Royal UNIBREW

Annual Report (ESEF) • Feb 28, 2024

Royal Unibrew A/S Annual Report 2023 Royal Unibrew A/S CVR no. 41 95 67 12 OUR PEOPLE We recruit, develop and retain entrepre- neurial and empowered people thirsting for success and striving to do better every day. Our people drive our success and progress – and live and protect our values. We work as one team and find solutions to all challenges. OUR CONSUMERS Bringing people together and facilitating great moments and enjoyment is the heart of our business. We offer strong local beverage brands in combination with global brands – continuously striving to match consumers’ changing preferences through meaningful innovations and by offering a broad range of refreshments that deliver choice. THE PREFERRED CHOICE Purpose and ambition OUR CUSTOMERS We partner with our customers and strive to grow together by offering a portfolio of relevant brands and having a chal- lenger mindset. With our local, decen- tralized setup we focus on agility and close collaboration – aiming to provide best-in-class service as well as pursuing extraordinary brand execution in all channels. THE FUTURE We are deeply rooted in the communities where we work, and we partner with all our stakeholders to make a positive impact on society. Our focus is to build a long-term sustainable business and to minimize the environmental footprint of our operations from raw materials to the end consumption. OUR SHAREHOLDERS It is our main focus to create sustainable shareholder value by investing behind the categories and channels that grow the most, pushing premiumization and driving organic EBIT growth. We will do value accretive bolt-on, as well as strategic acquisitions if possible. We aim to increase distribution to shareholders over time through dividend and share buy-backs. We want to be THE PREFERRED CHOICE of local beverage partner that challenges the status quo by doing better every day in a fun, agile and sustainable way THE PREFERRED CHOICE for... THE PREFERRED CHOICE ROYAL UNIBREW Annual Report 2023 2 EXP ECTATIONS Behaviors and values ROLE MODELING We want our people to be role models by demonstrating proper behaviour in line with our values and expectations. Compliance with legal and other requirements is instru- mental for our license to operate why we expect the highest level of business ethics from all our colleagues. Role modeling is not limited to leaders, every employee has the potential to act as a compelling role model within our company. TEAM PLAY Collaboration is a cornerstone in our workplace culture. We all work hard every day to come up with the right solutions for our stakeholders. This underlines the importance of setting up our teams for success, and choosing the right people for the right roles. It is deeply rooted in our work place culture that everyone contrib- utes to our collective success and that nobody is above the team. ZOOMING OUT We support our employees in taking the time to zoom out and reflect on the long-term value and opportunities for our company to ensure that we focus on what really makes a difference in the long run. Zooming out involves the ability to adjust to new market trends, consumer behaviour changes or other external factors in the environment surrounding our company. B R AV E RY We strive to nurture an entrepre- neurial mindset, encouraging our employees to change the game instead of just playing the game. We want to foster a winning culture where high ambitions and daring decisions are allowed to thrive while at the same time respecting each other. To support our purpose and ambition of being THE PREFERRED CHOICE, we have developed a framework of expectations for our employees in line with our culture and values. Our Expectations constitute the foundation for leading our business Succeeding through... ZOOMING IN Agile behavior and fast execution have always been the hallmarks of Royal Unibrew employees. Short-term focus in combination with the right empowerment of our people makes certain that we keep our agility and deliver excellent operational execution. Closeness to our business secures a faster response to changes in the market and customer preferences. ROYAL UNIBREW Annual Report 2023 3 Letter from the Chair & the CEO We are on a transformative journey Royal Unibrew has doubled in size over the past three years. From being a business with operations in Denmark, Finland, Italy and the Baltic countries, Royal Unibrew is now a business with strong multi-beverage platforms in the Nordic region and a footprint in Western Europe with solid growth perspectives. On this transformative journey, numerous opportunities have emerged, and we have successfully improved our port- folio of local brands as well as partner brands, continuously enhancing our offering of beverages to provide choices for every occasion. Acquisitions play an integral role in Royal Unibrew’s transfor- mation. We have acquired 10 companies since the beginning of 2021, three of which were brought to closing in 2023. The acquisition of Vrumona in the Netherlands has been on our wish list for a considerable period. When Vrumona became available for purchase, we seized the opportunity with a strong belief in the long-term value of the asset. We now have a new growth platform in Western Europe, which Lars Jensen President & CEO Peter Ruzicka Chair of the Board CEO Letter also provides us with entry points into additional small and medium-sized markets where we can expand and build our beverage offering over the next 10 years. With the acquisition of San Giorgio Brewery in Italy, we have not only expanded our production capacity, but very importantly, we have cemented our position in the Italian market, improving our ability to meet the growing demand for our beverages in Italy. The third acquisition being Nørrebro Bryghus in Denmark. We would like to take this opportunity to welcome our new colleagues to the Royal Unibrew family. Keeping to the topic of acquisitions, we have acquired a range of margin dilu- tive companies the past years to either gain access to new geographies, new market segments, production capacity or attractive customer bases. We are confident that we have a lot of earnings potential to realize, but patience is a virtue, as it is not a task achieved over night. We cannot conclude on the year 2023 without addressing the volatile environment. It came to be yet another year with unprecedented circumstances and high uncertainty related to the inflation level as well as the war in Ukraine and the Middle East that add uncertainty to Europe. In addition, we have been compelled to deal with the consequences of a signif- icant weakening of the currencies in Norway and Sweden. Despite these external factors, we are pleased to conclude the year in the middle of our initial guidance range set out in March 2023. Commitment to building a more sustainable Royal Unibrew As we reflect on the past year, there is no doubt that it has been a significant milestone in our commitment to sustain- ability. In the second quarter of 2023, Royal Unibrew was ROYAL UNIBREW Annual Report 2023 4 recognized as an ”ESG Industry Top Rated” company by Morningstar Sustainalytics. With the ambition to become a global leader in sustainable beverages, this recognition fills us with pride and motivates us to persist in driving the ESG agenda. Shortly hereafter, we inaugurated our solar park in Faxe, Denmark, and a biogas plant in Lahti, Finland, both of which represent crucial achievements on our sustainability journey. In addition to these energy optimization projects, we received validation of our emissions reduction targets from the Science Based Targets initiative, reaffirming Royal Unibrew’s commitment to decarbonizing our operations and hereby contributing to a better, more sustainable world for future generations. This validation is a testament of our persistent efforts to mitigate our climate impact and do better every day. What remains unchanged is our continued support to the UN Global Compact. We take pride in the progress we have made on our sustain- ability journey and acknowledge that our current standing is the outcome of the collective hard work and dedication of our colleagues around the world. There is still much work to be done on the ESG agenda, but we remain committed to advancing our efforts to achieve our sustainability targets. The path forward Our ambition is to expand and fortify the business even more, thereby ensuring future growth. We are dedicated to making progress in four key areas during 2024. We will pay more attention to efficiency across all our operations, securing a solid foundation for Royal Unibrew in an ever-evolving busi- ness environment. Efficiency is not just about working faster; it is about optimizing processes and maximizing output with the resources we have. In addition to our focus on efficiency, we will focus on implementation of our Capex projects to ensure we will be able to serve all our markets better and with higher profitability. Moreover, we will continue the integration of our latest acquisitions, Hansa Borg in Norway, Vrumona in the Netherlands and San Giorgio Brewery in Italy, involving IT integration and realization of the identified synergies for the benefit of the Group. We managed to close the gap between cost inflation and price increases in 2023, but there is no doubt that price increases will resurface as a topic in 2024, not least as wage inflation will affect cost negatively. We will slow down the acquisitions pace in 2024, meaning that we will merely consider acquisitions of medium and large companies if they are characterized as quality assets that possess a strong strategic fit with our business model. Dividend distribution to our shareholders As a consequence of acquisitions, increasing interest rates and a volatile environment, we propose that the Board of Directors postpones the dividend distribution to our share- holders until after the high season, where we generate the majority of our cash flow. In that way, we reduce the amount of interest payments and improve our financial flexibility as fast as possible, while at the same time maintaining a dividend to shareholders. Exceptional contributions and trust We recognize that Royal Unibrew’s transformative journey would not have been possible without the agile mindsets of our colleagues and their willingness to work together across functions, departments and geographies. These qualities are of vital importance for achieving our ambition of being THE PREFERRED CHOICE of local beverage partner. 2023 was yet another year where our people across the organization demonstrated that our corporate ambition is not just words on a piece of paper. We would not have been able to trans- form Royal Unibrew into the multi-beverage company we represent today if it were not for our colleagues. On behalf of the Board of Directors and the Executive Management, we would like to express our appreciation to all our colleagues for their hard work and efforts throughout the year. We would like to take this opportunity to also extend our sincere gratitude to our partners as well as to our share- holders for placing their trust in us. Thank you for contributing to the continued growth and success of our company. We look forward to yet another exciting year for Royal Unibrew. Peter Ruzicka Lars Jensen Chair of the Board President & CEO “We continue to expand our local platforms through organic growth and acquisitions, and we continue to strengthen our business through partnerships that fit to Royal Unibrew and our ambition of being THE PREFERRED CHOICE of local beverage partner.” ROYAL UNIBREW Annual Report 2023 5 2013 2019 2021 202320172015 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 0 5 10 15 20 25 Our strategic journey: From a few markets to full Nordic coverage with additional opportunities in Western Europe We are on a transformative journey where we have nearly doubled our net revenue in just three years. Combined with significant inflation during the last couple of years, the short-term dynamics of the business has noticeably altered. We are confident that the future for our company looks bright with high growth and strong margins. To understand Royal Unibrews performance, three main factors have driven the development in recent years: Firstly, acquisitions add revenue and earnings but comes with lower margins. They provide numerous opportunities for future growth by rolling out our growth framework and business model. Secondly, partnership opportunities have increased in step with our growing footprint which is value creating for our shareholders, despite coming with lower margin than our own brands. Thirdly, inflation has put pres- sure on performance across the Group as it takes time before price increases can be passed on to customers. This has been more pronounced for acquisitions, where dicipline has not been present to the same extent as in the rest of the Group due to change of ownership. Acquisitions We have added approximately DKK 4.6 billion in net revenue from acquisitions since 2021. The majority comes from what we refer to as platform acquisitions. Platform acquisitions require a longer period to realize synergies compared to other types of acquisitions, which typically materialize more quickly. In addition, platform acquisitions usually require investments in equipment and organizational capital, as well as a cultural shift before synergies start to manifest. However, historically, Net revenue and EBIT margin dilution (mDKK) (�) Net revenue (DKKm) EBIT margin (rhs) Acquisitional margin dilution Dilution from acquisitions 6ROYAL UNIBREW Annual Report 2023 Average Group margin Multi-beverage Multi-niche Acquisitions Partnerships 2010 2020 2023 2016 2012 2011 2018 2014 2021 2022 2017 2013 2019 2015 2 3 4 5 6 platform acquisitions have been the ones that provide the most significant value creation, accumulated over the long term. Most of the acquisitions we have made or may under- take are margin-dilutive, as our margins are initially positioned at the high end in the beverage sector. The acquisitions we have made in recent years have diluted our EBIT margin by approximately 5 percentage points, and it is clearly our goal to bring the profitability of most of these acquisitions over time closer to our Group average margin. Solera Beverage Group being a distribution business will not be capable of reaching Group average margins. Partnerships We have significantly expanded our partnerships in recent years. We have taken over the sales of PepsiCo's snack portfolio in Norway, Sweden, and Finland (already partner in Denmark) as well as its beverage business on the border between Denmark and Germany. We have also extended our collaboration agreement with Diageo to include the Norwe- gian market, along with several additional new partnerships. The profitability of these partnerships varies depending on whether they are solely based on distribution or also involve production, sales, and marketing. As a starting point, partnerships are dilutive to the EBIT margin. On average, however, the capital employed is low, making the return on invested capital very attractive. Addi- tionally, it enhances our product portfolio with strong brands that further support the sales of our own products. Short-term pressure on margins due to inflation The war in Ukraine triggered a significant increase in energy prices and most of our input costs. This has led to a substan- tial increase in the cost of producing our products in recent years, following a decade where overall production costs had been declining. After the Ukraine war outbreak, we accumu- lated around DKK 1.5 billion in additional costs due to inflation in input prices. By the second quarter of 2023, we reached a point where we had neutralized the majority of this inflation on an absolute basis in most of our markets. The companies we acquired during the inflationary years still have a slight price gap, which we expect to close during 2024. Hence, infla- tion has resulted in a technical dilution of our EBIT margin by approximately 2 percentage points. Opportunities for long-term growth Our world has changed since we formulated our long-term EBIT margin target of 20-21%, and we are now starting to see ample growth opportunities. Thus, we have decided to replace it with a new long-term organic EBIT growth target. We have expanded our business with new platforms in Norway and the Netherlands, while at the same time signifi- cantly increased our partnership business with new and existing partners. A focus on organic earnings growth ensures that we make the right decisions in our efforts to achieve our target of maximizing value creation in the long run. The growth formula we have pursued over the past many years is still valid, as we continue to have strong confidence in our multi-beverage strategy, and the potential for organic earnings growth is significant. Therefore, our new long-term financial target is to grow EBIT organically by an average 6-8% per year. We anticipate the EBIT margin to rise in the upcoming period as a result of our strategic focus on catego- ries that are growing faster than the overall beverage market and with a higher margin. A high EBIT margin is essential for Relative profitability Production cost per hectoliter (DKK) our long-term sustainability and ability to invest in growth and innovation. ROYAL UNIBREW Annual Report 2023 7 Contents Management report Who we are 9 Strategy 16 Our business 18 Performance 32 Governance 46 Sustainability/ESG 68 Financial statements Signatures and statements 103 Consolidated financial statements 111 Parent company annual report 156 Other information 175 → Financial review Page 33-36 → Our business Page 18-31 → Sustainability/ESG Page 68-102 Follow us: royalunibrew.com Contents ROYAL UNIBREW Annual Report 2023 8 Management report Who we are → Royal Unibrew in brief • Results for 2023 and outlook for 2024 • Results for 2023 per business segment Financial highlights and ratios • ESG results for 2023 and outlook for 2024 • ESG highlights and ratios in numbers Who we are Who we are ROYAL UNIBREW Annual Report 2023 9 Markets Multi-beverage Multi-niche Production Non- alcoholic Western Europe Northern Europe Above mainstream brands Multi-niche and niche International International AlcoholicNorthern Europe Western Europe Mainstream brands Multi- beverage 68 67 33 32 2022 2023 87 82 10 8 8 5 2022 2023 49 52 48 51 2022 2023 78 78 22 22 2022 2023 16 12 77 76 11 8 2022 2023 Net revenue by brand category (�) Volume by segment (�) EBIT by segment (�) Royal Unibrew is a leading regional multi-beverage company with strong local brand portfolios in our main markets in the Nordic region, the Baltic countries, the Netherlands, Italy, France and Canada. In addition, our products are sold in more than 70 countries in the rest of the world. We want to offer our customers and consumers a broad portfolio of high-quality beverages, which accommodates their demands over a wide range of categories, including beer, soft drinks, malt beverages, energy drinks, cider/RTD, juice, water, wine and spirits. By offering a broad and deep portfolio across categories, we strive to provide choices for every occasion. Our business is based on a solid foundation of strong local brands. In our largest markets, Denmark, Finland, the Baltic countries, Italy, the Netherlands and Norway, our local brands are accompanied by well-known international brands on license (such as PepsiCo and Heineken) and trading brands (such as Diageo). In some of our smaller markets, like Canada and Sweden, our offering consists of a mix of our own brands and agency brands. We want to be THE PREFERRED CHOICE as local beverage partner that challenge the status quo by doing better every day in a fun, agile and sustainable way, creating good and enjoyable moments for our consumers. Net revenue split in alcoholic vs. non-alcoholic (�) Royal Unibrew in brief Net revenue split (�) * Royal Unibrew also has a production facility in Toronto, Canada from the acquisition of Amsterdam Brewery. Who we are Royal Unibrew in brief 10 2019 2020 2021 2022 2023 CO 2 from production 33 34 35 36 37 38 39 40 41 0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 CO 2 (kgCO 2 /hl) scope 1+2 2019 2020 2021 2022 2023 Net revenue 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 -4 -2 0 2 4 6 8 10 12 14 Organic growth 2019 2020 2021 2022 2023 EBIT 1,350 1,400 1,450 1,500 1,550 1,600 1,650 1,700 0 5 10 15 20 25 EBIT margin Adjusted 2019 2020 2021 2022 2023 5 10 15 20 25 30 35 2019 2020 2021 2022 2023 30 35 40 45 50 55 60 2019 2020 2021 2022 2023 0 200 400 600 800 1,000 1,200 1,400 1,600 Earning per share (DKK) Share of CSD volumes with no/low sugar content (%) Net revenue/Organic growth (mDKK) (�) CO 2 from production EBIT/EBIT margin (mDKK) (�) Free cash flow (mDKK) Results for 2023 and outlook for 2024 Outlook for 2024 mDKK Outlook Actual 2023 Actual 2022 Net revenue Around DKK 15 bn 12,927 11,487 Organic EBIT growth 5%-15% 7% -14% Please refer to page 31 for more details. In 2023, we increased prices to cover input price inflation, and especially in the second half of the year, we achieved growth in both volume, net revenue, and EBIT. With increasing momentum in the business, we look forward to a 2024 characterized by profitable organic growth. Developments in 2023 • Net revenue increased organically by 4% to DKK 12,927 million (2022: DKK 11,487 million) • After a strong finish to the year, EBIT grew organically by 7% in 2023 • Free cash flow amounted to DKK 1,143 million (2022: DKK 577 million), corresponding to an increase of 98% • Earnings per share declined to DKK 21.9 (2022: DKK 23.1 per share, adjusted) • CO 2 from production decreased by 2% in 2023 despite growing volumes • In 2023, total distribution to shareholders was DKK 720 million (2022: DKK 992 million) • It is proposed to the AGM that a mandate is given to the Board of Directors authorizing them to potentially distribute an extraordinary dividend of up to DKK 14.50 per share before the end of 2024 (2022: dividend of DKK 14.50 per share) • We expect organic EBIT growth in the range of 5-15% for 2024 leading to a reported EBIT in the range of DKK 1,800-1,950 million (including acquisitions) based on net revenue of around DKK 15 billion 12.7� EBIT-margin in 2023, a decrease of 0.5 percentage point +8� EBIT increase in 2023 to DKK 1,638 million + 13� Net revenue increase in 2023 to DKK 12,927 million +98� Free cash flow increase in 2023 to DKK 1,143 million * adjusted for gains on remeasurements of investments in associates Who we are ROYAL UNIBREW Annual Report 2023 11 Results for 2023 per business segment Northern Europe DENMARK, GERMANY, FINLAND, NORWAY, SWEDEN, LATVIA, LITHUANIA AND ESTONIA Western Europe THE NETHERLANDS, ITALY AND FRANCE International MORE THAN 70 MARKETS IN AMERICAS AND EMEAA 10.8mhl VOLUME (up by 4%) 2.2mhl VOLUME (up by 36�) 1.1 mhl VOLUME (down by 18%) 1,445mDKK EBIT (up by 16%) 141mDKK EBIT (down by 10%) 75 mDKK EBIT (down by 41%) 10.0bnDKK NET REVENUE (up by 12%) 1.7bnDKK NET REVENUE (up by 28%) 1.2 bnDKK NET REVENUE (down by 2%) 14.4� EBIT-MARGIN (up by 0.5pp) 8.1� EBIT-MARGIN (down by 3.5pp) 6.4� EBIT-MARGIN (down by 4.3pp) → Read more: page 38 → Read more: page 42 → Read more: page 44 Who we are Results for 202x - business segments ROYAL UNIBREW Annual Report 2023 12 2023 2022 2021 2020 2019 Sales volume (million hectoliters) 14.1 13.4 12.3 11.1 11.0 Organic volume growth (%) -3 1 9 0 1 Income statement (mDKK) Net revenue * 12,927 11,487 8,746 7,315 7,692 Organic growth net revenue (%) 4 11 12 -3 1 EBITDA 2,208 1,997 2,020 1,861 1,814 EBITDA margin (%) 17.1 17.4 23.1 25.4 23.6 Earnings before interest and tax (EBIT) 1,638 1,516 1,652 1,515 1,469 Organic EBIT growth (%) 7 -14 6 2 4 EBIT margin (%) 12.7 13.2 18.9 20.7 19.1 Income after tax from investments in associates ** 18 362 37 33 25 Other financial income and expenses, net -250 -93 -42 -43 -36 Profit before tax 1,406 1,785 1,647 1,505 1,458 Net profit for the year 1,095 1,491 1,298 1,198 1,140 Parent company shareholders' share of net profit 1,095 1,492 1,299 1,183 1,142 Balance sheet (mDKK) Non-current assets 14,254 11,416 8,771 7,015 7,163 Total assets 17,778 14,474 10,914 8,306 8,493 Equity 5,748 5,158 3,342 3,332 3,106 Net interest-bearing debt 6,426 4,460 3,536 2,193 2,705 Net working capital -754 -770 -1,102 -875 -671 Invested capital 13,342 10,451 7,449 5,927 6,211 Cash flows (mDKK) Operating activities 1,777 1,135 1,753 1,738 1,402 Net cash used for investing activities -634 -558 -457 -324 -262 Free cash flow 1,143 577 1,296 1,414 1,140 Ratios comprised by the "Recommendations and Financial Ratios" issued by the Chartered Financial Analyst Society Denmark's Committee for Accounting standards have been calculated according to the recommendations. Definitions of financial highlights and ratios are provided on page 179. 2023 2022 2021 2020 2019 Share ratios (DKK) Number of shares (million) 50.2 50.2 48.8 49.4 50.1 Earnings per share (EPS) 21.9 30.5 26.5 24.1 23.0 Earnings per share (EPS), adjusted *** 21.9 23.1 26.5 24.1 23.0 Diluted earnings per share 21.9 30.5 26.5 24.1 22.9 Diluted earnings per share, adjusted *** 21.9 23.1 26.5 24.1 22.9 Free cash flow per share 23.0 11.8 26.4 28.8 23.0 Dividend per share* 0 14.5 14.5 13.5 12.2 Year-end price per share 451.1 495.3 737.2 706.6 610.0 Employees Average number of employees 3,984 3,365 2,890 2,631 2,567 Financial ratios (%) Return on invested capital including goodwill (ROIC) 11 13 19 20 19 Return on invested capital excluding goodwill (ROIC) 18 22 32 33 30 Free cash flow as a percentage of net revenue 9 5 15 19 15 Capex as a percentage of net revenue 5 5 5 5 4 Cash conversion 104 39 100 118 100 Net interest-bearing debt/EBITDA (times) 2.9 2.2 1.7 1.2 1.5 Equity ratio 32 36 31 40 37 Return on equity (ROE) 20 35 40 37 38 Dividend payout ratio (DPR) 0 49 55 56 54 * The IFRS-15 accounting policy concerning customer contracts was reassessed, and some sales costs were reclassifed to rebates, and as a consequence net revenue and sales costs are reduced with the same amount in 2020 and onwards. ** Income after tax from investments in associates includes gain on remeasurements of investments in associates of DKK 360 million in 2022. *** In 2022, earnings per share (EPS) and diluted earnings per share are adjusted for gain on remeasurements of invest- ments in associates (DKK 360 million). It is proposed to the AGM that a mandate is given to the Board of Directors authorizing them to potentially distribute an extraordinary dividend of up to DKK 14.50 per share before the end of 2024. Financial highlights and ratios Who we are Financial Highlights and Ratios ROYAL UNIBREW Annual Report 2023 13 0 10 20 30 40 2019 2020 2021 2022 20 23 2024E 2025E 2026E 0 20 40 60 80 100 We continued our sustainability journey in 2023 with efforts to reduce our sustainability/ESG footprint and potential impacts. We are on track on achieving our overall KPIs on consumers and customers, our products and our people. Volume growth of no/low products (products with no or low sugar/calories or no or low alcoholic content) significantly outperformed regular products, and we reached our goal of allocating 40% of our marketing budget to brands/campagins with a sustainability position. The overall increase in consumption of energy and water was 6% and 5%, respectively, in 2023 driven by acquisitions. Organically, the consumption remained unchanged. The absolute CO 2 emission from production on the other hand was reduced by 2% in 2023, corresponding to a 9% organic reduction. Thus, we start to see the effect of the transition from fossil-based energy to renewable energy. We are well underway to achieve our 100% CO 2 emission free target by 2025 for scope 1 and 2 excl. logistics. 44% of our energy consumption was based on renewable energy in 2023. We produce and consume 100% renewable elec- ESG results for 2023 and outlook for 2024 tricity. We have plans supported by capex in place for all our production sites, except the latest acquisitions in Italy and the Netherlands where we accept a short grace period. Effects of heat pumps, biobased or electrical boilers and further effi- ciencies will already reduce emissions in 2024. Our CO 2 reduction targets for scope 1, 2 and 3 are aligned with the 1.5°C trajectory of the Paris Agreement and were approved by the Science Based Target initiative (SBTi) in 2023. We have submitted our FLAG targets, zero deforesta- tion commitment and 2040 net zero targets for SBTi approval in 2024. We are gradually expanding our decarbonization journey to the entire value chain. Scope 3 emissions in 2023 were at level with our 2019 base year. However, the contribution from packaging materials was reduced by approximately 4% with a significant organic reduction of 16% driven by increased recy- cled content of cans and less glass bottles consumed. We achieved 96% recycled, recyclable or reusable packaging in 2023, and therefore we are on track toward our target of 100% recycled, recyclable or reusable packaging by 2025. We are investing in more filling lines, where cardboard will replace consumption of plastic-based shrink film. We are still challenged on our safety culture, where we have too many lost time incidents. Our Employee Engagement Score has declined slightly, where as our sustainability culture remains strong. Morningstar-Sustainalytics scored Royal Unibrew as Industry Top Rated in our sector beer, wine and spirits in 2023, proving that we are on the right path of balancing impacts, risks and opportunities with a sound finan- cial performance. Scope 1 & 2 organic development (2019 as baseline) (mkgCO 2 ) (%) Scope 1 (mkgCO 2 ) Scope 2 (mkgCO 2 ) % CO 2 reduction compared to base year Decarbonization at two major production sites Our biogas plant in Lahti, Finland and solar park in Faxe, Denmark were inaugurated in Q2 2023. Thus, we have transformed our fossil-based thermal energy to 100% bio-based energy utilizing our spent grain from production in Finland, and in Denmark our solar park delivers renewable energy corresponding to approximately 40% of the power consumption at the production facility. Further- more, a new heat pump will be fully operational in Faxe in the beginning of 2024, reducing the thermal energy consumption by approximately 30% (CO 2 emission by 25%). Who we are ESG Highlights and ratios summary ROYAL UNIBREW Annual Report 2023 14 ESG highlights and ratios in numbers 2023 2022 2021 2020 2019 PRODUCTION FIGURES Production sites 19 19 14 9 9 Production volume, total million hl 13.0 12.1 11.5 10.6 10.3 CO 2 emissions Scope 1 & 2 (location based) million kgCO 2 39.6 40.5 35.8 35.7 40.0 Scope 1 & 2 (market based) million kgCO 2 30.2 31.1 26.8 24.2 26.2 Scope 3 million kgCO 2 380 n/a 367 n/a 373 ENVIRONMENT & CLIMATE Electricity GWh 109.9 98.7 84.2 79.1 81.4 Natural gas GWh 93.0 87.3 99.5 88.3 94.2 Heat/steam/cooling GWh 32.2 34.6 33.5 30.6 37.8 Other GWh 26.9 27.0 3.1 2.8 1.9 Energy, total GWh 262.0 247.6 220.3 200.8 215.3 Water consumption, total million hl 39.4 37.5 34.8 33.3 33.3 Wastewater, total million hl 25.7 23.7 22.8 22.3 22.3 Hazardous waste million kg 0.1 0.1 0.0 0.1 0.1 Landfilled waste million kg 0.5 0.6 0.7 0.9 0.4 Incinerated waste million kg 0.8 0.7 0.6 0.7 1.5 Recycled waste million kg 15.1 10.5 5.5 5.5 5.9 Solid waste, total million kg 16.5 11.9 6.8 7.2 7.9 Recycled waste % % 91.5 88.3 80.6 76.7 74. 7 Spent grain & yeast million kg 83.3 91.7 79.2 76.8 77.4 RELATIVE PRODUCTION FIGURES Energy kWh/hl 20.2 20.5 19.2 18.9 20.9 CO 2 kg CO 2 /hl 3.0 3.3 3.1 3.4 3.9 Water hl/hl 3.0 3.1 3.0 3.1 3.2 Waste kg/hl 1.3 1.0 0.6 0.7 0.8 2023 2022 2021 2020 2019 PACKAGING MATERIALS Cans % 41.6 43.8 43.4 41.7 40.2 Returnable glass bottles % 3.9 2.3 2.4 2.9 3.4 Non returnable glass bottles % 7.3 10.1 9.1 7.9 8.7 PET % 37.6 33.4 36.0 36.8 37.0 Kegs % 3.6 2.9 2.0 1.9 3.5 Bulk % 0.8 1.0 0.3 0.2 2.9 Other % 5.3 6.5 6.8 8.5 6.5 PEOPLE WELL-BEING & DEVELOPMENT Occupational health & safety Total number of lost-time incidents (LTIs) Number 85 63 53 56 42 Lost time incident frequency per million working hrs 13.0 11.1 11.3 13.7 10.8 Number of lost days Days 786 1,153 944 2,070 1,594 Lost day rate per million working day 120 203 202 506 412 Fatalities Number 0 0 0 0 0 Employee engagement Employee turnover % 17.7 17.1 15.0 13.9 17.5 Leave of absence due to illness (not work related) % 3.0 3.6 3.8 3.7 3.9 Diversity Percentage of employees by gender, total Female % 27 26 26 24 25 Male % 73 74 74 76 75 Employees by gender, Int. Management teams Female % 32 28 29 33 32 Male % 68 72 71 67 68 * Location based: Calculated CO 2 emission based on IEA and DEFRA country factors ** Market based: Subtracting CO 2 emission covered by green certificates *** Calculated every year going forward Packaging materials excluding chips, the and coffee Who we are ESG Highlights and Ratios ROYAL UNIBREW Annual Report 2023 15 → Strategy Our strategy Strategy Strategy ROYAL UNIBREW Annual Report 2023 16 Our strategy Royal Unibrew is a multi-beverage business with a strategic focus on a decentralized organizational framework that prioritizes agile decision-making, customized to meet the preferences of local consumers and customers. Our strategy is built on the ambition of being THE PREFERRED CHOICE of local beverage partner that challenges the status quo by doing better every day in a fun, agile and sustainable way. To fulfil this ambition, we are building strong local businesses based with broad portfolios of high quality beverages and strong route-to-market operations securing broad-based market leading positions. Our strong local portfolios are complimented by well-known international brands provided by partners such as PepsiCo, Heineken, Diageo, etc. Every customer in each of our sales channels is important for our business, as our customers are our main route to market. We strive to remain relevant to our customers by offering excep- tional and comprehensive portfolios in local markets. We operate in both the non-alcoholic and alcoholic beverage segment in where we want to provide choices. We have no/ low sugar alternatives in the non-alcoholic segment and no/low alcohol alternatives in the alcoholic segment to make sure that we have products catering for diverse consumption occasions. Our product portfolio spans across all relevant categories where our products can be kept at ambient temperature, as it provides scale benefits in our value chain. It enables us to achieve higher utilization of fixed assets, higher efficiency in sales and logistics and, in general, higher productivity per employee. In markets where we do not have a multi-beverage presence, we want to build and develop strong niche positions. Our broad local brand portfolios of own brands and well-known international partner brands, together with our distribution power and our highly efficient value chain constitute key components of our profitability. High profitability is vital for a high return on invested capital and thereby important for our ability to pursue value creating growth opportunities. As a strong regional multi-beverage company, it is in our DNA to engage not only in the local societies surrounding our premises, sports clubs, cultural activities, employees’ families, but also in our brand communities in collaboration with our customers, other business partners and non-governmental organizations (NGOs). Strategy Our strategy ROYAL UNIBREW Annual Report 2023 17 → Our business Operating model • Equity story • Our growth formula • Production capacity and organizational capacity Our categories • Financial targets and capital allocation • Outlook for 2024 Our business Our business ROYAL UNIBREW Annual Report 2023 18 WAREHOUSING & DISTRIBUTIONEMPLOYEESPACKAGINGRAW MATE R IALS COMMUNITIESCUSTOMERS CONSUMERS PRODUCTION Royal Unibrew’s operating model Operating model Royal Unibrew is a multi-beverage business, with a decentralized organizational structure that fosters agile decision-making, customized to meet the preferences of local consumers and customers. Our product portfolio consists of beverages that can be stored at ambient temperatures, ensuring extended freshness and optimal efficiency across our entire value chain. Our company is rooted in robust local brand portfolios, that are strengthened by valuable international partnerships. Core to our success is a strong and efficient route to market, which in our main markets in the Nordics is a direct to customer model. Our business model is operated with a lean centralized setup, where only procurement and IT are run as global func- tions. This is to ensure that we reap the scale benefits from common procurement and IT across the Group, and that we monitor and operate the business through our simple and proven performance management, ERP and supporting systems. The commercial responsibility is locally anchored; thus, the commercial departments in local markets have a high degree of decision power, which secures a clear mandate and local ownership of the business development. Value chain It is important that we achieve a stable, high-quality and sustainable supply of the ingrediens we use for beverages, such as barley, water, sugar, juice, etc. Therefore, we work in close collaboration with our suppliers to understand the envi- ronmental and social footprint of our total activities. Addition- ally, our suppliers must comply with our Code of Conduct and ethical guidelines. We operate 19 production facilities across nine countries. In general, the vast majority of our product range is manufac- tured in these facilities, meaning that all beverages are filled in cans, glass bottles or PET bottles at the same filling lines no matter what product category. We do not produce our traded goods in-house, which also goes for some of our partner brands. On the commercial side, our multi-beverage platform also yields a lot of synergies, as the same salesforce can sell all our Our business Operating model ROYAL UNIBREW Annual Report 2023 19 engaged and included in our dynamic, team-oriented work culture that truly values everyone. Royal Unibrew is dedicated to being a responsible community member and fostering positive contributions to the sustain- able development of society. Our commitment extends to the communities where we operate, and we seek to contribute to the well-being of all our stakeholders, recognizing that this investment strengthens our business in the long run. Embedded in our culture is the active engagement not only with the local communities around our facilities, sports clubs, and the families of our employees but also with our brand communities in partnership with our customers, business associates, and non-governmental organizations (NGOs). products. Hence, the sales force can spend more time with our customers securing strong commercial relationships and top class in outlet execution. Route to market Our route to market is a critical component of our operating model, as it ensures that our broad and high-quality product portfolio reaches customers and consumers efficiently. We strive to optimize our product availability through our well-es- tablished distribution setup, while at the same time maintain our high quality standards to uphold and enhance customer satisfaction. In most of our multi-beverage markets, we operate a direct distribution model that ensures a seamless and timely flow of products from our warehouses directly to retail outlets, bars, restaurants and convenience stores or our customers' own central warehouses. In our multi-niche markets, we optimize the route to market through a combination of own direct distribution and distribu- tion partners and wholesalers. In our International business segment, we sell directly to distributors, our customers, who then stands for the in-market distribution. Products/brands Our multi-beverage model encompasses all relevant cate- gories where products can be stored at room temperature, yielding scalability advantages across the value chain. Oper- ating in both non-alcoholic and alcoholic segments, we aim to provide no/low sugar options in the non-alcoholic segment and no/low alcohol alternatives in the alcoholic segment. Our product portfolio consists of strong local brands, many of which hold iconic status in their respective home markets. Through robust marketing initiatives that reinforce brand identities, we aim to excel across all channels and further enhance the premium quality of our overall portfolio. In addtion to our own brands, we offer a range of well-known strong international brands, which we have secured through licensing agreements or third-party distribution agreements. We aspire to attain a market-leading position within the cate- gories we operate in. This aspiration applies to each of the markets where we are present. Environment, social and governance We have an ambitious aspiration to become a global leader in sustainable beverages, which is manifested in our ambitious decarbonization targets. At the end of 2023, these emission reduction targets were validated by the Science Based Target initiative (SBTi). We also continue to support the UN Global Compact. We support and seek a circular economy for our packaging, and we want 100% of our packaging materials to be recycled, recyclable or reusable by 2025. With well-established deposit return systems in our main markets, we see high recycling rates, but we continue to make efforts to improve. Our colleagues are the foundation of our business, and we want to attract the most engaged, diverse and talented people with an entrepreneurial attitude, who are empowered and eager to do better every day. We employ around 4,000 people across the Group, and we aim to create a safe work environment, where our talented and loyal employees will feel Our business ROYAL UNIBREW Annual Report 2023 20 Equity story Royal Unibrew is a growth company with solid profitability, high cash conversion and a disciplined capital allocation for the benefit of our stakeholders. Strong market positions Our strong market positions and efficient route to markets are vital for our profitability. Multi-niche and multi-beverage offerings through leading brand portfolios increase the numbers of must stock brands in the individual markets and thereby increase our portfolios’ attractiveness toward customers. We are a market leading beverage supplier throughout the Nordics and the Baltic countries, while we are market leading in categories in our multi-niche markets. Strong track record of earnings growth The development of our multi-beverage operating model and our expansion of market platforms, from which we have and are creating multi-beverage operating models, have over time created significant earnings growth. During the past ten years, the average annual growth in EBIT has been 11%, driven by both organic and inorganic contributions. A sustainable business Royal Unibrew has established a robust founda- tion with concrete initiatives, goals and KPIs for achieving our long-term strategy of being among the most sustainable beverage companies globally. We continue to support the UN Global Compact and has enrolled in the Task Force on Climate-Related Financial Disclosures (TCFD). By the end of 2023, our ambitious emissions reduction targets were vali- dated by the Science Based Targets initiative (SBTi). Leading brand portfolio We want to be THE PREFERRED CHOICE for our customers and consumers. We strive for this position by offering our customers and consumers a portfolio of leading beverage brands. The foundation of superior portfo- lios lies in strong local brands, reinforced by strong, influential, and well-known interna- tional brands through strategic partnerships. Disciplined capital allocation The main objective of our capital allocation is to create financial flexibility, enabling us to make the necessary investments in organic growth – and pursue inorganic growth opportunities, i.e. value creating acquisitions. Historically, this approach has facilitated a healthy redistribution of surplus cash. High cash conversion Our multi-beverage operating model yields high profitability as beverages, assets and people are leveraged throughout the value chain. High profitability is the foundation for a high return on invested capital (ROIC), which enables us to invest in value creating growth – both organic and inorganic. Clear growth and value oriented long-term strategy We have identified six focus areas for Royal Unibrew’s long-term strategy: energy drinks, enhanced water, cider/RTD, no/low sugar products, no/low alcoholic products and premiumization. All these areas are expected to structurally grow faster than the average beverage market, and most of the areas are also expected to generate higher margins than Royal Unibrew’s average margin. Our business Equity story ROYAL UNIBREW Annual Report 2023 21 Our growth formula Royal Unibrew remains committed to delivering profitable earnings growth in the coming years. We drive our everyday business by maximizing organic EPS growth in the long-term. Royal Unibrew has market leading portfolios of non-alcoholic and alcoholic beverages throughout its main markets with multi-beverage offerings in the Nordic region and the Baltic countries and leading market share positions in several categories. In addition, Royal Unibrew has strong niche positions in the Netherlands, Italy, France and Canada as well as export business in more than 70 additional countries. Our focus on selected growth cate- gories across geographies aims for higher organic volume growth than the underlying market growth. Strong multi-beverage portfolio, strong distri- bution power and excellent in-store execution contribute to slightly growing market shares in the markets we operate. Overall, we expect our markets to develop flattish in the coming years. Costs efficiency and effi- ciency improvements in general have always been part of how we work and think. Our culture-driven can-do attitude combined with a pronounced degree of team- work entail that we do things better and more efficient every day. Our strategic focus on structurally growing areas within our portfolio, which mostly comes with higher margins, optimizes our ability to increase price per volume unit, forming a solid founda- tion for an underlying margin expansion. We optimize the value of our brand portfolio through a focused price/pack strategy, balancing pricing and packing to meet consumer expectations. In combination with the right innovations and a focus on profitable channels and categories this is how we drive value every day. Price per volume unit has also increased significantly as a conse- quence of cost inflation, which means that we need to stay focused on the underlying profitability of our products. We do so by monitoring consumer demand, leveraging our price/pack architecture and other price/mix tools. It has always been a core part of our strategy to create value through acquisitions of companies. We have created significant value through acquisitions over time, and the foundation for acquisitions will always be that they can be incorporated in our operating model and, likewise, that our business model enables us to extract synergies from the combination of businesses. Timing of acquisitions is unpredictable and therefore not something that can be planned. Over the past couple of years, we have made several acquisitions of companies that have been on our radar for many years. These are as standalone units not transformative for Royal Unibrew, but in its totality they have transformed Royal Unibrew from a country-based company to a pan-Nordic company with several Western European growth opportunities. On top of this, we have made bolt-on or brands/category acquisitions to improve our market positions and like- wise acquired production assets to expand production capacity and bring production closer to consumption. All acquisitions are expected to contribute to organic EBIT growth in the coming years. Our multi-beverage model is a highly cash generative business, and it provides us the ability to develop the business in line with our strategic priorities while at the same time enable us to distribute an attractive pay-out to our shareholders. It is our priority to create a positive total shareholder return through a combination of growing distribution (dividends and share buy-backs) and increasing share price. Share buy-backs will be the balancing instrument to secure that we remain financially flexible within our capital allocation policy (see page 30). Due to our net interst-bearing debt/EBITDA being above our target of 2.5x, share buy-backs are currently on hold. Our growth formula: volume + value + efficiency + potential M&A + share buy-backs = increased earnings per share Volume growth Value growth Operating leverage Mergers and acquisitions Share buy-backs Our business Our growth formula ROYAL UNIBREW Annual Report 2023 22 DK DK DK FI FI DK FI DK DK NL IT Production capacity and organizational capacity Production capacity After many years of high volume growth, the recent years have been characterized by shorter periods during which we have lacked production capacity in Denmark, primarily affecting our International business unit, the Danish market, and the Group's profitability. In the years leading up to and following the acquisition of Hartwall, production capacity exceeded the demanded and produced quantities. The 2010s were marked by surplus capacity, efficiency improvements, high service levels to customers, and consequently, increasing profitability. As capacity utilization became more optimal, we began plan- ning ongoing capacity expansions in response to the contin- uously growing business. However, with the onset of COVID- 19, all expansion plans were put on hold due to restrictions on external parties in our production facilities. Emerging stronger from COVID-19 with higher volumes and expanded partnership collaboration agreements, we found ourselves in a situation of insufficient production capacity. Consequently, we had to prioritize which of our markets should receive which products, impacting our International business and the Danish market. Since emerging from COVID-19, we have worked diligently to address the production capacity backlog, undertaking both organic and inorganic investments. Organic capacity investments 2013 CAN LINE, DENMARK 2014 PET LINE, DENMARK 2017 MICRO-BREWERY, FINLAND MICRO-BREWERY, DENMARK 2021 CAN LINE, DENMARK 2022 PET LINE, FINLAND CAN LINE, DENMARK WAREHOUSE CAPACITY, DENMARK 2023 GLASS BOTTLE LINE, FINLAND WAREHOUSE CAPACITY, FINLAND 2024 PET LINE, DENMARK CAN LINE, THE NETHERLANDS GLASS BOTTLE LINE, THE NETHERLANDS CAN LINE, ITALY Between 2014 and 2022, the sole capacity expansions involved a micro-brewery in Denmark, a micro-brewery in Finland and a can line in Denmark because the focus was on maximizing the utilization of existing capacity and because COVID-19 made capacity expansion impossible as external people was not allowed to enter our sites. Our business Mergers & Acquisitions ROYAL UNIBREW Annual Report 2023 23 TM Bolt-on acquisitions • Minor businesses with operations within an area where Royal Unibrew is already present through the multi-beverage model • The acquired business is relatively simple to integrate • Significant value creation potential as synergies are relatively large as percentage of acquired revenue Brand/category acquisitions • Acquisitions of brands, which will give Royal Unibrew exposure to brands/ categories in existing niche/multi-niche markets • Includes acquisitions of brands in cate- gories where we are already established but where we significantly improve our market position through the acquisition of complementary brands • Sizeable syngergies Platform acquisitions • Businesses in markets where we have limited or no presence • Provides us with a strong market position within one or more categories • Normally more demanding in terms of integration • Cost synergies are lower in the short run, but over the long run these acquisitions offer significant potential Asset acquisitions • Acquisition of additional production capacity close to consumers • Accelerates development of additional capacity and people skills • Is often less expensive than building new capacity • Logistics synergies and CSR improve- ments by optimized route-to-market and capex avoidance Examples include Nørrebro Bryghus Total acquired bolt-on net revenue (2021-2023) DKK ~150 million Total acquired brand/category net revenue (2021-2023) DKK ~275 million Total acquired platform net revenue (2021-2023) DKK ~3,800 million Total acquired asset net revenue (2021-2023) DKK ~300 million Examples include Amsterdam Brewery Examples include Vrumona Examples include San Giorgio Royal Unibrew’s acquisitions Over the past three years, we have made several acquisitions that have, in various ways, helped and will continue to help improve capacity utilization at Group level. We categorize acquisitions into four types. Our business ROYAL UNIBREW Annual Report 2023 24 PLATFORM ACQUISITION CASE Vrumona became a part of Royal Unibrew in September 2023. Vrumona is the second-largest soft drinks company in the Netherlands and constitutes a new platform for us in Western Europe. Vrumona's product portfolio consists of a range of strong own brands and partner brands. The company is located near Utrecht and adds more than 300 dedicated skilled colleagues to our Group. With robust local brands and a highly effective local organization, Vrumona aligns well with Royal Unibrew's operating model. The company was the first in the Netherlands to truly focus on bever- ages with no/low sugar and calorie content. Hence, Vrumona has a powerful position in this segment of the beverage market. Through the acquisition of Vrumona, we have also expanded our partnership with PepsiCo, as Vrumona operates the complete beverage portfolio for PepsiCo in the Netherlands. The company's produc- tion facility has excess capacity, which we already benefit from in other markets now, and its structures and processes are robustly ingrained in the organi- zation. Initially, platform acquisitions often yield lower returns as cost synergies are low in the first years. They constitute the backbone for a local business and ensure that future business expansion projects will yield high returns. Therefore, Vrumona and other platform investments are considered investment cases rather than acquisitions based on signifi- cant cost savings. With these acquisitions, we aim to achieve strategically strong market positions, contributing to consistently high organic revenue growth through the implementation of our multi-bev- erage strategy. The acquisition of Vrumona establishes new growth platform in the Netherlands “Vrumona is a leading soft drinks company with a high quality broad brand portfolio and a strong local organization, which makes it a very good strategic fit for Royal Unibrew. ” Our business ROYAL UNIBREW Annual Report 2023 25 Organizational capacity A doubling of the business volume in few years naturally requires an upgrade of the organizational capacity. The companies we acquire will naturally be optimized using local resources, whereas expansion of partnerships creates opera- tional efficiencies when we add them to our existing business where it takes advantage of fixed costs already present. Therefore, it is primarily the central organizational capacity that has been and will continue to be upgraded. It is particularly the group functions procurement and IT that require more resources as our business volume continues to grow. Additionally, the central finance function, including ESG, demands significantly more resources. “The acquisition of a production facility in Italy supports the continued growth of our italian business as well as alleviating production constraints in the group." ASSET ACQUISITION CASE Towards the end of 2023, we also completed the acquisition of a production facility from Birra Castello located in San Giorgio di Nogaro, Italy. This was a strategic initiative aimed at supporting our continually growing business in Italy and our expanding business in international markets. The acquisition will ultimately assist in releasing production capacity in Denmark for the Danish market, while at the same time enabling us to relocate our beer production to the Italian market from Denmark to Italy. This move contributes to a more optimal sustainable footprint for Royal Unibrew. Having production locally in Italy will also make the Italian commercial organization more agile and responsive to customer requests, enhancing the overall quality of the deliv- ered service. The alternative to acquiring a brewery in Italy would have been an investment in expanding brewing capacity in Faxe, Denmark. However, this expansion would not have been optimally positioned, as what we needed was a platform to serve the Italian market and international markets. Additionally, the cost of expanding brewing capacity in Faxe, Denmark, would have been at least 2-3 times higher than the amount we paid for the brewery in San Giorgio di Nogaro. Royal Unibrew's group production capacity expanded with the acquisition of a production facility In Italy 3.4x More IT people 2.2x More procurement people 2.5x More finance people Group functions upgraded to support expanded business (2019-2024) Our business ROYAL UNIBREW Annual Report 2023 26 34 29 11 5 5 4 2 10 2021 Beer CSD Wine & spirits Cider/RTD Energy Water Other Malt 29 31 2022 2023 13 10 5 5 4 3 Our high-quality beverage portfolio comprises both own brands and partnerships brands, spanning a broad range of both alcoholic and non-alcoholic beverages. It is our aim to offer choices for all consumers at most occasions, including no/low alcoholic alternatives within the alcoholic segment and no/low sugar alternatives within the non-alcoholic segment. Non-alcoholic beverage net revenue grew organically more than double the level of alcoholic beverages in 2023 driven by high growth in carbonated soft drinks (CSD) and a negative growth in beer. Together with the acquisition of Vrumona in the Netherlands, the share of net revenue for non-alcoholic beverages increased to 51% of total net revenue compared to a share of 48% in 2022. Fastest organic growing categories on net revenue in 2023 was CSD and energy. Non-alcoholic beverages Driven by good execution in most markets, and the extended partnership with PepsiCo on the border between Denmark and Germany, our largest non-alcoholic category CSD grew net revenue organically by almost 20%. In combination with the acquisition of Vrumona in the Netherlands CSD was 34% of total net revenue in 2023 up from 29% in 2022. In 2023, we experienced organic net revenue growth in one of our most profitable categories, energy drinks. As the share of energy drinks are relatively low in our recently acquired businesses, energy drinks continue to be 5% of our total net revenue. In 2023, we launched CULT as the energy drink for the Norwegian market. The launch is off to a good start, and quickly conquered a good market position. Water net revenue grew organically by 3% in 2023, despite a significant volume decline of almost 25% in the Baltics due to price increases on low margin high volume SKU’s. Our malt beverage business net revenue declined in 2023, as glass bottle capacity constraints meant that it was down prioritized on behalf of other more profitable products. Alcoholic beverages Following the acquisition of Vrumona in the Netherlands, beer is no longer our biggest category, as its share of net revenue has declined from 31% in 2022 to 29% in 2023. Net revenue declined organically, as a result of de-stocking in Italy in the Our categories Revenue split categories (%) CSD Beer Wine and spirits Cider/RTD Energy Water Other Malt Our business Our categories ROYAL UNIBREW Annual Report 2023 27 -25 -20 -15 -10 -5 0 5 10 15 20 Beer Water Malt beverages Wine and spirits CSD Cider/RTD Energy drinks -6% 3% -24% -7% 19% 1% 5% beginning of the year, lower sales in International as it was down prioritized and a less optimal channel mix towards the end of the year. Wine and spirits, which was 11% of net revenue in 2023, declined organically as the market is affected by price increases and higher cost of living in general. Towards the end of the year, the price increases executed in Q3 2023 started to impact net revenue positively. Further price increases are planned for 2024 to mitigate the devalued Norwegian and Swedish kroner. Our cider/RTD business constitutes 10% of total group net revenue and grew organically by 1% in 2023. This perfor- mance is due to the very successful launch of a new Original Long Drink variant with pineapple in Finland. The innovation not only secured a stronger market position for the Original Long Drink, but also expanded the cider/RTD segment in Finland. Organic category net revenue growth (%) Our business ROYAL UNIBREW Annual Report 2023 28 2019 2020 2021 2022 2023 2.91.5 1.2 1.7 2.2 2019 2020 2021 2022 2023 0%54% 56% 55% 49% 2019 EBIT margin 2019 Acquisitions 2020 2021 2022 2023 Inflation Organic EBIT margin reported 4% 19% 2% -2% -5% 1% 6% 7% 13% -14% <2.5 times 40- 60% of consolidated profit for the year 6- 8% Organic EBIT growth We aim to drive Royal Unibrew’s long-term developments to its fullest potential to maximizing shareholder value creation to the benefit of all stakeholders. This involves establishing the right financial targets, which support a long-term view of the business, while at the same time being ambitious in the short-term. This must be governed by strict capital management to secure the necessary financial flexibility, which enables us to invest in both organic and inorganic profitable growth opportunities. All while maintaining efficient capital allocation and securing strong shareholder distribution. In recent years, we have undertaken a series of acquisitions, each of which, on its own, may not have been transformative, but collectively, they have had a transformative impact on our company. While each of these acquisitions has diluted margins in the short-term, they will all contribute to value creation in the long run. At the same time, we have signifi- cantly increased our partnership business with new and existing partners. New long-term financial targets We have significantly enhanced our Nordic footprint through recent inorganic investments, transforming Royal Unibrew into a true Nordic multi-beverage company. At the same time, we have strengthened and expanded our presence in Western Europe, where we now have multiple platforms, each possessing several options for future growth opportu- nities. In other words, Royal Unibrew has transformed from being a mature, high-margin business into a growth-oriented company with substantial potential for organic EBIT growth. Our net revenue has increased by approximately 70% through acquisitions since 2019. We are now in a position where we have the opportunity to drive significant organic profit growth by optimizing our current business, expanding in new markets and growing our partnerships. We have strong confidence in our multi-beverage strategy with focus on categories that are growing faster than the overall beverage market and with higher margins. A focus on organic earnings growth ensures that we make the right decisions in our efforts to achieve our goal of maximizing Financial targets and capital allocation * It is proposed to the AGM that a mandate is given to the Board of Directors authorizing them to potentially distribute an extraordinary dividend of up to DKK 14.50 per share before the end of 2024. Dividend pay-out ratio EBIT margin development 2019-2023 NIBD / EBITDA Our business Financial targets ROYAL UNIBREW Annual Report 2023 29 value creation in the long run, and we want this to be reflected in our long-term financial target. In light of this, our new long-term financial target is to grow EBIT organically by an average 6-8% per year. It remains our ambition to increase the EBIT margin. Given the current business composition and prevailing input prices, we expect to organically grow the EBIT margin in the same period. Capital structure and distribution policy The objective of our capital structure policy is to secure flex- ibility to develop the business in line with our strategic priori- ties. It remains our target to have a net interest-bearing debt below 2.5 times EBITDA. At the end of 2023, we were above this target, and therefore, our focus in the coming period is to bring the financial leverage down in accordance with our target. We endeavor to secure financial flexibility through long-term loan agreements and facilities. Our priorities for capital allocation remain: 1. Maintain financial flexibility - Net debt/EBITDA less than 2.5 2. Invest in organic growth Total distribution for the year mDKK 2023 2022 2021 2020 2019 Dividend 720 692 653 600 538 Share buy-backs 0 300 582 362 433 Total distribution 720 992 1,235 962 971 as a % of prior year consolidated profit 48 76 103 84 93 3. Acquisitions 4. Stable dividend pay-out ratio (40-60%) 5. Share buy-backs to adjust capital structure As was the case at the end of 2022, we may depart from the targeted ratio for a certain period if structural business opportunities arise. In an ongoing effort to close the capacity gap resulting from robust growth during the pandemic, continued expansion of our partnership business, expected future organic growth and an ongoing priority to invest in sustainability and circularity, we expect that our investments will remain at a high level in the coming years. The Board of Directors continuously evaluates whether the capital structure needs to be adjusted by launching share buy-back programs. With the current high financial leverage, no share buy-backs are expected for 2024. Our business ROYAL UNIBREW Annual Report 2023 30 Outlook for 2024 Outlook for 2024 mDKK Outlook Actual 2023 Actual 2022 Net revenue Around DKK 15 bn 12,927 11,487 Organic EBIT growth 5%-15% 7% -14% We expect organic EBIT growth of 5-15% in 2024 (equivalent to a reported EBIT in the range of DKK 1.8-1.95 billion, including acquisitions) and net revenue of around DKK 15 billion. Uncertainty regarding the macroeconomic development and consumer behavior remains unchanged. Total cost per hectoliter is not expected to organically decrease significantly in 2024. Revenue Due to the overall uncertainty of the macroeconomic devel- opment and consumer behavior, we have based our net revenue expectations on a flat volume development and a positive price/mix leading to a low-to-mid-single digit percentage organic net revenue growth, as the M&A contri- bution from Vrumona and San Giorgio is expected to be around DKK 1.5 billion. We have not monitored any significant changes to consumer behavior recently. Consumers still appear to be going out less frequently and spending less during their outings, particularly affecting the On-Trade sector negatively. Additionally, we anticipate consumers in the Off-Trade sector to continue to be seeking good deals. Profitability We expect organic EBIT growth of 5-15% in 2024 (equiva- lent to a reported EBIT in the range of DKK 1.8-1.95 billion, including acquisitions). We do see deflation in some input price categories, whereas inflation in other cost categories is increasing in 2024. We continue to expect that total cost per hectoliter will not organically decrease significantly in 2024. Vrumona is expected to contribute in-organically to EBIT by around DKK 80 million in 2024, whereas the EBIT impact from San Giorgio will be non-material. We will do investments in Italy during 2024, which will neutralize the underlying earn- ings of the business, and the benefits, which will materialize in both Italy and International, is not expected to impact EBIT until 2025. As a consequence, and supported by an expected positive value management impact, we do expect the EBIT margin to expand organically. Top and bottom end of range The macro setting is highly uncertain due to geopolit- ical uncertainty and pressure on consumers discretionary spending power. The main factors impacting profitability are: • Consumer behavior and impact on channel mix • High season weather Financial assumptions • Net financial expenses, excluding currency related losses or gains, of around DKK 350 million • Corporate income tax rate of around 21% • The guidance is built on normal summer weather and trav- elling activities • Capex in the range of DKK 850-1,000 million Our business Outlook for 202x ROYAL UNIBREW Annual Report 2023 31 → Performance Financial review • Northern Europe Western Europe • International Performance Performance ROYAL UNIBREW Annual Report 2023 32 Financial review Financial review of FY 2023 and Q4 2023 results With a strong year-end finish and an organic EBIT growth of 29% in Q4 2023, the annual EBIT concluded at DKK 1,638 million, meeting expectations within the guided range. This outcome has been achieved despite the aftermath of generally higher consumer living costs and a historically poor summer, thanks to the dedicated and persistent efforts of our employees. Our overall business scope significantly expanded as both Vrumona and San Giorgio have become part of Royal Unibrew. Northern Europe and Western Europe performed particularly well in the quarter, while International continues to be affected by a lack of production capacity. FY 2023 results The start of the year was difficult as the cost base was nega- tively impacted by very high inflation and price increases were needed to offset the higher cost levels. The higher prices put slight pressure on volumes and volume growth was nega- tive in 2023 as consumers were hit by higher general living costs. Clearly, gross profit margins came under pressure in the beginning of the year and continued to be so until price increases covered the inflation. Poor weather, especially in the Nordics, put pressure on the business during the summer peak season. Towards the end of the year, performance improved as price increases were implemented. In our multi-beverage markets, strong market positions and solid customer relationships supported a very strong development. Overall, volumes declined organically by 3% in 2023, while strong price/mix impact resulted in an organic net revenue growth of 4%. EBIT increased organically by 7%, resulting in an EBIT margin that declined by 50 basis points to 12.7% negatively impacted by acquisitional impacts of almost 1 percentage point. Key highlights Q4: • Organic volume growth of 2% (FY 2023: -3%) • Positive price/mix from pricing initiatives and mix improvements • Organic net revenue growth of 6% (FY 2023: 4%) • EBIT increased organically by 29% (FY 2023: 7%) • EBIT margin up by 1.3 percentage points to 12.2% (FY 2023: down 0.5 percentage point to 12.7%) Financial highlights Q4 and FY 2023 In Q4 2023, volumes increased by 28% compared to Q4 2022, totalling 4.0 million hectoliters. The organic volume growth was 2%, with the difference of approximately 800 thousand hectoliters explained by the acquisitions of Vrumona and San Giorgio. For FY 2023, the volume saw a 6% increase, corresponding to an organic decline of 3% driven by poor weather in peak season and destocking in Italy. In Q4 2023, net revenue rose by 22% (organic: 6%), reaching DKK 3,444 million. The net revenue growth for FY 2023 was 13% (organic: 4%) compared to 2022, amounting to DKK 12,927 million. Production costs in Q4 2023 increased by DKK 333 million, a 19% rise. Consequently, the gross profit increased by 28%, resulting in a gross profit margin of 38.9%, which is 1.8 percentage points higher than in 2022. This is a result of value management activities carried out during the past two years of input price inflation, including price initiatives across our business. For FY 2023, the gross profit margin declined by 0.7 percentage points to 41.7% compared to 2022. Performance Financial review ROYAL UNIBREW Annual Report 2023 33 Sales and distribution costs increased by 10% in Q4 2023 but decreased as a percentage of net revenue to 22.7% from 25.3% in Q4 2022. This was primarily due to lower freight and distribution costs, which was positively impacted by the reduction of freight rates compared to the same period the year before. In FY 2023, sales and distribution costs increased by 8%, falling from 25.5% of net revenue in 2022 to 24.4% in 2023. The fourth quarter of 2023 marked the third consecutive quarter of organic EBIT growth, a result of highly effective execution in Northern Europe and Italy. EBIT for Q4 was DKK 114 million higher than in 2022, amounting to DKK 421 million (2022: DKK 307 million) impacted positively by DKK 30 million from the long planned sale of a brewery site in Norway. For FY 2023, EBIT increased by DKK 122 million compared to 2022, totaling DKK 1,638 million (2022: DKK 1,516 million). The reported EBIT margin increased by 1.3 percentage points to 12.2% in Q4 2023 due to lower production costs and lower freight and distribu- tion costs. For FY 2023, the reported EBIT margin declined by 0.5 percentage points compared to 2022. In Q4 2023, acquisitions diluted the EBIT margin by 1.1 percentage point, whereas they diluted the EBIT margin by almost 1 percentage point in FY 2023 compared to the previous year. Free cash flow amounted to DKK 388 million in Q4 2023 compared to DKK -37 million in Q4 2022, while the free cash flow for FY 2023 was DKK 1,143 million compared to DKK 577 million in 2022. This development is driven by higher earnings and a positive swing of DKK 535 million from a decrease in working capital. Developments in activities for the period October 1 - December 31 broken into market segments Northern Europe Western Europe International Group Q4 2023 Q4 2022 Q4 2023 Q4 2022 Q4 2023 Q4 2022 Q4 2023 Q4 2022 Volumes (million hectoliters) 2.6 2.5 1.1 0.2 0.3 0.4 4.0 3.1 Organic volume growth (%) 4 11 -16 2 Net revenue (DKK million) 2,459 2,278 684 187 302 352 3,444 2,818 Organic net revenue growth (%) 7 27 -14 6 Management’s review The strong top-line development in Q4 2023 was supported by robust commercial execution in the majority of our markets. Additionally, Italy had a significant positive impact on the top line, as 2022 figures were very weak due to de-stocking in the wholesale On-Trade beer business. The annual negotiations have proceeded constructively with the vast majority of our customers, and the results will be implemented gradually throughout the first quarter of 2024. The focus has been on addressing the general inflation in society reflected in salaries, among other things. The integra- tion of Vrumona in the Netherlands and San Gorgio in Italy is proceeding according to plan. Net debt Net debt by the end of 2023 amounted to DKK 6,426 million, which is an increase of DKK 1,966 million compared to year-end 2022. The increase in net debt is primarily driven by the acquisitions of Vrumona in the Netherlands and San Giorgio in Italy. Net interest-bearing debt/EBITDA increased from 2.2x to 2.9x over the same period. Financial review In Northern Europe, there was a 4% organic increase in volumes in Q4 2023, leading to a 1% organic volume increase for FY 2023. Net revenue increased organically by 7% in Q4 2023 and organically by 8% in FY 2023. The positive devel- opment was driven by strong performance in our multi-bev- erage markets. In Western Europe, volume growth was adversely affected by destocking in Italy in Q4 2022. Consequently, volumes increased organically by 11% in Q4 2023, and net revenue increased organically by 27% in the quarter due to a positive impact on price/mix from the more positive product mix. For FY 2023, volumes in Western Europe decreased organically by 14%, while net revenue decreased organically by 4%. This performance was caused by an exceptional good summer in Italy in 2022 making comparable numbers difficult to meet as well as the destocking in Italy, which impacted the first Performance ROYAL UNIBREW Annual Report 2023 34 four months of 2023 negatively before normalizing for the remainder of the year. The International segment continues to be under pressure as the high inflation makes it less competitive relative to local competition that is not affected by inflation to the same degree. Volumes declined by 16% in Q4 2023 leading to net revenue growth of -14% in the quarter compared to the same period the year before. For FY 2023, volumes decreased organically by 21%, whereas net revenue decreased organi- cally by 14%. At the Group level, this resulted in an organic volume increase of 2% in the last quarter of 2023, bringing the full-year devel- opment to a 3% organic volume decrease. Strong in-market execution and price initiatives across the Group supported a positive price/mix impact, resulting in an organic net revenue increase of 6% for Q4 2023 and 4% for FY 2023. The negative impact from weaker Norwegian and Swedish kroner was around DKK 55 million on net revenue in the quarter. Adjusting for this, organic net revenue was 2 percentage points higher. EBIT increased by DKK 114 million in Q4 2023, leading to an EBIT increase of DKK 132 million in H2 2023, corresponding to an organic increase of 13%. The International division continued to be negatively impacted by high costs, resulting in an organic EBIT decline of 29% in H2 2023. In Western Europe, the normalization of the Italian wholesale On-Trade beer market resulted in an organic EBIT increase of 89% in H2 2023, whereas it declined by 25% for FY 2023 because of the exceptional good summer in Italy in 2022. In Northern Developments in activities for the period July 1 - December 31 broken into market segments Northern Europe Western Europe International Unallocated Group H2 2023 H2 2022 H2 2023 H2 2022 H2 2023 H2 2022 H2 2023 H2 2022 H2 2023 H2 2022 Volumes (million hectoliters) 5.4 5.5 1.5 0.7 0.6 0,7 7.5 6.9 Organic volume growth (%) -1 -4 -17 -3 Net revenue (DKK million) 5,092 4,891 1,083 591 605 631 6,781 6,114 Organic net revenue growth (%) 4 8 -12 2 EBIT (DKK million) 807 709 76 28 50 61 -6 -3 928 796 Organic EBITgrowth (%) 14 89 -29 13 EBIT margin (%) 15.9 14.5 7.0 4.7 8.3 9,7 13.7 13.0 Developments in activities for the period January 1 - December 31 broken into market segments Northern Europe Western Europe International Unallocated Group FY 2023 FY 2022 FY 2023 FY 2022 FY 2023 FY 2022 FY 2023 FY 2022 FY 2023 FY 2022 Volumes (milion hectoliters) 10.8 10.4 2.2 1.6 1.1 1.4 14.1 13.4 Organic volume growth (%) 1 -14 -21 -3 Net revenue (DKK million) 10,023 8,943 1,738 1,353 1,166 1,191 12,927 11,487 Organic net revenue growth (%) 8 -4 -14 4 EBIT (DKK million) 1,445 1,247 141 157 75 128 -23 -16 1,638 1,516 Organic EBITgrowth (%) 16 -25 -40 7 EBIT margin (%) 14.4 13.9 8.1 11.6 6.4 10.7 12.7 13.2 Performance ROYAL UNIBREW Annual Report 2023 35 Europe, EBIT developed favorably in Q4 2022 due to strong execution across our multi-beverage markets, resulting in an organic EBIT increase of 14% in H2 2023 and 16% for FY 2023. In Denmark, net revenue increased by 20% to DKK 939 million in Q4 2023, and for FY 2023, net revenue increased organ- ically by 19%. In Finland, net revenue increased organically by 5% in Q4 2023, while net revenue grew by around 6% organically in FY 2023. Both markets were supported by price initiatives and strong commercial execution. In Norway, net revenue amounted to DKK 437 million in Q4 2023, which corresponds to an organic decline of 9%. Adjusting for the weaker Norwegian kroner, net revenue increased organically by 1%. In FY 2023, net revenue decreased organically by 17% and adjusting for the weak currency development, the organic decline was 6%. Net revenue (DKK million) - selected countries in Northern Europe Q4 2023 Q4 2022 % change H2 2023 H2 2022 % change FY 2023 FY 2022 % change Denmark 939 781 20 1,957 1 ,674 17 3,786 3,169 19 Finland 735 700 5 1,569 1,554 1 3,151 2,958 6 Norway 437 482 -9 826 960 -14 1,602 1,495 7 Sweden 119 95 26 236 191 24 466 379 23 Baltic countries 229 221 4 505 512 -1 1,019 942 8 In Sweden, net revenue increased organically by 25% to DKK 119 million in Q4 2023 and adjusted for the weak currency 28%. In the Baltic countries, net revenue increased organically by 4% in Q4 2023 due to high price increases, whereas for FY 2023, the organic net revenue growth amounted to 8%. Management review for the parent company Net profit for the year was DKK 1,032 million compared to DKK 1,571 million in 2022. The decrease of DKK 539 million against last year was driven by increased net financial costs of DKK 95 million and by recognition of a gain on investments in associates of DKK 460 million in 2022. In 2023, the equity increased by DKK 552 million from DKK 4,967 million to DKK 5,519 million, primarily driven by a profit for the year of DKK 1,032 million and a sale of shares for treasury of DKK 249 million offset by dividends paid to share- holders of DKK 720 million. Performance ROYAL UNIBREW Annual Report 2023 36 2022 2023 78 78 2022 2023 12 13 2022 2023 10 9 2022 2023 82 87 2022 2023 10 8 2022 2023 8 5 Share of net revenue Share of net revenue Share of net revenue Share of EBIT Share of EBIT Share of EBIT Overview business segments financial performance Northern Europe DENMARK, ESTONIA, FINLAND, GERMANY, LATVIA, LITHUANIA NORWAY AND SWEDEN Western Europe FRANCE, ITALY AND THE NETHERLANDS International MORE THAN 70 MARKETS IN AMERICAS AND EMEAA → Read more: page 44→ Read more: page 38 → Read more: page 42 Performance Overview business segments nancial performance ROYAL UNIBREW Annual Report 2023 37 Northern Europe NORTHERN EUROPE mDKK 2023 2022 % changes %organic Volumes (thl) 10.8 10.4 4 1 Net revenue 10,023 8,943 12 8 EBIT 1,445 1,247 16 16 EBIT margin 14.4 13.9 Financial performance Total volumes increased by 4% in 2023 to 10.8 million hecto- liters. Organic growth amounted to 1% despite high price increases, resulting in improved market shares, and was realized despite poor summer weather. Net revenue increased from DKK 8,943 million in 2022 to DKK 10,023 million in 2023, corresponding to a growth of 12%. Organic net revenue growth amounted to 8% and were driven by price increases as well as an improvement in price/mix. “Overall, our Northern European business performed very strongly in 2023. The mature markets, Finland, Denmark, and the Baltics, increased net revenue and earnings despite cost inflation and an unfavorable summer. In Norway, the integration is well under way, and we have secured important customers for the future. ” Kalle Järvinen, SVP Baltic Sea, Sweden & Norway and Managing Director Hartwall, Finland 10.8 mhl VOLUME (up by 4 %) 1,445 mDKK EBIT (up by 16%) 10.0bnDKK NET REVENUE (up by 12%) 14.4% EBIT-MARGIN (up by 0.5pp) EBIT increased by DKK 198 million from DKK 1,247 million in 2022 to DKK 1,445 million in 2023. This corresponds to an organic growth of 16% and resulted in an improved EBIT margin that expanded by 50 basis points from 13.9% in 2022 to 14.4% in 2023. The improvement in EBIT and profitability is driven by Finland, Denmark and the Baltic countries. EBIT (bnDKK) EBIT-margin (%) Volumes (mhl) Net revenue (bnDKK) 20212020 2022 2023 0,0 0,3 0,6 0,9 1,2 1,5 20212020 2022 2023 0 6 12 18 24 30 20212020 2022 2023 0 2 4 6 8 10 12 20212020 2022 2023 0 2 4 6 8 10 Performance Northern Europe ROYAL UNIBREW Annual Report 2023 38 The Finnish market declined in 2023, as a result of inflation and higher living costs in general, which towards the end of the year also started to impact consumer behavior. In this challenging market environment, our strong and wide beverage portfolio delivered a solid performance with market share gains in RTD, CSD and water. The Original Long Drink Pineapple launch in 2023 was very successful and one of the top launches of all Fast Moving Consumer Goods (FMCG) launches in Finland measured by value. The launch, which turned Finland yellow during the summer, expanded the RTD market, and the strong demand for the new variant continued throughout the year. We continued to drive our agenda of providing healthier options for our consumers, and within our non-alcoholic port- folio, no sugar versions secured market share growth in 2023. PepsiMax strengthened its position as the number one cola variant in the market with an all-time high market share, and no sugar Jaffa increased volumes by double digit percentages. In 2023, we strengthened our position in On-Trade by gaining new customers within fast food and events, while at the same time extending contracts with important customers. We are expanding our market leadership in wine and spirits On-Trade to a market leadership in the total market, as a result of new customer wins in 2023. We continued our work to reach our sustainability ambitions. Lahti biogas plant (operated together with Lahti Energy) was taken into use in H1 2023 with full circular economy cycle and getting us to zero CO 2 emissions (scope 1 & 2). In Denmark, the year was only a few days old when we announced a deal to acquire the Copenhagen-based brewery, Nørrebro Bryghus – a strong, locally rooted brand with two decades of history and a flagship in Danish beer culture. The range consists of 100% organic craft beers, which are to be continued, developed, and expanded – even outside the capital region – through our robust distribution platform. The integration of Nørrebro Bryghus was successfully completed in the last quarter of the year. The new addition to the portfolio instilled confidence in further positive expectations for growth and progress in the Danish business, and these expectations were met to a satisfactory extent, especially considering what turned out to be another year of challenging market conditions. Infla- tion persisted, and both On- and Off-Trade had to navigate a very unpredictable and hesitant market. Month by month, we observed the increasingly negative consequences of climate change and the geopolitical world situation, with ongoing warfare in Europe, influencing shopping patterns. The consumer trend towards more discount shopping remained dominant, leading supermarket chains to contemplate and initiate radical changes in their setups, including the closure of chains and stores. We closely monitored the developments, engaged in many close dialogues with our customers and partners, and Development and initiatives in 2023 Performance ROYAL UNIBREW Annual Report 2023 39 strongest beer brand, and we have succeeded in growing our strong cider and RTD position. In addition, we have in 2023 developed our market shares in the Energy category with our brand CULT. Nøgne Ø continues its role as Norway's leading craft brewery, and its barrel aging program has received international award, making Nøgne Ø the 69th most checked in brewery on Untapped in Europe out of a staggering 7120 breweries in total. Our ambition is to be THE PREFERRED CHOICE for customers and partners, offering the best access to market as well as the broadest and most attractive beverage portfolio. Hansa Borg & Solera Norway closed the year by winning two central long-term collaboration agreements on everything from wine, beer, cider & RTD to spirits. The agreements, shows our strengths as a multi-beverage partner to our customers, and we aim to create even more value and opportunities for our customers and consumers. In the Baltic countries, the focused attention on our beer and cider portfolio, coupled with premiumization efforts and timely price increases, resulted in a significant growth in net revenue for the beer category compared to 2022. Despite volume declines in the beer market and a flat cider market, we continued to gain market share with our local and imported premium brands. CULT, through intensive brand activation efforts including the introduction of new products, enhanced visibility in stores, and targeted brand-building activities, especially in social media with influencers and communities, expanded its consumer base. Despite the overall strong category growth, drew on our experiences from the years with COVID. Thus, we succeeded in identifying current needs, adjusting and developing campaigns to remain attractive to our customers and consumers. A good example is the expansion of the Faxe Kondi series with an orange variant, which received an overwhelming and extraordinary reception in the market. But other collaborations have also been a great success. Overall, we have gained market shares, especially in the soft drink segment – but also in the water, snacks, and craft beer segments. Recognition of our targeted efforts and strategy came again in the form of top rankings in customer satisfaction analyses, including collaboration at the head office level and efforts in physical stores – Royal Unibrew is the Preferred partner in the category. Likewise, we achieved significant progress in our NPS Score in the On-Trade market. As the expansion of our portfolio, increased complexity, and interest in our brands have been growing, we have also experienced a need to adapt the organization. This has meant welcoming several new colleagues both at the head office in Faxe and at our other locations in Denmark. The integration of Hansa Borg & Solera in Norway moved into its next phase in January 2023, to further increase the commercial focus, harvesting the advantages of having all categories in one house and being even more closely inte- grated into the Group. Our portfolio was further expanded by the introduction of PepsiCo snacks (Lay's® and Doritos®) at the beginning of 2023 as well as an extended long-term partnership agree- ment with Diageo to include all products in Diageo’s spirits portfolio for the Norwegian market, strengthening our posi- tion as a multi-beverage business in the Norwegian beverage market, both On-Trade and at Vinmonopolet. The Norwegian Krone weakened in 2023. The high infla- tion affected the Norwegian beverage market, consumer purchasing power and consumer behavior. The Norwegian summer was cold and grey, taken to the extreme with landslides and floods in August, affecting both sales and distribution. Despite this, we delivered numerous successful festivals during the summer and succeeded in closing several large customer agreements with existing and new customers, aiming to be THE PREFERRED CHOICE. Focus on sustainability efforts increased throughout the year. Inbound empty can transport from Sweden to Norway, Bergen, transferred from road to railway in August, reducing the carbon footprint by 95 percent on the distance. During the year, 60 percent of the total shrink film usage on own produced beverages was converted to recycled materials and 100 percent recycled corrugated trays was implemented. In addition, energy efficiency measures continued, and we succeeded in reducing energy spend with as much as 13 percent per produced hl throughout 2023. ISO 14001 certi- fication was achieved within Hansa Borg’s supply chain, in addition to re-certification of ISO 9001 and FSSC 22000. We have a strong portfolio of both own brands and partner- ship brands with a solid customer base both in On-Trade, Off-Trade and at Vinmonopolet in Norway. Hansa is Norway’s Performance ROYAL UNIBREW Annual Report 2023 40 CULT outperformed significantly and secured additional market share. Our commitment to growing the PepsiCo brands portfolio, resulted in market share gains, and the growth was facilitated by increased investments in expanding cold space, enhancing brand visibility in media and events, and a successful third- year execution of a massive blind tasting. The results revealed that over 60% of cola drinkers prefer the taste of Pepsi. The heightened focus on zero-sugar cola also yielded outstanding results, with the market share of zero-sugar carbonated soft drinks increasing significantly. In line with our commitment to sustainability, our Off-Trade and On-Trade clients participated in a survey for the second consecutive year, selecting Royal Unibrew companies in Lithuania and Latvia as their top 1 and 2 sustainable partners. Over 40% of our marketing budget is dedicated to sustain- ability initiatives, including the no/low agenda and support for various communities and initiatives such as Malt Order and WWF. One of our significant achievements was the installa- tion of solar panels in the Kalnapilis brewery. PerformancePerformance ROYAL UNIBREW Annual Report 2023 41 Western Europe Financial performance In 2023, volumes increased by 36% to 2.2 billion hectoliters significantly impacted by the acquisition of Vrumona in the Netherlands. Adjusting for this, volumes dropped organically by 14% due to de-stocking in Italy and a very good summer in 2022. Net revenue increased by 28% to DKK 1,738 million and adjusted for the acquisition in the Netherlands net revenue declined organically by 4%. “Vrumona became part of Royal Unibrew in the fourth quarter of 2023. The integration is proceeding according to plan, and we have already started to realize synergies. We are optimistic about the future and are confident that as a new Western European platform we will deliver profitable growth in the coming years.“ Ilco Kwast, Managing Director Vrumona EBIT declined from DKK 157 million in 2022 to DKK 141 million in 2023. Organically EBIT declined by 25% driven by de-stocking in the Italian On-Trade wholesale beer market and an exceptional good summer in Italy in 2022 making the comparable numbers difficult to repeat in 2023. That devel- opment resulted in an EBIT margin of 8.1%, which was 3.5 percentage points lower than in 2022. Adjusting for the acqui- sition, the organic EBIT margin declined by 2.5 percentage points to 9.1%. 2.2 mhl VOLUME (up by 36%) 141mDKK EBIT (down by 10%) 1.7 bnDKK NET REVENUE (up by 28%) 8.1% EBIT-MARGIN (down by 3.5pp) 20212020 2022 2023 0 50 100 150 200 250 20212020 2022 2023 0 6 12 18 24 30 20212020 2022 2023 0,0 0,5 1,0 1,5 2,0 2,5 20212020 2022 2023 0,0 0,4 0,8 1,2 1,6 2,0 EBIT (mDKK) EBIT-margin (%) Volumes (mhl) Net revenue (bnDKK) WESTERN EUROPE mDKK 2023 2022 % changes %organic Volumes (thl) 2.2 1.6 36 -14 Net revenue 1,738 1,353 28 -4 EBIT 141 157 -10 -25 EBIT margin 8.1 11.6 Performance Western Europe ROYAL UNIBREW Annual Report 2023 42 In 2023, the Netherlands saw noteworthy macroeconomic stability characterized by a consistent GDP growth and low unemployment rates. The elevated inflation rates at the begin- ning of 2023 led to a decrease in consumer spending power and diminished consumer confidence. These factors had an impact on the beverage sector in 2023, particularly in the first half of the year. Both non-alcoholic and alcoholic beverage categories encountered challenges in retail, as consumer price increases occurred due to high inflation rates. The soft drinks category also experienced dynamic shifts, resulting in market volume decline but market value growth. On the sustainability side, Vrumona has conducted several projects during 2023. A modular flexible warehouse has been built, which meant less traffic back and forth to the external warehouse. Moreover we were able to reduce our energy consumption by 5% by means of continuous improvement projects. Commercially, Vrumona ran a successful pilot at the biggest retailer in the Netherlands with a new shelf layout for the cola segment with the aim to grow share of Pepsi and the cate- gory. After extensive research and a period of careful testing throughout the country, the new cola shelf was rolled out in 850 shops in the autumn, leading to significant category growth in the segment thanks to the perception of more offer and less stress in choosing for shoppers. And last, but not least, there have been many new campaigns and new introductions such as Mocktails under our Royal Club brand, providing the consumer with a deliciously refreshing drink, without alcohol and without sugar. Fully in line with our leading position in providing healthier drinks. In 2023, the Italian business grew market share in beer, carbonated soft drinks and energy drinks in the Off-Trade. In Off-Trade, the Ceres brand significantly outperformed the market with a double-digit value growth in sell-out driven by an extended pack/price strategy on multipacks, a new 50 cl can format launch, and with a new marketing campaign to celebrate 60 years of Ceres Brand in Italy. In On-Trade Ceres performance has been impacted by high stock in the begin- ning of 2023, but normalized during the second quarter of 2023, and we have now had nine months of balanced sell-in and sell-out. In 2023, sell-out grew both volume and value when compared to 2022. Throughout 2023 we implemented price increases according to our plans, for all categories. The LemonSoda range also grew significantly faster than the underlying CSD market gaining market shares in all the segments (Lemonade, Orangeade and Other flavours). The growth was supported by a new campaign and a packaging special edition celebrating the “original Italian lemonade” and by a strong commercial focus in the promo and in-store execution. The new Zero range is driving the growth of citrus Development and initiatives in 2023 zero CSD category, with a significant share of market increase both for Lemonsoda Zero and Oransoda Zero. We also had a double-digit growth in the fast growing energy drinks market. Lemonsoda Energy is today well established as the number three brand in the market, with a range focused on the strong growing ‘’juicy’’ segment. We also entered with success in the ‘’original’’ segment with the launch of Crazy Tiger for selected customers. Performance ROYAL UNIBREW Annual Report 2023 43 International Financial performance Volumes in International declined by 18% in 2023 to 1.1 million hectoliters, which corresponds to an organic decline of 21%. The decline is explained by political unrest and lack of hard currency in Africa, a situation that is now stabilized, and a down prioritizing of the business due to lack of production capacity. As a result, net revenue declined organically by 14% to DKK 1,166 million in 2023, which equates to a reported decline of 2% when adjusting for acquisitions. “High COGS inflation and significantly higher logistic costs created a difficult competitive situation in 2023 - a situation we expect to improve in 2024. In 2023, we also successfully relocated beer production for the Canadian market to Amsterdam Brewery, allowing us to better serve the market.” Michael Nørgaard Jensen, SVP International EBIT declined by DKK 53 million to DKK 75 million, corre- sponding to 41% in reported terms and 40% in organic terms. This led to an EBIT margin of 6.4% in 2023, down from 10.7% in 2022. Acquisitional effects had a negative impact on the EBIT margin of 1 percentage point. 1.1 mhl VOLUME (down by 18�) 75 mDKK EBIT (down by 41%) 1.2 bnDKK NET REVENUE (down by 2�) 6.4� EBIT-MARGIN (down by 4.3pp) INTERNATIONAL mDKK 2023 2022 % changes %organic Volumes (thl) 1.1 1.4 -18 -21 Net revenue 1,166 1,191 -2 -14 EBIT 75 128 -41 -40 EBIT margin 6.4 10.7 EBIT (mDKK) EBIT-margin (�) Volumes ( mhl) Net revenue (bnDKK) 20212020 2022 2023 0 50 100 150 200 20212020 2022 2023 0 6 12 18 24 30 20212020 2022 2023 0,0 0,3 0,6 0,9 1,2 1,5 20212020 2022 2023 0,0 0,3 0,6 0,9 1,2 1,5 Performance International ROYAL UNIBREW Annual Report 2023 44 2023 marked a year of significant transition for us. Our Inter- national business underwent a transformation, becoming more localized, and we successfully shortened our supply chains, resulting in clear sustainability gains. The acqui- sition of the Amsterdam brewery and the relocation of Faxe brewing to Canada contributed to a decrease in our overall CO 2 footprint. Similarly, our CO 2 footprint in China substantially reduced as we shifted production operations to the local market. These actions represent important milestones in our ongoing efforts to reduce lengthy supply lines, localize production, and achieve sustainability gains, all while enhancing proximity to local markets. Proximity to our markets is crucial for maintaining agility and responsiveness to local market needs. The integration of our two companies in Canada, Amsterdam Brewery and Bruce Ashley Group, is progressing according to plan. Despite cost increases in input materials, we managed to absorb costs through price adjustments in most markets. In Germany, we successfully regained a strong position in the 1-liter beer market. Across the DACH region, we strength- ened our market position in Crodo Italian Lemonade, holding a strong position in all three markets. In the UK, we lead the market in malt beverages and successfully introduced a new line of brands in collaboration with Live Nation for pre-mixed cocktails. Our presence in festivals and music venues across the UK has expanded, and we plan to continue this expansion into more venues in 2024. Our malt business in the Americas and Latin America/Carib- bean regions has improved, securing a leadership position in key strategic markets for premium malt beverages. We've included more markets in Latin America and are actively building additional markets in the region. Despite economic challenges in some African markets, including strained economics and a lack of hard currencies, we are growing our African business, with Faxe beer leading the expansion. We are entering new markets to complete West Africa penetration, recognizing Africa as an important opportunity despite its volatile nature. The expansion and localization of Tempt cider production in China represent a crucial step in several areas, offering the potential to grow profits, decrease the CO 2 footprint, and establish closer connections with local consumers. Development and initiatives in 2023 Performance ROYAL UNIBREW Annual Report 2023 45 → Governance Corporate governance • Risk management • Remuneration Board of Directors and Executive Management • Shareholder information Governance Governance ROYAL UNIBREW Annual Report 2023 46 Corporate governance Annual General Meeting / shareholders The ultimate authority in all affairs of Royal Unibrew is the Annual General Meeting (AGM). According to the Articles of Association of Royal Unibrew, AGMs shall be called not earlier than five weeks and not later than three weeks prior to the AGM. It is an objective to formulate the notice convening the meeting and the agenda in a way that gives shareholders an adequate presentation of the business to be transacted at the general meeting. Proxies are limited to a specific AGM and are formulated also to allow absent shareholders to give specific proxies for individual items of the agenda – either to the Board of Directors or to a person attending the AGM. All documents relating to AGMs are available at Royal Unibrew’s website no later than three weeks prior to the AGM. Each share of a nominal value of DKK 2 entitles the holder to one vote. Royal Unibrew’s shares are not subject to any restrictions of voting rights, and the Company has one class of shares. Royal Unibrew’s corporate governance framework is based on recommendations by the Danish Committee on Corporate Governance, current legislation and regulation, best practices and internal rules. Royal Unibrew aims to fulfil its responsibilities to shareholders, customers, employees, authorities and other stakeholders while actively pursuing the creation of long-term value. Annual General Meeting / shareholders Board of Directors Senior Leadership Team Growth Leadership Team Organization Executive Management Team Audit Committee Nomination & Remuneration Committee Governance Corporate governance ROYAL UNIBREW Annual Report 2023 47 Proposals for resolutions to be considered at the AGM may be submitted by shareholders to the Board of Directors no later than six weeks prior to the date of the AGM. Board of Directors The Board of Directors is responsible for the overall and strategic management of the Company and to ensure that the Company is properly, reasonably and soundly managed in compliance with applicable laws and regulations. Further- more, the Board of Directors supervises the organizational, financial and performance management of Royal Unibrew and continuously evaluates the work performed by the Executive Management on behalf of the shareholders. Attendance at meetings (in total 11) Position Board meetings Peter Ruzicka Chair Jais Valeur Deputy chair Martin Alsø Board member Torben Carlsen Board member Heidi Kleinbach-Sauter Board member Claus Kærgaard Board member Michael Nielsen Board member Christian Sagild Board member Catharina Board member Stackelberg-Hammarén Attended the meeting Did not attend the meeting Not a board member at the time elected by the employees The Board of Directors performs its tasks in accordance with the Rules of Procedure of the Company governing the Board of Directors and the Executive Management. These Rules of Procedure are reviewed and updated annually by the Board of Directors. The Board of Directors usually meets for six annual ordinary board meetings. Under normal circumstances at least one of the meetings centers around the Company’s strategy and prospects, and at least one meeting takes place in a market in which the Company operates with a deepdive into the local business. In 2023, five extraordinary meetings were held resulting in a total of eleven board meetings during the year. The Board of Directors has established the following commit- tees: Nomination and Remuneration Committee The Nomination and Remuneration Committee consists of the Chair and the Deputy Chair of the Board of Directors. The principal obligations of the Committee are to prepare and complete evaluation of the Board of Directors including selec- tion and nomination of potential new candidates to the Board of Directors and Executive Management and securing overall succession planning of the Board of Directors and the Execu- tive Management. Additionally, the committee is tasked with evaluating and advising on the remuneration of the Board of Directors and the Executive Management. Furthermore, the committee ensures the regular updating of the remuneration policy and verifies adherence to its principles. In 2023, the Committee held a total of seven meetings. Attendance at meetings (in total 7) Remuneration and Position Nomination Committee Peter Ruzicka Chair Jais Valeur Deputy chair Attended the meeting Did not attend the meeting Not a committee member at the time Audit Committee The Audit Committee consists of two members: the Chair (Christian Sagild) and one member (Peter Ruzicka) of the Board of Directors. The principal duty of the Audit Committee is to secure quality and integrity in the Company’s presen- tation of financial statements, audit and financial reporting including compliance with relevant accounting legislation and other legal requirements. In addition, the Audit Committee monitors accounting and reporting processes, audit of the Company’s financial reporting, risk issues and the external auditor’s performance and independence. Moreover, the Audit Committee oversees the responsibility of monitoring the whistle-blower reporting system and ESG reporting. Finally, the Audit Committee assesses and recommends elections of external auditors to the Board of Directors. The external auditor has participated in all ordinary meetings of the Audit Committee. The committee held six meetings in 2023. Governance ROYAL UNIBREW Annual Report 2023 48 Attendance at meetings (in total 6) Position Audit Committee Meetings Christian Sagild Chair Audit Committee Board member Peter Ruzicka Chair of the Board of Directors Attended the meeting Did not attend the meeting Not a committee member at the time Evaluation of the work of the Board of Directors Evaluation of the work of the Board of Directors is conducted annually. The purpose of the evaluation is to ensure that the Board of Directors (as a body) has expertise and experience within Fast Moving Consumer Goods (FMCG), produc- tion, sales and marketing of brands globally and in busi- ness-to-business markets, strategic and general manage- ment as well as expertise and experience with economic, financial and capital market issues including those relating to listed companies. The evaluation is initiated by the Chair of the Board of Directors. Both the performance of the Execu- tive Management and the cooperation between the Board of Directors and the Executive Management are evaluated annually as a minimum. An external consultant is involved in the evaluation at least every third year. An evaluation by an external consultant therefore took place in 2023. Findings are based on the outcome of a questionnaire and additional interviews. The findings of the latest evaluation were presented and discussed at board meetings in 2023. The Board will include the findings from the evaluation when considering the future development of the Board ensuring that competences support Royal Unibrew's business model and strategy. Responsibilities and composition of the Board of Directors When forming the Board of Directors, the Company priori- tizes members possessing the necessary competencies. The Board of Directors conducts an annual evaluation to ensure that the board composition aligns with Royal Unibrew Group’s activities, considering both competencies and diversity among members. Candidates for the Board of Directors are recommended for election by the AGM supported by motivation in writing by the Board of Directors as well as a description of the recruiting criteria. The individual members’ competencies and creden- tials are described in the below section on the Board of Direc- tors and the Executive Management (see page 60-63). Three of the members of the Board of Directors are elected by the employees of Royal Unibrew for a period of four years pursuant to the Danish Companies Act. Latest election took place in 2022. New board members are upon their election introduced to the Company through a focused introduction program. Executive Management The CEO and the CFO report to the Board of Directors. Together with the Senior Leadership Team (SLT), they are responsible for the day-to-day short- and long-term duties, management and strategy of the Company. In addition to the SLT, the company operates with a Growth Leadership Team (GLT) comprising leaders within Group functions and country managers with broad experience and special expertise within their area of business. SLT and GLT are committed to realizing our strategy of becoming THE PREFERRED CHOICE in local markets. Diversity and inclusion The international management teams of Royal Unibrew – a total of 164 leaders – comprises 68% (2022: 72%) male and 32% (2022: 28%) female. Our target is a more balanced gender representation of at least 40% of the underrepre- sented gender among the Board of Directors and in interna- tional management teams by 2025. In the Senior Leadership team, including direct reports, employed at Royal Unibrew A/S, cf. the Danish Companies Acts, section 139c, we aim for 30% of the underrepresented gender in 2027. When recruiting new executives, we identify candidates of all genders without Underrepresented gender (%) 2023 2022 Board of directors 33% (2/6) 33% (2/6) Senior leadership team 27% (3/11) 15% (2/13) International management team 32% (53/164) 28% (41/149) Governance ROYAL UNIBREW Annual Report 2023 49 61 59 29 28 7 8 4 3 2022 2023 2021 2019 2020 2022 2023 0.0 2.0 4.0 6.0 8.0 discrimination and strive to foster the interest of the under- represented gender in assuming managerial responsibilities. Acquisitions in 2023 had a negative effect on management gender representation. Currently, the Board of Directors consists of six board members elected by the AGM and three board members elected by the employees based in Denmark. Three of the members elected by the AGM are Danish and three are of different nationalities. Two of the AGM elected board members are female (33%). Thus, gender is equally distrib- uted. We aim for the Board of Directors to consist of expert members who, to the widest extent possible, complement each other in terms of education, experience, age, back- ground, nationality, gender, etc. This is to ensure a competent and versatile contribution to the board at Royal Unibrew. These matters are taking into consideration when the Nomination and Remuneration Committee identifies new candidates for the Board of Directors, and it is the commit- tee’s objective to identify both male and female candidates. Recommendation of candidates will always be based on an assessment of the competencies of the individual candidate and how the person will match Royal Unibrew’s needs and contribute to the overall efficiency of the board. Whistle-blower system Royal Unibrew is committed to doing business according to high ethical standards striving to be responsible, committed, holistic, creative, ambitious as well as honest and open. The Company’s secure whistle-blower system provides employees and third parties doing business with Royal Unibrew the possibility to report knowledge or suspicion of unethical behavior in violation of Royal Unibrew’s Code of Conduct or other illegal behavior. The whistle-blower system can be accessed from Royal Unibrew’s group website (www.royalunibrew.com) as well as the websites of Royal Unibrew’s subsidiaries’ and is avail- able in eleven languages. When communicating through the whistle-blower system, the communication is encrypted, and complete anonymity can be chosen and maintained in connection with reporting. All reports are evaluated by Group General Counsel and Director of Finance and Treasury. The Audit Committee oversees the monitoring of the whis- tle-blower reporting system. Reporting is made in compliance with national data protection regulation and GDPR. No cases were reported in 2023. Corporate Governance Report 2023 The Board of Directors regularly reviews Royal Unibrew’s corporate governance framework and policies in relation to the activities of Royal Unibrew. A detailed description as well as an overview of Royal Unibrew’s position on each of the recommendations have been prepared in compliance with recommendations on corporate governance issued by the Danish Committee on Corporate Governance, cf. Section 107b of the Danish Financial Statements Act. → For further information see Corporate Governance Report 2023 The total contribution through taxes in 2023 amounted to DKK 7.3 billion (2022: 6.8 billion). Tax by category (%) Excise duties VAT Personal taxes and social security contributions Company income taxes Tax Royal Unibrew seeks to comply with all tax legis- lations to its business operations and, in doing so, aims to minimize its tax risks by actively seeking to identify, evaluate, monitor and manage tax risks. Please refer to page 93-94 for further details. Development in total contribution bnDKK Governance ROYAL UNIBREW Annual Report 2023 50 Risk management We are exposed to a variety of risks some of which are beyond our direct control. These risks may have a signifi- cant impact on our business if not properly assessed and controlled. Maintaining a sound and deeply rooted risk culture, including a strong control environment, is essential for the continued development of Royal Unibrew, and the purpose of our risk management approach is to address and handle risks and uncertainties in due time, but also to take advantage of the opportunities that arise when risks are being mitigated, espe- cially within the climate area. On an ongoing basis, we assess risks within each of the identified key risk areas based on their potential impact and likelihood. Geopolitical tensions, extreme weather, and higher cost-of-living. The geopolitical tensions continued in 2023 with the war in Ukraine and the conflict in Gaza. The global insta- bility impacted the input prices, inflation and interest levels resulting in an increase in the cost-of-living for our consumers. It also increases the threat from cyberattacks, thus increasing the cost to protect the company. Royal Unibrew operates mainly in Europe and normally not exposed to extreme weather. In 2023, we discovered both heat, drought and heavy rain in our markets compared to a normal year. Acquisitions We expanded our footprint in 2023 with acquisitions in the Netherlands and Italy. Royal Unibrew has a strong track record of integrating new companies into its existing business setup. Nevertheless, the acquisitions will naturally add more complexity to our business and, thereby, also additional risks. We take an active approach to risk management to ensure that our key risks and opportunities are identified, monitored and mitigated in a structured and prioritized manner. Royal Unibrew has defined clear risk management processes, including policies and procedures, for the dual purpose of minimizing the effects of our key risks and protecting our people, assets, reputation, values and freedom to operate. Governance Risk management ROYAL UNIBREW Annual Report 2023 51 1 2 3 4 Time; final decision mandate 1 2 3 4 Risk management structure and governance Royal Unibrew’s risk management structure is based on a systematic process of risk identification, risk analysis and risk assessment. This struc- ture provides a detailed overview of key risks relating to the realization of our strategies in the short- and long-term and enables us to take the required measures to address risks or opportunities. At Royal Unibrew risk management is an enterprise-wide effort, where local risk owners as well as central risk owners from group functions are appointed to facilitate the risk identification, control, mitigation and reporting of current and emerging risks supported by the central risk management function. The identified risks and proposed action plans are reviewed and assessed by Royal Unibrew’s Growth Leadership Team, while the Audit Committee reviews the adequacy and effectiveness of the risk management system. Subsequently, the Executive Management presents the key risks to the Board of Directors and reports the necessary risk-mitigating activities/ action plans for review. The Board of Directors is ultimately responsible for assessing the nature and extent of risks and opportunities associated with Royal Unibrew’s strategic direction and activities as well as the implementation of effective risk identification, assessment and mitigation. In 2023, we have updated our two-dimensional “heat map” assessment system, to include climate-re- lated risk and to ensure a clear link between the ERM system and the risk management processes to the materiality assessment. In the assessment, the impact of each risk is estimated in relation to profit, environmental and climate, social and governance implications. Based on the continuous assessment of potential risks, the ”heat map” is updated to bring a current and better understanding of potential risks or in some cases opportunities and, likewise, to ensure that adequate mitigation efforts are initiated. Royal Unibrew leverages a structured stage-gate process to ensure timely identification and mitigation of key risks Staff functions and business units • Risk identification, assessment, quantification and recording • Risk mitigation suggestions • Risk monitoring management • Regular reporting to the Growth Leadership Team Audit Committee • Monitors the development in total strategic risk exposures • Monitors the development in individual risk factors • Verifies compliance with overall risk policy Board of Directors • Approves overall risk policy • Reviews risk findings reported by the Growth Leadership Team Growth Leadership Team • Determines risk management policies and individual risk strategies • Risk mitigation efforts implementation • Ensures consistency between risk management policy and business objectives • Evaluates, rates and manages key risk developments • Ensures resource availability to implement efficient risk management. Total risk universe of known and unknown risks that may or may not be encountered at any given point in time Prioritized risk pool for review on next level Prioritized risk pool for review on next level Review final presentation and compliance Incoming risk pool from previous level Incoming risk pool from previous level Final review and approval Incoming risk pool either due to high impact and/or high potential likelihood Governance Risk management structure and governance ROYAL UNIBREW Annual Report 2023 52 Financial impact Our key risks An aggregated presentation of our key risks and how we attempt to address and mitigate such risks is outlined in the following. Additional risks, not presently identified or those currently deemed to be less material, may also have an adverse effect on our business. Read the risk details on page 57 related to climate risks. A detailed description of the financial risks is included in note 3. Very unlikely Unlikely Likelihood Medium Likely Very likely Very low Low Medium Hign Very high 1 2 3 4 5 6 A Area 1 Raw materials 2 Beverage industry 3 IT risk 4 Macro economic uncertainty 5 Partnerships 6 Statutory restrictions Material environmental impact A Climate change (EI) Governance ROYAL UNIBREW Annual Report 2023 53 Key risk factors in 2023 Area Description Development Risk mitigation Raw materials and utility Prices and availability of a large number of key commodities fluctuate in line with the world market, the fall out of geopo- litical tensions and severe climate/weather related events. To the extent that higher unit costs cannot be compensated for by means of higher selling prices per unit, or in other ways of increasing the average selling price per unit correspondingly, Royal Unibrew’s earnings will decrease. The price fluctuation can also lead to deficiency of raw materials and affect Royal Unibrew's earnings negatively. Decreasing availability of recycled materials, due to lack of ro- bust Deposit Return Systems (DRS) or other collection systems as well as poor run or lack of recycling facilities, is a potential risk for our ambition to use more recycled materials. Most raw material prices stabilized in 2023, but we still see elevated pricing levels in some raw materials as e.g. sugar. The impact of Increasing cost due to climate changes and climate related legislation have been limited in 2023 but is expected to increase in the coming years. As a consequence of the European energy crisis, some of our production sites have been categorized as non-protected cus- tomers meaning that we are not guaranteed the needed gas supply at these sites in case of potential gas supply disrup- tions. We have not experienced any shortage in the gas supply at our production sites in 2023. Royal Unibrew monitors the trend in commodity prices in close collaboration with our suppliers. Some commodities are hedged on a rolling basis through agreements with suppliers and, like- wise, through commodity hedges with financial institutions (e.g., aluminum and energy for heating) to mitigate inflation and provide a level of cost certainty. Price increases toward customers, directly and indirectly are used as a tool to compensate for higher raw material prices and other input prices. With initiatives as solar panels, biogas plant and installations of multi fuel burners for heating, we are reducing our energy con- sumption, and thereby also our dependency on gas supply. Beverage Industry In most markets the product categories beer and soft drinks are characterized by tough price competition and intensive marketing from a number of suppliers. We have evolved our footprint further in 2023 with two acqui- sitions. With the acquisition of Vrumona in the Netherlands we have expanded our European presence and at the same time added more capacity. With the acquisition of San Giorgio di Nogaro in Italy, we have acquired production capacity closer to our consumers and customers. Read more about the acquisitions in note 24. Royal Unibrew’s earnings and competitiveness are ensured through constant focus on markets and segments in which Royal Unibrew holds or may achieve a significant position. Our invest- ments in digital solutions and our continuous improvements across the Group are expected to limit the negative effects from the changes in the industry. Moreover, Royal Unibrew focuses on value management through the development of products, con- tainers and packaging, cooperation with customers and communi- cation with consumers. Governance Our key risks ROYAL UNIBREW Annual Report 2023 54 Area Description Development Risk mitigation IT risk Royal Unibrew’s activities are to a large extent dependent on the established IT systems and the quality of the applied IT security solutions. A prolonged breakdown, unintended malo- peration or unauthorized break-in into the systems supporting sales and supply processes as well as internal information systems may involve a significant risk of interruption of Royal Unibrew’s activities. The cybersecurity risk landscape has accelerated for produc- tion companies such as Royal Unibrew in 2023 with a focus on service disruption and ransomware. When acquiring companies, it is our risk philosophy to adopt the companies into our existing IT system landscape and IT security framework. On April 1, 2023, Solera Sweden was inte- grated in our ERP platform. In 2024, we will have a large IT project in Norway bringing some of the Norwegian companies on our SAP platform. Royal Unibrew works consistently to improve our IT security. We have established procedures to ensure: • day-to-day operation of the IT systems supporting the key busi- ness processes, • protection against data loss, • Continuous cybersecurity monitoring and response • Adherence to new regulations such as strengthening our vulnerability through implementation of NIS2 • Training of employees • protection against unauthorized access to and distribution of confidential data, • general protection against cybercrime and securing physical access to RU facilities. The CIO presents risk on Audit Committee meetings biannually. Macro- economic uncertainty Royal Unibrew’s products are sold in markets and market areas where market developments are usually determined by eco- nomic cycles. Macroeconomic uncertainty, including changes of free trade agreements, low growth of long duration, outbreaks causing a threat to the public health or geopolitical instability, may affect earnings negatively. Consequently, we may expe- rience declining consumption or shifts in product mix toward products in other packaging formats with lower earnings. The higher interest rates and higher costs of living, has to some extent changed consumer preferences, resulting in less spend on bars and restaurants in some markets towards the end of the year. Consumers continued to spend less in the supermar- kets and increasingly look for good offers throughout 2023, resulting in private label and discount products continuing to gain slight shares of the total market. In general beverages volumes are robust in times of uncertainty. Royal Unibrew focuses on flexibility in all operations and commer- cial spending. Thus, we strive to get some leeway for reducing the effects of macroeconomic uncertainty as well as changing consumption patterns. The efforts directed at continuous improvements across the busi- ness are expected to limit the negative effects of macroeconomic changes. Partner- ships Royal Unibrew cooperates with different partners across mar- kets and product categories. Changes in these relationships may affect the Group’s sales, net revenue and earnings. In 2023, Royal Unibrew expanded its partnerships further across categories and also geographically supported by acqui- sitions. Royal Unibrew has in general a long history with our partners and mitigate the partnership risks by entering into long-term agree- ments and by providing adequate business results to ensure a mutually beneficial development of the partnerships. In 2023, we have established a new dedicated global team, to support the partner strategy at both Group and country levels. Governance ROYAL UNIBREW Annual Report 2023 55 Area Description Development Risk mitigation Statutory restrictions Royal Unibrew’s activities are subject to national legislation in the markets in which Royal Unibrew operates. Changes in applicable legislation may impact the ability to operate, e.g., by way of restrictions on production, packaging, marketing and sale of Royal Unibrew’s products or due to increasing taxes on raw materials and consumption. Such restrictions may affect the Group’s sales and earnings significantly In 2023, we have seen an increase in sugar tax in many coun- tries, which has increased our focus on products with less sugar as well as products with no/low alcohol. Royal Unibrew continues to bring product innovations to market within both categories. Changes in regulation will drive changes in packaging material such as the packaging & packaging waste directive. The flex- ibility of Royal Unibrew's filling and packaging equipment may limit adaptation to new packaging systems and materials. Royal Unibrew participates in national and international co- operation fora within the beverage industry such as brewery associations. The purpose is to participate actively in the legisla- tive process to ensure that legislative initiatives, that may impact the production, packaging, marketing and sales of Royal Unibrew’s products, take into account all relevant perspectives and interests. Climate change Mitigating climate change means reducing the emission of greenhouse gases into the atmosphere. Risk of underinvestment in electrification and the speed of implementation of renewal energy projects can impact decar- bonization. Royal Unibrew believes that we will be subject to carbon emis- sion taxation and that the carbon emission prices will go up, even though we are not currently eligible to the EU ETS. How- ever, the Danish Government has already proposed taxation for the industry from 2025 as well as taxation for transportation, agriculture and materials. The need of investments in the local power grids are vital as shortages in the grids will effect our ability to meet our targets. The speed of public infrastructure expansion locally and na- tionally can also impair the transition to renewable energy. Royal Unibrew's target of being 100% carbon emission free from Scope 1 and 2 in 2025, means that the exposure to environmental taxes are reduced. We work actively on our capex plans to ensure, we can meet our targets on reduction on carbon emissions in the future. Through national trade associations we lobby for increasing speed of plan- ning and expansion. See page 53 → Governance ROYAL UNIBREW Annual Report 2023 56 Assessing ESG impact and financial materiality We updated the ESG materiality assessment in 2023 and initiated full integration of the double materiality assessment approach in our ERM framework. We conducted an in-depth assessment of climate and energy related impacts, risks and opportunities to align methodologies and understanding. The sustainability/ESG matters covered by our current mate- riality assessment are essentially all material from an impact perspective on a topic and subtopic level. Numerous are furthermore financially material. We believe that our strategy, governance, policies and targets support mitigation of poten- tial impacts, risks and utilization of opportunities. Therefore, we prioritize issues that represent the highest concerns, such as climate and energy and responsible sourcing. Several of the sustainability matters are heavily regulated, and our internal processes prevent actual risks. → For further information on the process see section on Double Materiality Assessment In our deepdive on climate and energy, we have identified two financial material IROs (impact, risk and opportunity) out of a total of six with a risk above our threshold and two with opportunity related to climate change mitigation and energy. For the impact assessment, we have identified six IROs as well, which are all material. Two are material from a negative perspective and related to climate change, i.e., emissions of CO 2 in scope 1, 2 and 3. Climate change (E1) Area Description Risk mitigation Risk opportunity Climate change mitigation Reducing emission of greenhouse gases While not currently subject to the EU Emissions Trading System, Royal Unibrew anticipates carbon emission taxa- tion in the future. Royal Unibrew's target of being 100% carbon emission free from scope 1 and 2 in 2025, reduce the risk for the existing business, however, acquisitions can impose a risk. Risk Energy Risk of underinvestment in electrification and speed of implementation of renewable energy The need of investment in the local power grids (on-site) is vital as shortages in the grid will affect our ability to meet our targets. The speed of public infra structure expansion locally and nationally may also impair the transition to renewable energy. Royal Unibrew makes capex plans to ensure we meet our tar- gets on reduction of carbon emissions. Through national trade associations Royal Unibrew lobby for increasing speed of planning and expansion of the grid. Risk Energy efficient production Our opex optimizations drive enhanced energy efficiency, and our planned capex will also drive transformations. Changes/ increases in carbon pricing will work positively for our goal of reducing our dependency on fossil fuels. Opportunity Climate change adaptation Shift in consumer preferences towards sustainable products Customers’ and consumers’ awareness and preference for sustainable products is growing. Our strategy supports achievement of our CO 2 reduction goals for scope 1,2 and 3, which are approved by SBTi. Our internal work on PEF (Product Environmental Footprint) is an important lever for providing transparent data and communication. Opportunity Physical risks of extreme weather mainly flooding on facilities owned and operated by Royal Unibrew. Based on WRI Aqueduct our locations are not currently ex- posed to a significant risk of flooding. Risk Climate change reducing harvest Climate change increases water scarcity or flooding in some areas, which can lead to supply restrictions. Our production sites do not face immediate water scarcity issues. Our beverages are manufactured consuming locally sourced raw materials. As we do not source from high or extremely high water-stressed areas and irrigation is not currently applied, we believe the risk is low in the long term. Risk Governance ROYAL UNIBREW Annual Report 2023 57 Remuneration Royal Unibrew has prepared a Remuneration Report in accor- dance with section 139b of the Danish Companies Act for the financial year 2023, which concludes that the remuneration of the Board of Directors and the Executive Management is disclosed in accordance with the incentive guidelines and remuneration policy adopted at the Annual General Meeting on April 27, 2023. When granting the variable part of the remuneration, information is made available for the potential value of the programs at the time of exercise. The overall objective of the remuneration is to attract, moti- vate and retain qualified members of the Board of Directors and the Executive Management. Executive Management The remuneration of the Executive Management comprises a gross salary, a short-term ordinary cash-based bonus, a long-term share-based incentive plan and other customary benefits. The remuneration is designed to attract and retain members of the Executive Management and align interest with shareholders. The fixed remuneration to the Executive Management is based on benchmarks from similar positions in C25 companies in Denmark. The variable remuneration, on the other hand, is designed to drive performance in line with Royal Unibrew’s strategy, financial and non-financial targets. In 2023, the Executive Management received a 4% increase in the fixed salary and achieved 54% of the short-term bonus program with a maximum 90% payout of the gross salary. The fixed and short-term remuneration increased in total 34% compared to 2022. The change is related to the short-term Achievements for the Executive Management 2023 Targets (KPIs) Weight Target Maximum Achievement Payout 60% of gross salary EBIT 60% 1,500 1,650 1,638 92% Free cash flow 20% 1,100 1,230 1,143 33% ESG rating 20% Top 50% in peer group To p 2 5% in peer group No. 1 in peer group 100% 30% of gross salary EBIT (stretch) 100% 1,650 1,815 1,638 0% 54% ESG peer group: Pernod Ricard, PepsiCo, Diageo, Britvic, Molson Coors, AB InBev, Coca-Cola, Carlsberg, Olvi, Keurig Dr. Pepper, A.G. Barr, Heineken and C&C Group. Governance Remuneration ROYAL UNIBREW Annual Report 2023 58 Remuneration Remuneration of Board of Directors and Executive Management mDKK 2023 Change (%) 2022 Granted pay Fixed salaries to Executive Management 14 14 Short-term bonus scheme for Executive Management 7 2 Short-term remuneration for Executive Management 21 34 16 Long-term bonus remuneration for Executive Management 13 8 Remuneration of Executive Management 34 24 Remuneration of Board of Directors 5 5 Total remuneration of Board of Directors and Executive Management 39 29 Expensed pay Adjustment to granted pay: Long-term bonus (note 6) -7 -9 Total remuneration of Board of Directors and Executive Management 32 20 Average remuneration of employees Royal Unibrew employees (Group) 0.5 -1 0.5 * Expensed pay is the P&L change in Royal Unibrew A/S accounts. The adjustment represents fair value adjustments to the LTIP. bonus program where the payout in 2022 was lower than an average year. The Executive Management team achieved 15% of the long- term share based incentive program for the period 2021-2023, vesting in total 3,004 Royal Unibrew shares. Board of Directors The members of the Board of Directors receive a fixed cash remuneration and a multiplier of the fixed cash remuneration for their extended duties as Chair, Deputy Chair and members of the Board Committees. The base fee for the board members were increased in 2023 from DKK 380,000 to 415,000. Except for board members elected by the employees. Members of the Board of Directors did not receive any performance or share- based remuneration in 2023. → Read our full Remuneration Report here The overall guidelines for incentive pay adopted at the Company’s Annual General Meeting are available at http://investor.royalunibrew.com/corporate-governance. Governance ROYAL UNIBREW Annual Report 2023 59 Board of Directors and Executive Management Peter Arne Ruzicka Chair Jais Valeur Deputy Chair Torben Carlsen Member of the Board Nationality: Norwegian Nationality: Danish Nationality: Danish Year of birth: 1964 Year of birth: 1962 Year of birth: 1965 Gender: Male Gender: Male Gender: Male Elected: 2021 Elected: 2013 Elected: 2021 Professional board member Listed companies: Chair of the Board of Directors of Pandora A/S, Denmark Member of the Board of Directors of Axfood AB, Sweden Non-listed companies: Member of the Board of Directors of Aspelin Ramm Gruppen AS and AKA AS, both in Norway Competences: Extensive international experience within the food and beverage industry as well as FMCG (Fast Moving Consumer Goods). In addition, broad operational expertise with stra- tegy execution and transformation. Chair of the Nomination and Remuneration Committee Member of the Audit Committee Group CEO of Danish Crown Listed companies: Member of the Board of Directors of Alm. Brand A/S, Denmark Competences: Special expertise in general management of international enterprises within FMCG (Fast Moving Consumer Goods). Member of the Nomination and Remuneration Committee President & CEO of DFDS Non-listed companies: Member of the Board of Directors of Dyal 1 ApS, and P/S Dyal Investment, PPC Ejendomme A/S, all in Denmark Competences: Broad international expertise and knowledge within finance, risk management, M&A and management of international corporations Term of office: 2023-2024 Term of office: 2023-2024 Term of office: 2023-2024 Considered independent: Yes Considered independent: Yes Considered independent: Yes No. of Royal Unibrew shares: (Change from January 1, 2023) 1,000 No. of Royal Unibrew shares: (Change from January 1, 2023) 1,381 No. of Royal Unibrew shares: (Change from January 1, 2023) 3,300 Board of Directors Governance Board of Directors ROYAL UNIBREW Annual Report 2023 60 Kenn Hvarre Member of the Board of Directors Employee representative Heidi Kleinbach-Sauter Member of the Board Claus Kærgaard Member of the Board of Directors Employee representative Nationality: Danish Nationality: German/US Nationality: Danish Year of birth: 1965 Year of birth: 1956 Year of birth: 1968 Gender: Male Gender: Female Gender: Male Elected: 2022 Elected: 2019 Elected: 2018 Terminal worker in Royal Unibrew Board member since February 26, 2024 as Martin Alsø has resigned from the Board of Directors, cf. company announce- ment no 3/2024 of February 26, 2024 Professional board member Listed companies: Member of the Board of Directors of Chr. Hansen Holding A/S, Denmark (until January 2024) Non-listed companies: Women’s Business Collaborative, US Competences: Broad international experience within general management, technology, quality management and science within the food and beverage industry. Global thought leader on diversity and inclusion Sales Manager Off-Trade in Royal Unibrew Term of office: 2024-2026 Term of office: 2023-2024 Term of office: 2022-2026 Considered independent: No Considered independent: Yes Considered independent: No No. of Royal Unibrew shares: (Change from January 1, 2023) No. of Royal Unibrew shares: (Change from January 1, 2023) No. of Royal Unibrew shares: (Change from January 1, 2023) 180 Board of Directors (continued) Governance Board of Directors ROYAL UNIBREW Annual Report 2023 61 Board of Directors (continued) Michael Nielsen Member of the Board of Directors Employee representative Christian Sagild Member of the Board Catharina Stackelberg-Hammarén Member of the Board Nationality: Danish Nationality: Danish Nationality: Finnish Year of birth: 1974 Year of birth: 1959 Year of birth: 1970 Gender: Male Gender: Male Gender: Female Elected: 2022 Elected: 2018 Elected: 2019 Brewery worker in Royal Unibrew Professional board member Listed companies: Chair of the board of Directors of Nordic Solar A/S and Penneo A/S and member of the board of Directors of Ambu A/S, all in Denmark. Competences: Special expertise within general management of listed enterprises, including in-depth insight within finance and risk management Chair of the Audit Committee Senior Vice Presidet Knowit Oy Listed companies: Chair of the Board of Directors of Alma Media Oyj, member of the Board of Directors of Kojamo Oyj (until March 14, 2024), Purmo Group Plc, and Harvia Plc, all in Finland. Competences: Broad international experience within general management, strategy, commercial excellence, innovation, technology and ESG. Term of office: 2022-2026 Term of office: 2023-2024 Term of office: 2023-2024 Considered independent: No Considered independent: Yes Considered independent: Yes No. of Royal Unibrew shares: (Change from January 1, 2023) 21 No. of Royal Unibrew shares: (Change from January 1, 2023) 4,000 (1,000) No. of Royal Unibrew shares: (Change from January 1, 2023) 450 Governance ROYAL UNIBREW Annual Report 2023 62 Executive Management Lars Jensen President & CEO Lars Vestergaard CFO Nationality: Danish Nationality: Danish Year of birth: 1973 Year of birth: 1974 Gender: Male Gender: Male Diploma in Business Economics, Informatics and Management Accounting, Copenhagen Business School CEO from September 2020 COO April-August 2020 CFO December 2011-March 2020 Joined Royal Unibrew in 1993 Master of Science (MSc) in Economics Aarhus University CFO from April 2020 Member of the Board of Directors of CO-RO A/S, Denmark (from August 2022) Member of the Board of Directors of Royal Unibrew (April 2018-March 2020) No. of Royal Unibrew shares: (Change from January 1, 2023) 81,051 (+1,895) No. of Royal Unibrew shares: (Change from January 1, 2023) 5,724 (+1,991) Governance Executive Management ROYAL UNIBREW Annual Report 2023 63 Shareholder information The management of Royal Unibrew is committed to fostering effective and transparent communication and dialogue with the Company shareholders and various stakeholders. Share information The Royal Unibrew share is listed on Nasdaq Copenhagen A/S and is included in the Danish OMX C25. In 2023, a total of 25,537,087 (2022: 30,196,514) shares were traded corresponding to 50.9% (2022: 60.2%) of the total number of shares traded (at year end) through Nasdaq Copenhagen A/S (source: Bloomberg). The trading value amounted to DKK 13,838 million (2022: DKK 17,321 million) representing a 20% decrease. Basic information Share capital, DKK 100,400,000 Number of shares 50,200,000 Denomination DKK2 Number of share classes 1 Restriction of voting right None Place of listing Nasdaq Copenhagen A/S Short name RBREW ISIN code DK0060634707 Bloomberg code RBREW DC Reuter code RBREW.CO Index OMXC25 Development in Royal Unibrew’s share capital DKK ‘000 2023 2022 2021 2020 2019 Share capital 1/1 100,400 97,600 98,700 100,200 102,000 Capital reduction -1,100 -1,500 -1,800 Capital increase 2,800 Share capital 31/12 100,400 100,400 97,600 98,700 100,200 Governance Shareholder information ROYAL UNIBREW Annual Report 2023 64 2022 2023 46 4 49 52 4 1 1 43 60 80 100 120 140 160 jan feb mar apr may jun jul aug sep okt nov dec Royal Unibrew OMX C 25 Peer group At the end of 2023, the price of the Royal Unibrew share was DKK 451.10 compared to DKK 495.30 per share at the end of 2022. Royal Unibrew’s market capitalization amounted to DKK 23 billion at the end of 2023 compared to DKK 25 billion at the end of 2022. Each share carries one vote, and all share- holders registered in the Company’s register of shareholders are entitled to vote. Change of control The realization of a takeover bid resulting in change of control of the Company will entitle a few trading partners and lenders to terminate trading agreements entered. The Executive Management will not be entitled to any compensa- tion. However, a member of the Executive Management may choose to consider himself dismissed as per employment contract. Share buy-backs and treasury shares At the Annual General Meeting (AGM) on April 27, 2023, the Board of Directors was authorized to acquire treasury shares for up to 10% of the total share capital in the period up to the next AGM. In 2023, share buy-back programs were kept on hold to bring down financial leverage to our target of net debt/EBITDA below 2.5x. Sale of treasury shares On September 12, 2023, the Company sold 430,000 existing treasury shares in the market to finance part of the acquisi- tion of Vrumona in the Netherlands, as well as the acquisition of a brewery in San Giorgio, Italy. The sale of the existing treasury shares was part of the total financial package to fund the two acquisitions. Break-down of shareholders at the end of 2023 Share performance 2022 (index) Note: The peer group consists of: AB InBev, Carlsberg, Heineken, Molson Coors Brewing Company, Britvic, Olvi, AG Barr, C&C Group, Coca Cola, PepsiCo, Keurig Dr Pepper (Source: Bloomberg). Foreign investors Danish investors Not registered Danish and foreign investors Royal Unibrew Royal Unibrew OMX C25 Peer group After completing the sale of 430,000 existing treasury shares at an offer price of DKK 583 per share net proceeds of DKK 249 million was raised to the Company. At the end of 2023, the total number of shares of the Company was 50,200,000 including 146,952 treasury shares. Dividends It is proposed to the AGM that a mandate is given to the Board of Directors authorizing them to potentially distribute an extraordinary dividend of up to DKK 14.50 per share before the end of 2024. For 2022 an ordinary dividend of DKK 14.50 was paid. Ownership At the end of 2023, Royal Unibrew had approximately 37,000 registered shareholders holding together 96.5% of the total Governance ROYAL UNIBREW Annual Report 2023 65 share capital. According to the latest Company announce- ments or other public announcements, the following share- holders hold more than 5% of the share capital: Shareholder End of February 2024 Chr. Augustinus Fabrikker A/S 14.94% notified May 30, 2022 Invesco Asset Management Limited 5.06% notified August 21, 2023 The Master Trust Bank of Japan Limited 5.00% notified December 21, 202 3 Share transactions made by members of the Board of Direc- tors and the Executive Management are governed by Royal Unibrew’s insider rules. Therefore, the members’ transactions as well as those of their connected persons are subject to a notification requirement according to the Market Abuse Regulation. Individuals on Royal Unibrew’s insider list as well as their spouses and children below the age of 18 may trade Royal Unibrew shares only when the Board of Direc- tors has announced that the window for trading shares is open (provided that they do not have inside information). This normally applies for a period of four weeks following an announcement of financial results. On December 31, 2023, members of the Board of Directors held 12,732 shares of the Company, and members of the Executive Management held 86,775 shares corresponding to a total of 0.2% of the share capital. Annual General Meeting • The Company’s AGM will be held on April 30, 2024, at 4 pm CEST, as a fully virtual meeting giving shareholders the possibility to follow the live stream, ask questions and vote • Information on the registration for electronic communica- tion is provided at Royal Unibrew’s website www.royaluni- brew.com under “Investor” • Registration of shareholders' names are handled by the bank that holds their shares in safe custody Communication with shareholders and stakeholder relations The management of Royal Unibrew is committed to fostering effective and transparent communication and dialogue with the company shareholders and other stakeholders. We believe that a high level of transparency in the communication of the Company’s development supports our work and a fair valuation of the Company’s shares. Our openness is limited by the duties of disclosure of Nasdaq Copenhagen A/S as well as competitive considerations. The dialogue with and communication to shareholders and other stakeholders take place in connection with the publishing of financial reports and other announcements communicated via audio casts as well as meetings with investors, analysts and media relations. Financial reports and other announcements are available at Royal Unibrew’s website immediately after publication. Our website also includes material used in connection with investor presenta- tions, seminars, capital market updates and audio casts.. Investor relations activities Royal Unibrew aims to ensure open and timely information to its shareholders and other stakeholders. In order to maintain and develop good relations with the Company’s stakeholders, a number of activities are carried Share ratios per share of DKK 2 – DKK 2023 2022 2021 2020 2019 Parent company shareholders’ share of earnings per share 21.9 23.1 26.5 24.1 23.0 Parent company shareholders’ diluted share of earnings per share 21.9 23.1 26.5 24.1 22.9 Free cash flow per share 23.0 11.8 26.4 28.8 23.4 Year-end price per share 451.1 495.30 737.20 706.60 610.00 Dividend per share 0 14.50 14.50 13.50 12.20 Number of shares 50,200,000 50,200,000 48,800,000 49,350,000 50,100,000 * Earnings per share and diluted earnings per share are adjusted for gain on remeasurements of investments in associates (DKK 360 million) in 2022 ** It is proposed to the AGM that a mandate is given to the Board of Directors authorizing them to potentially distribute an extraordinary dividend of up to DKK 14.50 per share Governance ROYAL UNIBREW Annual Report 2023 66 Financial calendar 2024 FEBRUARY 28 2024 APRIL 30 2024 APRIL 30 2024 AUGUST 22 2024 NOVEMBER 12 2024 out continuously. In 2023, Royal Unibrew facilitated three audio casts in connection with the publication of the Annual Report 2022 as well as H1 Interim Report 2023 and Q3 Trading Statement 2023. Presentations from audio casts, seminars, etc., are available at Royal Unibrew’s website www. royalunibrew.com under “Investor”. Moreover, Royal Unibrew facilitates and participates in analyst and investor meetings in connection with the publication of financial reports. Currently, Royal Unibrew is covered by 15 brokers, including brokers from major international investment banks. Analysts covering the Royal Unibrew share can be found at www.royal- unibrew.com under “Investor”. Shareholders, analysts, investors, stockbrokers and other stakeholders who have questions concerning Royal Unibrew may contact Royal Unibrew A/S, Faxe Alle 1, DK-4640 Faxe: Contacts Jonas Guldborg Hansen (Head of IR) Jonas.Guldborg@royalunibrew.com Telephone +45 20 10 12 45 Stine Felten (daily IR contact) Stine.Felten@royalunibrew.com Telephone +45 29 23 04 93 Annual Report 2023 Trading Statement Q1 Annual General Meeting Interim Report H1 Trading Statement Q3 Capital Market Day will be held on May 7, 2024, at Science Gallery London. To sign up please send an email to investor.relations@royalunibrew.com Governance ROYAL UNIBREW Annual Report 2023 67 → Sustainability/ESG Our long-term sustainability/ESG strategy • ESG story and achievements • Double materiality assessment Environmental topics • Social topics • Governance topics • ESG highlights and ratios accounting principles • EU Taxonomy This section is prepared in accordance with section 99a, b and d and 107b and d of the Danish Financial Statement Act and supporting our Communication On Progress report in accordance with UN Global Compact. Sustainability/ESG Corporate social responsibility ROYAL UNIBREW Annual Report 2023 68 Our long-term sustainability/ESG strategy Our sustainability/ESG strategy is an integral part of our corporate strategy, THE PREFERRED CHOICE. Hence, we consider systainability to be essential for future-proofing our business. Our ambition is to lead the beverage industry with respect to climate actions and the demand for sustainable products. We will reduce the impacts and risks of our operations and products while at the same time delivering sustainable business growth, utilizing opportunities and considering stakeholders’ views. We have always been committed to contributing positively to the communities we are part of; limiting our environmental foot- print; establishing safe and developing working conditions for our employees and delivering high-quality responsible products. Likewise, we continue our commitment to the principles of the UN Global Compact (UNGC), the UN Sustainable Development Goals (SDGs) as well as our endorsement of the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations with balanced disclosure of climate risks and opportunities. Our strategy, operating model, and KPIs remain well-suited to support integration of material ESG aspects related to our business and transitions plans. During 2023, we continued the implementation of our strategy and objectives with concrete actions and initiatives to achieve our targets for our strategic pillars: • Our consumers and customers • Our products • Our people For each of the pillars, we have defined near-term 2025 and 2030 sustainability targets. We monitor our performance closely to ensure progress on our targets and to make timely adjustments if needed from an impact, risk and opportunity perspective. In 2023, Royal Unibrew’s aspiration of becoming a global leader in sustainable beverages with ambitious decarboniza- tion targets became reinforced, as our targets for scope 1, 2 and 3 were approved by the Science Based Targets initiative (SBTi). Being a beverage company, we have now set specific targets for FLAG (Forest, Land-use and Agriculture) in line with our general scope 3 target, committed to zero defor- estation and not the least committed to net-zero in 2040. We have submitted these targets for SBTi approval in 2024. Despite the continued geopolitical challenges, we remain determined to transition to a net-zero future. The roadmaps for energy efficiencies and CO 2 reductions are in place in all markets and for the entire value chain. Net-zero 2040 commitment Coordinated and wide-ranging efforts are needed to succeed with our ambitious sustainability/ESG strategy – and we cannot do it alone. We will innovate, develop, and engage in partnerships with our key stakeholders, such as strategic suppliers, major customers, consumers, local communities and our employees for mutual benefit. Overall, we are on track to deliver on our near-term 2025 and 2030 targets. Further- more, integration of the acquired companies in 2023 is well underway. The new companies and their business models and competencies have inspired us to improve some of our programs and approaches. The acquisitions did not trigger changes to our materiality assessment. Sustainability/ESG ROYAL UNIBREW Annual Report 2023 69 96% 92% 76% 67% Not measured yet in all markets 10- 12% Overall KPIs Our consumers & customers No/low growing faster than average on the portfolio and faster than market (YoY) #1 partner of choice for customers as sustainable beverage supplier by 2030 40% of marketing budget allocated to brands/ campaigns with a sustainability position by 2025 Our products 100% carbon emission free by 2025 in scope 1 and 2 50% reduction in supply chain emissions (scope 1, 2, 3) by 2030 100% recycled, recyclable or reusable packaging by 2025 Our people 100% safety culture 80% of employees being Royal Unibrew ambassadors by 2030 100% sustainability culture by 2025 Disclaimer: The targets apply to our current footprint. It is our ambition that our acquisitions will be integrated, but a grace period may be required * without distribution and biogenic emissions Sustainability/ESG Overall KPIs ROYAL UNIBREW Annual Report 2023 70 2018 2018 2019 2020 Before 2021 2022 2023 ESG story and achievements At Royal Unibrew, sustainability/ESG is deeply engrained in our purpose and ambition to be THE PREFERRED CHOICE NEW LONG-TERM SUSTAINABILITY/ ESG STRATEGY AND INITIATIVES Establishing the frame- work for our sustain- ability strategy as part of THE PREFERRED CHOICE and setting long-term targets (2030) and KPIs EXPANDING ESG FOCUS AND ACHIEVING SHORT-TERM TARG ETS Achieving short term 2020/2022 targets for no/low, CO 2 reduction and packaging materials • Submitting targets (scope 1, 2 and 3) for SBTi approval • Reviewing materiality assess- ment from 2018 - water and biodiversity as new topics • Elaborating EU taxonomy data and expanding ESG indicators to meet CSRD requirements • Finalizing plans for energy efficiency and decarboniza- tion toward 2025 • Continued investments in major solar park and biogas CONTINUED EFFORTS TO REDUCE FOOTPRINTS AND POTENTIAL IMPACTS On track on achieving our overall KPIs Current status • No/low volume increase for alcoholic and non-alcoholic categories outperforms regular volume • Maintains market leading position in no/ low carbonated soft drinks • SBTi approval of emissions targets for absolute reduction in scope 1, 2 and 3. • Submitting FLAG target and Net Zero target for 2040 for SBTi approval in 2024 • 44% share of renewable energy in scope 1 and 2 CO 2 . Plans and capex for 92% • 96% recycled, recyclable or reused packaging materials • Investing in more filling lines ESG capabilities • Strong sustainability culture • ESG Industry Top Rated in our sector beer, wine & spirits by Morningstar Sustainalytics • Limited assurance on ESG data EFFICIENCY IMPROVEMENTS YEAR-ON YEAR Optimizing eco- efficiencies in produc- tion processes: • Investing in cleaner technology • Reduce, reuse and recycle packaging materials SHORT-TERM TARG ETS ESTABLISHED Establishing short term ESG targets for 2020 and 2022 on • No/low products • CO 2 emissions from scope 1 and 2 • Packaging materials (recycled content) • Occupational health and safety MATER IALI TY ASSESSMENT AS BASIS FOR ESG PRIORITIZATION Materiality assessment as foundation for: • Priioritization of nine strategic focus areas • Integrated reporting INITIATION OF STRATEGY IMPLEMENTATION Implementing actions to achieve our 2025/2030- targets and measuring performance • Joining and commit- ting to SBTi • Endorsing the TCFD framework • Disclosing country- by-country on tax and EU Taxonomy on Climate eligibility Sustainability/ESG Equity story ROYAL UNIBREW Annual Report 2023 71 Policies and systems Royal Unibrew is working in accordance with international and national legisla- tion, as well as international guidelines, conventions, and standards for environ- ment, social conditions, governance and sustainability. Our policies and systems ensure compliance. Royal Unibrew’s policies provide guidance for the employees, third parties acting on behalf of the company and suppliers regarding anti-corruption, environment/climate, human rights and labor standards, quality and product safety, data safety, competition, and responsible marketing. The basic require- ment is legal compliance combined with awareness of potential impacts, risks and opportunities. Thus, the policies and proce- dures ensure our freedom to operate. → For further information on human rights see the Business Ethics Policy Implementation of processes and proce- dures to align further and be ready to disclose in accordance with the Corporate Social Responsibility Directive (CSRD) and Policies and systems Policy Systems, procedures and guidelines Environment • Business ethics Policy • Environmental & Climate Policy ISO 14001 (9 sites) Environmental & Energy management systems, incl. energy audits (20) Disclosures: CDP Social • Business ethics Policy • Diversity, Equity & Inclusion Policy Ethical guidelines ISO 45001 (3 sites) Occupational Health and Safety Management Systems Employee Engagement survey ISO 9001 (8 sites) Global Food Safety initiative (GFSI) recognized systems (16 sites) Governance • Business ethics Policy • Data Ethics Policy • Tax policy • Whistleblower policy • Supplier Code of Conduct • Investor Relations Policy • Remuneration policy Tax compliance and transfer pricing documentation Ethical guidelines Supplier Management Procedures Mandatory training: GDPR, Cybersecurity, Business Integrity, Responsible marketing, etc. the requirements as outlined in the European Sustainability Reporting Standards (ESRS) has been ongoing in 2023. Despite the fact that Royal Unibrew has been disclosing ESG performance KPIs for many years, it is a huge endeavor to provide the required data and documentation. We have decided to get limited assurance of our ESG data for 2023 to make sure our accounting principles, internal controls and documentation are in place. We are monitoring additional future EU legis- lation closely such as the proposed Corpo- rate Social Due Diligence Directive (CSDDD), Packaging and Packaging Waste Regulation (PPWR), climate labelling, as well as the remaining standards for the EU Taxonomy, especially on circularity and biodiversity to be ready with technologies, processes and tools for implementation of requirements. 99.9% of volumes covered by product safety certification (GFSI recognized) Sustainability/ESG Our policies and systems ROYAL UNIBREW Annual Report 2023 72 Our governance structure Our sustainability/ESG activities are anchored at the Board of Directors who has the oversight of our strategy, targets, impacts, risks and opportunities and Group policies together with the Executive Management. Our targets and relevant business processes are imple- mented through the Growth Leadership Team, consisting of SVPs and VPs from our main markets and Group functions, including the Sustainability VP. The latter reports directly to the CEO. Thus, the ESG/sustainability area adheres to the same governance principles as all other business critical processes and decisions. → For further information see the corporate governance section. The Executive Management and senior management teams have long-term and short-term incentive programs (LTIP/ STIP) that are directly linked to Royal Unibrew's sustainability and ESG performance. The ESG targets constitute 15% and 20%, respectively, of the total weight in 2023. We are constantly working on improving the transparency in decision processes and due diligence related to our strategy, material issues, policies, actions, targets and performance. Establishing clear accounting principles for ESG data and thus forming the basis for external assurance has been an integral part of this process. Group CSR and finance are responsible for reporting our results, including good practice guidelines for risks and internal controls. The ESG data governance and materiality responsibility lies at the Audit Committee, whereas the Board of Directors oversees all sustainability aspects, including the strategy. → For further information see the risk management section. A strong company culture is crucial for our progress and performance – a culture in which decisions are made in respect of our consumers’, customers’, suppliers’, share- holders’ and other key stakeholders’ views and priorities, and a culture that encourages people to take responsibility for their actions. In Royal Unibrew, we believe that having ESG matters anchored in our strategy ensures that we include these aspects in daily decision making. Internal controls and the whistleblower scheme are important means for controlling and reporting potential irregularities, also by external stakeholders. Regular training is among our tools to ensure compliance, i.e. employees and specific business functions are trained in relevant aspects depending on their potential exposure. Sustainability/ESG Our governance structure ROYAL UNIBREW Annual Report 2023 73 1 15 16 17 19 20 21 22 23 18 2 5 6 7 8 10 11 12 9 13 14 3 4 Importance for stakeholders, incl. society 1 2 3 4 5 Impact on Royal Unibrew and surroundings 1 5 High 4 3 2 Social Social/environmental Environmental Consumer Other 1 Diversity, Equity and Inclusion 2 Occupational Health & Safety 3 Employee attraction & retention 4 Human rights in business 5 Responsible procurement, incl. due diligence 6 Local sourcing 7 Dangerous substance 8 Sustainable farming, incl. deforestation & land-use change 9 Biodiversity 10 Climate & energy 11 Packaging materials 12 Transportation & logistics 13 Circularity, resources and waste 14 Water stewardship (in/out) 15 Local community (incl. impact economic/ investments, social & cultural) 16 Partnerships 17 Responsible communication/information (labeling & marketing) 18 Consumer health & wellbeing, incl. product safety & responsible drinking 19 Business integrity, incl. code of conduct 20 Economic impact & tax 21 Governance 22 Data security/privacy & cyber security 23 Risk management & mitigation High We are further developing our materiality process to match CSRD requirements for ESG impact and financial materiality – double materiality. We strive to work with a balanced approach toward our stakeholders by disclosing potential risks to our business and how we control these as well as by expressing the oppor- tunities for Royal Unibrew; commercially as a sustainable beverage company and locally as a sustainable partner and not the least a preferred workplace. Our key stakeholders are defined in our strategic formulation: we want to be THE PREFERRED CHOICE for our employees, consumers, customers, shareholders and the future. In addition, our busi- ness partners, suppliers, legislators, local communities and NGOs are among our stakeholders. Through recurring meetings and concrete sustainability work streams with selected stakeholder representatives, we gain valuable insights into their needs, potential concerns and not mutual development possibilities. We believe that these insights are fully elucidated and implemented in our strategy. During 2023, Royal Unibrew reviewed the materiality assess- ment to determine if our strategy continues to address rele- vant ESG issues. We identified global trends, standards and benchmarks and made use of insights from our stakeholder engagement survey. Moreover, we initiated full integration of the double materiality assessment approach in our Enter- Double materiality assessment Sustainability/ESG ROYAL UNIBREW Annual Report 2023 74 prise Risk Management (ERM) framework and conducted an in-depth assessment of climate-related impacts, risks and opportunities, to align the methodologies and understanding. The materiality assessment was reviewed and validated by the Growth Leadership Team and hereafter approved by the Audit Committee and the Board of Directors. → For further information please see the risk management chapter Based on the review of our materiality assessment, we main- tain the material sustainability matters identified in the 2022 assessment. However, data security/privacy and cyberse- curity have become more important for our stakeholders, whereas human rights risk in Royal Unibrew’s operations are reduced. In addition, employee attraction and retention as well as water stewardship are assessed to be more material for Royal Unibrew. Climate and responsible sourcing remain a top priority. Several of the sustainability matters, such as pollution, have a very low risk. Only a couple of our production facilities store dangerous substances, and the area is heavily regulated, which is why monitoring and management are preventing any real exposure. Sustainability/ESG ROYAL UNIBREW Annual Report 2023 75 Social Social/environmental Environmental Consumer Other Materiality assessment and sustainability matters Topic Sub-topics Materiality Climate change Climate change adaptions Climate change mitigation Energy 6 8 10 11 12 Pollution Pollution of air Pollution of water Pollution of soil Pollution of living organisms and food resources Substances of concern and very high concern 7 Water and marine resources Marine resources Water consumption Water discharge 14 Biodiversity and eco systems Direct impact on drivers of loss Impact on the state of species Impacts on the extent and condition of the ecosystem 8 9 Resource use and circular economy Resources inflows Resources outflows related to products and services Waste 12 Topic Sub-topics Materiality Own workforce Working conditions Equal treatment and opportunities for all Other work-related rights 1 2 3 4 Workers in the value chain Working conditions Equal treatment and opportunities for all Other work-related rights 4 5 Affected communities Communities economic, social, cultural rights Communities civil and political rights Indigenous rights 4 5 6 14 Consumers & End-Users Information-related impacts for consumers and/or end-users Personal safety of consumers and/or end-users Social inclusion of consumers and/or end-users 16 17 Business conduct Corporate culture Protection of whistle-blowers Animal welfare Political engagement and lobbying activities Management of relationship with suppliers including payment practices Corruption and bríbery 4 5 18 19 20 21 22 Sustainability/ESG ROYAL UNIBREW Annual Report 2023 76 Environmental topics We want to be THE PREFERED CHOICE for the future, and it is our ambition to be one of the most sustainable beverage companies globally. We are in the process of converting our energy consumption to renewable energy in the entire value chain, and we collaborate with our partners and other stakeholders to reduce CO 2 emissions as well as our use of resources by fostering a circular mindset and ensuring biodiversity. All this while contri- buting to society. We apply a precautionary principle to ensure that factors which may present an environmental or climate risk are monitored, avoided or mitigated. 19% RAW MATERIALS 10% BREWERIES 17% DISTRIBUTION 7% REFRIGERATION TOTAL 42% PACKAGING 5% MALT I N G Emissions throughout the life cycle Proportion of greenhouse gas emissions in each stage of the life cycle of our products. Royal Unibrew’s environmental and climate policy aims to minimize potential impacts on the environment and climate by reducing resource consumption such as energy, water, materials, as well as the associated emis- sions, to protect biodiversity and ultimately to do no harm. Our environmental policy applies to Royal Unibrew and our suppliers. 2023 Kg CO 2 /hl 7.1 2.4 4.1 16.6 6.7 2.8 39.6 2019 Kg CO 2 /hl 7.3 2.4 6.8 17..7 5.4 2.9 42.5 Change since 2019 -3% -3% -40% -6% 24% -5% -7% * the figure for 2019 is underreported and therefore under revision We have ambitious environmental and climate targets that are well-integrated in our management processes and systems. Systematic monitoring allows us to make continuous improvements and communicate our performance both internally and exter- nally. Our overall KPIs for the environment remain unchanged with a maintained focus on climate and circularity but with underlying targets established for water and the inter- connection to biodiversity. We have, however, added a SBTi approved 1.5°C target for scope 3 alone, with a 50% reduction target in 2030 compared to 2019. Royal Unibrew has reviewed the impact materiality in 2023. The material topics and impact assessment are unchanged; however, water stewardship has been assessed as having a higher impact. We have conducted a thorough assessment of the financial materiality of climate change in relation to transitional and physical risks. → For further information please see the risk management chapter Sustainability/ESG Renewable energy sources ROYAL UNIBREW Annual Report 2023 77 CO 2 from production kg CO 2 /hl (rhs) Total energy consumption kWh/hl (rhs) 2019 2022 2023202120202019 2022 202320212020 20 25 30 35 40 45 2.5 2.8 3.1 3.4 3.7 4.0 2019 2022 2023202120202019 2022 202320212020 0 50 100 150 200 250 300 18 19 20 21 22 23 24 CO 2 from production (mkg) (kg CO 2 /hl) Energy consumption (mkWh) (kWh/hl) Climate and energy We will increase our renewable energy use toward 2030 by starting with our own production and gradually increasing demands on suppliers and engaging in partnerships. Our commitment to environmental sustainability is unwav- ering, and we are fully aware of the critical role businesses play in addressing climate change. The SBTi approved our scope 1, 2 and 3 targets in 2023 in alignment with the overar- ching objective of limiting global warming to 1.5°C as outlined in the Paris Agreement. We have submitted our FLAG target (50% reduction in 2030, compared to 2019); no-deforestation and net-zero target for 2040 for SBTi approval in 2024. Our targets are not a one-size-fits-all solution but are tailored to our industry. We have conducted comprehensive sector-specific assessments to understand our industry's unique challenges and opportunities in addressing climate change. We recognize that addressing climate change requires collective action, and we are encouraging our peers, suppliers, and partners to embrace similar commitments. Basically, we are dependent on efforts in the entire value chain, sharing of data and collaboration to reduce impacts. Royal Unibrew’s principles for decarbonization are unchanged, and the primary drivers are efficiency improvements and tran- sition from fossil fuels to renewable energy and adding renew- ables to the grid. In 2023, we further developed our road maps for decarbonization and energy efficiencies. For scope 1 and 2, where our target is to be 100% emission free by the end of 2025, excl. distribution and biogenic emissions, we have capex projects and capex plans in place to support implementation. Sustainability/ESG ROYAL UNIBREW Annual Report 2023 78 0 20 40 60 80 100 2019 204020302026 Our net-zero journey Giorgio and Vrumona) from our production are progressing or planned for the period of 2024 to end of 2025. The main projects include installation of solar cells, heat pumps and bio-based or electrical boilers. Royal Unibrew is not regulated through EU’s Emissions Trading Scheme (ETS), and we have not financed carbon credits or carbon removals. We do not currently apply internal carbon pricing. Despite of the war in Ukraine resulting in a temporary switch from natural gas to oil at our sites in Faxe, Denmark; Toronto, Canada; and Bergen, Norway, in the beginning of 2023, the kg CO 2 per produced volume decreased organically by 9% in 2023. This decline is an expression of the effects of Royal In 2023, we had a total of DKK 76 million capex allocated to climate, which is a significant increase from 2022. The energy efficiency measured as energy consumption per produced hectoliter declined organically by 0.5% to 20.4 MWh/hl in 2023. Efficiency measured relative to net revenue was 2.0 MWh/DKK in 2023, which is an improvement of 5% compared to 2022. Today, 44% of Royal Unibrew’s energy consumption in scope 1 and 2, excl. logistics, is based on renewable energy from our own production or Renewable Energy Certificates (REC). Proj- ects ensuring a reduction of almost 100% of our carbon foot- print (36.2 million kg CO 2 excluding Amsterdam Brewery, San Unibrew’s transformation from fossil-based to renewable energy based. Our absolute scope 3 emissions (mkgCO 2 ) in 2023 were at level with our 2019 base year. When looking at the efficiency measured as mkgCO 2 per hectoliter, we have reduced the impact in all parts of the value chain except for transporta- tion. The predominant reduction is at our breweries covering scope 1 and 2. For packaging materials the reduction is related to a significant increase of the recycled content of cans, and despite of an increase in the PET contribution as we temporarily switched to a higher content of virgin material. % Initiatives to reduce our emissions Energy efficiency improvements Heat pumps Solar panels Electrification Transition from fosil-based boilers to bio-based and/or electrical boilers Green certificates or PPAs Scope 1 + 2 Scope 3 For scope 1 and 2, our target is to be 100% emission free by the end of 2025 Sustainability/ESG ROYAL UNIBREW Annual Report 2023 79 Total water consumption hl/hl 2019 2022 202320212020 15 22 29 36 43 2.0 2.4 2.8 3.2 3.6 Water consumption (mhl) (hl/hl) Water is our most important raw material; therefore, water preservation and water quality are key focus areas for us. Royal Unibrew’s production sites are not located in extremely high water stressed areas, except for a small site in Estonia (0.04% of total consumption). Withdrawal of water in low and medium-low water-stressed areas constitute approximately 53%. Water consumed is either based on municipal supply or water from own wells. At a couple of our production sites scarcity of water or capacity of wastewater treatment plants may become limiting factors for growth. All wastewater is treated prior to emission either at privately owned or public wastewater treatment plants upholding the stipulated requirements. Our consumption of water per hectoliter declined organi- cally by 1% between 2022 and 2023. The water intensity measured as water consumed per hectoliter from 2019 to 2023 has been reduced by 6%, organically. Water stewardship 0.04% of water consumption from extremely high water stressed areas Reducing water consumption remains a priority. We continue our efforts to improve water efficiencies, and we are inves- tigating opportunities to reuse more water at our major production sites. In addition, projects aiming at restoring freshwater ecosystems continue at the Lake Vesijärvi in Lathi, Finland, and in Latvia where collaboration with the World Wide Fund for Nature (WWF) also entails education in the society at large. Sustainability/ESG ROYAL UNIBREW Annual Report 2023 80 2019 2022 202320212020 0 3 6 9 12 15 18 50 60 70 80 90 10 0 Waste generation Total waste (mkg) % Recycled waste Total waste % recycled waste (rhs) Circularity in the beverage industry starts with packaging materials and closing the material loop In the beverage industry, resource consumption and circu- larity, apart from water, is closely connected to packaging materials from manufacturing via filling and distribution to end-of-life – and to a lesser extent loss and scrap of products as well as waste generated in production. Closing the loop of packaging materials (primary, secondary and tertiary) is key, but also removing, reducing, reusing and recycling mate- rials are important. The impact materiality within this area is considered unchanged from 2022. Packaging materials serve a critical role of protecting the beverages and avoiding food waste. Food safety requirements for primary packaging are stringent, as it is vital to protect our products and ultimately consumer health. The entire packaging system ensures there Circularity and waste systems, (DRS) where return rates are above 90%. We are therefore well prepared for our extended producer respon- sibility and the new EU legislation on packaging and pack- aging waste. In less mature markets, we are looking to drive solutions. Reuse and recycling concepts at our customers and venues are currently being tested for washable cups, and also collection and recycling of rPET cups at festivals as well as recycling plastic kegs using DRS are being tested. We continue to work on projects to reduce the amount of material used with the limitations and restrictions mentioned above. We continue to look at substitution of plastics by implementing more filling lines that operate with paper or cardboard solutions such as keel clip. Circularity principles are also applied to our production waste, where 92% was recycled in 2023. Organic byproducts and organic waste are utilized 100% for food, feed or biogas. In 2024, we will continue our work on implementing circu- larity principles more broadly in our supplier management processes in relation to equipment, building materials, etc. Organic recycled content (excl. Vrumona and San Giorgio) Realized 2022 Realized 2023 TAR GET 2025 r- Corrugated cardboard 98 94% 100 r- Paper labels 92 87% 100 r- Shrink film 68 59% 100 r-PET 64 28% 100 is no harm to our products during distribution. Therefore, our approach to circularity is founded on the primary purpose of packaging materials’ ability to protect the products. Royal Unibrew is applying circular principles in the design of packaging materials and systems. We are on track toward our overall goal of 100% reusable, recyclable, or recycled materials in 2025. 96% of the materials we use today are mono materials. Mono materials can easily be separated, sorted, recycled or reused in clean fractions, such as glass, PET, carton, aluminum, etc. However, a few concepts such as our juice portfolio and bag-in-box concepts for wine and soft drinks as well as certain plastic-based kegs are not yet recyclable or recycled. These concepts contributed approximately 4% of the sales volume in 2023. While recyclability may be improved in the next couple of years, we will also be looking for alternatives. We are committed to converting to a higher content of recy- cled materials both in our plastic and fiber-based packaging in accordance with our 2025 targets. However, in 2023 we slowed our conversion rates down on targeted materials. We have registered challenges especially in the quality and cost of rPET, and we also experienced challenges with the robustness of both shrink film and corrugated cardboard in distribution. Based on our learnings, we have decided to investigate recy- cled content further, as more materials needs to be added to ensure stability in our current systems. Subsequently, we need to establish the optimum between environmental, technical and protective properties for packaging materials. Our sector is characterized by using reusable (e.g. kegs, glass bottles) and recyclable packaging systems, and the systems are in many markets supported by strong deposit return Sustainability/ESG ROYAL UNIBREW Annual Report 2023 81 The impact of climate, pollution, land use and water use changes on biodiversity and loss thereof is increasingly articulated as a major challenge, at least in the same order of magnitude as climate. New legislation such as the EU Taxonomy and CSR directive address this as well as several initiatives like the Science Based Targets for Nature (SBTN) and the Taskforce on Nature-Related Financial Disclosures (TNFD). The beverage industry is dependent on agricultural raw materials such as barley, sugar and corn, primarily sourced locally, but also forest-based products such as cardboard, carton, paper and land-based excavation of filter material (kieselguhr). As a consequence, Royal Unibrew assesses biodiversity to be material. In 2023, we updated our review of our physical locations’ vicinity to nature protected areas or protected species under the Natura 2000 umbrella. The review demonstrated that we are not located in Natura 2000 areas. We will work on stepwise to expand the assessment to the entire value chain, especially upstream. We have elaborated the climate-related impacts from raw materials and fiber-based packaging during preparation of the proposal for FLAG related CO 2 targets to SBTI. Adjusting our initial scope 3 calculation for purchased goods and services with 59 mkgCO 2 from FLAG in 2019. Furthermore, we are now committed to zero-deforestation. Royal Unibrew realizes that target setting on biodiversity requires more work. We spent 2023 to further educate ourselves, and we are leaning toward targets for sustain- able agriculture based on concepts such as nature positive methods and methods such as regenerative farming focusing on water consumption and use of chemicals as well as social aspects. We will formulate targets in 2024. Biodiversity Zero We are comitted to zero-deforestation Sustainability/ESG ROYAL UNIBREW Annual Report 2023 82 Pollution Royal Unibrew is a beverage company, and subsequently, we use chemicals for cooling, cleaning and process control. Boilers on site are associated with air emissions, and we have organic material and nutrient (nitrogen and phosphorous) containing wastewater. Our production sites are heavily regu- lated via general environmental permits, which also regulate air emissions and wastewater permits, governing permittable emissions to recipients. Therefore, all production sites have implemented operational procedures and controls to monitor emissions and investigate and report any non-conformities. The procedures are systematically managed and audited by the authorities and/or certifying bodies, where we have certified systems such as ISO 14001. In 2023, we had one accidental oil spill. It was remedied and no adverse effects were observed. We do have reporting requirements on emissions to the Pollutant Release and Transfer Register (PRTR) at the EU level. It is triggered by a production volume threshold level of 300 hectoliter per day at three sites, Lahti, Faxe and Bunnik, but only the site in Faxe, Denmark, is subject to air and waste- water emissions reporting, as the emissions are above the threshold levels per the PRTR legislation. We have two production sites in Denmark that are subject to the Seveso regulation on control of major-accident hazards involving hazardous substances related to storage of ammonia (cooling), and one site in Denmark on storage of nitric acid (process control) with a five tons storage threshold (column 2). Storage and operational controls are implemented and approved by relevant authorities. The system is audited by the authorities and described in a publicly available safety document. No leaks or spills have been observed in 2023. There is a potential environmental impact from our opera- tions; however, it is well-managed and audited regularly. The storage and consumption of hazardous substances, emis- sions to air and water are limited and therefore the risk is considered to be low. However, we will continue to monitor our emissions. Sustainability/ESG ROYAL UNIBREW Annual Report 2023 83 Social topics To achieve our business strategy of becoming THE PREFERRED CHOICE, we must attract, build and retain talented people at all levels and in all markets in which we operate. We will evaluate our success based on our long-term business results, our engagement surveys and our ability to place key talent in critical positions. We want to be the preferred partner for our customers with a broad portfolio of tasty high-quality products for any occasion and deliver the most relevant innovations for our consumers. We want to support the consumers in making healthy, nutritious and sustainable choices by always providing an alternative to regular beverages, i.e., sugary drinks, alcoholic drinks, etc. Moreover, we want to provide transparency for the consumer when choosing beverages. Royal Unibrew has policies for social matters as put forward in our Business Ethics Policy and further elaborated in our Diversity, Equity and Inclusion (DEI) Policy and Supplier Code of Conduct. Our policies are codified in accordance with the Universal Declaration of Human Rights (UDHR) with the prin- ciples set out by the International Labor Organization (ILO), the UN Guiding Principles, the Ten Principles of the UN Global Compact and relevant UN Sustainable Development Goals. Compared to 2022, we have increased the level of impact of attraction and retention of employees, whereas human rights and labor standards in our own operations, mainly located in Europe, have been slightly downgraded from a net risk perspective. The area has been regulated for years, and we have processes in place ensuring compliance. We have ambitious targets concerning our customers and consumers, including local communities. The same applies to our people. Other supply chain objectives are covered under governance topics. Sustainability/ESG Proudest employees ROYAL UNIBREW Annual Report 2023 84 OWN WORKFORCE Attraction and retention We aspire to have the proudest employees in the industry by fostering a sustainable and winning culture. We strive to cultivate the proudest employees, as they are the foundation for Royal Unibrew’s success and progress. Our performance builds on our deeply rooted culture as well as our strong experience and know-how within the beverage industry. We continuously work to ensure that our leader- ship model accommodates our strategic ambitions to deliver future growth, while nurturing a sustainable culture and providing a healthy working environment. Among the core initiatives to support our ambition of being THE PREFERRED CHOICE for our people are the establishment of Royal Unibrew’s Expectations and strengthening of our perfor- Employees by country Country Average FTE Denmark 1,322 Finland 731 Norway 347 Latvia 340 Lithuania 323 Netherlands 314 Italy 253 France 136 Canada 96 Sweden 69 Estonia 31 UK 12 USA 10 Total 3,984 mance management. In addition, we have initiatives covering organizational and people development, engagement surveys and digitalization of people processes, etc. Royal Unibrew's Expectations is a framework developed to support our leaders in performing effective value-based leadership. The framework supports our leaders in acting as Sustainability/ESG ROYAL UNIBREW Annual Report 2023 85 23 56 16 5 4.0 Satisfaction 33 41 19 3 1 4.1 Pride 27 39 22 8 4 3.8 Ambassador Willingness 28 47 18 5 1 4.0 Engagement Score 30 49 14 6 1 4.0 Motivation people development to ensure organizational readiness and hereby successful strategy execution. We continuously invest in the identification and development of talent across the organization through strengthened succession planning, both as a way of identifying talent as well as building and deploying talents to seize the increasing number of growth opportunities, both domestically and internationally. Measurement of progress and feedback are essential for achieving ongoing advances in our people management. Therefore, we are establishing well defined and digitalized people management processes in all our business units, including regular and constructive performance reviews and development planning. The digitalized performance manage- ment process provides our leaders with a common support tool to steer their performance conversations and track previous dialogues, supporting the employees' individual development and talent deployment across the organiza- Overall engagement score (%) Strongly agree Agree Neither agree not disagree Disagree Strongly disagree role models by demonstrating proper behavior in line with the expectations of Royal Unibrew while pursuing and achieving our shared ambition to be THE PREFERRED CHOICE. Local empowerment is at the core of our business model; hence, the ownership and commitment to fuel implementation of Royal Unibrew's Expectations is locally anchored. During 2023, we further rooted Royal Unibrew's Expectations in the organization and based on the positive experiences and measurable impacts of these initiatives, we have decided to roll out the key principles to all Royal Unibrew employees – aiming at providing an even more broad-based anchoring of sustain- able cultural values. Alongside, we will continuously develop the leadership framework, including strengthening the communi- cation, activation and implementation of new initiatives. Attracting, developing and retaining talented people remain key to our success, and we continue to invest in experience-based tion into sustainable careers across functions and countries. Furthermore, the digitalization of performance management, employee master data and recruitment processes improve the human capital development and tracking. As the external and internal expectations for tracking and reporting will increase in the coming years, digitalization of all our people processes becomes even more central. In 2023, the overall engagement score decreased marginally from 4.1 to 4.0 and the ambassador willingness decreased from 4.0 to 3.8, correspoding to 76% of our employees. Hence, we are not fully meeting the targets of more than 80% of our employees to be Royal Unibrew ambassadors. Proudness decreased sligthly from 4.2 to 4.1, whereas more employees believe Royal Unibrew is a sustainable company (increasing from 4.0 to 4.1). This signifies that more than 80% of our employees are proud of working at Royal Unibrew and believe that the company is focusing on sustainability. Going forward, we will carry out employee engagement surveys once a year to measure engagement both for short-term developments and changes and long-term trends compared to past years. The total employee turnover in 2023 remained at approxi- mately the same level as in 2022, yet slightly increasing from 17.1% in 2022 to 17.7% in 2023. Although still high, we operate in a time where the unemployment rate has been quite low across all our markets, while we are at the same time inte- grating companies into the Group. Taking the given labor market trends into account, we work actively to retain diverse, qualified and talented employees by offering attractive working conditions, including an attractive work environment and good career opportunities. Leave of absence due to non-work-re- lated illness has decreased from 3.6 % in 2022 to 3.0% in 2023. Sustainability/ESG ROYAL UNIBREW Annual Report 2023 86 Our strong commitment to a 100% sustainable culture at all levels and in all markets is reflected in our ambitious KPIs and our Executive Incentive Program. Core to our business strategy is a fundamental belief that a diverse and inclusive working environment in Royal Unibrew will create extraordinary and sustainable business results through our approach to local markets, local products and people. We continue to focus on building and driving a sustainable culture by assessing and monitoring the organizational health, including employee turnover, sick leave, safety culture, diver- sity, equality and inclusion – and by initiating new initiatives to support this agenda. We expect all our leaders to embrace their role as inclusive leaders by being committed to building diverse teams of complementary strengths, skills, experiences and perspec- tives. Furthermore, we expect them to foster an inclusive culture where all employees have a sense of belonging, equi- table opportunities to realize their potential and in which all employees feel free to speak up. These expectations and our strong commitment to sustainability in general are reflected in the executive incentive programs by setting ambitious sustainability KPIs as part of the programs. Our Diversity, Equity and Inclusion Policy (DEI) is our commit- ment to ensuring a diverse workforce, an inclusive workplace with equal opportunities and leadership valuing DEI. Gender is only one dimension of diversity, and we fully recognize that diversity is any dimension that differentiates our people, e.g., ethnicity, race, age, nationality, disability status or sexual orientation. Traditionally, the beverage industry is male dominated. However, we aspire to achieve a more balanced gender repre- sentation. Specifically, our target is a representation of at least 40% of the underrepresented gender across the Group and in the Board of Directors by 2025. In our Senior Leadership Team, incl. direct reports, in Royal Unibrew A/S, our target is 30% by 2027, currently at 27%. Our action plan to achieve this target is based on three elements: attraction, retention and inclusion. In 2023, we have reviewed hiring processes, including job advertisements and job interviews to increase recruitment of diverse profiles and reduce biases in the hiring process. Our objective is to ensure robust shortlists of competent diverse candidates for job vacancies and always recruit the best candidate for the job. At the end of 2023, 27% (2022: 26%) of all employees were women. Our ambition is to increase female representation at all levels. For the international management teams, we have unfortu- nately seen a downward trend in female representation during recent years, but 2023 marked a change in this tendency. There was an increase in female representation at leadership levels except for the Senior Leadership Team, though still not enough to adhere to the 40% principle in all countries. While the underlying development has been positive for the past years, we have seen that acquired companies have had a lower share of females at management level. The develop- ment over recent years emphasizes that the change toward a more balanced gender representation requires an extraordi- nary effort and continuous push within the area. This includes finding new ways to achieve critical mass of diverse talents and retain and develop the talents among office workers as well as within the production area. Employees by gender, Int. Management teams 2023 2022 2021 2020 2019 Female % 32 28 29 33 32 Male % 68 72 71 67 68 OWN WORKFORCE Diversity, equality and inclusion 27% Number of female employees at the end of 2023 Sustainability/ESG ROYAL UNIBREW Annual Report 2023 87 We are committed to maintaining and continuously improving our employees’ safety and keeping a harassment free working environment. We recognize that one accident is one too many, and we continue to focus on mitigating risks by allocating more resources and sharing best practices across the Group. All employees (100%) are covered by occupational health and safety management systems that emcompass procedures for identification and control of potential hazards (physical, chemical, biological, ergonomic, psychological health and well-being aspects), training, monitoring, recording and inves- tigation of incidents and legal compliance. Royal Unibrew engages with employees in many ways either formally through the worker’s councils, where representa- tives of employees and managers meet on a regular basis to discuss cooperation, challenges and progress, or informally via regular 1:1 development interviews and through our open feedback culture on daily basis. Furthermore, all employees and subcontractors have the opportunity to speak up on their own through representatives, managers, HR or our whis- tleblower mechanism. All employees can be part of a collective bargaining agreement if they choose to. The majority of white-collar employees in Royal Unibrew are covered by legal require- OWN WORKFORCE Safety culture Sustainability/ESG ROYAL UNIBREW Annual Report 2023 88 48 25 7 7 5 8 Behavior Lack of Procedure No assessed yet Lack of barrier Lack of PPE Lack of training 35 35 2023 Root causes % Behavior Lack of Procedure Lack of barrier No assessed yet Lack of Personal Protective Equipment Lack of training 2019 2022 202320212020 0 150 300 450 600 Severity Lost dayrate ments stipulating employee rights such as wages during parental leave, terms of notice, etc., rather than directly through a collective bargaining agreement. The distribu- tion between white-collar and blue-collar employees in Royal Unibrew is 56% to 44%, respectively. Furthermore, all employees in Royal Unibrew have contracts stipulating rights (work hours, vacation, benefits, etc.) and responsibilities. As we aim for zero lost time incidents, we have conducted behavior-based safety campaigns in several markets. In addition, we have worked on communicating safety aspects to enhance incident prevention, not only concentrating on lost time incidents but also on safety observations and near- misses. Improving root cause assessments for preventive measures have been in focus as well as more inspections and audits. 2019 2022 202320212020 0 18 36 54 72 90 0 4 8 12 16 Lost time incidents Accidents per million working hours LTI Lost time incident frequency (LTIF) (rhs) We measure the effect of our initiatives and track perfor- mance. In 2023, we did not have any fatal accidents among our employees or contractors. However, the frequency of incidents increased by 17% compared to 2022, resulting in 13 incidents per 1 million working hours. Therefore, we have started a range of initiatives anchored at the management level. The severity rate measured as lost days per 1 million working hours has decreased significantly by 51% since 2019, measured organically. Behavior and lack of codified proce- dures accounted for almost 73% of our lost time incidents in 2023, whereas lack of physical barrier, PPE use, and lack of training accounted for 20%. The latest employee engagement survey shows that 15% of the employees find they have been either bullied or sexu- ally harassed. Our objective is to be 100% harassment-free, measured as more than 90% of our employees feel they have a harassment-free working environment. Sustainability/ESG ROYAL UNIBREW Annual Report 2023 89 We believe in consumer’s choice. We want to help consumers make healthy or nutritious choices by always having an alternative to regular products, e.g., sugary, alcoholic beverages, etc. We want to provide transparency for the consumer when choosing beverages. Royal Unibrew is aware of the global challenges formulated by WHO regarding overweight, obesity and the associated risks of cardiovascular diseases, cancer and diabetes as well as risk of alcohol abuse that are linked to excess consumption of food and beverages. We are not only aware of the challenges, but we also work to reduce the challenges. With our THE PREFERRED CHOICE strategy, we strive to offer consumers a broad variety of beverages that complement the occasions that individuals participate in from music events, to exercising and dining with friends or family. Our goal is to offer no/low alternatives in all categories and in all our markets and hereby offering customers healthier choices. Royal Unibrew also wants to be the market leader by offering new products, more information and transparent communication about the products. Being perceived as #1 on sustainability by our customers remains a focus area. We are currently #1 in Latvia and #4 in Off-Trade in Denmark. Our commitment to responsible marketing and products is unambiguous as stated on our policy, and it is our responsi- bility to prioritize quality over quantity for products containing alcohol and sugar. We display nutritional information at least per the legal requirements. As for energy drinks, we have a warning sign for children, pregnant and lactating women, and we display proper advertising practices by avoiding targeting school children, which is also our standard for other bever- ages. We participate in relevant multi-stakeholder initiatives to continuously improve the heathy choices for consumers. An example is The Danish Food Partnership with participation of NGOs such as the Cancer Association, The Diabetes Asso- ciation, Food Authorities and representatives from the Food and Drinks Industry. The revenue split between alcoholic and non-alcoholic bever- ages was 49% and 51% in 2023, and we hold a strong market position within the zero-calorie and zero-sugar segment for carbonated soft drinks. Driven by a strong emphasize on innovation, marketing regular and zero-products together and making sure both alternatives have great taste, we act responsibly. More than 40% of our marketing spend is allocated not only to no/low but sustainability in general. Promotion of responsible drinking is an integrated part of our strategy. The volume growth in no/low sugar alternatives compared to regular products, e.g., in soft drinks, water and energy drinks, increased by 11% from 2019 to 2023, while regular products increased by 7% in the same period, indicating that we are on track with our 2030 target: no/low growing faster than average of the portfolio. In addition, the calorie content of the Our consumers and customers portfolio was reduced by 9.5% per 100 ml during the same period. The no/low alcoholic segment (beer, cider and RTD] increased by 8% from 2019 to 2023 compared to a 4% decrease for regular and strong alcohol-containing products in the same period, which indicates we are on track with our 2030 target: no/low growing faster than average of the portfolio. In recent years, we have acquired new portfolios of wine and estab- lished additional partnerships on spirits, and we are working on applying our strategy and initiatives to these categories as well. To protect consumers, we produce in accordance with the highest quality and food safety standards. 99.9% of our production volume is certified in accordance with the inter- national recognized Global Food Safety Initiative's (GFSI) standards such as FSSC 22000, IFS and BRC. Due to our diligent management of product safety, including staying on top of food alerts, we only experienced 16 withdrawals in total (microbiology, labelling and quality) and one recall in 2023. We received three notifications regarding violations of labeling requirements in 2023, and we received one noti- fication (promotion of alcohol to young people below the legal age limit) regarding non-compliance with marketing codes or regulations related to either advertising or promo- tion, including advertising to youth and other susceptible consumers. Consequently, we changed our marketing approach immediately. Sustainability/ESG ROYAL UNIBREW Annual Report 2023 90 Governance topics THE PREFERRED CHOICE strategy of Royal Unibrew, along with our governance framework and Business Ethics Policy, as well as our leadership framework and performance culture, form the foundation of the way we do business, including how we interact with business partners. The Business Ethics Policy, underpinned by other policies such as our Data Ethics Policy, and Whistleblower Policy, is our commitment to be and act responsibly and contribute positively to our stakeholders and society at large, i.e., our consumers, customers, people, shareholders, other business partners, suppliers and the future. Respecting and complying with the laws, international standards and practices wherever we do business is the foundation. Processes and procedures are imple- mented to ensure compliance and performance is tracked. The policies apply to all Royal Unibrew’s employees, providers of goods and services, and third parties acting on behalf of the company. We encourage anyone who becomes aware of actual or potential violations to speak up. Compared to 2022, we have changed the impact assessment of data security and cyber-security due to publicly acknowledged assessments and increasing attention from our stakeholders. Sustainability/ESG Proudest employees ROYAL UNIBREW Annual Report 2023 91 Royal Unibrew’s corporate culture is governed by our policies and the basic drive of doing the right thing, acting responsibly and respecting our stakeholders’ views and interests. Our approach to business ethics is to conduct business responsibly with integrity, honesty, and transparency and in compliance with our Business Ethics Policy and international and local standards for responsible business conduct. The Business Ethics Policy covers anti-corruption, breaches of competition law, quality and food safety, human rights and labor standards, environment and climate, etc. The policy applies to all Royal Unibrew’s employees and providers of goods and services such as suppliers, vendors, distributors, contractors, consultants, advisors and agents. We conduct annual training of relevant employees and busi- ness functions on topics such as competition law, marketing law, corruption and bribery, data security and protection (GDPR) as well as cyber-security to ensure compliance with policies and to protect our business, employees, consumers, etc. Training and internal controls will continue in 2024. Our whistleblower scheme available online aims to promote a culture of openness, accountability and integrity within our sphere of influence. We encourage all customers, suppliers, distributors, consultants and others who do business with us as well as our own employees to raise any concerns about unethical behavior, unlawful behavior or violation of our company policies. Any whistleblower will be protected with anonymity and from retaliation. All substantiated issues will be investigated. There were no reported cases in 2023. Our Data Protection and Data Ethics Policy specifies require- ments and principles to design, purchase and implementation of technologies, especially new technologies, including AI, entailing processing of personal data. The principles include topics such as legality, ethical design, security, transparency and respect for human rights. All employees were trained in aspects of GDPR and data security in 2023. No activities did by its nature trigger any need for specific initiatives in relation to data ethics. → For further information see the Data Ethics Statement 2023 In 2023, we reviewed our Policy on Political Contributions. We do not make financial contributions to political or religious parties or political or religious causes. We do allow charitable donations to publicly acknowledged organizations provided they are fully transparent. Royal Unibrew is non-political and will only involve in political positions if it may affect our busi- ness or the industry. We are member of various trade associa- tions in the countries where we have strong market presence, such as national brewer’s associations that lobby for our sector's points of view. The membership fee paid in 2023 was DKK 11.6 million. Royal Unibrew does not test on animals. Business integrity Sustainability/ESG Proudest employees ROYAL UNIBREW Annual Report 2023 92 Country-by-country key figures - IFRS, 2023 Number of employees average Total employee remuneration DKKm Revenues from third party sales DKKm Revenues from intragroup transactions with other tax jurisdictions, DKKm Balance of intercompany debt DKKm Profit/loss before tax DKKm Tangible assets other than cash DKKm Corporate income tax paid on a cash basis, DKKm Calculated local tax on profit (loss) DKKm Denmark 1,322 831 4,423 695 16 668 1,841 88 131 Finland 731 400 3,149 141 0 769 1,293 131 157 Norway 347 223 1,602 317 703 -31 770 - 0 Italy 253 112 1,015 129 854 20 411 2 1 France 136 80 318 78 438 -50 158 - -9 Holland 314 70 404 4 1,068 5 744 23 2 Latvia 340 75 433 146 94 89 172 0 24 Lithuania 323 67 503 119 34 36 219 2 5 Estonia 31 11 83 3 - -13 28 - 0 United Kingdom 12 7 92 - 0 10 3 1 3 United States 10 13 165 - 25 -4 33 3 -2 Canada 96 86 276 - 217 -16 140 - 0 Sweden 69 56 464 1 47 -77 251 - -1 3,984 2,031 12,927 1,633 3,496 1,406 6,063 250 311 Creating jobs and delivering prosperity in the communities in which Royal Unibrew operates are our tangible contributions to society. Providing transparent disclosures for tax is anchored in the Sustainable Development Goals (SDGs) (1 No Poverty, 10 Reduced Inequalities and 17 Partnerships) and our business Tax integrity, which is further elaborated in our Tax Policy and processes. Royal Unibrew operates in a number of predominately Euro- pean countries and is therefore subject to both national and international tax rules. Royal Unibrew follows the OECD prin- ciples for transfer pricing disclosures and documentation and use external advisors to prepare the documentation. We always enter an open and constructive dialogue with the tax authori- ties, and we are pleased to report that we were not involved in any instances of non-compliance with tax legislation in 2023. For 2023, Royal Unibrew has sold goods in countries that are defined as tax havens by OEDC, i.e., Trinidad, Panama, Antigua, Bahamas, Turks and Caicos and the U.S. Virgin Islands, effec- tively fully taxed in Denmark. Sustainability/ESG ROYAL UNIBREW Annual Report 2023 93 Country-by-country key figures - IFRS, 2023 Excise duties DKKm VAT DKKm Personal taxes & social security contributions DKKm Corporate taxes DKKm Tot a l DKKm Denmark 238 255 243 88 824 Finland 2,071 755 85 131 3,042 Norway 1,310 507 50 0 1,867 Italy 150 173 42 2 367 France 9 - 3 - 12 Holland 181 23 99 23 326 Latvia 95 78 29 0 202 Lithuania 155 81 1 2 239 Estonia 0 16 4 0 20 United Kingdom 21 16 3 1 41 United States - - 1 3 4 Canada 9 15 23 - 47 Sweden 166 80 22 - 268 4,405 1,999 605 250 7,259 Total tax contribution In 2023, Royal Unibrew had a total tax contribution of DKK 7.3 billion (2022: DKK 6.8 billion) divided between taxes borne of DKK 0.3 billion (2022: DKK 0.3 billion) and taxes collected of DKK 7.0 billion (DKK 6.5 million). Taxes collected comprise excise duties, VAT and personal taxes and social security contributions. Royal Unibrew seeks to comply with all tax legislation to our business operations, and we have prepared the country-by-country tax disclosure based on the GRI 207 tax guideline. Tax incentives Royal Unibrew seeks to benefit from tax incentives where this is industry standard for being competitive. As an example, Royal Unibrew engaged in a step-up tax arrangement with the Italian tax authorities in 2019. The arrangement was related to a reverse merger where relevant intangible assets with an associated value of EUR 40 million was recognized. The recognized intangible assets are deductible in the Italian tax over 5 years span. For being entitled to this, a step-up tax of 16% equal to nominal EUR 6.4 million was paid in 2019. Sustainability/ESG ROYAL UNIBREW Annual Report 2023 94 We engage with our entire value chain to reduce carbon emissions and minimize negative environmental effects and social impacts. Royal Unibrew has always cooperated closely with suppliers and other partners to improve our product, processes and production performance, while ensuring that any concerns for employees, environment, climate, etc., in the value chain are addressed. It is pivotal on one hand that we build on these well-established relations and work hard to strengthen them further, especially to achieve our ambitious targets on climate and future targets on biodiversity and water. On the other hand, it is vital that we identify and establish new partnerships for sustainable development. Our approach to responsible sourcing is rooted in our commit- ments, legislation and internationally recognized conventions and guidelines such as OECD Guidelines for Multinationals, Universal Declaration on Human rights, International Labor Organization Standards, UN Global Compact, UN Guiding Prin- ciples on Business and Human Rights, UN Sustainable Devel- opment Goals, etc. Our policies are adopted in our Supplier Code of Conduct, which also stipulates specific requirements regarding climate and renewable energy, biodiversity, water, chemicals for agricultural raw materials as well as circularity principles for packaging materials. We ask strategic suppliers to recognize our Supplier Code of Conduct by signature. We were aiming at signature of our responsible procurement principles by all critical suppliers in 2023. Currently, we are at a rate of 60%. We will focus on getting the remaining signatures in 2024. Our payment terms are aligned with the Unfair Trading Practices (UTP) regulation for agriculture and food supply chain and accommodates small and medium-sized companies’ potential liquidity challenges. Royal Unibrew believes that by creating a more sustainable business and by working together with suppliers, we can create shared value and a better and more resilient future. The quality and integrity of our products depend on continuity of supply and a healthy supply chain. We recognize that respon- sible sourcing is a journey where improvements are achieved through cooperation and partnerships with our suppliers. A large share of our footprint is outside our direct control. As an example, more than 90% of our carbon footprint is associated with our value chain (upstream and downstream). Our supplier management program is risk-based and initiated with a due diligence process (commercial, environmental, social, incl. food safety and governance) as the basis for approval. The majority of direct materials and services are currently sourced locally, i.e., 80% in Europe. Based on the risk assessment, certain suppliers are audited, and an outcome of an audit may be that we need to support the supplier with implementation of specific programs to improve performance. Suppliers are re-approved every third year. We are currently using different data management tools to support and docu- ment our supply chain, but we will be looking at consolidating commercial, food safety and sustainability information into one platform to improve overview and transparency. We monitor potential controversies and incidents with our suppliers. In case of incidents and non-conformities, we engage with the supplier to get full understanding of the cause/root cause and preventive actions taken, and we may conduct audits depending on severity and repetitiveness. In 2023, we had one such case (sexual harassment) where the supplier immediately implemented corrective actions and has implemented policies, processes and further initiatives to remediate and change the culture. Several markets already have implemented Transparency Acts, and the upcoming EU legislation on due diligence (CSDDD) has prompted further review of our policies and supplier management system. Supported by our supply chain management procedures, we believe that we have a robust system based on due diligence, risk assessments and periodic review of supplier performance, where any concerns will be addressed as they arise. Responsible sourcing 60% of our suppliers have signed our responsible procure- ment principles Sustainability/ESG Proudest employees ROYAL UNIBREW Annual Report 2023 95 Scope of reporting Our ESG data cover the performance of all operating entities in the period January 1 to December 31, 2023. Data is reported according to financial scope, including all sites, in which Royal Unibrew has a majority share, unless otherwise stated. Pure sales offices, restaurants, and terminals, except for the one in Faxe, Denmark, is not part of the 2023 scope, as the environmental footprint is considered insignificant. However, we are working on full integration. Data from newly acquired companies are included from the date of the acquisition being completed. When acquiring a new company, our sustainability strategy and targets are applied in accordance with the KPIs of the Group. In 2023, we have included Vrumona. San Giorgio Brewery acquired on November 2, 2023, is, however, not included, yet. Reporting and data governance Data is reported according to our internal data reporting procedure securing validation of the data. Business units are responsible for submitting monthly or annual data on environmental, social, and governance (ESG) key performance indicators (KPIs). Internally, these data are collected, reviewed and consolidated before being aggre- gated at the Group level. For any data points that have changed by more than 5% compared to the previous year's data, an explanation of these deviations must be provided. Each business unit is responsible for following the data vali- dation and verification procedures outlined in the reporting manual. We have established requirements for data docu- mentation and assigned a data owner for all business units. Upon submission of ESG data, the General Managers in local markets must review and sign off on its accuracy, verification, and documentation. Data and indicators Our data collection process serves to ensure compliance with the requirements of the UN Global Compact Communication on Progress and Nasdaq's ESG Reporting Guide. We consider key ESG indicators and global frameworks such as the GRI, SASB, UN Guiding Principles and the SDGs. CO 2 emissions are calculated in alignment with the GHG Protocol and SBTi, using local emission factors sourced from International Energy Agency (IEA) and DEFRA. ESG highlights and ratios accounting principles Sustainability/ESG ROYAL UNIBREW Annual Report 2023 96 Definitions of ESG highlights and ratios Production sites Total number of production sites within the Group end of year. Production volume Total volume of beverages produced within the Group. Scope 1 Direct CO 2 emissions from all sources owned or controlled by the company, which includes natural gas, diesel, fuel oil, propane and LPG. Energy consumption is converted from invoiced or metered units to kwh and kg CO 2 using Net Value. When calculating our KPIs, logistics and biogenic emissions are excluded. Scope 2 location based Indirect CO 2 emissions from sources not owned or controlled by Royal Unibrew but used in our operations, such as purchased elec- tricity, steam, heating and cooling. Energy consumption is converted from invoiced or metered units to kg CO 2 e using Net Value. Location based emissions are calculated based on a country-specific emis- sion factor. Scope 2 marked based Indirect CO 2 emissions from sources not owned or controlled by the company but used in our operations, such as purchased electricity, steam, heating, and cooling. Energy consumption is converted from invoiced or metered units to kg CO 2 e using Net Value. Market based emissions are calculated according to associated certificates. Scope 3 Value chain CO 2 emissions. Approximately 80%of our scope 3 value chain emissions are in the scope of our SBTi target. 2019 is our base year. We calculate our emissions every year and recalculate within the two-year deadline for acquisitions/divestments. Thus, Vrumona, San Giorgio, Amsterdam Brewery and Nørrebro Bryghus are currently not in scope. The primary contributors to our scope 3 emissions are purchased goods and services, downstream transportation and downstream refrigeration. For all categories, activity data has been used for quantifying the volumes. The emission factors are eitherbased on industry standards or supplier specific data. For categories 4 and 9, emissions factors from DEFRA were applied using the ton.km method. Energy consumption, total Total energy consumption including all sources of electricity, natural gas, oil and purchased heat/steam/cooling. Water consumption, total Water withdrawn from its source for production purposes but not returned to the same source. Withdrawn water may originate from internal wells, groundwater, or municipal water supply. Wastewater, total Water that has been used for production purposes and is subsequently returned to the water source. Wastewater treatment includes public wastewater treatment, onsite treatment followed by discharge to a river or onsite treatment followed by discharge to a public sewer. Sustainability/ESG ROYAL UNIBREW Annual Report 2023 97 Definitions of ESG highlights and ratios Solid waste, total Total weight of waste from production, including recycled, hazardous, landfilled, incinerated and household waste all measured in million kg. Recycled waste is the waste materials reprocessed into products, materials or substances whether for the original or other purposes. The different types of recycled waste are defined by national legis- lation. Hazardous waste is defined by the national legislation at the point of generation. Landfilled waste is categorized by Directive 1999/31/EC as landfills for hazardous waste, landfills for non-hazardous waste and landfills for inert waste (waste, which is not degradable). Recycled waste % Recycled waste relative to total solid waste. Spent grain and yeast Byproduct from beer production measured in million kg utilized for food, feed, biogas or fertilizer. Energy efficiency Energy efficiency of the production defined as energy consumption per total hectoliter of beverages produced. CO 2 efficiency CO 2 efficiency of the production defined as CO 2 emissions in scope 1 and 2 (location based) per total hectoliter of beverages produced. Water efficiency Water efficiency of the production defined as water consumption per total hectoliter of beverages produced. Waste efficiency Waste efficiency of the production defined as waste generated in production per total hectoliter of beverages produced. Packaging materials Share of packaging materials per total sales volume. Packaging materials include cans, returnable glass bottles, non-returnable glass bottles, PET, Kegs, Bulk and other. Total number of lost- time incidents (LTIs) Total number of workplace accidents resulting in lost time of more than one day. Lost time incident frequency The number of incidents resulting in lost time of more than one day per 1 million working hours. Number of lost days Total number of lost days due to Lost-Time Incidents. Lost day rate Lost day rate indicates the severity of incidents by the total number of workdays lost per 1 million working hours. Fatalities The number of work-related fatal accidents covers all types of employees and contractors. Employee turnover Employee turnover ratio covers both voluntary and involuntary leavers. Calculated per average FTEs during the year. Leave of absence due to illness (not work-related) Absence measured as number of absence days per total number of working days, where absence is defined as leave due to an employees’ own illness, excluding leave such as parental leave, leave due to occupational injuries or diseases, etc. Percentage of employees by gender, total Percentage of female(male) employees in the entire company irre- spective of job function. Measured as the number of total women (male) FTE per total FTE. Employees by gender, Int. Management teams Percentage of female (male) employees in Int. Management. Measured as the number of total women(male) per total number of members in Int. Management. Int. Management consists of Senior Leadership Team and Growth Leadership Team, incl. direct reports. Sustainability/ESG ROYAL UNIBREW Annual Report 2023 98 EU Taxonomy Investing in and maintaining sustainable economic activities are at the core of our strategy, which is aligned with the EU Taxonomy six environmental objectives. The EU Taxonomy framework provides an opportunity for Royal Unibrew to disclose our revenue and sustainable investments based on a recognized standard. For 2023, EU Taxonomy requirements mandate Royal Unibrew to report on eligibility and alignment with the environmental objectives of climate change mitigation and climate change adaptation and eligibility with the remaining four objectives. The EU Taxonomy is still evolving and remains subject to inter- pretation. The food and beverage sector is eligible for the objectives of Circular Economy and Biodiversity. Therefore, we expect our taxonomy eligibility and alignment will expand in the future when the technical screening criteria for the remaining four objectives are finalized and implemented. We are dedicated to continuous improvement and will maintain our position at the forefront of sustainable practices. We will reassess our KPIs on an annual basis. EU Taxonomy accounting principles In 2023, we have identified revenue related to the electricity production at our solar panel park in Faxe, Denmark. Eligibility and alignment During 2023, we assessed our economic activities, including turnover, capex and opex to determine their eligibility and alignment with the EU Taxonomy. Our assessment involved an initial screening of all activities aligned with the EU Taxonomy Compass and Annexes I and II of the Climate Delegated Act, followed by a detailed evaluation of potentially relevant activities. Our analysis focused on identifying activities that fall under the scope of the current legislation regardless of their size. We established the eligibility of each activity, followed by a thorough assessment of its alignment with the technical screening criteria. This involved evaluating each activity against the specific criteria to verify its compliance. Minimum safeguards Royal Unibrew is committed to operating responsibly, and we have adopted various measures to align our activities with the EU Taxonomy's minimum safeguards, including complying with our Supplier Code of Conduct, which is aligned with international standards, including UN Principles on Business and Humans rights. However, due to challenges in securing adequate documentation from suppliers, we are unable to currently claim full alignment with the EU Taxonomy. To demonstrate Substantial Contribution (SC) and Do No Significant Harm (DNSH), Royal Unibrew has carried out a thorough evaluation of both physical and transitional risks for the Group as part of the ESG/sustainability reporting. However, detailed climate risk assessments specifically covering EU Taxonomy-eligible activities are still in progress; therefore, we cannot fully demonstrate alignment for these activities in 2023. Double counting None of our activities contribute to multiple objectives. For the capex and opex allocations, we have identified the economic activities in the Climate Delegated Act and mapped these with relevant purchases. Thereby, we ensure that no capex or opex are double counted. Sustainability/ESG ROYAL UNIBREW Annual Report 2023 99 Substantial contribution criteria DNSH criteria Economic activities (1) Code(s) (2) Absolute turnover (3) mDKK Proportion of turnover (4) % Climate change mitigation (5) % Climate change adaptation (6) % Water and marine resources (7) % Circular economy (8) % Pollution (9) % Biodiversity and ecosystems (10) % Climate change mitigation (11) Y/N Climate change adaptation (12) Y/N Water and marine resources (13) Y/N Circular economy (14) Y/N Pollution (15) Y/N Biodiversity and ecosystems (16) Y/N Minimum safeguards (17) Y/N Taxonomy-aligned or eligible proportion of turnover, year 2022 % Enabling activity E Transitional activity T A ELIGIBLE ACTIVITIES A.1 Eligible taxonomy-aligned activities Turnover of eligible taxonomy -aligned activities (A.1) 0 0.0% 0% A.2 Eligible not taxonomy-aligned activities Electricity generation using solar photovoltaic tecnology CCA 4.1 1 0.0% EL 0% Turnover of eligible not taxonomy -aligned activities (A.2) 1 0.0% 0% 0% Total (A.1+A.2) 1 0.0% 0% B NON-ELIGIBLE ACTIVITIES Turnover of non-eligible activities (B) 12,926 100% Total (A+B) 12,927 100% Proportion of turnover from products or services associated with taxonomy-aligned economic activities - disclosure covering year 2023 Turnover KPI Our screening shows that our main revenue gener- ating activities are not currently covered in the EU Taxonomy under the Delegated Act 2021/2139. However, the energy production in 2023 from our solar park in Faxe, Denmark, is explicitly covered in the criteria and has generated revenue in 2023. The proportion of taxonomy eligible turnover identified is 0.0%. We expect the solar panels at our sites in Crodo, Italy, and Kalnapilis, Lithuania, will be included. The numerator of the turnover KPI consists of the portion of net turnover generated from our solar park in Faxe. The denominator equals total net turnover. Sustainability/ESG ROYAL UNIBREW Annual Report 2023 100 Substantial contribution criteria DNSH criteria Economic activities (1) Code(s) (2) Absolute CapEx (3) mDKK Proportion of CapEx (4) % Climate change mitigation (5) % Climate change adaptation (6) % Water and marine resources (7) % Circular economy (8) % Pollution (9) % Biodiversity and ecosystems (10) % Climate change mitigation (11) Y/N Climate change adaptation (12) Y/N Water and marine resources (13) Y/N Circular economy (14) Y/N Pollution (15) Y/N Biodiversity and ecosystems (16) Y/N Minimum safeguards (17) Y/N Taxonomy-aligned or eligible proportion of CapEx, year 2022 % Enabling activity E Transitional activity T A ELIGIBLE ACTIVITIES A.1 Eligible taxonomy-aligned activities CapEx of eligible taxonomy-aligned activities (A.1) 0 0.0% 0.0% A.2 Eligible not taxonomy-aligned activities Electricity generation using solar photovoltaic technology CCA 4.1 35 1.4% EL 1.0% Installation and operation of electric heat pumps CCA 4.16 12 0.5% EL 0.0% Construction, extension and operation of water collection, treatment and supply systems CCA 5.1 1 0.0% EL 0.3% Renewal of water collection, treatment and supply systems CCA 5.2 10 0.4% EL 0.0% Transport by motorbikes, passenger cars and light commercial vehicles CCA 6.5 0 0.0% EL 0.1% Installation, maintenance and repair of energy efficiency equipment CCA 7.3 17 0.7% EL 0.2% Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) CCA 7.4 0 0.0% EL 0.0% Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings CCA 7.5 1 0.1% EL 0.0% CapEx of eligible not Taxonomy-aligned activities (A.2) 76 3.2% 3.2% 1.7% Total (A.1+A.2) 76 3.2% 1.7% B NON-ELIGIBLE ACTIVITIES CapEx of non-eligible activities (B) 2,324 96.8% Total (A+B) 2,400 100% Proportion of capex from products or services associated with taxonomy-aligned economic activities - disclosure covering year 2023 Capex KPI Our screening shows that 3.2% of our capex is eligible under the Delegated Act 2021/2139. The numerator of the capex KPI covers eligible capex activities such as energy production, efficiency, water treatment and elements of transportation. The denominator of the capex KPI covers addi- tions to property, plant and equipment, intangible assets (excluding goodwill) and right-of-use assets, including additions resulting from business combi- nations. Sustainability/ESG ROYAL UNIBREW Annual Report 2023 101 Substantial contribution criteria DNSH criteria Economic activities (1) Code(s) (2) Absolute OpEx (3) mDKK Proportion of OpEx (4) % Climate change mitigation (5) % Climate change adaptation (6) % Water and marine resources (7) % Circular economy (8) % Pollution (9) % Biodiversity and ecosystems (10) % Climate change mitigation (11) Y/N Climate change adaptation (12) Y/N Water and marine resources (13) Y/N Circular economy (14) Y/N Pollution (15) Y/N Biodiversity and ecosystems (16) Y/N Minimum safeguards (17) Y/N Taxonomy-aligned or eligible proportion of OpEx, year 2022 % Enabling activity E Transitional activity T A ELIGIBLE ACTIVITIES A.1 Eligible taxonomy-aligned activities OpEx of eligible taxonomy-aligned activities (A.1) 0 0.0% 0.0% A.2 Eligible not taxonomy-aligned activities Electricity generation using solar photovoltaic technology CCA 4.1 0 0.0% EL 0.0% Installation and operation of electric heat pumps CCA 4.16 3 0.7% EL 0.0% Construction, extension and operation of water collection, treatment and supply systems CCA 5.1 4 1.2% EL 1.1% Renewal of water collection, treatment and supply systems CCA 5.2 0 0.1% EL 0.0% Construction, extension and operation of waste water collection and treatment CCA 5.3 3 0.8% EL 0.0% Transport by motorbikes, passenger cars and light commercial vehicles CCA 6.5 14 4.0% EL 3.8% Installation, maintenance and repair of energy efficiency equipment CCA 7.3 2 0.5% EL 0.4% Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings) CCA 7.4 1 0.2% EL 0.2% Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance of buildings CCA 7.5 0 0.1% EL 0.2% OpEx of eligible not Taxonomy-aligned activities (A.2) 28 7.7% 7.7% 5.8% Total (A.1+A.2) 28 7.7% 5.8% B NON-ELIGIBLE ACTIVITIES OpEx of non-eligible activities (B) 330 92.3% Total (A+B) 358 100% Proportion of opex from products or services associated with taxonomy-aligned economic activities - disclosure covering year 2023 Opex KPI Our screening shows that 7.7% of our opex is eligible under the Delegated Act 2021/2139. The numer- ator of the opex KPI covers eligible activities such as energy production and energy efficiency, water treatment and elements of transportation. The denominator of the opex KPI covers direct non-capitalized costs that relate to research and development, building renovation measures, short- term leases, maintenance and repair and any other direct expenditures relating to the day-to-day servicing of items, of property, plant and equipment by either Royal Unibrew or third party to whom activities are outsourced that are necessary to ensure the continued and effective functioning of such assets. Sustainability/ESG ROYAL UNIBREW Annual Report 2023 102 → Financial statements Signatures and statements Management's statement on the Annual Report • Independent auditor's report Independent Auditor’s Assurance Report on ESG highlights and ratios Signatures and statements Signatures and statements ROYAL UNIBREW Annual Report 2023 103 Managements statement The Board of Directors and the Executive Manage- ment have today considered and approved the annual report of Royal Unibrew A/S for the financial year ended December 31, 2023. The Annual Report 2023 is presented in accor- dance with IFRS Accounting Standards as adopted by the EU and disclosure requirements for annual reports of listed companies in Denmark. In our opinion, the consolidated financial state- ments and the parent company’s financial state- ments give a true and fair view of the Royal Unibrew Group’s and the parent company’s assets, liabilities and financial position at December 31, 2023, and of the results of the Royal Unibrew Group’s and the parent company’s operations and cash flows for the financial year 2023. In our opinion, the Management review contains a fair review of the development of the Royal Unibrew Group's and the parent company's operations and financial matters, the results for the year and of the Royal Unibrew Group's and the parent company’s financial position, together with a description of the significant risks and uncer- tainties facing the Royal Unibrew Group and the parent company. Executive Management Lars Jensen Lars Vestergaard President & CEO CFO Board of Directors Peter Ruzicka Jais Valeur Chair Deputy Chair Torben Carlsen Kenn Hvarre Heidi Kleinbach-Sauter Claus Kærgaard Michael Nielsen Christian Sagild Catharina Stackelberg-Hammarén Management's statement on the Annual Report In our opinion, the Annual Report of the Royal Unibrew Group and the parent company for the financial year January 1 - December 31, 2023, with the file name ROYAL-2023-12-31-en.zip, is prepared, in all material respects, in compliance with the ESEF Regulation. Further, the consolidated ESG highlights and ratios in numbers for January 1 – December 31, 2023 as presented on page 15 has been prepared in accor- dance with Danish Financial Statements Act and the stated accounting policies on pages 96-98. In our opinion, the consolidated ESG highlights and ratios in numbers give a true and fair presentation of Royal Unibrew A/S’ sustainability activities and result of the Group’s sustainability efforts in the reporting period in accordance with the frame- work mentioned and the stated accounting poli- cies as well as a balanced presentation of Royal Unibrew A/S’ environmental, social and gover- nance performance. We recommend the Annual Report for adoption at the Annual General Meeting. Faxe, February 28, 2024 Signatures and statements ROYAL UNIBREW Annual Report 2023 104 Independent auditors report Independent auditor's report To the shareholders of Royal Unibrew A/S Report on the consolidated financial statements and the parent financial statements Opinion We have audited the consolidated financial statements and the parent financial statements of Royal Unibrew A/S for the financial year 1 January 2023 – 31 December 2023, which comprise the income statement, statement of compre- hensive income, balance sheet, statement of changes in equity, cash flow statement and notes, including material accounting policy information, for the Group as well as for the Parent, page 103-177. The consolidated financial statements and the parent financial statements are prepared in accor- dance with IFRS Accounting Standards as adopted by the EU and additional requirements of the Danish Financial State- ments Act. In our opinion, the consolidated financial statements and the parent financial statements give a true and fair view of the Group’s and the Parent’s financial position at 31 December 2023, and of the results of their operations and cash flows for the financial year 1 January 2023 – 31 December 2023 in accordance with IFRS Accounting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act. Our opinion is consistent with our audit book comments issued to the Audit Committee and the Board of Directors. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) and the additional requirements applicable in Denmark. Our responsibilities under those stan- dards and requirements are further described in the "Auditor’s responsibilities for the audit of the consolidated financial statements and the parent financial statements" section of this auditor’s report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (IESBA Code) and the additional ethical require- ments applicable in Denmark, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. To the best of our knowledge and belief, we have not provided any prohibited non-audit services as referred to in Article 5(1) of Regulation (EU) No 537/2014. We were appointed auditors of Royal Unibrew A/S for the first time on 28 April 2021 for the financial year 2021. We have been reappointed annually by decision of the general meeting for a total contiguous engagement period of three years up to and including the financial year 2023. Statement on the management report Management is responsible for the management report. Our opinion on the consolidated financial statements and the parent financial statements does not cover the management report, and we do not express any form of assurance conclu- sion thereon. In connection with our audit of the consolidated financial statements and the parent financial statements, our respon- sibility is to read the management report and, in doing so, consider whether the management report is materially incon- sistent with the consolidated financial statements and the parent financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. Moreover, it is our responsibility to consider whether the management report provides the information required by the Danish Financial Statements Act and article 8 of Regulation (EU) 2020/852 (EU Taxonomy Regulation). Based on the work we have performed, we conclude that the management report is in accordance with the consolidated financial statements and the parent financial statements and has been prepared in accordance with the information required Signatures and statements ROYAL UNIBREW Annual Report 2023 105 Key audit matters How our audit addressed the key audit matter Revenue recognition There are a significant number of transactions and contracts with customers. Sales contracts with certain customers are relatively complex with discounts and agreements with marketing contributions etc. This introduces an inherent risk to revenue recognition. Therefore, we have considered this a key audit matter. Reference is made to note 5 in the consolidated financial statements. For the purpose of our audit, the procedures we carried out included the following: • We have considered the appropriateness of the Group’s revenue recognition policy and assessed the compliance with IFRS 15 Revenue from Contracts with Customers. • We have evaluated the systems and key controls, designed and implemented by Management, related to revenue recog- nition. • We have discussed with Management the key judgements related to recognition, measurement and classification of net revenue and marketing cost etc. • In addition, we have performed substantive procedures. We have reviewed significant and complex customer contracts and the development in discounts and the treatment of marketing contribution to ensure that accounting policies are applied correctly. • In addition, we have assessed whether the disclosures; note 5 in the consolidated financial statements meet the require- ments of IFRS Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements and the parent financial statements for the financial year 1 January 2023 - 31 December 2023. These matters were addressed in the context of our audit of the consolidated financial statements and the parent financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. by the Danish Financial Statements Act and article 8 of Regu- lation (EU) 2020/852 (EU Taxonomy Regulation). We did not identify any material misstatement of the management report. Management's responsibilities for the consolidated financial statements and the parent financial statements Management is responsible for the preparation of consoli- dated financial statements and parent financial statements that give a true and fair view in accordance with IFRS Accounting Standards as adopted by the EU and additional requirements of the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of consolidated finan- cial statements and parent financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements and the parent financial statements, Management is responsible for assessing the Group’s and the Parent’s ability to continue as a going concern, for disclosing, as applicable, matters related to going concern, and for using the going concern basis of accounting in preparing the consolidated financial statements and the parent financial statements unless Management either intends to liquidate the Group or the Entity or to cease operations, or has no realistic alternative but to do so. Auditor's responsibilities for the audit of the consolidated financial statements and the parent financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements and the parent financial statements as a whole are free from mate- Signatures and statements ROYAL UNIBREW Annual Report 2023 106 rial 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 ISAs and the additional requirements applicable in Denmark 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 and these parent financial statements. As part of an audit conducted in accordance with ISAs and the additional requirements applicable in Denmark, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated financial statements and the parent 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 appro- priate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Parent’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management. • Conclude on the appropriateness of Management’s use of the going concern basis of accounting in preparing the consolidated financial statements and the parent financial statements, 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 and the Parent’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 and the parent 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 and the Entity to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements and the parent financial statements, including the disclosures in the notes, and whether the consolidated financial statements and the parent financial statements represent the underlying transactions and events in a manner that gives a true and fair view. • 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 state- ment that we have complied with relevant ethical require- ments regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and, where appli- cable, safeguards put in place and measures taken to elimi- nate threats. 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 state- ments and the parent 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. Signatures and statements ROYAL UNIBREW Annual Report 2023 107 Report on compliance with the ESEF Regulation As part of our audit of the consolidated financial statements and the parent financial statements of Royal Unibrew A/S we performed procedures to express an opinion on whether the annual report for the financial year 1 January 2023 – 31 December 2023, with the file name ROYAL-2023-12-31-en. zip, is prepared, in all material respects, in compliance with the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF Regulation), which includes requirements related to the preparation of the annual report in XHTML format and iXBRL tagging of the consolidated financial statements including notes. Management is responsible for preparing an annual report that complies with the ESEF Regulation. This responsibility includes: • The preparing of the annual report in XHTML format; • The selection and application of appropriate iXBRL tags, including extensions to the ESEF taxonomy and the anchoring thereof to elements in the taxonomy, for financial information required to be tagged using judgement where necessary; • Ensuring consistency between iXBRL tagged data and the consolidated financial statements presented in human readable format; and • For such internal control as Management determines necessary to enable the preparation of an annual report that is compliant with the ESEF Regulation. Our responsibility is to obtain reasonable assurance on whether the annual report is prepared, in all material respects, in compliance with the ESEF Regulation based on the evidence we have obtained, and to issue a report that includes our opinion. The nature, timing and extent of proce- dures selected depend on the auditor’s judgement, including the assessment of the risks of material departures from the requirements set out in the ESEF Regulation, whether due to fraud or error. The procedures include: • Testing whether the annual report is prepared in XHTML format; • Obtaining an understanding of the company’s iXBRL tagging process and of internal control over the tagging process; • Evaluating the completeness of the iXBRL tagging of the consolidated financial statements including notes; • Evaluating the appropriateness of the company’s use of iXBRL elements selected from the ESEF taxonomy and the creation of extension elements where no suitable element in the ESEF taxonomy has been identified; • Evaluating the use of anchoring of extension elements to elements in the ESEF taxonomy; and • Reconciling the iXBRL tagged data with the audited consoli - dated financial statements. In our opinion, the annual report of Royal Unibrew A/S for the financial year 1 January 2023 – 31 December 2023, with the file name ROYAL-2023-12-31-en.zip, is prepared, in all mate- rial respects, in compliance with the ESEF Regulation. Copenhagen, 28 February 2024 Deloitte Statsautoriseret Revisionspartnerselskab CVR No. 33963556 Lars Siggaard Hansen Eskild Nørregaard Jakobsen State-Authorised Public Accountant State-Authorised Public Accountant mne32208 mne11681 Signatures and statements ROYAL UNIBREW Annual Report 2023 108 Independent Auditor’s Assurance Report on ESG highlights and ratios To the stakeholders of Royal Unibrew A/S Royal Unibrew A/S engaged us to provide limited assurance on ESG highlights and ratios for Royal Unibrew Group for the financial year 1 January - 31 December 2023 as presented in section “ESG highlights and ratios in numbers” under column “2023” on page 15 in the Annual Report 2023 of Royal Unibrew A/S. Other than as described in the preceding paragraph, which sets out the scope of our engagement, we did not perform assurance procedures on the remaining information included in section “ESG highlights and ratios in numbers”, and accord- ingly, we do not express an opinion on this information. Management’s responsibility Management of Royal Unibrew A/S is responsible for designing, implementing, and maintaining internal controls over information relevant to the preparation of the ESG data and information in the ESG highlights and ratios, ensuring they are free from material misstatement, whether due to fraud or error. Furthermore, Management is responsible for estab- lishing objective accounting principles for the preparation of the ESG highlights and ratios, for the overall content of the ESG highlights and ratios, and for measuring and reporting the ESG highlights and ratios for Royal Unibrew Group in accor- dance with the ESG accounting principles for environmental, social, and governance data, respectively, the Greenhouse Gas Protocol Corporate Standard Revised edition (2015) and The Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011) (“accounting principles”) included on pages 96 to 98. Auditor’s responsibility Our responsibility is to express a limited assurance conclusion based on our engagement with Management and in accor- dance with the agreed scope of work. We have conducted our work in accordance with ISAE 3000 (Revised) Assur- ance Engagements Other than Audits or Reviews of Historical Financial Information and ISAE 3410 Assurance Engagements on Greenhouse Gas Statements, and additional requirements under Danish audit regulation, to obtain limited assurance about our conclusion. Greenhouse Gas emissions quantifica- tion is subject to inherent uncertainty because of incomplete scientific knowledge used to determine emission factors and the values needed to combine emissions of different gasses. We are responsible for: • planning and performing the engagement to obtain limited assurance about whether the ESG highlights and ratios are free from material misstatement, whether due to fraud or error, and prepared, in all material respects, in accordance with the accounting principles; • forming an independent conclusion, based on the proce- dures we performed and the evidence we obtained; and • reporting our conclusion to the stakeholders of Royal Unibrew A/S. Deloitte Statsautoriseret Revisionspartnerselskab applies International Standard on Quality Management 1, ISQM 1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. We have complied with the requirements for independence and other ethical requirements of the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (IESBA Code), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour, and ethical requirements applicable in Denmark A limited assurance engagement is substantially less in scope than a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had we performed a reasonable assurance engage- ment. Signatures and statements ROYAL UNIBREW Annual Report 2023 109 Work performed We are required to plan and perform our work in order to consider the risk of material misstatement in the ESG highlights and ratios. To do so, we have: • conducted interviews with data owners and internal stakeholders to understand the key processes and control activities for measuring, recording and reporting the ESG highlights and ratios; • reviewed evidence on a selective basis to check that data has been appropriately measured, recorded, collated and reported; • performed analysis of data, selected based on risk and materiality; • made inquiries regarding significant developments in the reported data; • considered the presentation and disclosure of the ESG highlights and ratios for Royal Unibrew Group; • assessed that the process for reporting greenhouse gas emissions data follows the principles of relevance, completeness, consistency, transparency and accuracy outlined in The Greenhouse Gas Protocol Corporate Stan- dard Revised edition (2015) and The Corporate Value Chain (Scope 3) Accounting and Reporting Standard (2011); and • evaluated the evidence obtained. Our conclusion Based on the procedures performed and the evidence obtained, nothing has come to our attention that causes us not to believe that the ESG highlights and ratios as presented in section “ESG highlights and ratios in numbers” under column “2023” on page 15 in the Annual Report 2023 of Royal Unibrew A/S for the financial year 1 January - 31 December 2023, have been prepared, in all material respects, in accordance with the accounting principles on pages 96 to 98. Copenhagen, 28 February 2024 Deloitte Statsautoriseret Revisionspartnerselskab Business Registration No. 33 96 35 56 Lars Siggaard Hansen Aida Sasivarevic State-Authorised Public Accountant State-Authorised Public Accountant mne32208 mne47817 Signatures and statements ROYAL UNIBREW Annual Report 2023 110 Consolidated nancial statements Consolidated financial statements 2023 Consolidated financial statements ROYAL UNIBREW Annual Report 2023 111 Consolidated income statement Consolidated income statement Consolidated statement of comprehensive income for January 1 - December 31 mDKK Note 2023 2022 Net profit for the year 1,095 1,491 Other comprehensive income Items that may be reclassified to the income statement Exchange adjustment of foreign group enterprises -29 6 Value adjustment of hedging instruments -28 22 Tax on value adjustment of hedging instruments 10 9 -3 Total -48 25 Items that may not be reclassified to the income statement Actuarial gain on pension schemes 0 3 Tax on actuarial gain on pension schemes 0 0 Total 0 3 Other comprehensive income after tax -48 28 Total comprehensive income 1,047 1,519 Comprehensive income for the year is attributable to: Equity holders of Royal Unibrew A/S 1,047 1,520 Non-controlling interests 0 -1 Total comprehensive income for the year 1,047 1,519 for January 1 - December 31 mDKK Note 2023 2022 Net revenue 5 12,927 11,487 Production costs 7 -7,533 -6,618 Gross profit 5,394 4,869 Sales and distribution expenses 7 -3,158 -2,926 Administrative expenses 7 -628 -427 Other income 7 30 0 Earnings before interest and tax (EBIT) 1,638 1,516 Income after tax from investments in associates 13 18 2 Gain on remeasurements of investments in associates 0 360 Financial income 8 10 10 Financial expenses 9 -260 -103 Profit before tax 1,406 1,785 Tax on the profit for the year 10 -311 -294 Net profit for the year 1,095 1,491 Profit for the year is attributable to: Equity holders of Royal Unibrew A/S 1,095 1,492 Non-controlling interests -1 Net profit for the year 1,095 1,491 Earnings per share (DKK) 17 21.9 30.5 Earnings per share (DKK) 17 21.9 23.1 Diluted earnings per share (DKK) 17 21.9 30.5 Diluted earnings per share (DKK) 17 21.9 23.1 * In 2022, earnings per share (EPS) and diluted earnings per share is adjusted for gain on remeasurements of investments in associates (DKK 360 million). Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 112 Con income statement Sales and earnings Sales and earnings Volumes, net revenue and gross profit 2023 2022 Change, % Volumes, beverages (mhl) 14.1 13.4 5% Net revenue (mDKK) 12,927 11,487 13% Gross profit (mDKK) 5,394 4,869 11% Volumes for 2023 show an aggregated sale of 14.1 million hectoliters of beverages, equaling a growth over 2022 of 5% of which -3% was organic growth. Net revenue for 2023 increased by 13% and amounted to DKK 12,927 million compared to DKK 11,487 million in 2022. Organic revenue growth amounted to 4% in 2023 compared to 11% in 2022. Gross profit increased DKK 525 million, up 11%, compared to 2022 and amounted to DKK 5,394 million. The gross margin of 42% was on par with 2022. Expenses 2023 2022 Change, % Sales and distribution expenses (mDKK) 3,158 2,926 8% Administrative expenses (mDKK) 628 427 47% Sales and distribution expenses in 2023 was DKK 232 million higher than the 2022 figure and amounted to DKK 3,158 million compared to DKK 2,926 million in 2022. Administrative expenses for 2023 showed a DKK 201 million increase compared to 2022 and amounted to DKK 628 million compared to DKK 427 million in 2022. The increase is primarily driven by central organizational capacity increases, particularly the group functions IT, finance and procure- ments. Additionally, the increase also stems from acquisitions made in 2022 which in 2023 had full year impact as well as impact from acquisitions made in 2023. 10.0 11.0 12.0 13.0 14.0 2019 2020 2021 2022 2023 Volumes (mhl) Net revenue (mDKK) 12,927 mDKK in net revenue AN INCREASE OF 13% COMPARED TO 2022 4,000 6,000 8,000 10,000 12,000 14,000 2019 2020 2021 2022 2023 0 1,100 2,200 3,300 4,400 5,500 2019 2020 2021 2022 2023 40 44 48 52 56 60 Gross Prot Gross margin (rhs) Gross profit (Mio.) (%) Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 113 Sales and earnings EBITDA, EBIT and financials 2023 2022 Change, % EBITDA (mDKK) 2,208 1,997 11% Amortization -71 -74 4% Depreciation -499 -407 -23% EBIT (mDKK) 1,638 1,516 8% Net interest expenses -250 -93 -169% Gain on remeasurements of investments in associates - 360 -100% Income after tax from investments 18 2 800% Earnings before interest, tax, depreciation and amortization (EBITDA) for 2023 showed a DKK 211 million increase and amounted to DKK 2,208 million compared to DKK 1,997 million in 2022. EBIT for 2023 amounted to DKK 1,638 million, DKK 122 million higher than the 2022 figure. The positive devel- opment in both EBITDA and EBIT were primarily driven by strong execution in our mature multi-bev- erage markets, price initiatives across our Group, and secondly by acquisitions. The EBIT margin for 2023 was 12.7% compared to 13.2% in 2022. Net interest expenses including FX increased from DKK 93 million in 2022 to DKK 250 million in 2023. Net interest expenses excluding FX was DKK 232 million (2022: DKK 76 million). The increase on a net basis is due to the higher debt, which is linked to the acquisitions and the increase in interest rates. In 2022 DKK 360 million was recognized as a non-cash tax-free profit in connection with the reval- uation of the 25% ownership that Royal Unibrew had in Hansa Borg Bryggerier before acquiring the remaining 75% in 2022. 0 500 1,000 1,500 2,000 2,500 0 5 10 15 20 25 30 2019 2020 2021 2022 2023 EBITDA and EBITDA margin (mDKK) (%) EBITDA EBITDA margin (rhs) 300 500 700 900 1,100 1,300 1,500 1,700 0 5 10 15 20 25 2019 2020 2021 2022 2023 EBIT and EBIT margin (mDKK) (%) EBIT EBIT margin (rhs) Profit and earnings per share 2023 2022 Change, % Profit before tax (mDKK) 1,406 1,785 -21% Tax on profit (mDKK) -311 -294 -6% Net profit (mDKK) 1,095 1,491 -27% Adjusted earnings per share (DKK) 21.9 23.1 -5% Profit before tax for 2023 was DKK 379 million below the 2022 figure and amounted to DKK 1,406 million compared to DKK 1,785 million for 2022, equivalent to a decrease of 21%. Tax on the profit for 2023 was an expense of DKK 311 million and corresponds to an effective tax rate of 22.1% on the profit before tax. The net profit for 2023 amounted to DKK 1,095 million, which is DKK 396 million below the 2022 figure, equivalent to a decrease of 27%. The adjusted earnings per share decreased in 2023 to DKK 21.9 per share compared to 23.1 in 2022, equivalent to a decrease of 5%. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 114 Consolidated Balance sheet Consolidated balance sheet Assets at December 31 mDKK Note 2023 2022 NON-CURRENT ASSETS Intangible assets 11 9,469 7,558 Property, plant and equipment 12 4,662 3,680 Investments in associates 13 34 99 Other non-current investments 14 89 79 Non-current assets 14,254 11,416 CURRENT ASSETS Inventories 15 1,401 1,213 Receivables 16 1,901 1,500 Prepayments 165 131 Cash and cash equivalents 57 214 Current assets 3,524 3,058 Assets 17,778 14,474 Liabilities and equity at December 31 mDKK Note 2023 2022 EQUITY Share capital 17 100 100 Other reserves 1,519 1,567 Retained earnings 4,129 2,763 Proposed dividend 0 728 Equity contributable to equity holders of Royal Unibrew A/S 5,748 5,158 Non-controlling interests 0 0 Equity 5,748 5,158 LIABILITIES Non-current liabilities Deferred tax 18 1,281 1,011 Mortgage debt 3, 20 998 1,009 Credit institutions 3, 20 4,506 2,677 Other payables 1 9 Non-current liabilities 6,786 4,706 Current liabilities Mortgage debt 3, 20 11 2 Credit institutions 3, 20 968 986 Trade payables 3 2,425 1,934 Provisions 11 11 Corporation tax 10 44 8 Other payables 19 1,785 1,669 Current liabilities 5,244 4,610 Liabilities 22 12,030 9,316 Liabilities and equity 17,778 14,474 Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 115 Con Balance sheet and nancial position Balance sheet and financial position Balance sheet Royal Unibrew’s balance sheet 2023 amounted to DKK 17,778 million, which is DKK 3,304 million above the 2022 figure. The increase is mainly caused by the acquisitions in 2023 compared with 2022. Invested capital increased by DKK 2,891 million from DKK 10,451 million in 2022 to DKK 13,342 million in 2023. ROIC including goodwill decreased by 2 percentage points to 11% and ROIC excluding good- will decreased by 4 percentage points to 18%. ROIC is negatively impacted by effects from acquisi- tions as the proportional increase of invested capital is higher than the proportional increase of EBIT. In 2023, the equity ratio amounted to 32% equaling a decrease of 4 percentage points compared to 2022, mainly driven by acquisitions. Equity at the end of December 2023 amounted to DKK 5,748 million compared with DKK 5,158 million in December 2022. The increase of DKK 590 million mainly comes from a positive net profit of DKK 1,095 million for the year (2022: DKK 1,492 million) and sale of treasury shares of DKK 249 million (2022: net DKK 167 million) offset by dividend paid out of DKK 720 million (2022: DKK 692 million). Net interest-bearing debt increased in 2023 with DKK 1,966 million from DKK 4,460 million on December 31, 2022, to DKK 6,426 million on December 31, 2023. The increase in net interest-bearing debt is linked to the acquisitions in 2023. The net interest-bearing debt to EBITDA ratio (running 12- months) was 2.9x (2022: 2.2x) and the increase relate to effects from acquired companies. Net working capital amounted to a negative DKK 754 million at the end of December 2023 compared with a negative DKK 770 million at the end of 2022. 0 2,500 5,000 7,500 10,000 12,500 15,000 2019 2020 2021 2022 2023 -1,500 -1,000 -500 0 500 2019 2020 2021 2022 2023 0 6 12 18 24 30 36 2019 2020 2021 2022 2023 ROIC incl. goodwill ROIC excl. goodwill Net working capital (mDKK) ROIC (%) Invested capital (mDKK) 5.7 bnDKK in equity Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 116 Consolidated Cash ow statement Consolidated cash flow statement for January 1 - December 31 mDKK Note 2023 2022 Net profit for the year 1,095 1,491 Adjustments for non-cash operating items 21 1,127 506 Change in working capital 55 -480 Received financial income 8 3 Paid financial expenses -251 -79 Financial expenses related to leasing -7 -2 Corporation tax paid -250 -304 Cash flows from operating activities 1,777 1,135 Dividends received from associates 13 13 27 Sale of property, plant and equipment 93 6 Purchase of property, plant and equipment 12 -602 -475 Acquisition of enterprises 24 -2,419 -275 Purchase of intangible assets and fixed asset investment -10 -27 Cash flows from investing activities -2,925 -744 mDKK Note 2023 2022 Debt financing: Proceeds from borrowings 20 2,554 2,450 Repayment of borrowings 20 -947 -1,594 Repayment on lease facilities 20 -138 -116 Dividends paid to shareholders -720 -692 Purchase of shares for treasury -300 Sale of shares for treasury 249 Cash flows from financing activities 998 -252 Change in cash and cash equivalents -150 139 Cash and cash equivalents at January 1 214 86 Exchange adjustment -7 -11 Cash and cash equivalents at December 31 57 214 Free cash flow Net cash from operating activities 1,777 1,135 Net cash used in investing activities -496 -442 Payment of lease liabilities -138 -116 Free cash flow 1,143 577 Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 117 Con Cash ow Cash flow Cash flow statement Cash flows from operating activities in 2023 amounted to DKK 1,777 million (2022: DKK 1,135 million) comprising DKK 2,222 million (2022: DKK 1,997 million) of profit for the period adjusted for non-cash operating items, positive working capital cash flow of DKK 55 million (2022: a negative DKK 480 million), net interest paid of DKK 258 million (2022: DKK 81 million) and taxes paid of DKK 250 million (2022: DKK 304 million). The free cash flow in 2023 amounted to DKK 1,143 million, which was an increase of DKK 566 million compared to 2022. Cash flows from operating activities showed a DKK 642 million increase compared to the 2022 figures, and cash used in investing activities showed a DKK 54 million increase. Further repayment on lease facilities increased by DKK 22 million. Net interest-bearing debt NIBD/EBITDA (rhs) Due to IFRS-15 restatement, the net revenue figures for 2020 to 2023 are not comparable with 2019. 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2019 2020 2021 2022 2023 0 375 750 1,125 1,500 2019 2020 2021 2022 2023 0 5 10 15 20 0.0 1.0 2.0 3.0 4.0 5.0 6.0 2019 2020 2021 2022 2023 NIBD and NIBD/EBITDA (mDKK) (%) Free cash flow (mDKK) (%) 1,143 mDKK free cash ow INCREASE OF 566 MDKK COMPARED TO 2022 CAPEX in % of net revenue (%) Free cash ow Cash ow ratio (rhs) Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 118 Consolidated Statement of changes in equity Consolidated statement of changes in equity for January 1 - December 31, 2023 mDKK Share capital Share premium account Trans- lation reserve Hedging reserve Total other reserves Retained earnings Proposed dividend for the year Parent Company share of equity Minority share Tot a l Equity at December 31, 2022 100 1,573 -41 35 1,567 2,763 728 5,158 0 5,158 Changes in equity in 2023 Net profit for the year 0 1,095 1,095 1,095 Other comprehensive income -29 -28 -57 -57 -57 Tax on other comprehensive income 9 9 0 9 9 Total comprehensive income 0 0 -29 -19 -48 1,095 0 1,047 0 1,047 Dividends paid to shareholders 0 -720 -720 -720 Dividend on treasury shares 0 8 -8 0 0 Sale of shares for treasury 0 249 249 249 Share-based payment 0 14 14 14 Proposed dividend 0 0 0 Total shareholders 0 0 0 0 0 271 -728 -457 0 -457 Total changes in equity in 2023 0 0 -29 -19 -48 1,366 -728 590 0 590 Equity at December 31, 2023 100 1,573 -70 16 1,519 4,129 0 5,748 0 5,748 The share capital at December 31, 2023, amounts to DKK 100,400,000 (2022: DKK 100,400,000) and is distributed in shares of DKK 2 each. It is proposed to the AGM that a mandate is given to the Board of Directors authorizing them to potentally distribute an extraordinary dividend of up to DKK 14.50 per share (2022 DKK 14.50 per share) based on the share capital at December 31, 2023. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 119 Consolidated statement of changes in equity for January 1 - December 31, 2022 mDKK Share capital Share premium account Trans- lation reserve Hedging reserve Total other reserves Retained earnings Proposed dividend for the year Parent Company share of equity Minority share Tot a l Equity at December 31, 2021 98 753 -47 13 719 1,805 708 3,330 12 3,342 Changes in equity in 2022 Net profit for the year 0 1,492 1,492 -1 1,491 Other comprehensive income 6 22 28 3 31 31 Tax on other comprehensive income 0 -3 -3 -3 Total comprehensive income 0 0 6 22 28 1,492 0 1,520 -1 1,519 Capital increase 2 1,061 1,061 1,063 1,063 Capital increase adjustment to fair value -241 -241 -241 -241 Minority's share of sold business 0 11 11 -11 0 Dividends paid to shareholders 0 -692 -692 -692 Dividend on treasury shares 0 16 -16 0 0 Purchase of shares for treasury 0 -300 -300 -300 Transfer of treasury shares as acquisition of enterprises 0 467 0 467 467 Proposed dividend 0 -728 728 0 0 Total shareholders 2 820 0 0 820 -534 20 308 -11 297 Total changes in equity in 2022 2 820 6 22 848 958 20 1,828 -12 1,816 Equity at December 31, 2022 100 1,573 -41 35 1,567 2,763 728 5,158 0 5,158 Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 120 Con Notes contents Notes to consolidated financial statements Descriptive notes 1 Basis of preparation of consolidated financial statements. . . . . . . . . . . . . . . . . . .122 2 Significant accounting estimates and judgments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .124 3 Financial risk management . . . . . . . . . . . . . . . . . . . . . . . . . . .125 4 Derivatives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .127 5 Segment reporting and revenue . . . . . . . . . . . . . . . . . . . .129 Notes referring to income statement, balance sheet and cash flow statement 6 Staff expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 7 Expenses broken down by nature. . . . . . . . . . . . . . . . . . .133 8 Financial income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .134 9 Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .134 10 Tax on the profit for the year . . . . . . . . . . . . . . . . . . . . . . . . .135 11 Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .136 12 Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . .139 13 Investments in associates. . . . . . . . . . . . . . . . . . . . . . . . . . . .140 14 Other fixed asset investments . . . . . . . . . . . . . . . . . . . . . . . 141 15 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .142 16 Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .143 17 Equity and basis of earnings/cash flow per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .144 18 Deferred tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .145 19 Other current payables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .146 20 Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147 21 Cash flow statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .148 Other notes 22 Contingent liabilities and securities . . . . . . . . . . . . . . . . .149 23 Related parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .149 24 Acquisitions of enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . 150 25 Events after the reporting period. . . . . . . . . . . . . . . . . . . .155 Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 121 Descriptive notes Note 1 Basis of preparation of consolidated financial statements BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS Royal Unibrew A/S is a limited liability company registered in Denmark. The financial statements for the period January 1 - December 31, 2023, presented in the Annual Report 2023 comprise both consolidated financial statements of Royal Unibrew A/S and its subsidiaries (Group) and separate Parent Company Financial Statements. The financial statements of Royal Unibrew for 2023 have been prepared in accordance with IFRS Accounting Standards as adopted by the EU and additional Danish disclosure requirements for finan- cial statements, of the Danish Statutory Order on Adoption of IFRS issued pursuant to the Danish Financial Statements Act. The Board of Directors and the Executive Management considered and adopted the Annual Report of Royal Unibrew A/S for 2023 on February 28, 2024. The Annual Report will be submitted for adoption by the shareholders of Royal Unibrew A/S at the Annual General Meeting on April 30, 2024. § Material accounting policies This section describes the general accounting policies applied by Royal Unibrew. A detailed descrip- tion of the accounting policies applied and critical estimates made with respect to specific reported amounts are presented in the relevant notes. The purpose of this is to create full transparency of the disclosed amounts by providing a total description of the relevant accounting policy, the critical esti- mates and the numerical information for each note. The description of accounting policies in the notes constitutes part of the overall description of Royal Unibrew's accounting policies. Accounting policies are unchanged from last year. New and amended standards and interpretations that have not yet taken effect Management has assessed the impact of new or amended and revised accounting standards and interpretations (IFRS Accounting Standards) issued by the IASB and IFRS Accounting Standards' endorsed by the European Union effective on or after January 1, 2023. It is assessed that application of amendments effective from January 1, 2023, has not had a material impact on the financial state- ments for 2023. Furthermore, management does not anticipate any significant impact from new or amended accounting standards and interpretations (IFRS Accounting Standards') issued by the IASB that have not yet become effective. Application of materiality In the preparation of the annual report, Royal Unibrew aims to focus on information that is considered to be material and relevant to the users of the annual report. The consolidated financial statements are a result of aggregating large numbers of transactions into classes of similar terms, according to their nature or function, in the consolidated financial statements. If a line item is not individually mate- rial, it is aggregated with other items of a similar nature in the consolidated financial statements or in the notes. The provisions in IFRS Accounting Standards contain extensive disclosure requirements. The specific disclosures required by IFRS Accounting Standards are provided in the annual report unless the information is considered immaterial to the users of the annual report. Consolidated financial statements The consolidated financial statements comprise Royal Unibrew A/S (Parent Company) and enter- prises in which the Parent Company exercises control (subsidiaries). Enterprises in which the Group holds between 20% and 50% of the votes and exercises significant influence but not control are classified as associates. The consolidated financial statements are prepared on the basis of financial statements off all Group enterprises prepared under the Group's accounting policies by combining accounting items of a uniform nature. Elimination is made of intercompany income and expenses, unrealized intercom- pany profits and losses, balances and shareholdings. Comparative figures are not adjusted for newly acquired, sold or wound-up enterprises. Acquired enterprises are recognized as of the date of acquisition. Enterprises disposed of are recog- nized in the consolidated income statement up until the date of disposal. Non-controlling interest's share of profit/loss for the year and of the equity in subsidiaries are included as part of Royal Unibrew's profit and equity, respectively; nevertheless, presented as separate items. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 122 Note 1 Basis of preparation of consolidated financial statements (continued) Translation policies For each of the reporting entities of the Group, a functional currency is determined. The functional currency is the currency of the primary economic environment in which the reporting entity operates. Transactions in other currencies than the functional currency are transactions in foreign currencies. Transactions in other currencies than the functional currency are initially translated into Danish kroner (DKK) at the exchange rates at the dates of transaction. Receivables, payables and other mone- tary items in foreign currencies that are not settled at the balance sheet date are translated at the exchange rates at the balance sheet date. Exchange adjustments arising due to differences between the transaction date rates and the rates at the dates of payment or the rates at the balance sheet date, respectively, are recognized in financial income and expenses in the income statement. Property, plant and equipment and intangible assets, inventories and other non-monetary asset purchase in foreign currencies and measured at historical cost are translated at the transaction date rates. On recognition in the consolidated financial statements of enterprises with another functional currency than Danish kroner (DKK), income statements are translated at average annual exchange rates. Balance sheet items are translated at the exchange rates at the balance sheet date. Exchange adjustments arising on the translation of the opening balance sheet items of foreign enter- prises at exchange rates at the balance sheet date and on the translation of income statements from average exchange rates to exchange rates at the balance sheet date are recognized in other compre- hensive income. Similarly, exchange adjustments arising due to changes made directly in equity of foreign enterprises are recognized in other comprehensive income. On recognition in the consolidated financial statements of associates with a functional currency that differs from the presentation currency of the Parent Company, the share of results for the year is translated at average exchange rates, and the share of equity including goodwill is translated at the exchange rates at the balance sheet date. Exchange adjustments arising on the translation of the share of the opening equity of foreign associates at exchange rates at the balance sheet date and on the translation of the share of results for the year from average exchange rates to exchange rates at the balance sheet date are recognized in other comprehensive income; likewise, classified in equity under a separate translation reserve. Reporting under the ESEF regulation The Annual Report 2023 is prepared using a combination of the XHTML format and tagging of the primary consolidated financial statements using iXBRL tags and in accordance with the ESEF Taxonomy, which is included in the ESEF regulation. It is developed based on the IFRS Taxonomy published by the IFRS Foundation. The line items in the consolidated financial statements are tagged to elements in the ESEF Taxonomy. For financial line items that are not directly defined in the ESEF Taxonomy, extensions to the taxonomy have been created. Extensions are anchored to elements in the ESEF Taxonomy, except for extensions that are subtotals. The Annual Report 2023 submitted to the Danish Financial Supervisory Authority (the officially appointed mechanism) is included in the zip file ROYAL-2023-12-31-en.zip. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 123 Con Note 2 Note 2 Significant accounting estimates and judgments In connection with the preparation of the Parent Company's annual report and consolidated financial statements, management makes estimates and judgments as to how recognition and measurement of revenue, assets and liabilities should take place based on the accounting policies applied. When determining the possible impact from climate risks on the financial reporting, management has assessed that the effect of climate related risks do not significantly impact estimates and assump- tions, nor have any significant accounting impact. Included in the budgets and strategic forecasts for 2024-2028 applied for impairment testing are dedicated capex for solar cells, heat pumps and bio-based or electric boilers which supports our plans to be 100% emission free by the end of 2025 for scope 1 and 2. Furthermore, in these plans it is assumed that imposed sugar taxes can be coun- tered by sales price increases, and/or by increasing focus on no/low products, i.e., behavior shift. As for the potential carbon emission taxes, we do not expect any significant impact due to the dedicated capex. Judgments as an element in material accounting policies The calculation of carrying amounts of certain assets and liabilities requires judgment as to how assets and liabilities should be classified in the financial statements, and how future events will affect the value of these assets and liabilities at the balance sheet date. In connection with the financial reporting for 2023, the judgments presented in the list to the right have been considered material affecting the related items as described in relevant notes. Critical accounting estimates Management's estimates are based on assumptions which management considers reasonable but which are inherently uncertain and unpredictable. In connection with the financial reporting for 2023, the following critical estimates have been made as described in the notes, see list to the right. Accounting policies, judgments as an element in material accounting policies as well as critical accounting estimates are described in the notes. Note Significant accounting estimate and judgments Impact of estimates and judgments 4 Derivative financial instruments § 5 Segment reporting and revenue § Aggregation of similar segments ** 6 Staff expenses § 7 Expenses broken down by nature § 8 Financial income § 9 Financial expenses § 10 Tax on profit for the year § 11 Intangible assets § Key assumptions in impairment test *** 12 Property, plant and equipment § 13 Investments in associates § 14 Other fixed asset investments § 15 Inventories § 16 Receivables § 17 Equity § 18 Deferred tax § Recovery of deferred tax assets 19 Other current payables § 20 Debts § 21 Cash flow statement § 22 Contingent liabilities and securities 23 Related parties 24 Purchase Price Allocation (PPA) § Purchase price allocation *** 25 Events after the reporting period * Low ** Medium *** High Legends Material accounting policies. Judgments as an element in material accounting policies. Critical accounting estimates. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 124 Con Note 3 Note 3 Financial risk management The Group's financial risks are managed centrally according to the Treasury Policy approved by the Board of Directors, which includes guidelines for handling of currency-, interest rate-, liquidity- and credit risks. Commodity risks are also managed centrally according to the Commodity Risk Policy approved by the Board of Directors. Currency risk Royal Unibrew's overall objective for currency risk management is to reduce the negative impact of currency fluctuations on earnings and cash flow, thereby securing a more predictable financial result. The risk is therefore monitored and hedged continually in a nonspeculative nature in accordance with the Treasury Policy. The Group's foreign currency risk is primarily in EUR, USD, CAD, GBP, SEK and NOK and is derived from the geographic spread of the Group's business activities. This currency exposure is reflected through the activities in the subsidiaries and the Parent Company's export activities and purchases of raw materials primarily in EUR and USD, including purchases which involve an indirect currency risk. Furthermore, the translation of loans to/from subsidiaries as well as the Group's net debt are subject to currency risk where these are not established in DKK. EUR is not hedged as the risk is considered too limited due to the fixed exchange rate policy of the central bank of Denmark toward EUR. The total gross currency risk (before hedging) on the balance sheet items was calculated on December 31, 2023. The table shows the sensitivity to a positive change in the rates on December 31, 2023, with all other variables unchanged. A negative change has a corresponding effect merely with the sign reversed. Royal Unibrew's translation risks relate primarily to Norway (NOK), Canada (CAD), Sweden (SEK), US (USD), the UK (GBP), France, Italy, the Netherlands, Finland, Latvia, Estonia as well as Lithuania (EUR). The translation risks related to Royal Unibrew's investments in foreign subsidiaries are, as a general rule, not hedged. Financial risks such as the loss of competitive strength due to long-term exchange rate changes are not hedged by financial instruments but are included in Royal Unibrew's strategic considerations and risk management. Interest rate risk Royal Unibrew's interest rate is related to interest bearing assets and liabilities, which is primarily denominated in DKK and EUR. Interest rate changes will affect the market value of fixed-interest loans as well as interest payments on floating-rate liabilities. Debt is established only in currencies in which the Group has commercial activities. In Royal Unibrew’s assessment, the key interest rate risk is related to the immediate effect of interest rate changes on the Group's interest expenses and Royal Unibrew focuses only secondarily on changes in the market value of the debt. It is the Group's policy to limit the effect of interest rate changes on profit and cash flows while also achieving the lowest possible financing cost within this framework. In accordance with the Treasury Policy, at least 30% of the loan portfolio must be at fixed rate. At the end of 2023, 48% (2022: 33%) of the mortgage and bank debt was with fixed interest rate and hedged with interest rates swaps, having a duration between one to five years (2022: two-six years). Change in the interest rate of one percentage point will affect the Group's interest expenses by approx. +/- DKK 30 million (2022: approx. +/- DKK 29 million) and the interest expenses of the Parent Company by approx. +/- DKK 30 million (2022: approx. +/- DKK 29 million). Earnings Earnings impact impact Equity Equity before tax before tax impact impact mDKK Change2023202220232022EUR 0.1% -1.1 -0.3 -1.1 -0.3USD 10% 5.4 5.5 5.4 5.5GBP 10% -0.2 -2.1 -0.2 -2.1CAD 10% 20.7 21.2 20.7 21.2NOK 10% 51.6 132.9 51.6 132.9SEK 10% 7.3 -0.6 7.3 -0.6 Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 125 Credit risks The Group’s credit risks relate primarily to receivables and counterparty risks. The Group's counterparty risks comprise both derive from commercial and financial risks. The commercial counterparty risk relates primarily to business agreements with a built-in element of firm rate/price. The financial counterparty risk that relates to hedging agreements and net bank deposits is actively reduced by distributing bank deposits with banks in accordance with the credit rating criteria determined in the Treasury Policy. Royal Unibrew seeks to limit risks relating to credit granting to customers in export markets through extensive use of insurance cover and other types of hedging of payments. Where effective hedges cannot be established, Royal Unibrew has established procedures for approval of such risks. The credit risk is generally higher related to customers in the On-Trade sales channel than in the Off-Trade channel. This difference in credit risk is addressed through various approval procedures and credit granting conditions for customers in the two sales channels. The current geopolitical and macroeconomic situation has increased the risks in Europe. In Finland, risks on major single receivables from customers are reduced through sale of the receivables factoring DKK 424 million (2022: DKK 423 million). Credit risks related to trade receivables are reduced by setting off accrued bonus. On December 31, 2023, accrued bonus amounts to DKK 466 million (2022: DKK 236 million) set off against trade receivables. The maximum credit risk corresponds to the carrying amount of the financial assets. Liquidity risks It is Group policy that cash resources should be adequate to meet the expected liquidity requirements in the current and next financial year. The cash resources may be bank deposits, short- term bonds and committed credit facilities. The long-term liquidity risks are managed by having loans with different durations, and by having a target for the minimum average duration of the loan portfolio. It is the Group policy to renegotiate loan facilities in timely manner. In 2023, Royal Unibrew utilized the first extension option in the DKK 4 billion revolving credit facility extending the facility with one year until end of 2028. Note 3 Financial risk management (continued) To finance the acquisition of Vrumona, Royal Unibrew entered into a three-year term loan of EUR 260 million with same group of banks as for our revolving credit facility. At the end of 2023, mortgage debt amounted to DKK 1,009 million (2022: DKK 1,011 million) with an average time to maturity of 12.9 years (2022: 13.9 years). Debt to credit institutions comprises drawn committed bank credit facilities and long-term loan with an agreed time to maturity between one to five years (2022: two to six years). Capital management Royal Unibrew wants to ensure structural and financial flexibility as well as competitive power. To ensure this, continuous assessment is performed to determine the appropriate capital structure of Royal Unibrew. At the operational level, continuous efforts are directed at optimizing working capital. It is the target that the Group's net interest-bearing debt should not exceed 2.5 x EBITDA. The target for dividend payout ratio is 40-60% of the profit. End of 2023 the net interest-bearing debt ratio to EBITDA ended higher than our target due to increased debt level related to the closing of the acquisitions in 2023. Commodity risks The commodity risks relate primarily to the purchasing of cans (aluminum), malt (barley), hops and packaging materials (cardboard) as well as energy. The commodity risks are actively hedged commercially and financially in accordance with the Group's Commodity Risk Policy. The Group's overall objective for commodity risk management is to reduce the negative impact of commodity price increases on earnings and cash flow, thereby securing a more predictable financial result. This is primarily achieved by entering into fixed-price agreements with the relevant suppliers and financial contracts covering aluminum and gas prices. Exchange rate changes with respect to the settlement currency of aluminum (USD) are an element of the overall currency risk management. In accordance with the Commodity Risk Policy the most significant part of purchases for the next 12 months has been hedged by entering into supplier agreements and financial contracts. A +/-10% change in the price of aluminum and gas on the unhedged position will have an effect on the income statement of approx. +/- DKK 16 million (2022: DKK 12 million). Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 126 Note 3 Financial risk management (continued) Financial liabilities 12/31 2023Contrac-Maturity Group tual cash Maturity > 1 year Maturity Carrying mDKKflows< 1 year< 5 years> 5 yearsamountNon-derivative financial instruments:Financial debt, gross 6,770 1,079 4,840 851 5,934Leasing 588 123 346 119 549Trade payables 2,425 2,425 2,425Other payables 630 629 1 630Total 10,413 4,256 5,187 970 9,538 The debt is classified as "debt at amortized cost". 12/31 2022Contrac-Maturity Group tual cash Maturity > 1 year Maturity Carrying mDKKflows< 1 year< 5 years> 5 yearsamountNon-derivative financial instruments:Financial debt, gross 4,907 970 2,854 1,083 4,304Leasing 390 118 196 76 370Trade payables 1,934 1,934 1,934Other payables 721 712 9 721Total 7,952 3,734 3,059 1,159 7,329 The debt is classified as "debt at amortized cost". Note 4 Derivatives Currency, commodity and interest rate risks and use of derivative financial instruments Hedging of currency, commodity and interest rate risk The risk is managed by entering into derivatives, such as forward contracts and swaps. On December 31, 2023, the Group had short-term FX contracts covering the balance sheet exposure end of 2023 in USD, CAD, NOK, SEK and GBP, and short-term FX contracts covering part of the cash flow exposure in 2024 in SEK and NOK. The Group actively hedges the commodity risk related to aluminum and gas. At the end of 2023, the Group had hedged 60% (2022: 64%) of the expected aluminum use within the next 12 months and 40% (2022: 0%) of the expected gas use within the next 12 months. The interest rate swaps hedge the interest rate exposure on the mortgage debt and committed bank debt in Denmark and Finland. Hedge effectiveness is assessed on a regular basis by comparing changes in the value and timing of the underlying exposure with the value and timing of the designated hedging transaction. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 127 Con Note 4 Note 4 Derivatives (continued) Derivative financial instruments entered into to hedge expected future transactions and qualifying as hedge accounting under IFRS 9. Group mDKK 2023 2022Deferred Deferred gain (+) / gain (+) / Periodloss (-)loss (-)Forward contracts:USD 0 - 1 year 0 0CAD 0 - 1 year 0 1GBP 0 - 1 year 0 0NOK 0 - 1 year -8 5SEK 0 - 1 year -4 0Total -12 6Commodity hedge:Gas 0 - 2 years -5 0Aluminum 0 - 1 year 6 -12Total 1 -12Interest rate swaps:Mortgage and bank loans 2-4 years 20 51Total hedging instruments 9 45 The fair value of the hedging instruments is included in current liabilities under other payables. The derivative financial instruments applied in 2023 and 2022 may all be classified as level-2 instruments in the IFRS Fair Value Hierarchy. The determined fair value of derivative financial instruments is based on observable market data such as yield curves or forward rates. Realized hedging transactions in the income statement mDKK 2023 2022 Realized hedging transactions are included in the income statement as follows:Production costs include foreign currency and commodity hedges of 40 6Financial income and expenses include currency, commodity and interest rate hedges of -44 -4Total -4 2 § Derivative financial instruments Derivative financial instruments are initially recognized in the balance sheet at fair value and are subsequently remeasured at their fair values. Positive and negative fair values of derivative financial instruments are included as other receivables and other payables, respectively. Changes in the fair values of derivative financial instruments that are designated and qualify as fair value hedges of a recognized asset or a recognized liability are recognized in the income statement as are any changes in the value of the hedged asset or the hedged liability. Changes in the fair values of derivative financial instruments that are designated and qualify as hedges of future cash flows are recognized in other comprehensive income. Income and expenses relating to such hedging transactions are transferred from other comprehensive income on realization of the hedged item and are recognized in the same entry as the hedged item. For derivative financial instruments that do not meet the criteria for hedge accounting, changes in fair values are recognized on a current basis in financial income and expenses in the income statement. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 128 Con Note 5 Note 5 Segment reporting and revenue The Group’s results break down as follows in segments: Northern Western Interna-Un- mDKKEuropeEuropetionalallocated Total2023Net revenue 10,023 1,738 1,166 0 12,927Amortization and depreciation 454 85 30 1 570Impairment 0Earnings before interest and tax (EBIT) 1,445 141 75 -23 1,638Sales (million hectoliters) 10.8 2.2 1.1 14.1 Northern Western Interna-Un- mDKKEuropeEuropetionalallocated Total2022Net revenue 8,943 1,353 1,191 0 11,487Amortization and depreciation 394 52 34 1 481Impairment 0Earnings before interest and tax (EBIT) 1,247 157 128 -16 1,516Sales (million hectoliters) 10.4 1.6 1.4 13.4 Effective January 1, 2022, segments have changed from Western Europe, Baltic Sea and International to Northern Europe, Western Europe and International. This is consistent with the Group’s internal management and reporting structure. Segment assets, segment liabilities and related disclosures are not provided to management on a regular basis and are therefore not disclosed. Geographically, revenue and non-current assets break down as follows: 2023 2022 2023 2022Non- Non- Net Net current current mDKKrevenuerevenueassetsassetsDenmark 3,786 3,169 2,087 1,930Finland 3,151 2,958 3,484 3,447Norway 1,602 1,495 2,103 2,271Netherlands 404 0 2,509 0Other countries 3,984 3,865 4,071 3,768Total 12,927 11,487 14,254 11,416 * Annualized net revenue exceeds 10%. The geographic breakdown is based on the geographic location of the Group's external customers and comprises countries that individually account for more than 10% of the Group's net revenue as well as the country in which the Group is headquartered. No single customer accounts for revenue in excess of 10% of the Group's net revenue. Revenue by category mDKK 2023 2022 CSD 4,309 3,285Beer 3,698 3,556Wine and spirits 1,392 1,428Cider/RTD 1,211 1,129Other beverages etc. 2,317 2,089Total revenue 12,927 11,487 Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 129 § Segment reporting The primary activity of the Group is sale of beverages, and we consider the Senior Leadership Team to be the operating decision-making body, as all significant decisions regarding business develop- ment and direction are taken in this team. Information reported to this team for the dual purpose of resource allocation and assessment of segment performance is focused on geographical markets. Segment performance is evaluated on the basis of operating profit (EBIT) consistent with the consol- idated financial statements. Other items below EBIT are managed at Group level and are not allocated to business segments. Items allocated both by direct and indirect computation comprise production costs and administra- tive expenses, which are allocated by indirect computation based on allocation keys determined on the basis of the market’s drain on key resources. Administrative expenses incurred in the group func- tions of the Parent Company are partly allocated. Note 5 Segment reporting and revenue (continued) § Net revenue Net revenue from the sale of goods is recognized in the income statement at the point in time where the control of goods and products is transferred to the customer, which is generally upon delivery, and if revenues can be measured reliably and are expected to be received. Net revenue from contracts with customers is measured at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods. Net revenue is measured exclusive of VAT and net of discounts as well as excise duties collected on behalf of third parties. The Group provides various discounts and fees depending on the nature of the customer and busi- ness. Discounts comprise unit price reductions as well as contributions to promotional activities and product promotion based on volumes or value of purchases. The discounts are either granted as deductions from the invoice amount or earned as a bonus paid at the end of the bonus period. All types of discounts granted are recognized in net revenue. The Group considers whether contracts include other promises that constitute separate performance obligations and to which a portion of the transaction price needs to be allocated. Judgments: Aggregation of similar segments When assessing segment information, management has provided significant judgments, especially related to the five aggregation criteria re. IFRS 8.12, i.e., nature of the products and services, nature of the production processes, type or class of customer, method used to distribute products and nature of the regulatory environment. Based on an analysis, it is concluded that aggregation of the identified operating segments into three reporting segments can be made as each of the operating segments share similar economic characteristics measured on a long-term gross profit margin basis as well as similar fundamental characteristics regarding the five aforementioned specific aggregation criteria. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 130 Notes referring to income statement, balance sheet and cash flow statement Note 6 Staff expenses Staff expenses are included in production costs, sales and distribution expenses as well as adminis- trative expenses. Staff expenses break down as follows: mDKK 2023 2022 Fixed salaries to Executive Management 14 14Short-term bonus scheme for Executive Management 7 2Long-term share based bonus scheme for Executive Management 6 -1Remuneration of Executive Management 27 15Remuneration of Board of Directors 5 5Total remuneration 32 20Wages and salaries 1,670 1,410Contributions to pension schemes 182 159Total wages, salaries and contribution to pension schemes 1,852 1,569Other social security expenses 57 56Other staff expenses 90 79Total 2,031 1,724Average number of employees 3,984 3,365 For Executive Management, debt re cash-based bonus schemes amounts to DKK 7 million (2022: DKK 2 million) and debt re share-based bonus scheme amounts to DKK 9 million (2022: DKK 3 million) as of December 31, 2023. The complete Remuneration Policy and Remuneration Report for the Board of Directors and the Exec- utive Management are disclosed at the Parent Company’s website. Share-based paymentSVP, VP and other Total fair Share Executive selected value at price at Manage-key time of grant ment employees To t a lgrantdateDKK Number Number Numberthousand DKKConditional shares 2022 42,581 27,196 69,777 Outstanding at January 1, 2023 42,581 27,196 69,777 Exercised 0 0 0Conditional shares granted in 2023 38,060 33,991 72,051 52,434 548Anti-dilution adjustment 1,035 653 1,688Forfeited -17,013 0 -17,013Outstanding at December 31, 2023 64,663 61,840 126,503 52,434Exercisable at December 31, 2023 3,004 0 3,004 2023 2022Remaining Remaining Restricted term to Restricted term to sharesmaturitysharesmaturityNumber Months Number MonthsConditional shares 2021 program (Executive Management) 3,004 0 19,543 12Conditional shares 2022 program (Executive Management) 23,599 12 23,038 24Conditional shares 2022 program (SVP, VP and selected key employees) 27,849 12 27,196 24Conditional shares 2023 program (Executive Management) 38,060 24Conditional shares 2023 program (SVP, VP and selected key employees) 33,991 24Outstanding at December 31, 2023 126,503 69,777 Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 131 Con Note 7 Note 6 Staff expenses (continued) Comment Royal Unibrew has established a share based Long-Term Incentive Plan (LTIP) for the Executive Management, SVPs, VPs and selected key employees. The program is designed to align the interests of Royal Unibrew’s Executive Management, employees and shareholders and to retain and reward the employees for dedicated and focused achievements of the company’s strategy and long-term objec- tives aligned with shareholders’ interests. The LTIP implies the grant of a number of Performance Share Units (PSUs). The PSUs granted in 2022 and 2023 to each participant will vest within 0-100% of the granted PSUs depending on achieve- ment of the defined KPIs during the period. In order to exercise the PSUs, the employee must still be employed at the excise date. The KPIs in the LTIP programs for Executive Management granted in 2022 and 2023 have four targets: Organic EBIT growth in year three (45%), accumulated free cash flow (15%), ESG perfor- mance relative to peers (15%) and share price development (25%). Royal Unibrew A/S launched a new share based Long-Term Incentive Plan (LTIP) for selected key employees (SVPs, VPs and selected key employees) with the following targets: organic EBIT growth (50%), accumulated free cash flow (25%) and CSR rating relative to peers (25%). The market value of the program applying to 2022 covering the performance period 2022-2024 for Executive Management was approximately DKK 8 million and for SVPs, VPs and selected key employees the market value at grant was approximately DKK 12 million.The market value of the program applying to 2023 covering the performance period 2023-2025 for Executive Manage- mentwas approximately DKK 13 million and for SVPs, VPs and selected key employees the market value at grant was approximately DKK 12 million.The market value has been charged to the income statement on an estimated straight-line basis over the vesting period,corresponding to the rate at which the conditions for the allotment of the shares was expected to be met. § Share-based payments The Group only has schemes classified as equity-settled schemes. Conditional shares are measured at fair value at the time of granting, and they are recognized in staff expenses in the income state- ment over the vesting period. The counter item is recognized directly in equity. At the initial recognition of the conditional shares, the number of shares expected to vest is estimated. Subsequently, the estimate of the number of restricted shares is revised so that the total recognition is based on the estimated number of shares allotted. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 132 Note 7 Expenses broken down by nature mDKK 2023 2022Aggregated by functionProduction costs 7,533 6,618Sales and distribution expenses 3,158 2,926Administrative expenses 628 427Total 11,319 9,971Break down by nature as follows:Raw materials and consumables 6,276 5,564Wages, salaries and other staff expenses 2,031 1,724Operating and maintenance expenses 478 371Distribution expenses and carriage 801 837Sales and marketing expenses 779 711Bad trade debts 24 -3Administrative cost 360 286Amortization, depreciation and gain/loss on sale 570 481Total 11,319 9,971Total amortization, depreciation and gain/loss on sale are included in the following items in the income statement:Production costs 283 223Sales and distribution expenses 258 246Administrative expenses 29 12Total 570 481 Comment Other income of DKK 30 million relates to a gain on property sold in Norway in 2023. mDKK 2023 2022Fee to auditors elected at the general assemblyFee for the audit of the annual report:Deloitte 8 7Total 8 7Deloitte fee for non-audit services:Other assurance services 1 1Other assistance 1 1Total 2 2 * Fees for other assurance services provided by Deloitte primarily comprise ESG assurance and auditor's reports related to mergers. Fees for other assistance than statutory audit of the financial statements provided by Deloitte primarily comprise services relating to financial due diligence. Comment The increase in audit fee of DKK 1 million is mainly due to an increase in legal entities as a conse- quence of acquisitions. § Expenses Production costs Production costs comprise direct and indirect expenses incurred to manufacture the finished goods, which represent revenue for the year, including expenses for raw materials and consumables purchases, salaries and wages, renting and leasing as well as depreciation of and impairment losses on plant and machinery. Production costs also include development costs that do not meet the criteria for capitalization. Sales and distribution expenses Sales and distribution expenses comprise expenses for distribution and sales campaigns relating to goods sold during the year, including expenses for sales personnel, marketing, depreciation and amor- tization as well as losses on trade receivables. Furthermore, depreciation and amortization of intan- gible assets are included. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 133 Administrative expenses Administrative expenses comprise expenses for management and administration of the Group, including expenses for administrative personnel, management, office supplies and insurance. § Leases At the commencement date, the Group recognizes a lease liability and a corresponding right-of-use asset at the same amount, except for short-term leases of 12 months or less and leases of low-value assets. The interest rate implicit in the lease or the Royal Unibrew Group’s incremental borrowing rate is used as the discount rate for calculating the lease liability and a corresponding right-of-use asset. A right-of-use asset is initially measured at cost, which equals the initial lease liability and initial direct costs less any lease incentives received. The Group has applied the practical expedient option allowed under IFRS by using a portfolio approach for the recognition of lease contracts related to assets of the same nature and with similar lease terms, i.e., cars and trucks. Subsequently, the right-of-use asset is measured at cost less depreciation and impairment losses and adjusted for remeasurement of the lease liability. The right-of-use asset is depreciated over the earlier of the lease term or the useful life of the asset. The impairment testing of right-of-use assets follows the same principles as those applied for prop- erty, plant and equipment. Right-of-use assets are recognized as property, plant and equipment. The Group has elected not to recognize right-of-use assets and liabilities for leases with a term of 12 months or less and leases of low-value assets. Lease payments related to such leases are recognized in the income statement as an expense on a straight-line basis over the lease term. Note 7 Expenses broken down by nature (continued) Note 8 Financial income mDKK 2023 2022 Interest income 8 3Foreign exchange gain 6Other 2 1Total 10 10 Note 9 Financial expenses mDKK 2023 2022 Interest on mortgage debt 21 5Interest on credit institutions 200 52Interest on leasing liabilities 7 3Finance costs on liabilities at amortized cost 228 60Other financial expenses 14 20Foreign exchange losses, net 18 23Total 260 103 § Financial income and expenses Financial income and financial expenses comprise interest, capital gains and losses on investments, balances and transactions in foreign currencies, amortization of financial assets and liabilities, fair value adjustments of derivative financial instruments that do not qualify as hedge accounting as well as extra payments and repayment under the on-account taxation scheme, etc. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 134 Con Note 8-9 Note 10 Tax on the profit for the year mDKK 2023 2022 Tax on the taxable income for the year 306 305Adjustment of previous year -11 -4Adjustment of deferred tax 16 -7Total 311 294which breaks down as follows:Tax on profit for the year 311 294Tax on other comprehensive income -9 3Tax on changes in equity, shareholders 9 -3Total 311 294Current Danish tax rate 22.0 22.0Adjustment of previous year -0.9 -0.2Income after tax from associates and gain on remeasurements -0.3 -4.2Effect on tax rate of permanent differences 1.0 0.3Carry forward tax losses not recognized 1.2 0.0Differences in effective tax rates of foreign subsidiaries -0.9 -1.4Effective tax rate 22.1 16.5 Comment The implementation of the Minimum Tax Act (Pillar II), as adopted by the Danish Parliament on December 7, 2023, is not expected to result in additional tax costs for the Royal Unibrew Group based on the current group structure. In 2022, the effective tax rate is significantly impacted by the remeasurement on the 25% share- holding in Hansa Borg Bryggerier AS. § Tax on the profit for the year Tax for the year consists of current tax for the year and movements in deferred tax for the year. The tax attributable to the profit for the year is recognized in the income statement and other compre- hensive income, respectively, whereas the tax attributable to equity entries is recognized directly in equity. § Corporation tax Current tax liabilities are recognized in the balance sheet as calculated tax on the expected taxable income for the year adjusted for tax on taxable incomes for previous years and for tax paid on account. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 135 Con Note 10-11 Note 11 Intangible assets Trade-Distribu-Customer mDKK Goodwillmarkstion rightsrelations To t a lCost at January 1, 2023 3,992 3,279 241 371 7,883Exchange adjustment -83 -46 -2 -12 -143Addition by acquisition 1,314 701 55 54 2,124Cost at December 31, 2023 5,223 3,934 294 413 9,864Amortization and impairment losses at January 1, 2023 -7 -6 -118 -194 -325Exchange adjustment -3 4 1Amortization for the year -15 -56 -71Amortization and impairment losses at December 31, 2023 -7 -9 -133 -246 -395Carrying amount at December 31, 2023 5,216 3,925 161 167 9,469 Trade-Distribu-Customer mDKK Goodwillmarkstion rightsrelations To t a lCost at January 1, 2022 3,038 2,486 234 354 6,112Exchange adjustment -47 -17 -10 -74Addition by acquisition 1,001 810 7 27 1,845Cost at December 31, 2022 3,992 3,279 241 371 7,883Amortization and impairment losses at January 1, 2022 -7 -6 -103 -135 -251Exchange adjustment 0Amortization for the year -15 -59 -74Amortization and impairment losses at December 31, 2022 -7 -6 -118 -194 -325Carrying amount at December 31, 2022 3,985 3,273 123 177 7,558 Comment Carrying amount of goodwill and trademarks with indefinite useful lives relates to the following coun- tries; Denmark 6%, Finland 25%, Norway 22%, Baltics 4%, France 14%, Italy 8%, the Netherlands 19% and Canada 2%. § Goodwill Goodwill is initially recognized in the balance sheet at cost. Subsequently, goodwill is measured at cost less accumulated impairment losses. The carrying amount of goodwill is allocated to the Group's cash-generating units (countries) at the time of acquisition. The determination of cash-generating units is based on management structure and internal financial management. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 136 § Trademarks, distribution rights and customer relations Trademarks, distribution rights and customer relations are initially recognized in the balance sheet at cost. Subsequently, distribution rights and customer relations are measured at cost less accumulated amortization and less any accumulated impairment losses. Distribution rights are amortized on a straight-line basis over their estimated useful lives, that is, maximum 20 years. Customer relations are amortized on a straight-line basis over their estimated useful lives, maximum five years. Trademarks are not amortized as they are all well-established, old and profitable trademarks which customers are expected to demand unabatedly, and which management is not planning to stop selling and marketing. Goodwill and trademarks with indefinite useful lives are not amortized but tested at least annually for impairment. It is the Group's strategy to maintain trademarks and their value. Impairment test of goodwill and trademarks The impairment test in 2023 did not show any impairment losses, similar to 2022. The carrying amount of goodwill and trademarks with indefinite useful lives on December 31, 2023, is related to the cash-generating operational units and breaks down as follows: Trade-mDKK Goodwillmarks Total Share2023Northern Europe 2,850 2,287 5,137 56%Western Europe 2,277 1,529 3,806 42%International 89 109 198 2%Total 5,216 3,925 9,141 100% * The most significant value for Northern Europe relates to Finland and Norway and for Western Europe to the Netherlands. Note 11 Intangible assets (continued) The recoverable amount is based on value in use, which is calculated by means of expected net cash flows on the basis of budgets and forecasts for 2024 - 2028, approved by management, as well as estimated market-driven discount rates and growth rates. In 2023, Royal Unibrew experienced continued high costs across our markets stemming from several factors, i.e., cost price increases on raw materials, labor and energy. It is expected that costs will remain high going into 2024. We will continue to invest in commercial opportunities and the development of our core brands to secure an increased market share development. Despite the higher cost base, consumption in the markets in which we operate is expected to develop positively over the forecast period, and we expect to continue to win market shares across geographies. With a continued focus on exploiting commercial opportunities and innovation following the consumer trends, Royal Unibrew expects to build on the positive volume and revenue growth. EBIT margins are expected to increase through continuous focus on procurement, investments in IT capabilities, continuous efficiency improvements and synergies from acquisitions. The key assumptions for the calculation of recoverable amount are shown below. Northern Western Interna-EuropeEuropetionalCompound annual growth rate 2024-2028 5.3-17.2% 2.5-17.1% 11.8%Growth rate on terminal value 1.0% 1.0% 1.0%WACC before tax 8.4-9.6% 9.2-11.0% 10.4%WACC after tax 6.7-7.9% 6.8-8.4% 8.3% The forecasted results approved by management are based on previously achieved results and expected market developments (see above). The average growth rates applied are considering industry conditions in the individual markets in accordance with management's expectations. The discount rates applied are before tax and reflect current specific risks in the individual markets. External consultants have advised how to determine the discounts rates. The assumptions applied by management are inherently subject to uncertainty and unpredictability. Reasonably probable changes will not lead to recognition of impairment losses, why no sensitivity analysis has been disclosed. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 137 Note 11 Intangible assets (continued) Trade-mDKK Goodwillmarks Total Share2022 Northern Europe 2,928 2,287 5,215 72%Western Europe 963 876 1,839 25%International 94 110 204 3%Total 3,985 3,273 7,258 100% * The most significant value for Northern Europe relates to Finland and Norway and for Western Europe to France. The recoverable amount is based on value in use, which is calculated by means of expected net cash flows on the basis of budgets and forecasts for 2023-2027, approved by management, as well as esti- mated market-driven discount rates and growth rates. In 2022, the consumption in the markets in which Royal Unibrew operates was generally impacted by the macroeconomic uncertainty due to the war in Ukraine. Royal Unibrew was compelled to deal with high inflation and historically high energy prices, which have adversely impacted our cost base. The consumption in the markets in which Royal Unibrew operates has developed positively as expected, and we continue to win market shares across geographies. We will build on our positive organic volume and revenue growth as well as through partnerships and acquisitions. This, together with further devel- oping the businesses acquired in recent years, continued focus on exploiting commercial opportunities and innovation following consumer trends, Royal Unibrew expects to gain market shares, and conse- quently, increase the revenue and earnings from the core brands and business areas. EBIT margins are expected to increase in all regions through continuous focus on value management, investments in IT capabilities, continuous efficiency improvements and synergies from acquisitions. The key assumptions for the calculation of recoverable amount are shown below. Northern Western Interna-EuropeEuropetionalCompound annual growth rate 2023-2027 2.7-13.3% 9.4-18.4% 17.8%Growth rate on terminal value 0.8-0.8% 0.6-0.8% 1.6%WACC before tax 7.4-10.0% 8.4-10.1% 8.2%WACC after tax 6.5-8.1% 6.9-8.0% 7.0% The forecasted results approved by management are based on previously achieved results and expected market developments (see above). The average growth rates applied are considering industry conditions in the individual markets in accordance with management's expectations. The discount rates applied are before tax and reflect current specific risks in the individual market. External consultants have advised how to determine the discounts rates. In Northern Europe, the highest point of the range indicated for the discount rate relates to Norway. In Western Europe, the lowest point of the range indicated for the growth rates of terminal value and discount rate relates to Italy. The assumptions applied by management are inherently subject to uncertainty and unpredictability. Reasonably probable changes will not lead to recognition of impairment losses, why no sensitivity analysis has been disclosed. § Impairment The carrying amounts of intangible assets and property, plant and equipment are reviewed on an annual basis to determine whether impairment has incurred other than that expressed by normal amortiza- tion and depreciation. If so, the asset is written down to the higher of net selling price and value in use. Goodwill and other assets for which a value in use cannot be determined, as the asset does not on an individual basis generate future cash flows, are reviewed for impairment together with the group of assets (cash-generating units) to which they are attributable. The carrying amount of goodwill and trademarks with indefinite useful lives is tested for impairment at least on an annual basis together with the other non-current assets of the cash-generating unit to which goodwill has been allocated. Subsequently, it is written down to recoverable amount in the income statement if the carrying amount exceeds the recoverable amount. The carrying amount of financial assets measured at cost or amor- tized cost is written down for impairment if the net present value is lower than the carrying amount due to changes in expected net payments. Estimates: Key assumptions in impairment test In relation to trademarks, management makes an annual judgment to determine whether the current market situation has reduced the value or affected the useful life of the trademarks, including whether past estimates of indefinite useful lives may be maintained. An annual impairment test is made of the values recognized in the financial statements of goodwill and trademarks assessed to have indefinite lives, which are therefore not amortized. For a description of the discount rates and growth rates applied in connection with the impairment test of goodwill and trademarks as well as other assumptions of the impairment test, reference is made to the above note. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 138 Con Note 12 Note 12 Property, plant and equipment Other fixtures Property, Leasing of Total other and fittings, plant and property, property, Land and Plant and tools and equipment plant and plant and mDKKbuildingsmachineryequipmentin progressequipmentequipment Cost at January 1, 2023 2,375 3,104 1,344 192 597 7,612Exchange adjustment -23 -11 -1 -35Adjustment previous year -1 3 11 1 -1 13Additions 18 143 187 233 319 900Additions by acquisitions 374 174 80 62 690Disposals -146 -63 -73 -98 -380Transfers for the year 35 23 34 -92 0Cost at December 31, 2023 2,632 3,373 1,583 396 816 8,800Depreciation, revaluation and impair-ment losses at January 1, 2023 -896 -1,973 -832 0 -231 -3,932Exchange adjustment -1 -1 -1 -3Adjustment previous year 1 -16 -15Depreciation for the year -67 -148 -151 -142 -508Reversal of depreciation of assets sold 99 63 65 93 320Depreciation, revaluation and impairment losses at December 31, 2023 -864 -2,059 -935 0 -280 -4,138Carrying amount at December 31, 2023 1,768 1,314 648 396 536 4,662Leasing of property, plant and equipment:Cost at December 31, 2023 524 292 816Depreciation, revaluation and impairment losses at December 31, 2023 -148 -132 -280Carrying amount per asset type 376 160 536 Property, plant and equipment net carrying amount 4,662 mDKK (2022: 3,680 mDKK) includes software at a net carrying amount of 146 mDKK. Land and buildings at a carrying amount of 995 mDKK (2022: 1,008 mDKK) have been provided as security for mortgage debt of 1,009 mDKK. Other fixtures Property, Leasing of Total other and fittings, plant and property, property, Land and Plant and tools and equipment plant and plant and mDKKbuildingsmachineryequipmentin progressequipmentequipment Cost at January 1, 2022 1,929 2,694 1,122 254 430 6,429Exchange adjustment -23 -15 0 1 -5 -42Adjustment previous year -3 20 17Additions 24 169 166 116 197 672Additions by acquisitions 434 218 40 31 723Disposals -1 -72 -56 -58 -187Transfers for the year 12 113 52 -179 2 0Cost at December 31, 2022 2,375 3,104 1,344 192 597 7,612Depreciation, revaluation and impair-ment losses at January 1, 2022 -850 -1,907 -760 0 -178 -3,695Exchange adjustment 7 1 0 0 8Adjustment previous year 3 -20 -17Depreciation for the year -53 -142 -121 -97 -413Reversal of depreciation of assets sold 0 72 69 44 185Depreciation, revaluation and impairment losses at December 31, 2022 -896 -1,973 -832 0 -231 -3,932Carrying amount at December 31, 2022 1,479 1,131 512 192 366 3,680Leasing of property, plant and equipment:Cost at December 31, 2022 343 254 597Depreciation, revaluation and impairment losses at December 31, 2022 -109 -122 -231Carrying amount per asset type 234 132 366 Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 139 § Property, plant and equipment Land and buildings, plant and machinery and other fixtures and fittings, tools and equipment are measured at cost less accumulated depreciation and less any accumulated impairment losses. Depreciation is calculated on a straight-line basis over the useful lives of the assets. Profits and losses on the disposal of property, plant and equipment are calculated as the difference between the sales sum less the expenses necessary to make the sale and the carrying amount at the time of sale. Profits or losses were immaterial in both 2022 and 2023 and have been recognized in the income statement as an adjustment to depreciation in production costs, sales or distribution expenses or administrative expenses, respectively. The expected useful lives of the assets remain unchanged from 2022 and are as follows: Buildings and installations 25-40 years Leasing of property, plant and equipment Lease term Plant and machinery 10-15 years Other fixtures and fittings, tools and equipment 5-8 years Vehicles 4-5 years IT hardware and software 3 years Returnable packaging 3-10 years Management reviews its estimate of the useful lives of property, plant and equipment annually. Note 12 Property, plant and equipment (continued) Note 13 Investments in associates Invest-ments in mDKKassociatesCost at January 1, 2023 123Addition by acquisition 0Reclassification -74Cost at December 31, 2023 49Value adjustments at January 1, 2023 -24Exchange adjustment 0Dividend, net -13Share of profit for the year 18Reclassification 4Value adjustments at December 31, 2023 -15Carrying amount at December 31, 2023 34Cost at January 1, 2022 76Addition by acquisition 75Reclassification -28Cost at December 31, 2022 123Value adjustments at January 1, 2022 77Exchange adjustment -6Dividend, net -27Share of profit for the year 2Reclassification -70Value adjustments at December 31, 2022 -24Carrying amount at December 31, 2022 99 Comment With reference to note 24, Royal Unibrew has acquired the share majority in Liquid Studio Holding ApS whereas the investment has been reclassified, consolidated and eliminated in the Consolidated Finan- cial Statements. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 140 Con Note 13 Note 13 Investments in associates (continued) Royal Unibrew's share of: mDKK 2023 2022Profit from continuing operations for the year 18 2Other comprehensive income 0 0Comprehensive income 18 2Total carrying amount at December 31 of the Group's total investments in associates, share of equity 34 99 § Investments in associates in the consolidated financial statements Investments in associates are measured in the balance sheet at the proportionate share of the net asset value of the enterprises calculated under the accounting policies of the Group with deduction or addition of the proportionate share of unrealized intercompany profits and losses and with addition of the carrying amount of goodwill. Associates with a negative net asset value are measured at DKK 0. If the Group has a legal or constructive obligation to cover the negative balance of the associate, this obligation is recognized in liabilities. The proportionate share of the results of associates is recognized in the income statement of the Group after adjusting for impairment losses on goodwill and eliminating the proportionate share of unrealized intercompany gains and losses. Note 14 Other fixed asset investments Total other Other fixed asset Other invest-invest-mDKKreceivablesmentsmentsCost at January 1, 2023 121 5 127Exchange adjustment -2 0 -2Additions by acquisition 13 13Additions 4 4Disposals -2 -2Cost at December 31, 2023 130 9 140Value adjustments at January 1, 2023 -52 4 -48Exchange adjustment -3 0 -3Disposals 0 0Revaluations and impairment losses for the year 0Value adjustments at December 31, 2023 -55 4 -51Carrying amount at December 31, 2023 75 13 89Cost at January 1, 2022 66 8 75Exchange adjustment 0 -4 -4Additions by acquisition 61 1 62Additions 0 0 0Disposals -6 -6Cost at December 31, 2022 121 5 127Value adjustments at January 1, 2022 -52 0 -52Exchange adjustment 0 4 4Disposals 0Revaluations and impairment losses for the year 0Value adjustments at December 31, 2022 -52 4 -48Carrying amount at December 31, 2022 69 9 79 Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 141 Con Note 14 Note 14 Other fixed asset investments (continued) Comment In connection with the presentation of the 2011 financial statements, management estimated the fair value of its investment (48% of the share capital) in the Polish brewery company Perla Browary Lubel- skie S.A. at DKK 0 due to governance issues. Since 2011, management has maintained its fair value estimate of DKK 0 as these issues have not subsequently been resolved. The fair value measurement of the investment in Perla Browary Lubelskie S.A. is classified at level 3 of the IFRS Fair Value Hier- archy. § Other investments Other investments classified as fair value through profit and loss are recognized in non-current assets at fair value at the trading date and at estimated fair value calculation on the basis of market data and recognized valuation methods as regard unlisted securities. Unrealized value adjustments are recog- nized in other comprehensive income except for impairment losses and reversal of impairment losses, which are recognized in financial income and expenses in the income statement. Upon realization, the accumulated value adjustment recognized in other comprehensive income is transferred to financial income and expenses in the income statement. Other investments may be classified as level-3 instru- ments. Note 15 Inventories mDKK 2023 2022Raw materials and consumables 502 399Work in progress 65 40Finished goods and goods for resale 834 774Inventories 1,401 1,213 Comment Indirect production costs are recognized in the value of work in progress and finished goods at DKK 28 million (2022: DKK 28 million). Write down of inventories amounted to DKK 28 million (2022: DKK 26 million). § Inventories Inventories are measured at the lower of cost under the FIFO method and net realizable value of individual product groups. The net realizable value of inventories is calculated at the amount of future sales revenues expected to be generated by inventories at the balance sheet date in the process of normal operations allowing for marketability, obsolescence and development in expected sales sum with deduction of calculated selling expenses. The cost of raw materials, consumables, goods for resale and purchased finished goods comprise invoiced price plus expenses directly attributable to the acquisition. The cost of work in progress and finished goods comprise the cost of materials and direct labor with addition of indirect production costs. Indirect production costs comprise the cost of indirect mate- rials and labor as well as maintenance and depreciation of and impairment losses on the machinery, factory buildings and equipment used in the manufacturing process as well as costs of factory administration and management. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 142 Con Note 15-16 Note 16 Receivables mDKK 2023 2022Trade receivables 1,777 1,360Other receivables 124 140Receivables 1,901 1,500 Receivables are classified as "assets measured at amortized cost" under IFRS 9. Trade receivables fall due as follows: Not due Due and prepaid Due 1-15 16-90 Due > mDKKbonus daysdays 90 days To t a l2023Trade receivables 1,620 147 59 35 1,861Impairment provision -46 -1 -10 -26 -83Trade receivables after impairment 1,574 146 49 9 1,777 Impairment provision % *** -2.8 -0.7 -16.9 -74.3 -4.5Impairment provision, beginning of the year -63Impairment realized during the year 8Impairment provision for the year -25Additions from acquisition -3Total -83 * Lifetime expected credit loss. ** Hereof DKK 24 million (1.5%) relates to prepaid bonus. *** Historical average loss rate is < 1%. Not due Due and prepaid Due 1-15 16-90 Due > mDKKbonus daysdays 90 days To t a l2022Trade receivables 1,287 59 38 39 1,423Impairment provision* -27 -1 -7 -28 -63Trade receivables after impairment 1,260 58 31 11 1,360 Impairment provision % *** -2.1 -1.7 -18.4 -71.8 -4.4Impairment provision, beginning of the year -50Impairment realized during the year 3Impairment provision for the year -5Addition from acquisition -11Total -63 * Lifetime expected credit loss. ** Hereof DKK 18 million (1.4%) relates to prepaid bonus. *** Historical average loss rate is < 1%. Comment Other current receivables all fall due for payment in 2024. § Receivables Trade receivables and contract assets are measured at amortized cost less allowance for lifetime expected credit losses. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due. An allowance for lifetime expected credit losses for trade receivables is recognized on initial recognition. Trade receivables and contract assets are written off when all possible options have been exhausted and there is no reasonable expectation of recovery. The cost of allowances for expected credit losses and write-offs for trade receivables are included in sales and distribution costs. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 143 Con Note 17 Note 17 Equity and basis of earnings/cash flow per share Treasury shares held by the Parent Company: Nom. Value in % NumbermDKKof capitalPortfolio at January 1, 2023 576,952 2 1.2Additions, net -430,000 -2 -0.9Shares used as payment 0 0 0.0Portfolio at December 31, 2023 146,952 0 0.3Portfolio at January 1, 2022 880,874 3 1.8Additions, net 490,335 1 1.0Shares used as payment -794,257 -2 -1.6Portfolio at December 31, 2022 576,952 2 1.2 The Group holds no other treasury shares. Basis of calculation of earnings and cash flow per share 2023 2022 The Parent Company shareholders' share of profit for the year amounted to (mDKK) 1,095 1,492The average number of treasury shares amounted to (number, DKK 2 each) 451,535 718,348The average number of shares in circulation amounted to (number) 49,686,199 48,886,875The average number of shares in circulation incl restricted shares amounted to (number) 49,748,465 48,956,652Cost of share buy-backs during the year (mDKK) 300Proceed from sale of treasury shares during the year (mDKK) 249 0 Comment Diluted earnings and cash flow per share have been calculated on the basis of the Parent Company's shareholders' share of profit/loss for the year. Shares were sold during 2023 as an element in the optimization of Royal Unibrew's capital structure in connection with the acquisition of Vrumona B.V. Shares were bought back during 2022 as an element in the optimization of Royal Unibrew's capital structure. It is the intention to cancel the shares bought back to the extent that they are not to be used for share-based payment to the Executive Management. Share capital of the Parent Company: ShareIncrease / ShareRegistration capitaldecrease of capitaldate1/1share capital31/12Decrease of share capital 03-06-2019 102,000,000 -1,800,000 100,200,000Decrease of share capital 15-05-2020 100,200,000 -1,500,000 98,700,000Decrease of share capital 02-06-2021 98,700,000 -1,100,000 97,600,000Increase of share capital 25-05-2022 97,600,000 2,800,000 100,400,000No movements N/A 100,400,000 0 100,400,000 Comment The share capital has been fully paid and is destributed in shares of DKK 2 each. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 144 Con Note 18 § Equity/Proposed dividend Dividend is recognized as a liability at the time of adoption at the Annual General Meeting. Dividend distribution for the year proposed by management is disclosed as a separate equity item. § Treasury shares Treasury shares acquired by the Parent Company or subsidiaries are recognized at cost directly in equity under retained earnings. Where treasury shares are subsequently sold, any consideration is also recognized directly in equity. Dividend on treasury shares is recognized directly in equity under retained earnings. § Share premium account Share premium account comprises amounts in excess of the nominal share capital paid up by share- holders in connection with capital increases. § Translation reserve The translation reserve in the consolidated financial statements comprises exchange adjustments arising on the translation of the financial statements of foreign enterprises from their functional currencies into the presentation currency (DKK) of the Group. Upon full or partly realization of the net investment in the foreign enterprises, exchange adjustments are recognized in the income statement. § Hedging reserve The hedging reserve comprises changes to fair values of derivative financial instruments that are designated and qualify as cash flow hedges of future transactions. On realization, the hedging instrument is recognized in the income statement in the same item as the hedged transaction. Note 17 Equity and basis of earnings/cash flow per share (continued) Note 18 Deferred tax mDKK 2023 2022 Deferred tax at January 1 1,011 747Reclassification 22 0Change in deferred tax for the year 16 -7Deferred tax, no income statement effect for the year -3 4Change in deferred tax by acquisitions 260 275Exchange adjustments -14 -9Adjustment of previous year -11 1Deferred tax at December 31 1,281 1,011Deferred tax relates to:Intangible assets 1,005 770Property, plant and equipment 306 267Current assets 6 5Non current liabilities 33 -1Current liabilities -32 -30Tax loss carry-forward -37 0Total 1,281 1,011 Comment The value of tax loss carry forward has been recognized as deferred tax assets in the companies where, based on budget and forecasts, it is considered very likely that this can be utilized in future earnings and a history of profit before tax within the last three to five years has been verified. A tax value of loss carry forwards of DKK 16 million at December 31, 2023 (2022: DKK 0 million) has not been recognized as deferred tax assets, as these are not considered likely to be utilized within three to five years. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 145 Con Note 19 Note 19 Other current payables mDKK 2023 2022 VAT, excise duties, etc 940 852Other payables 629 712Deposit, returnable packaging 216 105Total other current payables 1,785 1,669Deposit, returnable packaging is specified as follows:Balance at January 1 105 109Addition from acquisitions 107 0Adjustment for the year 4 -4Balance at December 31 216 105 Comment The addition from acquisitions for 2023 relates to Vrumona B.V. The change in the deposit on returnable packaging for the year reflects the net exchange with customers of returnable packaging for the year less estimated wastage of returnable packaging in circulation. The payable relating to deposit on returnable packaging is calculated on the basis of the estimated total packaging volume less packaging held in inventory. § Deposit, returnable packaging Plastic crates, bottles and kegs in circulation and held in inventory are recognized in property, plant and equipment, and the obligation to repay the deposit when the packaging in circulation is taken back on inventory is recognized in other payables. Note 18 Deferred tax (continued) § Deferred tax Deferred tax is recognized in respect of all temporary differences between the carrying amounts and the tax base of assets and liabilities except for temporary differences arising at the time of acquisition that do not affect the profit for the year or the taxable income and temporary differences concerning goodwill. In cases where the computation of the tax base may be made according to alternative tax rules, deferred tax is measured on the basis of the intended use of the asset or settlement of the liability. Deferred tax assets are recognized at the value at which they are expected to be realized, either by elimination in tax on future earnings or by set-off against deferred tax liabilities. Deferred tax is measured on the basis of the tax rules and tax rates expected under the legislation at the balance sheet date to be effective when the deferred tax crystallizes as current tax. In the balance sheet, set-off is made between deferred tax assets and deferred tax liabilities within the same legal tax entity and jurisdiction. Judgments: Recovery of deferred tax assets Deferred tax assets are recognized for all unutilized tax loss carry forwards to the extent it is consid- ered likely that the losses can be offset against taxable income in the foreseeable future. The amount recognized for deferred tax assets is based on judgment of the likely date and size of future tax loss carry forwards. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 146 Con Note 20 Note 20 Debts mDKK 2023 2022 Mortgage debt 1,009 1,011 Credit institutions 5,474 3,663 Other debts 4,255 3,620 Debts 10,738 8,294 Changes to interest-bearing debts12/31 Additions by New Exchange 12/31 mDKK2022acquisitions Repaymentfacilitiesadjustment2023Interest-bearing long-term debts 3,433 0 -180 1,821 0 5,074Interest-bearing short-term debts 871 22 -767 733 1 860Total interest-bearing debt, mortgage and credit institutions 4,304 22 -947 2,554 1 5,934Interest-bearing long-term leasing debt 253 4 -21 197 -3 430Interest-bearing short-term leasing debt 117 18 -117 101 119Total interest-bearing leasing debt 370 22 -138 298 -3 549Total 4,674 44 -1,085 2,852 -2 6,483 12/31 Additions by New Exchange 12/31 mDKK2021acquisitions Repaymentfacilitiesadjustment2022Interest-bearing long-term debts 2,812 0 -1,079 1,700 3,433Interest-bearing short-term debts 550 24 -515 750 62 871Total interest-bearing debt, mortgage and credit institutions 3,362 24 -1,594 2,450 62 4,304Interest-bearing long-term leasing debt 186 2 -42 109 -2 253Interest-bearing short-term leasing debt 74 29 -74 88 0 117Total interest-bearing leasing debt 260 31 -116 197 -2 370Total 3,622 55 -1,710 2,647 60 4,674 * Leasing debt is included in the balance sheets as "credit institution's". § Debts Mortgage loans and loans from credit institutions are recognized initially at fair values. Subsequently, the financial obli- gations are measured at amortized cost equal to the capitalized value using the effective interest method; the difference between the proceeds and the nominal value is recognized in financial income and expenses in the income statement over the loan period. Other debts, comprising trade payables, payables to subsidiaries and associates, VAT, excise duties, etc., as well as other payables are measured at amortized cost, substantially corresponding to the nominal debt. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 147 Con Note 21-22 Note 21 Cash flow statement Adjustments for non-cash operating items: mDKK 2023 2022 Financial income -10 -10Financial expenses 260 103Amortization and impairment of intangible assets 71 74Depreciation of property, plant and equipment 508 413Tax on the profit for the year 311 294Income from investments in associates -18 -2Gain on remeasurements of investments in associates -360Profit and loss from sale of property, plant and equipment (see note 12 regarding leasing part) -9 -6Share-based payments and remuneration 14 0Total 1,127 506 § Cash flow statement The consolidated cash flow statement is presented under the indirect method based on the net profit for the year. The statement shows cash flows for the year, changes for the year in cash and cash equivalents as well as the Group’s cash and cash equivalents at the beginning and end of the year. Cash flows from operating activities are calculated as the net profit/loss for the year adjusted for non-cash operating items, changes in working capital, financial income and financial expenses, and corporation tax paid. Cash flows from investing activities comprise acquisitions and disposals of property, plant and equip- ment and fixed asset investments as well as dividend received from associates. Cost is measured inclusive of expenses necessary to make the acquisition and sales prices after deduction of transac- tion expenses. Cash flows from financing activities comprise changes to the amount or composition of the Group’s share capital, payment of dividend as well as borrowing and repayment of interest-bearing debt. Cash and cash equivalents include securities with a maturity of less than 3 months that can readily be turned into cash and are only subject to an insignificant risk of value changes. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 148 Other notes Note 22 Contingent liabilities and securities mDKK 2023 2022 Third-party guarantees 79 83 Security No security has been provided in respect of loan agreements with credit institutions. Regarding security for loan agreements with mortgage credit institutes, reference is made to note 12. Contingent liabilities The outcome of pending legal actions is not expected to have any material impact on the financial position of the Group. Note 23 Related parties Related parties comprise the Board of Directors and the Executive Management as well as associates, see the sections on Board of Directors and Executive Management on page 60 and Group structure on page 176. No shareholder exercises control. Apart from contracts of employment, no agreements or transactions have been made between the Company and the Executive Board. Remuneration to the Board of Directors and the Executive Board is disclosed in note 6. In addition, the following transactions have been made with related parties: mDKK 2023 2022 RevenueSales to associates 18 19Financial income and expensesDividends received from associates 12 27 Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 149 Con Note 24 The acquisition has been included in the consolidated financial statements of Royal Unibrew as of the date of acquisition. Royal Unibrew has made the following calculation of the fair value of the acquired net assets and of goodwill at the time of the acquisition: mDKK Trademarks 651Distribution rights 55Customer relations 54Property, plant and equipment 591Inventories 123Receivables 293Prepayments 1Deferred tax -242Debt including leasing -21Trade payables -363Corporation tax -2Other payables -173Acquired net assets 967Goodwill 1,124Estimated fair value of the business 2,091Net debt taken over 0Cash consideration 2,091Number of employees 317 The purchase price allocation is considered preliminary. Note 24 Acquisitions of enterprises Acquisitions in 2023 Acquisition of Vrumona B.V. On July 3, 2023, Royal Unibrew entered into an agreement to acquire Vrumona B.V. from Heineken. The acquisition was completed on September 29, 2023. Vrumona is the second largest soft drinks player in the Dutch market carrying a range of strong own brands and partner brands. The headquarters and production facility are located near Utrecht. Vrumona B.V. has more than 300 employees. Vrumona B.V. operates seven production lines at the facility with a current annual output of around 3.1 million hectoliters. The acquisition of Vrumona B.V. establishes a new market platform for Royal Unibrew in the Netherlands. It is our plan to invest in further production capabilities to grow the existing business but also utilize spare capacity to support Royal Unibrew’s global production foot- print. Vrumona B.V. has a portfolio of strong local Dutch brands and a strong operational footprint in the Netherlands. The company offers a broad product portfolio of both own brands and third-party brands produced under license. Vrumona B.V. has a strong position within the no/low calorie segment, which has been a focus area for several years. At signing, the enterprise value of Vrumona B.V. was EUR 300 million. Vrumona B.V.’s net revenue was in 2022 EUR 200 million, whereas normalized EBITDA in 2022 was EUR 25 million, resulting in an acquisition multiple (EV/EBITDA) of 12 times. The purchase price at closing amounted to EUR 280 million, whereas EUR 255 million was paid in cash and EUR 25 million of debt taken over, immediately repaid to seller. The final purchase price could be subject to adjustments. The acquisition price exceeded the fair value of the acquired assets, liabilities and contingent liabili- ties. The difference is the expected value of synergies and future growth opportunities. Synergies are not recognized separately from goodwill. Goodwill is not eligible for tax depreciation. Royal Unibrew has incurred transaction costs relating to the acquisitions of approximately DKK 6 million for financial and legal advisors in connection with the transaction. The costs are recognized as administrative expenses in 2023. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 150 Note 24 Acquisitions of enterprises (continued) Acquisition of Birrificio San Giorgio S.r.l On July 20, 2023, Ceres S.p.A., a fully owned subsidiary of Royal Unibrew A/S, entered into an agree- ment to acquire Birrificio San Giorgio S.r.l from the seller Birra Castello S.p.A. The acquisition was completed on November 2, 2023. The company, including the production facility, is based in San Giorgio di Nogaro, Udine, in the northern part of Italy and has approximately 70 employees. Birrificio San Giorgio S.r.l. has two production lines at the facility with a potential annual output of around 0.8 million hectoliters. The acquisition establishes additional production capacity in Italy, which will free up capacity in Royal Unibrew’s largest production facility in Denmark. The total purchase price amounts to EUR 44 million, consisting of considerations paid of EUR 36.5 million regarding shares transferred and EUR 7.5 million regarding an associated stock transferred. The acquisition price exceeded the fair value of the acquired assets, liabilities and contingent liabili- ties. The difference is the expected value of synergies and future growth opportunities. Synergies are not recognized separately from goodwill. Goodwill is not eligible for tax depreciation. Royal Unibrew A/S has incurred transaction costs relating to the acquisitions of approximately DKK 4 million for financial and legal advisors in connection with the transaction. The costs are recognized as administrative expenses in 2023. The acquisition has been included in the consolidated financial statements of Royal Unibrew as of the date of acquisition. Royal Unibrew has made the following calculation of the fair value of the acquired net assets and of goodwill at the time of the acquisition: mDKK Property, plant and equipment 98Inventories 45Receivables 10Deferred tax -7Other payables -8Acquired net assets 138Goodwill 190Estimated fair value of the businesses 328Acquired cash at bank and in hand 0Cash consideration 328Number of employees 70 The purchase price allocation is considered preliminary. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 151 Note 24 Acquisitions of enterprises (continued) Acquisition of Liquid Studio Holding ApS On October 1, 2023, Royal Unibrew A/S entered into an agreement to acquire 37.7% of the shares in Liquid Studio Holding ApS. The total ownership hereafter amounts to 62.7% as Royal Unibrew A/S already owned 25%. Liquid Studio Holding ApS is owner of the brand Rebæl, and the strategic rationale of the transaction has been to fully integrate the activities of Rebæl into Royal Unibrew. Purchase price for the shares at closing was estimated to DKK 36 million, whereof DKK 18 million was paid in cash in prior years. In addition to considerations already paid, the remaining part of the purchase price of DKK 18 million comprise a discounted value of the liability Royal Unibrew A/S has toward existing minority shareholders as for their option to sell. No goodwill has been recognized in the transaction. Royal Unibrew A/S has incurred costs of less than DKK 1 million associated with the transaction. The costs are recognized as administrative expenses in 2023. The acquisition has been included in the consolidated financial statements of Royal Unibrew as of the date of acquisition. Royal Unibrew has made the following calculation of the fair value of the acquired net assets and of goodwill at the time of the acquisition: mDKK Trademarks 50Property, plant and equipment 1Inventories 1Receivables 3Prepayments 1Deferred tax -11Trade payables -2Other payables -3Acquired net assets 40Goodwill 0Estimated fair value of the businesses 40Net debt taken over -4Cash consideration paid in prior years -18Deferred payment -18Cash consideration 0Number of employees 5 The purchase price allocation is considered preliminary. Group impact from acquisitions in 2023 If the acquisitions had occurred on January 1, 2023, consolidated pro-forma revenue and EBITDA for the period ended December 31, 2023, of the combined Group would have been approximately DKK 14,207 million and DKK 2,310 million, respectively. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 152 Note 24 Acquisitions of enterprises (continued) Acquisitions in 2022 Acquisition of full ownership of Hansa Borg Bryggerier On January 7, 2022, Royal Unibrew A/S entered into an agreement to acquire the remaining 75% of Hansa Borg Bryggerier, of which Royal Unibrew already had 25% ownership, resulting in a 100% ownership of the company. The acquisition was completed on May 25, 2022. Hansa Borg Bryggerier is Norway’s second largest brewery and beverage company with four breweries and one bottling plant throughout the country and products ranging from beers to ciders, carbonated soft drinks, water and wines for the Norwegian market. Together with Solera Beverage Group, which Royal Unibrew acquired in September 2021, Hansa Borg Bryggerier is strategically very important for our Norwegian business as it in combination with Solera will create a strong player with a very strong beverage portfolio in Norway and thereby strengthen our multi beverage presence. The transaction is based on an enterprise value (at signing) of NOK 3.3 billion. With the share price at closing (587), the final enterprise value for 100% of the company was NOK 2.6 billion (DKK 1.9 billion). Hansa Borg Bryggerier is expected to generate normalized full-year revenue in 2022 of around NOK 1.4 billion with a normalized EBITDA of around NOK 210 million, resulting in an acquisition multiple (EV/ EBITDA) of 12.4 times at closing. The already owned 25% of Hansa Borg Bryggerier was revalued in connection with the transaction, resulting in a non-cash tax-free remeasurement of DKK 360 million. According to the agreement, 10% of the payment, corresponding to NOK 224 million (DKK 162 million), was paid in cash, while the remaining 90% of the payment was paid in Royal Unibrew shares (2,194,257 shares). The acquisition price exceeded the fair value of the acquired assets, liabilities and contingent liabili- ties. The difference is the expected value of synergies and future growth opportunities. Synergies are not recognized separately from goodwill. Goodwill is not eligible for tax depreciation. Royal Unibrew A/S has incurred transaction costs relating to the acquisitions of approximately DKK 5 million for financial and legal advisors in connection with the realization of the transaction. The costs are recognized as administrative expenses and split equally in 2021 and 2022. The acquisition has been included in the consolidated financial statements of Royal Unibrew as of the date of acquisition. Royal Unibrew has made the following calculation of the fair value of the acquired net assets and of goodwill at the time of the acquisition: mDKK Trademarks 698Distribution rights 7Customer relations 27Property, plant and equipment 629Inventories 143Receivables 238Prepayments 29Deferred tax -244Debt including leasing -34Trade payables -101Other payables -499Acquired net assets 893Goodwill 903Estimated fair value of the business 1,796Acquired cash at bank and in hand 138Total acquisition price 1,934Transfer of:Issue of new shares 821Treasury shares 467Cash 163Total consideration, 75% shareholding 1,451Number of employees 296 The receivables acquired include trade receivables of a fair value of DKK 180 million, corresponding to the gross amount receivable according to contract. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 153 Note 24 Acquisitions of enterprises (continued) Acquisition of Amsterdam Brewery Co. Ltd. On July 15, 2022, Royal Unibrew entered into an agreement to acquire 100% of the Toronto-based company Amsterdam Brewery Co. Ltd. Although the acquisition was completed on September 15, 2022, the purchase price allocation is considered provisional due to the fact that the transaction was closed on September 15, 2022, leaving limited time to identify and determine fair value of assets acquired and liabilities assumed. The Canadian based company is a large-scale craft brewery with a potential to increase both capa- bilities and capacities during the coming years. Moreover, the acquisition will support future growth of Royal Unibrew in the Americas region by adding capacity in Canada, which is also close to our US business. Over time we, expect to serve most of Canada and partly the US from Amsterdam Brewery Co. Ltd., which will reduce our transportation costs and our CO 2 footprint. The acquisition is based on an enterprise value of DKK 241 million on a debt free basis. The company has normalized revenue of around CAD 34 million (around DKK 200 million) and a normalized EBITDA of around CAD 5 million (around DKK 28 million). Royal Unibrew A/S has incurred transaction costs relating to the acquisition of approximately DKK 2 million for financial and legal advisors in connection with the realization of the transaction. The costs are recognized as administrative expenses in 2022. The acquisition has been included in the consolidated financial statements of Royal Unibrew as of the date of acquisition. Royal Unibrew has made the following preliminary calculation of the fair value of the acquired net assets and of goodwill at the time of acquisition: mDKK Intangibles 103Property, plant and equipment 83Inventories 22Receivables 8Prepayments 8Deferred tax -25Debt including leasing -21Trade payables -11Other payables -24Acquired net assets 143Goodwill 98Estimated fair value of the businesses 241Acquired cash at bank and in hand 0Cash consideration 241Number of employees 247 Baldersbrønde Bryggeri A/S (Nørrebro Bryghus) On December 30, 2022, Royal Unibrew acquired 100% of the shares in Baldersbrønde Bryggeri A/S (Nørrebro Bryghus) in Denmark. With the acquisition, Royal Unibrew takes over an exciting range of organic craft beers, adding to Royal Unibrew's portfolio of craft beers strengthening Royal Unibrew's position in Copenhagen. Group impact If the acquisitions had occurred on January 1, 2022, consolidated pro-forma revenue and EBITDA for the period ended December 31, 2022, of the combined Group would have been approximately DKK 12,111 million and DKK 2,069 million, respectively. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 154 Con Note 25 Note 24 Acquisitions of enterprises (continued) § Business combinations As for acquisition of new enterprises, the purchase method is applied, under which the identifiable assets and liabilities of newly acquired enterprises are measured at fair value at the time of acquisi- tion. Upon business combinations, positive differences between cost and fair value of identifiable assets and liabilities acquired are recognized as goodwill in intangible assets. At the time of acquisition, goodwill is allocated to the cash-generating units that subsequently form the basis of impairment tests. Goodwill and fair value adjustments in connection with the acquisition of a foreign enterprise with a functional currency that differs from the presentation currency of the Group are treated as assets and liabilities belonging to the foreign entity, and these adjustments are translated to the func- tional currency of the foreign entity at the exchange rates at the dates of transaction. Gains or losses on disposal of subsidiaries and associates are calculated as the difference between the sales sum and the carrying amount of net assets at the time of sale (including the carrying amount of goodwill) net of expected expenses and adjusted for exchange adjustments previously recognized in equity. Judgments and estimates: Business combinations The businesses assets, liabilities and contingent liabilities have been recognized under the purchase method in the financial statements of Royal Unibrew. The key assets of the businesses are goodwill, trademarks, customer relations, property, plant and equipment, inventories, receivables, deferred tax and payables. Especially regarding the intangible assets acquired, there are no efficient markets to be used to determine fair value. Therefore, management has made an estimate in connection with the calculation of the fair value of the acquired assets and liabilities at the date of acquisition and has allo- cated the purchase price on that basis. Note 25 Events after the reporting period No events have occurred in the period from the balance sheet date until the presentation of the financial statements that materially affect the assessment of the consolidated financial statements. Consolidated nancial statements ROYAL UNIBREW Annual Report 2023 155 Parent Company Annual Report Parent company annual report 2023 Parent company annual report ROYAL UNIBREW Annual Report 2023 156 ROYAL UNIBREW Annual Report 2023 157 Parent Income statement Parent Company income statement Statement of comprehensive income for January 1 - December 31 mDKK Note 2023 2022 Net profit for the year 1,032 1,571 Other comprehensive income Items that may be reclassified to the income statement Value adjustment of hedging instruments, end of year -30 12 Tax on other comprehensive income 7 3 -3 Total -27 9 Items that may not be reclassified to the income statement Other comprehensive income after tax -27 9 Total comprehensive income 1,005 1,580 for January 1 - December 31 mDKK Note 2023 2022 Net revenue 5,054 4,692 Production costs 3,4 -3,005 -2,730 Gross profit 2,049 1,962 Sales and distribution expenses 3,4 -1,005 -1,025 Administrative expenses 3,4 -331 -214 EBIT 713 723 Dividends received from subsidiaries and associates 554 565 Gain on sale of investments in associates 460 Financial income 5 130 62 Financial expenses 6 -234 -71 Profit before tax 1,163 1,739 Tax on the profit for the year 7 -131 -168 Net profit for the year 1,032 1,571 Parent company annual report ROYAL UNIBREW Annual Report 2023 158 Parent Balance sheet Parent Company balance sheet Assets at December 31 mDKK Note 2023 2022 NON-CURRENT ASSETS Intangible assets 9 413 409 Property, plant and equipment 10 1,532 1,407 Investments in subsidiaries 11 7,801 5,703 Investments in associates 11 49 67 Receivables from subsidiaries 12 3,203 2,661 Other non-current investments 12 8 7 Non-current assets 13,006 10,254 CURRENT ASSETS Inventories 13 331 343 Receivables 14 623 573 Receivables from subsidiaries 255 230 Corporation tax 0 9 Prepayments 71 36 Cash at bank and in hand 0 27 Current assets 1,280 1,218 Assets 14,286 11,472 Liabilities and equity at December 31 mDKK Note 2023 2022 EQUITY Share capital 15 100 100 Other reserves 1,564 1,591 Retained earnings 3,855 2,548 Proposed dividend 0 728 Equity 5,519 4,967 LIABILITIES Non-current liabilities Deferred tax 16 214 206 Mortgage debt 2, 19 722 733 Credit institutions 2, 19 4,156 2,483 Other payables 0 7 Non-current liabilities 5,092 3,429 Current liabilities Mortgage debt 2, 19 12 2 Credit institutions 2, 19 712 894 Trade payables 2 747 780 Payables to subsidiaries 2 1,911 1,188 Corporate tax 24 0 Other current payables 17 269 212 Current liabilities 3,675 3,076 Liabilities 8,767 6,505 Liabilities and equity 14,286 11,472 Parent company annual report ROYAL UNIBREW Annual Report 2023 159 Parent Cash ow statement Parent Company cash flow statement for January 1 - December 31 mDKK Note 2023 2022 Net profit for the year 1,032 1,571 Adjustments for non-cash operating items 18 -101 -678 Change in working capital -76 -274 Received financial income 130 62 Paid financial expenses -234 -71 Corporation tax paid -88 -144 Cash flows from operating activities 663 466 Dividends received from associates and subsidiaries 554 1,025 Sale of property, plant and equipment 10 2 2 Purchase of property, plant and equipment 10 -270 -281 Acquisition of enterprises -2,087 -252 Purchase of intangible assets and fixed asset investment -8 -18 Cash flows from investing activities -1,809 476 mDKK Note 2023 2022 Debt financing: Change in borrowings 19 1,473 1,323 Repayment on lease facilities 19 -41 -35 Proceeds from subsidiaries 19 723 0 Repayment to subsidiaries 19 -564 -1,211 Dividends paid to shareholders -728 -708 Dividend on treasury shares 8 16 Purchase of treasury shares -300 Sale of treasury shares 249 Cash flows from financing activities 1,120 -915 Change in cash and cash equivalents -27 27 Cash and cash equivalents at January 1 27 0 Exchange adjustment 0 0 Cash and cash equivalents at December 31 0 27 Free cash flow Net cash from operating activities 663 466 Net cash used in investing activities 286 746 Repayment on lease facilities -41 -35 Free cash flow 908 1,177 Parent company annual report ROYAL UNIBREW Annual Report 2023 160 Parent Statement of changes in equity Parent Company statement of changes in equity for January 1 - December 31, 2023 mDKK Share capital Share premium account Hedging reserve Total other reserves Retained earnings Proposed dividend for the year Total Equity at December 31, 2022 100 1,573 18 1,591 2,548 728 4,967 Changes in equity in 2023 Profit for the year 0 1,032 1,032 Other comprehensive income -30 -30 0 -30 Tax on other comprehensive income 3 3 3 Total comprehensive income 0 0 -27 -27 1,032 0 1,005 Effect of mergers 0 4 4 Dividends paid to shareholders 0 -720 -720 Dividend on treasury shares 0 8 -8 0 Sale of shares for treasury 0 249 249 Share-based payment 0 14 14 Proposed dividend 0 0 Total shareholders 0 0 0 0 275 -728 -453 Total changes in equity in 2023 0 0 -27 -27 1,307 -728 552 Equity at December 31, 2023 100 1,573 -9 1,564 3,855 0 5,519 Share premium account, hedging reserve and retained earnings may be applied for distribution of dividend to the Parent Company shareholders. The share capital at December 31, 2023, amounts to DKK 100,400,000 and is distributed on shares of DKK 2 each. It is proposed to the AGM that a mandate is given to the Board of Directors authorizing them to potentially distribute an extraordinary dividend of up to DKK 14.50 per share before the end of 2024 (2022: dividend of DKK 14.50 per share) based on the share capital at Decemeber 31, 2023. Parent company annual report ROYAL UNIBREW Annual Report 2023 161 Parent Company statement of changes in equity for January 1 - December 31, 2022 mDKK Share capital Share premium account Hedging reserve Total other reserves Retained earnings Proposed dividend for the year Total Equity at December 31, 2021 98 753 6 759 1,525 708 3,090 Changes in equity in 2022 Profit for the year 0 1,571 1,571 Other comprehensive income 12 12 0 12 Tax on other comprehensive income 0 -3 -3 Total comprehensive income 0 0 12 12 1,568 0 1,580 Capital increase 2 1,061 1,061 1,063 Capital increase adjustment to fair value -241 -241 -241 Dividends paid to shareholders 0 -692 -692 Dividend on treasury shares 0 16 -16 0 Acquisition of shares for treasury 0 -300 -300 Transfer of treasury shares as acquisition of enterprise 0 467 467 Proposed dividend 0 -728 728 0 Total shareholders 2 820 0 820 -545 20 297 Total changes in equity in 2022 2 820 12 832 1,023 20 1,877 Equity at December 31, 2022 100 1,573 18 1,591 2,548 728 4,967 Parent company annual report ROYAL UNIBREW Annual Report 2023 162 Parent Notes contents Notes to Parent company annual report Descriptive notes 1 Basis of preparation of Parent Company Annual Report . . . . . . . . . . . . . . . . . . . . .163 2 Financial risk management . . . . . . . . . . . . . . . . . . . . . . . . . . .164 Notes referring to income statement, balance sheet and cash flow statement 3 Staff expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .164 4 Expenses broken down by type . . . . . . . . . . . . . . . . . . . . .165 5 Financial income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .166 6 Financial expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .166 7 Tax on the profit for the year . . . . . . . . . . . . . . . . . . . . . . . . .166 8 Realized hedging transactions . . . . . . . . . . . . . . . . . . . . . . .167 9 Intangible assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167 10 Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . .168 11 Investments in subsidiaries and associates . . . . . .169 12 Receivables from subsidiaries and other fixed asset investments. . . . . . . . . . . . . . . . . . . . . . . .170 13 Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .170 14 Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 15 Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 16 Deferred tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 17 Other current payables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 18 Cash flow statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172 19 Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173 Other notes 20 Contingent liabilities, security and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .173 21 Related parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174 22 Events after the reporting period . . . . . . . . . . . . . . . . . . . 174 Parent company annual report ROYAL UNIBREW Annual Report 2023 163 Parent Note 1 Descriptive notes Note 1 Basis of preparation of Parent Company Annual Report Basis of Preparation § Material accounting policies The parent company's accounting policies remain unchanged from last year. Material accounting policies are identical to those applied by the Royal Unibrew Group except for those mentioned below. Reclassification is according to consolidated note 1. Translation policies Exchange adjustment of balances regarded as part of the total net investment in enterprises with another functional currency than DKK is recognized in financial income and expenses in the Parent Company income statement. New and amended standards and interpretations that have taken effect Reference is made to note 1 to the consolidated financial statements. Critical judgments and accounting estimates In connection with the preparation of the Parent Company and consolidated financial statements, Management makes estimates and judgments as to how recognition and measurement of assets and liabilities should take place based on the accounting policies applied. Judgments as an element in material accounting policies The calculation of carrying amounts of certain assets and liabilities requires judgment as to how assets and liabilities should be classified in the financial statements and how future events will affect the value of these assets and liabilities at the balance sheet date. In connection with the financial reporting for 2023, the following judgments have been made materially affecting the related items as described in relevant notes. Critical accounting estimates Management's estimates are based on assumptions that management considers reasonable, but which are inherently uncertain and unpredictable. In connection with the financial reporting for 2023, the following critical estimates have been made as described in relevant notes. Accounting policies, judgments as an element in material accounting policies as well as critical accounting estimates are described in note 1 of the consolidated financial statements. Parent company annual report ROYAL UNIBREW Annual Report 2023 164 Notes referring to income statement, balance sheet and cash flow statement Note 2 Financial risk management Financial liabilities 12/31 2023 Parent mDKK Contrac- tual cash flows Maturity < 1 year Maturity > 1 year < 5 years Maturity > 5 years Carrying amount Non-derivative financial instruments: Financial debt, gross 6,319 940 4,813 566 5,492 Financial debt, subsidiaries 1,911 1,911 1,911 Leasing 114 36 70 8 110 Trade payables 747 747 747 Other payables 195 195 195 Total 9,286 3,829 4,883 574 8,455 12/31 2022 Parent mDKK Contrac- tual cash flows Maturity < 1 year Maturity > 1 year < 5 years Maturity > 5 years Carrying amount Non-derivative financial instruments: Financial debt, gross 4,535 963 2,809 763 4,017 Financial debt, subsidiaries 1,188 1,188 1,188 Leasing 97 32 53 12 95 Trade payables 780 780 780 Other payables 170 170 170 Total 6,770 3,133 2,862 775 6,250 For above tables, the debt is classified as "debt at amortized cost" and the fair value of the total debt is assessed to equal carrying amount. For a description of the Parent Company's and the Group's currency, interest rate, credit, commodity and other risks as well as capital management, reference is made to note 2 related to the consolidated financial statements. Note 3 Staff expenses Staff expenses are included in production costs, sales and distribution expenses as well as adminis- trative expenses and break down as follows: mDKK 2023 2022 Fixed salaries to Executive Management 14 14 Short-term bonus scheme for Executive Management 7 2 Long-term share based bonus scheme for Executive Management 6 -1 Remuneration of Executive Management 27 15 Remuneration of Board of Directors 5 5 Total remuneration 32 20 Wages and salaries 682 590 Contributions to pension schemes 68 61 Total wages, salaries and contribution to pension schemes 750 651 Other social security expenses 8 9 Other staff expenses 32 30 Total 822 710 Average number of employees 1,283 1,229 For Executive Management, debt re cash-based bonus schemes amounts to DKK 7 million (2022: DKK 2 million) and debt re share-based bonus scheme amounts to DKK 9 million (2022: DKK 3 million) as of December 31, 2023. The complete Remuneration Policy and Remuneration Report for the Board of Directors and the Exec- utive Management are disclosed at the Parent Company’s website. Parent company annual report ROYAL UNIBREW Annual Report 2023 165 Parent Note 4-5 Note 4 Expenses broken down by type mDKK 2023 2022 Production costs 3,005 2,730 Sales and distribution expenses 1,005 1,025 Administrative expenses 331 214 Total 4,341 3,969 Break down by nature as follows: Raw materials and consumables 2,465 2,245 Wages, salaries and other staff expenses 822 710 Operating and maintenance expenses 200 164 Distribution expenses and carriage 201 269 Sales and marketing expenses 276 282 Bad trade debts 4 -5 Office supplies etc. 169 134 Amortization and depreciation 204 170 Total 4,341 3,969 Total amortization and depreciation are included in the following items in the income statement: Production costs 114 105 Sales and distribution expenses 64 58 Administrative expenses 26 7 Total 204 170 mDKK 2023 2022 Fee to auditors Fee for the audit of the Annual Report Deloitte 1 1 Total 1 1 Deloitte fee for non-audit services: Other assurance services 1 1 Other assistance 1 1 Total 2 2 * Fees for other assurance services provided by Deloitte primarily comprise ESG assurance and auditor's reports related to mergers. Fees for other assistance than statutory audit of the financial statements provided by Deloitte primarily comprise services relating to financial due diligence. Parent company annual report ROYAL UNIBREW Annual Report 2023 166 Parent Note 6-8 Note 5 Financial income mDKK 2023 2022 Interest income 1 3 Foreign exchange gain 5 Interest income from subsidiaries, net 129 54 Total 130 62 Note 6 Financial expenses mDKK 2023 2022 Interest on mortgage debt 19 5 Interest on credit institutions 197 42 Interest on leasing liabilities 1 1 Finance costs on liabilities at amortized cost 217 48 Other financial expenses 1 1 Foreign exchange losses, net 16 22 Total 234 71 Note 7 Tax on the profit for the year mDKK 2023 2022 Tax on the taxable income for the year 120 133 Adjustment of previous year -8 -1 Adjustment of deferred tax 19 36 Total 131 168 Which breaks down as follows: Tax on profit for the year 131 168 Tax on other comprehensive income -3 3 Tax on equity entries 3 -3 Total 131 168 Current Danish tax rate 22.0 22.0 Dividends received from subsidiaries and associates and gain of sale on investments in associates -10.0 -13.7 Effect on tax rate of permanent differences -0.8 1.5 Adjustment of previous year 0.0 -0.1 Effective tax rate 11.2 9.7 § Tax on the profit for the year The Parent Company is jointly taxed with its Danish subsidiaries. The Danish current tax for the year is allocated to the jointly taxed Danish enterprises in proportion to their taxable incomes (full allocation with credit for tax losses). Parent company annual report ROYAL UNIBREW Annual Report 2023 167 Parent Note 9 Note 8 Realized hedging transactions mDKK 2023 2022 Realized hedging transactions are included in the income statement as follows: Net revenue includes currency hedges Production costs include foreign currency and commodity hedges 25 4 Financial income and expenses include currency, commodity and interest rate hedges -36 -3 Total -11 1 Reference is made to note 4 related to the consolidated financial statements for a description of hedging policies. Note 9 Intangible assets mDKK Goodwill Trademarks Distribution rights Customer relations To t a l Cost at January 1, 2023 227 173 0 21 421 Additions by mergers and acquisition 8 8 Disposals 0 Cost at December 31, 2023 227 181 0 21 429 Amortization and impairment losses at January 1, 2023 0 -3 0 -9 -12 Reversal depreciation of disposals 0 Amortization for the year -4 -4 Amortization and impairment losses at December 31, 2023 0 -3 0 -13 -16 Carrying amount at December 31, 2023 227 178 0 8 413 Note 9 Intangible assets (continued) mDKK Goodwill Trademarks Distribution rights Customer relations To t a l Cost at January 1, 2022 227 173 0 21 421 Additions 0 Disposals 0 Cost at December 31, 2022 227 173 0 21 421 Amortization and impairment losses at January 1, 2022 0 -3 0 -5 -8 Reversal depreciation of disposals 0 Amortization for the year -4 -4 Amortization and impairment losses at December 31, 2022 0 -3 0 -9 -12 Carrying amount at December 31, 2022 227 170 0 12 409 § Trademarks Trademarks are not amortized as they are all well-established, old and profitable trademarks that customers are expected to continue demanding unabatedly, other things being equal, and which management is not planning to stop selling and promote. Reference is made to note 11 related to the Consolidated Financial Statements for a description of impairment test. Parent company annual report ROYAL UNIBREW Annual Report 2023 168 Parent Note 10 Note 10 Property, plant and equipment mDKK Land and buildings Plant and machinery Other fixtures and fittings, tools and equipment Property, plant and equipment in progress Leasing of property, plant and equipment Total other property, plant and equipment Cost at January 1, 2023 880 1,510 694 110 184 3,379 Additions 6 40 70 154 56 326 Adjustments previous years 2 -1 2 -1 2 Disposals -2 -29 -27 -58 Transfers for the year 3 28 22 -53 0 Cost at December 31, 2023 889 1,577 759 210 213 3,649 Depreciation, revaluation and impairment losses at January 1, 2023 -458 -1,017 -405 0 -91 -1,971 Depreciation for the year -18 -65 -76 -40 -199 Adjustments previous years 1 1 Reversal of depreciation and impairment of assets sold 1 27 25 53 Depreciation, revaluation and impairment losses at December 31, 2023 -475 -1,082 -453 0 -106 -2,116 Carrying amount at December 31, 2023 414 495 306 210 107 1,532 Leasing of property, plant and equipment: Cost at December 31, 2023 78 135 213 Depreciation, revaluation and impairment losses at December 31, 2023 -43 -63 -106 Carrying amount per asset type 35 72 107 Property, plant and equipment net carrying amount 1.532 mDKK includes software at a carrying amount of 146 mDKK. Land and buildings including plant and machinery at a carrying amount of 407 mDKK (2022: 417 mDKK) have been provided as security for mortgage debt of 722 mDKK (2022: 733 mDKK). mDKK Land and buildings Plant and machinery Other fixtures and fittings, tools and equipment Property, plant and equipment in progress Leasing of property, plant and equipment Total other property, plant and equipment Cost at January 1, 2022 831 1,417 595 194 171 3,208 Additions 18 101 104 58 33 314 Adjustments previous years -3 -3 Disposals -1 -68 -52 -20 -141 Transfers for the year 32 63 47 -142 0 Cost at December 31, 2022 880 1,510 694 110 184 3,379 Depreciation, revaluation and impairment losses at January 1, 2022 -441 -1,028 -392 0 -76 -1,937 Depreciation for the year -17 -61 -63 -35 -176 Adjustments previous years 3 3 Reversal of depreciation and impairment of assets sold 0 69 50 20 139 Depreciation, revaluation and impairment losses at December 31, 2022 -458 -1,017 -405 0 -91 -1,971 Carrying amount at December 31, 2022 422 493 289 110 93 1,407 Leasing of property, plant and equipment: Cost at December 31, 2022 72 112 184 Depreciation, revaluation and impairment losses at December 31, 2022 -39 -52 -91 Carrying amount per asset type 33 60 93 Parent company annual report ROYAL UNIBREW Annual Report 2023 169 Parent Note 11 Note 11 Investments in subsidiaries and associates mDKK Investments in subsidiaries Investments in associates Cost at January 1, 2023 5,792 67 Additions 2,098 Disposals -18 Cost at December 31, 2023 7,890 49 Impairment losses at January 1, 2023 -89 Impairment losses at December 31, 2023 -89 0 Carrying amount at December 31, 2023 7,801 49 Cost at January 1, 2022 4,513 77 Additions 1,279 18 Disposals -28 Cost at December 31, 2022 5,792 67 Impairment losses at January 1, 2022 -89 Impairment losses at December 31, 2022 -89 0 Carrying amount at December 31, 2022 5,703 67 Comment Additions for 2023 relate to the acquisitions of Vrumona B.V. and Birrificio San Giorgio S.r.l. and for 2022 to Hansa Borg Bryggerier AS, Amsterdam Brewery Inc. and Restaurationsselskabet Nørrebro Bryghus A/S. The carrying amount of investments in subsidiaries is tested to identify any impairment in case there is an indication that the investment may be impaired. Reference is made to note 11 related to the consolidated financial statements. § Dividend on investments in subsidiaries and associates Dividend on investments in subsidiaries and associates is recognized in the parent company's income statement in the financial year in which dividend is declared. § Investments in subsidiaries and associates in the parent company financial statements Investments in subsidiaries and associates are measured at cost and tested in the event of indication of impairment. Where cost exceeds the recoverable amount, the investment is written down to its lower recoverable amount. Parent company annual report ROYAL UNIBREW Annual Report 2023 170 Parent Note 12-13 Note 12 Receivables from subsidiaries and other fixed asset investments mDKK Receiv- ables from subsidiaries Other invest- ments Other receivables Total other fixed asset invest- ments Cost at January 1, 2023 2,661 55 4 59 Exchange adjustment 17 0 Additions 525 1 1 Disposals 0 Cost at December 31, 2023 3,203 55 5 60 Revaluations and impairment losses at January 1, 2023 0 -52 0 -52 Revaluations and impairment losses at December 31, 2023 0 -52 0 -52 Carrying amount at December 31, 2023 3,203 3 5 8 Cost at January 1, 2022 1,316 55 5 60 Exchange adjustment -65 0 Additions 1,410 0 Disposals -1 -1 Cost at December 31, 2022 2,661 55 4 59 Revaluations and impairment losses at January 1, 2022 0 -52 0 -52 Revaluations and impairment losses at December 31, 2022 0 -52 0 -52 Carrying amount at December 31, 2022 2,661 3 4 7 Note 13 Inventories mDKK 2023 2022 Raw materials and consumables 137 155 Work in progress 23 18 Finished goods and goods for resale 171 170 Total inventories 331 343 Comment Indirect production costs are recognized in the value of work in progress and finished goods at DKK 15 million (2022: DKK 16 million). Parent company annual report ROYAL UNIBREW Annual Report 2023 171 Parent Note 14-15 Note 14 Receivables mDKK 2023 2022 Trade receivables 561 532 Other receivables 62 41 Receivables 623 573 Receivables are classified as "assets measured at amortized cost" under IFRS 9. Trade receivables fall due as follows: mDKK Not due and prepaid bonus Due 1-15 days Due 16-90 days Due > 90 days To t a l 2023 Trade receivables 505 31 24 7 567 Impairment provision -2 - -2 -2 -6 Trade receivables after impairment 503 31 22 5 561 Impairment provision % ** -0.4 0.0 -8.3 -28.6 -1.1 Impairment provision, beginning of the year -5 Impairment realized during the year 0 Impairment provision for the year -1 Total -6 * Lifetime expected credit loss. ** Historical average loss rate is < 1%. mDKK Not due and prepaid bonus Due 1-15 days Due 16-90 days Due > 90 days To t a l 2022 Trade receivables 513 11 10 4 538 Impairment provision -1 - -1 -4 -6 Trade receivables after impairment 512 11 9 0 532 Impairment provision % ** -0.2 0.0 10.0 100.0 -1.1 Impairment provision, beginning of the year -12 Impairment realized during the year 1 Impairment provision for the year 5 Total -6 * Lifetime expected credit loss. ** Historical average loss rate is < 1%. Note 15 Share capital Reference is made to note 17 related to the Consolidated Financial Statements. Parent company annual report ROYAL UNIBREW Annual Report 2023 172 Parent Note 16-18 Note 16 Deferred tax mDKK 2023 2022 Deferred tax at January 1 206 168 Change in deferred tax for the year 19 36 Deferred tax, no income effect for the year -2 2 Addition by acquisition 1 0 Adjustment of previous year -10 0 Deferred tax at December 31 214 206 Deferred tax relates to: Intangible assets 40 32 Property, plant and equipment 130 130 Fixed asset investments 18 18 Current assets 28 33 Current liabilities -2 -7 Total 214 206 Note 17 Other current payables mDKK 2023 2022 VAT, excise duties, etc. 52 27 Other payables 195 163 Deposit, returnable packaging 22 22 Total other current payables 269 212 Deposit, returnable packaging is specified as follows: Balance at January 1 22 26 Adjustment for the year 0 -4 Balance at December 31 22 22 Comment The change in the deposit on returnable packaging for the year reflects the net exchange with customers of returnable packaging for the year less estimated wastage of returnable packaging in circulation. Note 18 Cash flow statement Adjustments for non-cash operating items: mDKK 2023 2022 Dividend received from subsidiaries and associates -554 -1,025 Financial income -130 -62 Financial expenses 234 71 Amortization and impairment of intangible assets 4 4 Depreciation of property, plant and equipment (see note 10, leasing part) 199 176 Tax on the profit for the year 131 168 Profit and loss from sale of property, plant and equipment 1 -10 Share-based payments and remuneration 14 0 Total -101 -678 Parent company annual report ROYAL UNIBREW Annual Report 2023 173 Other notes Note 19 Debts Changes to interest-bearing debts mDKK 12/31 2022 Payment Additions 12/31 2023 Interest-bearing long-term debts 3,153 -179 1,821 4,795 Interest-bearing short-term debts 2,052 -750 1,304 2,606 Total interest-bearing debt, mortgage and credit institutions 5,205 -929 3,125 7,401 Interest-bearing long-term leasing debt 63 -9 26 80 Interest-bearing short-term leasing debt 32 -32 30 30 Total interest-bearing leasing debt 95 -41 56 110 Total 5,300 -970 3,181 7,511 mDKK 12/31 2021 Payment Additions 12/31 2022 Interest-bearing long-term debts 2,167 -714 1,700 3,153 Interest-bearing short-term debts 1,715 -417 754 2,052 Total interest-bearing debt, mortgage and credit institutions 3,882 -1,131 2,454 5,205 Interest-bearing long-term leasing debt 69 -7 1 63 Interest-bearing short-term leasing debt 28 -28 32 32 Total interest-bearing leasing debt 97 -35 33 95 Total 3,979 -1,166 2,487 5,300 Note 20 Contingent liabilities, security and other liabilities mDKK 2023 2022 Guarantees Guarantees relating to subsidiaries 348 312 Total 348 312 Third-party guarantees 11 11 Security No security has been provided in respect of the Group's loan agreements with credit institutions. As regard security for loan agreements with mortgage credit institutes, reference is made to note 10. Contingent liabilities The outcome of pending legal actions is not expected to have any material impact on the financial position of the Parent Company or the Group. Parent company annual report ROYAL UNIBREW Annual Report 2023 174 Parent Note 21-22 Note 21 Related parties Related parties comprise the Board of Directors and the Executive Managment as well as subsidiaries and associates. See the sections on Board of Directors and Executive Management on page 60 and Group structure on page 176. No shareholder exercises control. Apart from contracts of employment, no agreements or transactions have been made between the Company and the Executive Board. Remuneration to the Board of Directors and the Executive Board is disclosed in note 3. The following transactions have been made with related parties: mDKK 2023 2022 Revenue Sales to subsidiaries 596 777 Sales to associates 18 19 Costs Purchases from subsidiaries 273 141 Financial income and expenses Dividends received from associates 12 27 Dividends received from subsidiaries 542 538 Gain on sale of investments in associates 0 460 Interest received from subsidiaries 129 54 Intercompany balances on December 31 Loans to subsidiaries 3,203 2,661 Receivables from subsidiaries 255 230 Financial debts subsidiaries 1,911 1,188 Capital contributed to subsidiaries Guarantees and securities Guarantee for subsidiaries 348 312 Note 22 Events after the reporting period No events have occurred in the period from the balance sheet date until the presentation of the finan- cial statements that materially affect the assessment of the Parent Company's financial statements. Parent company annual report → Other information Other information Group structure • Quarterly financial highlights and ratios (Group) Definitions of financial highlights and ratios • Disclaimer Other information ROYAL UNIBREW Annual Report 2023 175175 Group structure Segment Country Owner- ship Currency Capital Parent company Royal Unibrew A/S, Denmark DKK 100,400,000 NORTHERN EUROPE Subsidiaries Aktieselskabet Cerekem International Ltd. Denmark 100% DKK 1,000,000 The Curious Company A/S Denmark 100% DKK 550,000 Nohrlund ApS Denmark 100% DKK 103,030 Restaurationsselskabet Nørrebro Bryghus A/S Denmark 100% DKK 1,100,000 Rebæl ApS Denmark 63% DKK 67,227 Solera Sweden AB Sweden 100% SEK 150,000 Cuveco AB Sweden 100% SEK 100,000 Royal Unibrew Norge AS Norway 100% NOK 9,900,000 Cuveco AS Norway 100% NOK 100,000 Hansa Borg Bryggerier AS Norway 100% NOK 1,453,242 Nøgne Ø AS Norway 100% NOK 320,000 Olden Brevatn AS Norway 100% NOK 30,000 Solera Norge AS Norway 100% NOK 6,000,000 Engelstad Spirits AS Norway 100% NOK 30,000 Einar A. Engelstad AS Norway 100% NOK 100,000 Orbis Wines AS Norway 100% NOK 30,000 Eurowine AS Norway 100% NOK 101,000 Best Cellars AS Norway 100% NOK 1,000,000 Stenberg & Blom AS Norway 100% NOK 100,000 Winehouse Norway AS Norway 100% NOK 30,000 Segment Country Owner- ship Currency Capital Bottleneck Holding AS Norway 100% NOK 100,000 Top Cellars Wine Import AS Norway 100% NOK 30,000 Urban Beverages AS Norway 100% NOK 110,000 Multibev AS Norway 100% NOK 100,000 Sommelier AS Norway 100% NOK 200,000 Solera Uteliv AS Norway 100% NOK 100,000 Craft Drinks AS Norway 100% NOK 30,000 Vinkilden AS Norway 100% NOK 45,580 Bacchus Wines AS Norway 100% NOK 30,000 Vinestor AS Norway 100% NOK 2,222,000 Vinum AS Norway 100% NOK 900,000 Vinarius AS Norway 100% NOK 920,000 Plus Vini AS Norway 100% NOK 1,600,000 B & R Wine AS Norway 100% NOK 1,002,000 Servco AS Norway 100% NOK 100,000 Trulli Wines AS Norway 100% NOK 100,000 Vinestor Sweden AB Sweden 100% SEK 100,200 OMA Vin AS Norway 50% NOK 30,000 Divini AS Norway 100% NOK 1,500,000 Innvino AS Norway 100% NOK 200,000 UAB Kalnapilio-Tauro Grupe Lithuania 100% EUR 1,153,337 UAB Prie Nevėžio - Royal Unibrew Service UAB Lithuania 100% EUR 43,500 OY Hartwall Ab Finland 100% EUR 13,240,140 Lapin Kulta Oy Finland 100% EUR 16,819 OY Hartwall Ab: Stadin Börsta Oy Finland 100% EUR Activity Production, sales and distribution Sales and distribution Holding company Other Group structure Other information ROYAL UNIBREW Annual Report 2023 176 Segment Country Owner- ship Currency Capital SIA "Cido Grupa" Latvia 100% EUR 1,117,054 SIA Lacplesa Alus Latvia 100% EUR 102,844 SIA Bauskas Alus Latvia 100% EUR 932,064 Tanker Brewery Estonia 100% EUR 163,405 Associates Grønlandskonsortiet I/S Denmark 50% DKK Nuuk Imeq A/S Greenland 32% DKK 38,000,000 WESTERN EUROPE Subsidiaries Ceres S.p.A Italy 100% EUR 206,400 Birrificio San Giorgio S.r.l Italy 100% EUR 1,010,000 Terme di Crodo S.r.l. Italy 100% EUR 19,000,000 Etablissement Geyer-Fréres S.A France 100% EUR 159,687 Royal Unibrew Netherlands B.V. Netherlands 100% EUR 1 Vrumona B.V. Netherlands 100% EUR 3,829,080 Segment Country Owner- ship Currency Capital INTERNATIONAL Subsidiaries Ferell sp. z.o.o. Poland 100% PLN 120,200 Supermalt UK Ltd. UK 100% GBP 9,700,000 Vitamalt (West Africa) Ltd. UK 100% GBP 10,000 Royal Unibrew Nigeria Ltd. Nigeria 100% NGN 10,000,000 The Danish Brewery Group Inc. USA 100% USD 100,000 Bruce Ashley Group Inc. Canada 100% CAD 1,865,100 Amsterdam Brewery Co. Ltd. Canada 100% CAD 17,600,100 Tempt International China China 100% USD 842,934 Activity Production, sales and distribution Sales and distribution Holding company Other Other information ROYAL UNIBREW Annual Report 2023 177 Quarterly financial highlights and ratios (Group) Quarterly nancial highlights and ratios Q1 Q2 Q3 Q4 mDKK (unaudited) 2023 2022 2023 2022 2023 2022 2023 2022 Sales (million hectoliters) 2.8 2.7 3.9 3.8 3.5 3.8 3.9 3.1 Income statement Net revenue 2,552 2,162 3,595 3,211 3,336 3,296 3,444 2,818 EBITDA 302 317 674 623 651 612 581 445 EBITDA margin (%) 11.8 14.7 18.7 19.4 19.5 18.6 16.9 15.8 Earnings before interest and tax (EBIT) 174 209 536 511 507 489 421 307 EBIT margin (%) 6.8 9.7 14.9 15.9 15.2 14.8 12.2 10.9 Result after tax from investments in associates 0 -4 4 355 7 6 7 5 Financial income and expenses -51 -10 -60 -15 -53 -22 -86 -46 Profit before tax 123 195 480 851 461 474 342 265 Net profit for the period 98 154 388 772 363 381 246 184 Balance sheet Non-current assets 11,220 8,780 11,308 11,143 13,931 11,363 14,254 11,416 Total assets 14,523 11,335 14,957 14,651 17,519 14,479 17,778 14 ,474 Equity 5,182 3,442 4,825 4,574 5,537 4,919 5,748 5,158 Net interest-bearing debt 4,887 4,012 4,783 4,416 6,456 4,364 6,426 4,460 Net working capital -214 -566 -711 -1,080 -650 -2,181 -754 -770 Invested capital 10,900 8,064 10,410 9,815 13,016 10,149 13,342 10,451 Cash flows Operating activities -281 -283 1,133 845 381 479 544 94 Net cash used for investing activities -123 -76 -184 -176 -171 -175 -156 -131 Free cash flow -404 -359 949 669 210 304 388 -37 Financial ratios (%) Free cash flow as a percentage of net revenue -16 -17 26 21 6 9 11 -1 Cash conversion -412 -233 245 87 58 80 158 -20 Net interest-bearing debt/EBITDA 2.5 2.0 2.4 2.2 3.1 2.2 2.9 2.2 Equity ratio 36 30 32 31 32 34 32 36 Ratios comprised by the "Recommendations and Financial Ratios" issued by the Chartered Financial Analyst Society Denmark's Committee for Accounting standards have been calculated according to the recommendations. Definitions of financial highlights and ratios are provided on page 179. This section forms part of our Management Report. * running 12-months. Other information ROYAL UNIBREW Annual Report 2023 178 Definitions of financial highlights and ratios Denitions of nancial highlights and ratios EBITDA Earnings before interest, tax, depreciation, amortization and impair- ment losses as well as profit from sale of property, plant and equip- ment and amortization of intangible assets. EBITDA margin EBITDA as a % of net revenue. EBIT Earnings before interest and tax. EBIT margin EBIT as a percentage of net revenue. Net interest-bearing debt Mortgage debt and debt to credit institutions less cash at bank and in hand, interest-bearing current investments and receivables. Net working capital Inventories + receivables - current liabilities except for corporation tax receivable/payable as well as mortgage debt and debt to credit institutions. Invested capital Equity + minority interests + provisions + deferred tax + net inter- est-bearing debt - financial assets. Investing activities, cash flow Dividend received from associates, purchase net of sale of property, plant and equipment less acquisitions and net proceed from intangible assets and fixed assets investments. Investing activities, free cash flow Dividend received from associates, purchase net of sale of property, plant and equipment less net cash used in investing activities excluding acquisitions and net proceed from intangible assets and fixed assets investments. Free cash flow Cash flow from operating activities less investing activities. Earnings per share Parent Company shareholders' share of profit for the year/average number of shares in circulation. Net cash used in investing activities The sum of dividend received from associates, sale and purchase of property, plant and equipments. Diluted earnings per share Parent Company shareholders' share of profit for the year/average number of shares in circulation including restricted shares "in-the- money". Free cash flow per share Free cash flow/average number of shares in circulation. Dividend per share Proposed dividend per share. Return on invested capital including goodwill (ROIC) EBIT net of tax as a percentage of average invested capital. Return on invested capital excluding goodwill (ROIC) EBIT net of tax as a percentage of average invested capital excluding goodwill. Free cash flow as a percentage of net revenue Free cash flow as a percentage of net revenue. Capex as a percentage of net revenue Purchase net of sale of property, plant and equipment plus repay- ment on lease facilities as a percentage of net revenue. Cash conversion Free cash flow as a percentage of net profit for the year. Net interest-bearing debt/ EBITDA before special items The ratio of net interest-bearing debt at year end to EBITDA. Equity ratio Equity at year end as a percentage of total assets. Return on equity (ROE) Consolidated profit after tax as a percentage of average equity. Dividend payout ratio (DPR) Dividend calculated for the full share capital as a percentage of the Parent Company shareholders' share of net profit for the year. Organic growth Growth adjusted for acquisitions and divestments and measured in local currencies. This section forms part of our Management Report Other information ROYAL UNIBREW Annual Report 2023 179 Disclaimer Disclaimer This annual report contains forward-looking statements, including statements about the Group’s sales, revenue, earnings, spending, margins, cash flows, inventories, products, actions, plans, strate- gies, objectives and guidance with respect to the Group’s future operating results. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words or phrases like believe, anticipate, expect, estimate, intend, plan, project, will be, will continue, likely to result, could, may, might, or any variations of such words or other words with similar mean- ings. Any such statements involve known and unknown risks, esti- mates, assumptions and uncertainties that could cause the Group’s actual results, performance or industry results to differ materially from the results expressed or implied in such forward-looking statements. Royal Unibrew assumes no obligation to update or adjust any such forward-looking statements (except for as required under the disclosure requirements for listed companies) to reflect actual results, changes in assumptions or changes in other factors affecting such forward-looking statements. Some important risk factors that may have direct bearing on the Group’s actual results include but are not limited to: economic and political uncertainty (including interest rates and exchange rates), financial and regulatory developments, development in the demand for the Group’s products, introduction of and demand for new products, changes in the competitive environment and the industry in which the Group operates, changes in consumer preferences, increasing industry consolidation, the availability and pricing of raw materials and packaging materials, cost of energy, production- and distribution-related issues, information technology failures, breach or unexpected termination of contracts, price reductions resulting from market-driven price reductions, determination of fair value in the opening balance sheet of acquired entities, litigation, pandemic, environmental issues and other unforeseen factors. New risk factors may emerge in the future, which the Group cannot predict. Furthermore, the Group cannot assess the impact of each factor on the Group’s business or the extent to which any individual risk factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Accordingly, forward-looking statements should not be relied on as prediction of actual results. Certain figures in this document may be subject to rounding differences. Other information ROYAL UNIBREW Annual Report 2023 180 Design and production: Noted Royal Unibrew A/S Faxe Alle 1 DK-4640 Faxe Tel +45 56 77 15 00 CVR No.: 41 95 67 12 Financial year: January 1 – December 31 Registered municipality: Faxe Homepage: www.royalunibrew.com E-mail: contact@royalunibrew.com Annual reportAuditor's report on audited financial statementsParsePort XBRL Converter2023-01-012023-12-312022-01-012022-12-31529900D69KFL8IAP8Q63Reporting class DOpinionBasis for 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