goodwill attributable to CzechoSlovakia business segment.

Goodwill in the CzechoSlovakia business segment

2020

2019

CZK´000/%

EBITDA margin

21.1%

20.6%

Perpetuity growth rate

2.0%

Discount rate post-tax

6.3%

6.5%

The management expects the return of revenues to pre-COVID times in mid 2022 to mid 2023.

Main assumptions adopted by the management are based on past experience and expectations as for the future market

development. Discount rates used are in line with those used when preparing the Group’s results assumptions. Discount rates

are post-tax and include risk related to respective operating segments and trademarks.

The Group’s management believes that the main assumptions used in impairment tests of cash generating units as at

31 December 2020 and 31 December 2019 are rational and based on the past experience, the Group’s development strategy

and on market forecasts. The Group’s forecasts of future financial results are based on series of assumptions, where those

relating to macroeconomic factors and actions taken by the competition, such as foreign exchange rates, prices of raw

materials and interest rates are beyond the Group’s control.

Management believes that, in relation to value in use calculations for trademarks and for Goodwill monitored at segment

level, no reasonable change in the adopted assumptions would result in their recoverable amounts being lower than their

carrying amounts.

During 2019, OOO MEGAPACK was an equity accounted investee because the Group didn’t have the power over the investee

and the control over the investee was shared (Group could not direct the activities of an investee on its own due to expiration

of the deciding vote in choosing the general director of the OOO MEGAPACK on 31 December 2012). The main activities of

the Megapack Group were the provision of beverage bottling services to third parties, production of own beverages, as well

as their distribution on the territory of the Russian Federation. OOO MEGAPACK was sold on

18 December 2019 (sale transaction became effective on 25 December 2019). The receivable of

CZK 115,690 thousand from the sale of the investment was settled in January 2020.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-39

Investment in equity accounted investee

2019

CZK´000

Opening balance

66,894

Share of profit/(loss) attributable to the Group

46,654

Dividends

(36,963)

Exchange difference

10,224

Disposal

(86,809)

Closing balance

Reconciliation of net assets to carrying amounts

2019

RUB´000

As at 1 January 2019

645,347

Profit/(loss) for the period

263,580

Dividends

(210,000)

As at 25 December 2019

698,927

Group´s share on net assets

689,958

Impairment

(301,066)

Group´s share on dividends paid

(105,000)

Disposal

(283,892)

Carrying amount in RUB ths.

FX rate as at 25 December 2019

0.363

Carrying amount in CZK ths.

Statement of financial position

25.12.2019

CZK´000

Current assets

425,388

Non-current assets

142,093

Current liabilities

(291,680)

Non-current liabilities

(22,565)

Net assets

253,236

Statement of profit or loss

1.1.2019-

25.12.2019

CZK´000

Revenue

523,402

Profit/(loss) for the period

93,308

Share of profit/(loss) attributable to Kofola ČeskoSlovensko group

46,654

Statement of cash flows

1.1.2019-

25.12.2019

CZK´000

Cash ﬂows from operating activities

9,518

Cash ﬂows from investing activities

(1,434)

Cash flows from financing activities

(76,869)

Cash inflow/(outflow)

(68,785)

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-40

Inventories

31.12.2020

31.12.2019

CZK´000

Inventories not written-down

519,157

485,152

Material

258,922

219,819

Goods

57,474

77,383

Work in progress

26,367

15,737

Finished products

176,394

172,213

Written-down inventories

26,322

15,697

Material

24,772

14,655

Goods

734

749

Work in progress

Finished products

761

235

Inventories write-down

(26,287)

(15,536)

Inventories total

519,192

485,313

Inventories write-down movement table

2020

2019

CZK´000

As at 1 January

15,536

16,549

Acquired through business combination

1,399

3,375

Increase due to creation

12,696

8,389

Decrease due to usage/(write-back)

(3,273)

(8,789)

Disposal of subsidiaries

(3,968)

Exchange differences

(71)

(20)

As at 31 December

26,287

15,536

Trade receivables and other receivables

31.12.2020

31.12.2019

Current

Non-current

Current

Non-current

CZK´000

Financial assets within Trade receivables and other

receivables

Trade receivables

671,171

773,135

1,226

Loss allowance for trade receivables

(78,022)

(55,981)

Bonds

25,045*

7,000

22,991*

Receivable from sale of Hoop Polska

142,439

Receivable from sale of Megapack

115,690

Government grant

11,581

70,938

23,646

47,292

Derivatives

3,817

3,112

3,674

Other financial receivables**

79,819

10,572

66,023

25,718

Loss allowance for other financial receivables

(15,472)

(668)

(13,720)

(6,856)

Total

669,077

109,704

1,061,344

94,045

Non-financial assets within Trade receivables and other

receivables

VAT receivable

28,526

42,862

Deferred expenses

46,413

21,114

55,172

1,801

Prepayments

50,414

92,603

88,543

67,672

Other non-financial receivables

1,749

2,066

Loss allowance for non-financial receivables

(12,759)

(14,770)

(2,953)

Total

114,343

98,947

185,690

69,473

Trade receivables and other receivables total

783,420

208,651

1,247,034

163,518

* Measured at amortized costs, repayable in December 2024. ** Mainly paid principals.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-41

Loss allowance for trade and other financial receivables

2020

2019

Trade

receivables

Other financial

receivables

Trade

receivables

Other financial

receivables

CZK´000

As at 1 January

55,981

20,576

44,127

17,806

Exchange differences

984

(2,792)

(1,774)

(124)

Acquired through business combination

3,598

3,331

Increase due to creation

30,191

5,500

15,462

Decrease due to usage/release

(9,134)

(7,144)

(5,432)

(437)

As at 31 December

78,022

16,140

55,981

20,576

Further information on transactions with related parties is presented in section 4.23.

Trade receivables are not interest bearing and are usually payable within 30-60 days of recognition.

The risks associated with trade and other receivables, as well as the Group’s policy relating to managing such risks, are

described in section 4.24.

Information on liens established on receivables to secure credits and loans is presented in section 4.18.

Cash and cash equivalents

31.12.2020

31.12.2019

CZK´000

Cash in bank and in hand

543,553

774,337

Other

336

158

Total cash and cash equivalents

543,889

774,495

Free funds are held at bank and invested in the form of term and overnight deposits, primarily with variable interest rates.

Split by currency

31.12.2020

31.12.2019

CZK´000

in CZK

296,169

438,294

in EUR

212,744

287,067

in PLN

7,417

9,872

in HRK

24,368

38,381

other

3,191

881

Total cash and cash equivalents

543,889

774,495

Share capital structure

2020

2019

Type of shares

Par value

pcs

CZK´000

pcs

CZK´000

Ordinary shares of Kofola ČeskoSlovensko a.s.

22,291,948

1,114,597

22,291,948

1,114,597

Total

22,291,948

1,114,597

22,291,948

1,114,597

Ordinary shares of Kofola ČeskoSlovensko a.s. have a par value of CZK 50 (as of 31 December 2019 value of CZK 50). Each

share ranks pari passu in all respects with all other shares. The same rights are incorporated into all shares including the right

to attend the General Meeting, to require and receive explanations of matters concerning the Company that are part of

the agenda of the General Meeting, to submit proposals and counterproposals, and to receive a dividend and share in

the liquidation surplus. In compliance with the relevant legal provisions, the voting rights attached to the shares owned by

RADENSKA d.o.o. cannot be exercised.

All of the issued shares have been fully paid up.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-42

The Company owned 11 pcs of own shares as of 31 December 2020. The Company didn’t have any own shares as of

31 December 2019.

RADENSKA d.o.o. as at 31 December 2020 owned 1,113,977 (as at 31 December 2019: 1,114,010) shares of the Company

(which represents 5.0% of the Company´s share capital) in total value of CZK 490,150 thousand (treasury shares)

(as at 31 December 2019: CZK 490,164 thousand).

On 5 March 2020, the Company announced the share buy-back programme for the purpose of share option plan.

The sole purpose of the acquisition of own shares by the Company was to meet obligations arising from share option

programmes, or other allocations of shares, to employees or to members of the administrative, management or supervisory

bodies of the Company or of an associate company.

Maximum number of shares to be acquired amounted up to 19,759 shares of the Company which may had been acquired for

a maximum total consideration (excluding incidental transaction charges) of up to CZK 5,600,000. The shares could have been

acquired up until April 30, 2020.

The Company has concluded a contract with Česká spořitelna, a.s. for the purpose of execution of the acquisitions of its own

shares. Pursuant to this contract, execution of the acquisitions of its own shares took place independently of the Company

and without its influence, and only on regulated markets in accordance with the respective legal regulations and rules of

these markets.

Course of purchase with a total purchase price of CZK 4,410 thousand was completed on March 20, 2020:

• Purchases 5 March-12 March 2020 (purchased 12,547 shares – 63.5%), weighted average price CZK 233.7 per share.

• Purchases 13 March-20 March 2020 (purchased 7,212 shares – 36.5%), weighted average price CZK 200.3 per share.

In March and April 2020, 19,748 shares with costs of CZK 4,408 thousand have been granted to the participants of the share

option plan.

There were no purchases of own shares in financial year 2019.

On 9 July 2020, 33 shares have been granted from own shares (in possession of RADENSKA) to the external provider as

a compensation for services provided by this external party. These shares were originally purchased by RADENSKA in a public

tender offer on the stock market mainly from CED GROUP S.à r.l. with an individual share price of CZK 440.

On 14 August 2019, 99 shares have been granted from own shares (in possession of RADENSKA) to the external providers as

a compensation for services provided by these external parties. These shares were originally purchased by RADENSKA in

a public tender offer on the stock market mainly from CED GROUP S.à r.l. with an individual share price of CZK 440.

Dividends

2020

2019

CZK´000

Dividends

285,902*

285,901

Dividends per share (CZK/share)**

13.5

* Net of dividend to own shares owned by the Company.

** Declared dividends divided by the number of shares outstanding as of dividend record date.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-43

Movements in provisions

Pension

benefits

Provision for

personnel

expenses

(bonuses)

Other

provisions

Total

CZK´000

Balance as at 1 January 2020

27,028

111,760

13,630

152,418

Acquired through business combination

144

Increase due to creation

3,060

66,941

1,333

71,334

Decrease due to usage/release

(1,321)

(111,760)

(3,792)

(116,873)

Transfer

(5,881)

5,881

Exchange differences

907

(143)

393

1,157

Balance as at 31 December 2020

23,793

66,798

17,589

108,180

Of which:

Current part

66,798

66,865

Non-current part

23,793

17,522

41,315

Balance as at 31 December 2020

23,793

66,798

17,589

108,180

For further information about contingent liabilities refer to section 4.22.

As at 31 December 2020, the Group’s total bank loans and credits amounted to CZK 3,937,364 thousand

(as at 31 December 2019: CZK 3,012,962 thousand). Increase of the balance is attributable mostly to the loan received in

connection with the acquisition of ONDRÁŠOVKA a.s. and Karlovarská Korunní s.r.o. From the total balance of Repayment of

loans and bank credits presented within the Consolidated statement of cash flows (Note 1.4), amount of

CZK 130,516 thousand represents the decrease of Group’s overdraft.

The Facility loan agreement as amended (which refinanced loans at that time, served for a loan financing of RADENSKA d.o.o.

acquisition and also the acquisition of ONDRÁŠOVKA a.s. and Karlovarská Korunní s.r.o) with carrying amount of

CZK 3,717,761 thousand as at 31 December 2020 (as at 31 December 2019: CZK 2,651,759 thousand) was a main component

of Group´s liabilities. The reason for the execution of the Facility loan agreement was a consolidation of Group financing to

ensure strategic development and taking advantage of the favourable conditions of financial market.

In relation to financing of ONDRÁŠOVKA a.s. and Karlovarská Korunní s.r.o. acquisitions, the Group has drawn a loan in

the amount of CZK 1,138,000 thousand in April 2020.

Based on credit agreements, the Group is required to meet specified covenants. In accordance with the requirements of

IAS 1, a breach of credit terms that may potentially limit unconditional access to credits in the nearest year makes it necessary

to classify such liabilities as current.

As of 31 December 2020, the Group obtained a bank waiver for the breach of Debt service coverage ratio covenant (mainly

due to COVID-19 related losses).

As of 31 December 2019, the Group obtained a bank waiver for the breach of CAPEX covenant (due to acquisition of Espresso).

All other bank loan covenants were met in 2020 and 2019.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-44

Financing entity

Credit

currency

Credit/limit

amount

Face value

Carrying

amount*

Interest terms

Maturity date

Collateral

Undrawn credit

line

31.12.2020

FCY´000

CZK´000

CZK’000

ČSOB, a.s. + Česká spořitelna, a.s.

CZK

4,769,559

3,729,023

3,717,761

3M PRIBOR*** + margin

2/2025,

8/2026, 2/2027

buildings, receivables, movable assets,

shares, bill of exchange, inventory

ČSOB, a.s. + Česká spořitelna, a.s.**

CZK

500,000

210,175

1M PRIBOR + margin

8/2022

buildings, receivables, movable assets,

shares, bill of exchange, inventory

289,825

ČSOB Leasing, a.s. (5 pcs.)

CZK

35,165

8,450

margin

2/2022

funded property

MONETA Money Bank, a.s.

CZK

1,738

475

margin

3/2022

funded property

ŠkoFIN s.r.o.

CZK

2,321

167

margin

11/2021

funded property

FCE Credit, s.r.o.

CZK

520

336

margin

1/2025

funded property

Total

3,937,364

289,825

Out of it non-current

3,252,207

Out of it current

685,157

* Carrying amount of borrowings on variable interest rate approximates fair value. ** Administration by Česká spořitelna, a.s. *** For part of the face value the interest rate swap was concluded (refer to section 4.24.1).

Financing entity

Credit

currency

Credit/limit

amount

Face value

Carrying

amount*

Interest terms

Maturity date

Collateral

Undrawn credit

line

31.12.2019

FCY´000

CZK´000

CZK’000

ČSOB, a.s. + Česká spořitelna, a.s.

CZK

3,631,559

2,662,113

2,651,759

3M PRIBOR*** + margin

8/2024

buildings, receivables, movable assets,

shares, bill of exchange, inventory

ČSOB, a.s. + Česká spořitelna, a.s.**

CZK

500,000

340,691

1M PRIBOR + margin

8/2020

buildings, receivables, movable assets,

shares, bill of exchange, inventory

159,309

ČSOB Leasing, a.s. (5 pcs.)

CZK

35,165

15,573

margin

2/2022

funded property

SG Equipment Finance CR s.r.o.

CZK

12,602

2,392

margin

11/2020

funded property

SG Equipment Finance CR s.r.o.

CZK

5,689

689

margin

7/2020

funded property

MONETA Money Bank, a.s.

CZK

1,738

919

margin

3/2022

funded property

ŠkoFIN s.r.o.

CZK

2,321

939

margin

11/2021

funded property

Total

3,012,962

159,309

Out of it non-current

2,229,162

Out of it current

783,800

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-45

Pledges of the Group

31.12.2020

31.12.2019*

Cost

Net book value

Cost

Net book value

CZK´000

Property, plant and equipment

4,326,215

1,663,700

3,873,279

1,604,617

Intangible assets (trademarks)

77,657

1,600

75,306

1,781

Inventories

271,794

251,259

Receivables**

418,536

431,029

Cash in bank

479,967

661,328

Total

5,574,169

2,835,597

5,292,201

2,950,014

*Balances related to the returnable packages are presented within Property, plant and equipment. ** Mostly trade receivables, without effect of loss allowances.

Trade and other payables

31.12.2020

31.12.2019***

Other liabilities

Current

Non-current

Current

Non-current

CZK´000

Financial liabilities within Trade payables and other liabilities

Trade payables

897,108

995,827

- of that accrued expenses

152,220

157,732

Liabilities for purchased tangible and intangible assets

32,771

69,916

Derivatives (i)

8,543

Advances received*

175,857

212,185

Other financial liabilities

16,138

20,452

10,864

22,867

Total

1,130,417

20,452

1,288,792

22,867

Non-financial liabilities within Trade payables and other liabilities

VAT

22,525

20,241

Payables to employees

75,109

76,887

Deferred revenue

6,646

7,819

Government grants

70,938

23,646

47,292

Other non-financial liabilities

86,181**

79,567**

249

Total

190,461

70,938

208,160

47,541

Trade and other payables and other liabilities total

1,320,878

91,390

1,496,952

70,408

* Mainly advances received for the returnable packages.

** Mainly payables to state authorities.

*** Adjusted to the new structure.

Trade payables are not interest bearing and are usually paid within 30-90 days of recognition.

Other payables are not interest bearing and are payable on average within 1 month.

(i) Derivatives

In 2020 and 2018, the Group concluded new IRS contract and established a hedge accounting. Revaluation of derivatives in

relation to the effective portion of the hedging relationship is accounted through OCI (refer to section 3.5 for more details).

As at 31 December 2020 the Group companies provided the following guarantees for third party entities:

Entity providing

guarantees

Entity receiving

guarantees

Currency

Guarantee

amount

Guarantee

amount

Guarantee

period

Guarantees provided

for

Relationship

FCY´000

CZK´000

Kofola ČeskoSlovensko a.s.

Unicredit Bank a.s.

EUR

1,515

39,761

12/2022

Santa-Trans.SK s.r.o.

third party

Total guarantees issued

39,761*

* The fair value of the guarantees is close to zero (fair valuation in level 3).

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-46

As at 31 December 2019 the Group companies provided the following guarantees for third party entities:

Entity providing

guarantees

Entity receiving

guarantees

Currency

Guarantee

amount

Guarantee

amount

Guarantee

period

Guarantees provided

for

Relationship

FCY´000

CZK´000

Kofola ČeskoSlovensko a.s.

Unicredit Bank a.s.

EUR

2,272

57,732

12/2022

SANTA-TRANS.SK, s.r.o.

third party

Total guarantees issued

57,732*

* The fair value of the guarantees is close to zero (fair valuation in level 3).

This note provides information about leases where the Group is a lessee. Leases where the Group is a lessor are immaterial.

Right-of-use asset forms a part of Property, plant and equipment. Lease liabilities are presented on separate rows in

the statement of financial position.

The net carrying amount at the end of the reporting period by classes of assets is provided below:

Net carrying amount by classes of assets

31.12.2020

31.12.2019

CZK´000

Land

25,220

3,202

Buildings and constructions

227,020

215,429

Plant and equipment

59,430

78,664

Vehicles

134,817

124,949

Fixed assets under construction, Advances

959

Total

446,487

423,203

Additions to the right-of-use assets during the 2020 financial year were following:

Additions by classes of assets

Land

Buildings and

constructions

Plant and

equipment

Vehicles

Fixed assets under

construction,

Advances

Total

CZK´000

Acquisition of subsidiaries

13,466

883

13,759

28,108

For the period

9,563

76,731

3,479

46,729

136,502

Total

23,029

76,731

4,362

60,488

164,610

Additions to the right-of-use assets during the 2019 financial year were following:

Additions by classes of assets

Land

Buildings and

constructions

Plant and

equipment

Vehicles

Assets under

construction,

Advances

Total

CZK´000

On initial application of IFRS 16

1,069

173,660

6,195

180,924

For the period

2,546

83,472

9,627

130,942

959

227,546

Total

3,615

257,132

15,822

130,942

959

408,470

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-47

Depreciation expense to the right-of-use assets during the 2020 and 2019 financial year was following:

Depreciation expense by classes of assets

Land

Buildings and

constructions

Plant and

equipment

Vehicles

Assets under

construction,

Advances

Total

CZK´000

2020

(972)

(57,196)

(25,563)

(49,598)

(133,329)

2019

(403)

(43,398)

(23,427)

(37,550)

(104,778)

Interest expense to lease liabilities is presented in note 4.7 Finance costs.

The statement of profit or loss further shows the following amounts relating to not capitalized leases:

Expense relating to not capitalized leases

2020

2019

CZK´000

Expense relating to short-term leases and leases of low-value assets

74,675

79,757

Expense relating to variable lease payments not included in lease liabilities

Total

74,675

79,783

Total cash outflows in relation to capitalized leases are presented in the section Cash flows from financing activities within

the Consolidated statement of cash flows. Future cash outflows in relations to capitalized leases are presented within section

4.24.4. Total cash outflows in relation to other leases is close to balance stated in the table above (short-term leases, leases

of low-value assets and variable lease payments).

Future cash outflows to which the lessee is potentially exposed that are not reflected in the measurement of lease liabilities

are mostly represented by variable lease payments presented in the table above and their value is expected to not

significantly differ from the balance presented in 2020 adjusted for newly concluded and terminated lease contracts.

Lease commitments for short-term leases and leases of low-value assets as of 31 December 2020 amounted to

CZK 23,291 thousand (as of 31 December 2019: CZK 21,503 thousand).

There are pending denationalisation proceedings with respect to denationalisation claims of the legal successors of

the former owners of RADENSKA d.o.o. – Wilhelmina Höhn Šarič and Ante Šarič. These denationalisation claims have been in

the process of being decided on from the year 1993 onward. After several turns in the process the Constitutional court in

2018 reversed the decisions of the authorities adopted by then which prevented the denationalization beneficiaries from

denationalization for legal reasons and returned the matter to the first instance authority. Upon such a decision

the administrative unit Gornja Radgona as the first instance authority resumed with the process in 2018. In the resumed

process the authority, in several partial decisions issued so far in 2018, 2019 and 2020, found the denationalization

beneficiaries are entitled to denationalization, however, not in the form of in-kind return of property, for which RADENSKA

would be liable, but merely in the form of compensation, which is paid from the Republic of Slovenia and neutral with respect

to RADENSKA. In part the denationalisation claims were rejected for lack of merit. Such decisions of the authorities effectively

mean that the beneficiary is not entitled to in-kind return of property and therefore neither RADENSKA nor Kofola are obliged

to any compensation payment. Recently, in February 2021, the beneficiary even withdrew the claim for the in-kind return of

the RADENSKA enterprise and real estates owned by the enterprise and is now primarily requesting to be compensated by

the state. However, we note that such decisions, including the most recent decision of the beneficiary are not final and thus,

in theory, there’s still the risk, albeit very low considering most recent developments, that RADENSKA's enterprise would

need to be returned to the beneficiaries together with significant compensation payments, if the current decisions would be

reversed later in the process or if the beneficiary would change his claims again. RADENSKA is therefore still actively

participating in the process and protecting its interests.

Some of the Group companies are routinely involved in legal proceedings which arise in the ordinary course of the Group's

business but which are not material to the Group. The Company is not involved in any judicial, administrative or arbitration

proceedings and has not conducted such proceedings in the past.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-48

Apart from the above denationalisation proceedings, there are no governmental, legal or arbitration proceedings (including

any such proceedings which are pending or threatened, of which the Company and/or Group is aware, including any claims

against the directors of the Company) which may have, or have had during the 12 months prior to the date of these financial

statements, an effect on the financial position or profitability of the Company and/or the Group.

Share capital structure

31.12.2020

31.12.2019

Name of entity

Number of

% in share

capital

% in voting

rights

Number of

% in share

capital

% in voting

rights

AETOS a.s.

14,984,204

67.22

70.75

14,984,204

67.22

70.75

RADENSKA d.o.o.

1,113,977

5.00

0.00

1,114,010

5.00

0.00

Others

6,193,767

27.78

29.25

6,193,734

27.78

29.25

Total

22,291,948

100.00

22,291,948

100.00

On 9 July 2020, 33 shares have been granted from own shares (in possession of RADENSKA) to the external provider as

a compensation for services provided by this external party. These shares were originally purchased by RADENSKA in a public

tender offer on the stock market mainly from CED GROUP S.à r.l. with an individual share price of CZK 440.

On 14 August 2019, 99 shares have been granted from own shares (in possession of RADENSKA) to the external providers as

a compensation for services provided by these external parties. These shares were originally purchased by RADENSKA in

a public tender offer on the stock market mainly from CED GROUP S.à r.l. with an individual share price of CZK 440.

On 26 March 2019, AETOS a.s. sold 175,000 shares of the Company to a Czech investor at a price per share of CZK 311.

The free float increased to 27.78%.

Interest in equity accounted investee in 2019 is set out in section 4.12.

Presented below is the structure of the remuneration of Group´s key management personnel in 2020 and 2019.

Remuneration of the Group´s key management

personnel 2020

Members of the

Company´s Board of

Directors

Members of the

Company´s

Supervisory Board

Members of the

Company´s Audit

Committee

Other key

management

personnel of the

Group

Total

compensation

CZK´000

Amounts paid for activities in the Company´s

Board of Directors

Financial

23,416

Non-financial

2,643

Amounts paid for activities in the Company´s

Supervisory Board

Financial

1,200

Non-financial

287

Amounts paid for activities in the Company´s

Audit Committee

Financial

288

Non-financial

Amounts paid for other activities within

the Group

Financial

6,900

7,828

1,796

13,806

30,330

Non-financial

1,000

680

1,423

3,160

Total expense from equity settled transactions

(Option scheme)*

Option

scheme

Shares transfer to option scheme participants

Option

scheme

(2,817)

(319)

(1,272)

(4,408)

Cumulated reserve from equity settled

transactions

Option

scheme

16,586

2,161

8,191

26,938

Cumulated number of Pair shares granted on

31.12.2020 [pcs.]**

Option

scheme

31,967

4,165

15,627

51,759

* 2019 was the last year of the option scheme programme. ** Decreased by the number of shares transferred to the option scheme participants.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-49

Remuneration of the Group´s key management

personnel 2019

Members of the

Company´s Board of

Directors

Members of the

Company´s

Supervisory Board

Members of the

Company´s Audit

Committee

Other key

management

personnel of the

Group

Total

compensation

CZK´000

Amounts paid for activities in the Company´s

Board of Directors

Financial

20,629

Non-financial

942

Amounts paid for activities in the Company´s

Supervisory Board

Financial

1,200

Non-financial

235

Amounts paid for activities in the Company´s

Audit Committee

Financial

288

Non-financial

Amounts paid for other activities within

the Group

Financial

5,240

7,294

1,278

13,238

27,050

Non-financial

360

202

619

Total expense from equity settled transactions

(Option scheme)

Option

scheme

13,827

1,717

6,667

22,211

Cumulated reserve from equity settled

transactions

Option

scheme

19,403

2,480

9,463

31,346

Cumulated number of Pair shares granted on

31.12.2019 [pcs.]

Option

scheme

44,590

5,595

21,322

71,507

The short-term loan of CZK 202,287 thousand provided to the parent company in June 2019 was repaid in July 2019. Interest

rate was concluded at market terms and was fixed.

Except for above stated and dividend payment to parent company, there were no other transactions concluded with

the Group’s related parties (those outside the consolidation group) in 2020 and 2019.

The Group’s primary financial instruments consist of bank credits, lease payables, derivatives, cash and cash equivalents,

deposits and loans. The main goal of holding such financial instruments is to obtain funds for business operations, or to invest

the Group’s available funds. In addition, the Group has other financial instruments, such as trade receivables and payables

that arise as part of its operations. The accounting methods relating to those instruments are described above (section 3.5).

It is the Group’s policy – now and throughout the reporting periods presented in these financial statements – not to keep

the financial instruments for trading purposes.

The Group’s activities are exposed to several types of financial risk: market risk (including foreign exchange risk, and

cash-flow risk relating to changes in interest rates), credit risk and liquidity risk. In addition, the Group monitors the market

prices risk relating to all of its financial instruments. Risks are managed by the Group’s management, which recognises and

assesses the above financial risks. The general risk management process is focused on the unpredictability of financial

markets, and the Group tries to minimise any potential adverse effects on its financial results. The Group uses derivative

financial instruments to hedge against certain types of risk, providing that the hedging instruments are considered to be cost

effective. Management verifies and agrees the risk management methods with regard to every type of risk. A short

description of these methods is presented below.

Interest rate risk is a risk that the fair value or future cash flows from a financial instrument will change due to changes in

interest rates. The interest-bearing financial liabilities of the Group are mainly bank credits. The Group has credit payables

with variable interest rates, which give rise to a risk of an increase in those rates compared to the rates applied at contract

conclusion. In addition, the Group places its free funds on variable interest rate deposits, which would bring the profits down

if the interest rates fall. The Group also uses fixed interest rate instruments, with regard to which interest rate movements

have no effect on interest costs or interest income. Trade and other receivables and payables are not interest bearing and

have mostly due dates of up to one year.

Management of the Group monitors its exposure to interest rate risk and interest rate forecasts. In order to protect against

changes in interest rates, the Group has fixed the interest rate on part of the loan for Group financing. The balance of the

loan which is covered by interest rate swaps as of 31 December 2020 is CZK 1,089,681 thousand

(as of 31 December 2019: CZK 624,272 thousand). Hedge accounting is established by the Group for these derivative

instruments. There was no ineffective portion of the hedging relationship for the year ended 31 December 2020 and

31 December 2019.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-50

Interest rate swaps

31.12.2020

31.12.2019

Net exposure

Average fixed

interest rate

Net exposure

Average fixed

interest rate

CZK´000

p.a.

CZK´000

p.a.

In period from one to six months

51,795

2.7%

51,795

3.1%

In period from six to twelve months

51,795

2.7%

51,795

3.1%

More than one year

986,091

2.5%

520,682

3.2%

Total

1,089,681

624,272

If interest rates at the balance sheet date had been 100 basis points lower/higher with all other variables held constant,

profit/(loss) for the period for the year 2020 would have been increased/decreased by CZK 27,304 thousand

(2019: CZK 22,705 thousand), mainly as a result of different interest expense on variable interest for financial liabilities.

The Group is exposed to the risk of changes in foreign exchange rates due to a volume of sales of finished products in local

currencies of individual entities (CZK, EUR, PLN) and the fact that significant part of the costs of purchased raw materials are

incurred in foreign currencies (mainly EUR). The currency risk relates primarily to the EUR exchange rates in relation to CZK.

The Group’s currency risk associated with other currencies is immaterial.

The effect of currency risk on the Group’s position is presented in the table (sensitivity analysis) below. The sensitivity analysis

is based on a reasonable change in the assumed foreign exchange rate while the other assumptions remain unchanged. In

practice this is not very likely, and changes in certain assumptions may be correlated, e.g. a change in interest rate and in

the foreign exchange rate. The Group manages currency risk as a whole. The sensitivity analysis prepared by management

for currency risk illustrates after-tax profit or loss effect of changes in the exchange rate of the EUR, PLN and USD to CZK.

Currency risk impact on profit or loss

31.12.2020

31.12.2019

CZK´000

EUR strengthening by 3%

6,498

(786)

EUR weakening by 3%

(6,498)

786

PLN strengthening by 3%

3,797

PLN weakening by 3%

(3,797)

(67)

USD strengthening by 10%

(726)

9,742

USD weakening by 10%

726

(9,742)

Credit risk arises from cash deposits in banks along with other short-term deposits, as well as from trade and other financial

receivables.

The Group undertakes activities aimed at limiting credit risk, consisting of checking the creditworthiness of its customers,

setting credit limits and monitoring the customers’ financial position. An analysis of ageing structure of trade and other

financial receivables assists with the credit risk management.

There are no significant concentrations of credit risk, whether through exposure to individual customers, specific industry

sectors and/or regions.

The Group is exposed to credit risk, defined as a risk that its debtors will not meet their obligations and thus cause the Group

to incur losses.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-51

Presented below is the ageing structure of receivables:

Credit risk

31.12.2020

31.12.2019

Trade receivables

Other financial

receivables

Trade receivables

Other financial

receivables

CZK´000

Total due

491,056

178,617

428,608

431,241

Past due

- less than 30 days overdue

60,799

12,700

238,979

4,770

- 30 to 90 days overdue

44,015

41,488

- 91 to 180 days overdue

14,538

19,634

- 181 to 360 days overdue

17,210

13,365

- over 360 days overdue

43,553

10,455

32,287

21,574

Total past due

180,115

23,155

345,753

26,344

Less loss allowance (-)

(78,022)

(16,140)

(55,981)

(20,576)

Total

593,149

185,632

718,380

437,009

Subject to the above, management believes that the credit risk has been accounted for in the financial statements through

the creation of appropriate allowances.

With regard to the Group’s other financial assets, such as cash and cash equivalents, credit risk arises as a result of the other

party’s inability to pay, and the maximum amount of the Group’s exposure to this risk is equal to the balance sheet value of

these amounts.

The credit risk associated with bank deposits, derivative instruments and other investments is considered to be immaterial,

as the Group has concluded transactions with institutions that have a sound financial position.

Credit quality of cash in bank and in hand

31.12.2020

31.12.2019

Credit rating

CZK´000

Aa3

15,760

6,531

279,429

556,146

6,116

18,749

5,698

8,071

Baa1

232,806

143,943

Baa2

35,051

279

Not on watch*

1,636

1,151

Cash in hand

2,444

4,574

Total cash in bank and in hand

543,889

774,495

* Mainly Fio banka a.s.

The risk for the Group arises from a potential restriction in access to financial markets or from a change in the attitude of

banks in the area of granting credits, which may result in an inability to obtain new financing or refinancing of debts.

Management of the Group monitors the risk of insufficient funds by adjusting the structure of financing to prediction of

future cash flows (planned investments included), diversifying of sources of financing and by keeping sufficient level of

available credit lines.

It is the Group’s objective to maintain a balance between financing continuity and flexibility, by using various financing

sources, such as credits, loans and lease agreements. The Group controls its financial liabilities so that in each given period

the amount of liabilities due within the next 12 months does not pose a threat for the Group’s ability to meet its financial

obligations. Despite the excess of current liabilities over current assets the Group’s management believes that the value of

cash and cash equivalents as at the balance sheet date, the available credit lines as at 31 December 2020 of

CZK 289,825 thousand (as at 31 December 2019: CZK 159,309 thousand) and the Group’s financial position are such that

the risk of losing liquidity is assessed as not significant.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-52

Analysis of financial liabilities is presented below. The amounts represent undiscounted cash flows, which represent

the Group's maximum exposure to liquidity risk.

Future cash outflows related to financial liabilities:

Contractual cash flows of financial

liabilities as at 31 December 2020

Less than

3 months

Between

3-12

months

Between

1-2 years

Between

2-5 years

Over

5 years

Total

contractual

cash-flows

Total

carrying

amount

CZK´000

Trade payables

887,230

9,878

897,108

Bank credits and loans

346,959

408,254

542,307

1,658,059

1,330,441

4,286,020

3,937,364

Lease liabilities

47,510

97,855

127,246

162,973

59,268

494,852

454,794

Advances received

175,857

Other liabilities*

48,265

9,187

3,067

5,075

12,310

77,904

Total

1,505,821

525,174

672,620

1,826,107

1,402,019

5,931,741

5,543,027

* Including derivatives for which the cash outflows were determined based on the latest available variable interest rate yield curves.

Contractual cash flows of financial

liabilities as at 31 December 2019

Less than

3 months

Between

3-12

months

Between

1-2 years

Between

2-5 years

Over

5 years

Total

contractual

cash-flows

Total

carrying

amount

CZK´000

Trade payables

834,073

3,923

837,996

Bank credits and loans

139,582

755,733

525,847

1,759,942

239,045

3,420,149

3,012,962

Lease liabilities

27,476

91,274

104,036

187,692

44,135

454,613

419,791

Advances received

212,185

Other liabilities

227,127

11,484

2,416

7,130

13,321

261,478

Total

1,440,443

862,414

632,299

1,954,764

296,501

5,186,421

4,744,412

The cash outflows schedules above do not include financial guarantees, where the fair value was determined to be close to

zero and which are listed in section 4.20.

The Group manages capital by having a balanced financial policy with the objective of supplying the necessary funds to grow

the business and, at the same time, secure an appropriate capital structure and financial liquidity and meet all the externally

imposed capital requirements.

The Group manages net debt and monitors the net debt/adjusted EBITDA ratio.

The net debt is defined as the total value of liabilities arising out of credits, loans, bonds and leases, less cash and cash

equivalents. Adjusted EBITDA is operating profit/(loss) plus depreciation and amortisation adjusted by all one-off events

(all non-recurring or exceptional items not arising out of ordinary operations, such as impairment write downs, costs of

relocation, extraordinary sale of non-current assets or group layoffs).

Net debt/Adjusted EBITDA calculation (Continuing operations)

2020

2019

CZK´000

Bank credits and loans

3,937,364

3,012,962

Lease liabilities

454,794

419,791

Cash and cash equivalents

(543,889)

(774,495)

Net debt

3,848,269

2,658,258

Operating profit/(loss)

293,133

539,761

Adjusted for:

One off´s

104,640

17,266

Depreciation and amortisation

632,480

562,367

Adjusted EBITDA

1,030,253

1,119,394

Net debt/Adjusted EBITDA

3.7

2.4

Increase of the ratio is attributable mainly to the new loan acquired on acquisition of subsidiaries.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-53

• The impairment of CZK 35,525 thousand related to the production of UGO bottles (mainly the production line) and

of CZK 8,813 thousand related to Grodzisk Wielkopolski plant (Fresh & Herbs segment).

• Restructuring costs (mainly payroll expenses) in CzechoSlovakia segment of CZK 33,027 thousand and in

Fresh & Herbs segment of CZK 4,357 thousand.

• Advisory costs – CzechoSlovakia segment incurred costs of CZK 13,915 thousand.

• Costs arising on integration of newly acquired subsidiaries of CZK 7,352 thousand (CzechoSlovakia segment).

• Costs for support of the parties impacted by COVID-19 of CZK 5,960 thousand, e.g. #zlasky (CzechoSlovakia segment).

• Costs (excluding depreciation) connected with the maintenance of closed Grodzisk Wielkopolski plant of

CZK 3,805 thousand (Fresh & Herbs segment).

• Costs arising on merger between LEROS and Espresso (Fresh & Herbs segment) of CZK 1,468 thousand.

• Net gain on sold items of Property, plant and equipment of CZK 9,582 thousand recognized in all business segments

(mainly CzechoSlovakia).

• Advisory costs – CzechoSlovakia segment incurred costs of CZK 21,530 thousand, business category Other incurred

costs of CZK 267 thousand.

• Costs (excluding depreciation) connected with the maintenance of closed Grodzisk Wielkopolski plant of

CZK 7,668 thousand (Fresh & Herbs segment).

• Severance costs in LEROS, s.r.o. (Fresh & Herbs segment) of CZK 2,906 thousand.

• Net gain on sold items of Property, plant and equipment (mainly machines) of CZK 6,070 thousand recognized in

the Adriatic segment and CZK 9,035 thousand recognized in the CzechoSlovakia segment.

Net debt reconciliation

Liabilities from financing

activities

Cash and cash

equivalents

Net debt

Bank credits

and loans

Lease liability

As at 1.1.2020

3,012,962

419,791

(774,495)

2,658,258

Acquisition of subsidiaries

58,263

28,108

86,371

Proceeds from loans and bank credits received

1,293,702

Repayment of loans and bank credits

(426,656)

Change in amortized costs

(907)

Repayment of lease liabilities

(123,995)

Lease additions

136,502

Lease terminations

(8,673)

Cash (inflow)/outflow*

239,241

Foreign exchange adjustments

3,061

(8,635)

(5,574)

As at 31.12.2020

3,937,364

454,794

(543,889)

3,848,269

* Includes the effect of cash and cash equivalents of acquired subsidiaries as at the acquisition date.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-54

Net debt reconciliation

Liabilities from financing

activities

Cash and cash

equivalents

Net debt

Bank credits

and loans

Lease liability

As at 1.1.2019

2,913,724

135,778

(619,300)

2,430,202

Proceeds from loans and bank credits received

503,509

Repayment of loans and bank credits

(413,882)

Change in amortized costs

5,841

Repayment of lease liabilities

(109,632)

Lease additions

408,470

Cash (inflow)/outflow*

(158,631)

Foreign exchange adjustments

3,770

(14,825)

3,436

(7,619)

As at 31.12.2019

3,012,962

419,791

(774,495)

2,658,258

* Includes the effect of cash and cash equivalents of acquired subsidiaries as at the acquisition date.

Fair value of Trade receivables, other financial receivables, Cash and cash equivalents, Trade liabilities and other financial

liabilities is close to carrying amounts since the interest payable on them is either close to market rates or they are

short-term.

31.12.2020

Financial assets at

amortised cost

Derivatives at fair

value through OCI

Financial liabilities

at amortised cost

Total

CZK´000

Trade and other receivables

774,964

Cash and cash equivalents

543,889

Derivatives

(4,726)

Bank credits and loans

(3,937,364)

Lease liabilities

(454,794)

Trade and other payables

(1,142,326)

Total

1,318,853

(4,726)

(5,534,484)

(4,220,357)

31.12.2019

Financial assets at

amortised cost

Derivatives at fair

value through OCI

Financial liabilities

at amortised cost

Total

CZK´000

Trade and other receivables

1,148,603

Cash and cash equivalents

774,495

Derivatives

6,786

Bank credits and loans

(3,012,962)

Lease liabilities

(419,791)

Trade and other payables

(1,311,659)

Total

1,923,098

6,786

(4,744,412)

(2,814,528)

Fair value of derivatives

In 2018 and 2020, the Group has concluded interest rate swaps and established a hedge accounting. Revaluation of

derivatives in relation to the effective portion of the hedging relationship is accounted through other comprehensive income.

Measured derivatives are not traded in active markets, however all significant inputs required for fair value measurement

are observable and as such the Group has included this instrument in Level 2 of fair value hierarchy levels.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-55

The average headcount in the Group was as follows:

Average headcount

2020

2019

Management Board of the Company

Management Boards of the Group entities

Administration

222

210

Sales, Marketing and Logistic department

1,177

1,013

Production division

649

751

Other

Total

2,073

1,991

Total number of employees as of 31 December 2020 was 2,042 persons (as of 31 December 2019: 1,978 persons).

Both acquired companies represent, in line with IAS 36, one cash-generating unit.

On April 15, 2020, the acquisition date, the Company concluded an agreement to purchase a 100% stake in

ONDRÁŠOVKA a.s. and Karlovarská Korunní s.r.o., producers of the mineral waters.

The following table summarizes the recognized amounts of assets acquired and liabilities assumed at the date of acquisition.

Fair value of assets and liabilities

Fair value

CZK´000

Property, plant and equipment

354,073

Intangible assets

434,275

Deferred tax assets

6,257

Inventories

56,104

Trade receivables and other receivables

87,296

Cash and cash equivalents

48,095

Issued bonds (non-current)

(103,800)

Bank credits and loans (non-current)

(57,820)

Lease liabilities (non-current)

(19,694)

Deferred tax liabilities

(87,067)

Other liabilities (non-current)

(21,000)

Lease liabilities (current)

(8,414)

Trade liabilities and other liabilities

(120,520)

Total identifiable net assets acquired

567,785

The following table summarizes the consideration transferred, net assets acquired and goodwill.

Goodwill calculation

CZK´000

Consideration transferred (cash)

1,105,824

Net assets acquired

567,785

Goodwill

538,039

The Group expects significant synergies from the acquisition of the subsidiaries that will arise through the unification of

operations and controls executed in purchase, production, sales, distribution, marketing and administrative departments.

The Group also expects significant positive effects on its current portfolio through broadening by the well-known and

established Czech mineral water brands. This significant acquisition helped us increase our market share.

Revenue of the acquirees for the period since the acquisition amounted to CZK 505,187 thousand. Should the acquisition be

performed as of 1 January 2020, the Group’s estimated revenue for the 12 months ended 31 December 2020 would be

CZK 6,343,365 thousand. Profit or loss for the period since the acquisition is not presented due to immateriality.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-56

On January 7, 2020, the Company concluded an agreement to purchase a 100% stake in F.H.Prager s.r.o., a producer and

distributor of cider drinks.

The following table summarizes the recognized amounts of assets acquired and liabilities assumed at the date of acquisition.

Fair value of assets and liabilities

Fair value

CZK´000

Property, plant and equipment

766

Intangible assets

8,027

Inventories

1,856

Trade receivables and other receivables

461

Cash and cash equivalents

Bank credits and loans

(443)

Deferred tax liability

(1,525)

Trade liabilities and other liabilities

(9,360)

Provisions

(144)

Total identifiable net assets acquired

(333)

The following table summarizes the consideration transferred, net assets acquired and goodwill.

Goodwill calculation

CZK´000

Consideration transferred (cash)

3,000

Net assets acquired

(333)

Goodwill

3,333

The reason for the acquisition was the entrance into the new product segment.

Revenue of the acquiree and result for the period since the acquisition are not presented in this note because they are

immaterial.

On July 9, 2019, the Company concluded an agreement to purchase a 100% stake in Espresso s.r.o., a distributor of

high-quality coffee (Café Reserva) and teas (Dilmah).

The following table summarizes the recognized amounts of assets acquired and liabilities assumed at the date of acquisition.

Fair value of assets and liabilities

Fair value

CZK´000

Property, plant and equipment

10,459

Intangible assets

67,200

Inventories

14,954

Trade receivables and other receivables

5,178

Cash and cash equivalents

3,196

Lease liabilities

(6,976)

Other liabilities

(5,029)

Deferred tax liability

(12,768)

Trade liabilities and other liabilities

(10,560)

Total identifiable net assets acquired

65,654

The following table summarizes the consideration transferred, net assets acquired and goodwill.

Goodwill calculation

CZK´000

Consideration transferred (cash)

77,745

Net assets acquired

65,654

Goodwill

12,091

The reason for the acquisition was the entrance into the new product segment.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-57

Should the acquisition be performed as of 1 January 2019, the Group’s estimated revenue for the 12 months ended

31 December 2019 would be CZK 6,447,273 thousand.

On 18 March 2019, the Group sold Hoop Polska Sp. z o.o. to ZMB Capital Sp. z o.o. Based on this fact, the consolidated

statement of profit or loss is divided into continuing and discontinued operations. Profit from discontinued operations for

the period of twelve months ended 31 December 2019 contained the loss attributable to Hoop Polska Sp. z o.o. for the period

since 1 January 2019 till 18 March 2019 of CZK 13,373 thousand, the income arising from the release of the cumulated foreign

currency translation reserve attributable to Hoop Polska Sp. z o.o. of CZK 81,422 thousand and the gain on sale of

CZK 7,979 thousand.

Financial information relating to the discontinued operation for the period to the date of disposal is set out below.

Analysis of the result from discontinued operation

2019

CZK´000

Revenue

157,203

Expenses

(170,576)

Gain on sale of the subsidiary

7,979

Income on release of the foreign currency translation reserve (“FCTR”)

81,422

Profit/(loss) before tax from discontinued operation

76,028

Profit/(loss) from discontinued operation

76,028

Exchange differences on translation of discontinued operation

(81,422)

Other comprehensive income from discontinued operation

(81,422)

Earnings per share for profit/(loss) from discontinued operation attributable to

the ordinary equity holders of the Company (in CZK)

3.41

Analysis of the cash flows from discontinued operation

2019

CZK´000

Cash ﬂows from operating activities

29,850

Cash flows from investing activities

(1,716)

Cash flows from financial activities

(2,655)

Analysis of gain on sale

CZK´000

Consideration received

67,983

Consideration receivable (paid in February 2020)

142,439

Total consideration

210,422

Carrying amount of net assets sold

202,443

Gain on sale

7,979

OOO MEGAPACK was sold in on 18 December 2019 (sale transaction became effective on 25 December 2019). As such,

the transactions related to Megapack are also presented as a part of discontinued operations. Profit from discontinued

operations for the period of twelve months ended 31 December 2019 contains Share of profit of equity accounted investee

for the period since 1 January 2019 till 25 December 2019 of CZK 46,654 thousand, the expense arising from the release of

the cumulated foreign currency translation reserve attributable to OOO MEGAPACK of CZK 118,399 thousand and the gain

on sale of CZK 19,094 thousand.

Consolidated financial statements for the year ended 31 December 2020

In accordance with IFRS as adopted by EU

B-58

Analysis of gain on sale

CZK´000

Consideration receivable (paid in January 2020)

115,690

Carrying amount of net assets sold and attributable costs of disposal

96,596

Gain on sale

19,094

Earnings per share for profit/(loss) attributable to the ordinary equity holders of the Company in relation to Megapack

discontinued operation amounted to CZK (2.36) per share in 2019.

Earnings per share for profit/(loss) attributable to the ordinary equity holders of the Company in relation to Megapack and

Hoop Polska discontinued operations amounted to CZK 1.05 per share in 2019.

Based on amendment to IFRS 16 issued in May 2020, the lessee may elect not to assess whether COVID-19 related rent

discounts are lease modifications. The Group has utilized this practical expedient and has also met all the requirements

prescribed by the standard. The amount of such rent discounts is presented within section 4.4 Other operating income.

As a result of greater uncertainty in relation to COVID-19 pandemic, the Group has applied the multiple scenario

cash-flow projections in case of impairment testing for assets / CGUs that were impacted by the pandemic the most.