Thank you very much. Good afternoon to all, and welcome to our call.

Thanks for joining us. I hope you've all been well in these past few months.

Clearly, this has been an interesting year. I think it's probably been the most intense and challenging for this generation of managers.

So before jumping into the numbers, I'd like to focus at the beginning on more qualitative measures.

Thank you Bob. If you follow me to Page 32, we have the analysis of the EBIT by region, starting from the biggest region the Americas.

Net sales came in at €733.9 million and EBIT at €139.7 million. On a reported basis, including organic change perimeter and FX, the top line declined by 5.8% in value and EBIT by 18.5%.

Now focusing on the organic performance. EBIT adjusted organically declined in value by 21.6% with 4.2% dilution.

But if we stripped out the effect of the US destocking the decline in EBIT adjusted in value would account for 10.5% and the margin dilution for 250 basis points. At gross profit level, we had a decline in value of 9.3%, which was stronger than the top line leading to 450 basis points in margin dilution primarily driven by negative brand and channel mix in the largest market of Americas, the US market driven by basically three factors.

The first one was the outperformance of the Espolòn brand, with -- whose margin continued to be dampened by elevated agave purchase price. The second effect was a severe destocking in the high-margin brands, particularly SKYY Vodka and the European imports Campari, Aperol and Grand Marnier, as well as a third effect a negative impact from the US tariffs.

Looking at the A&P, the A&P decreased in value by 8.3% more than the top line leading to 130 basis point margin accretion, driven by a combined effect of cost mitigation initiatives some shifts of investments from offline to the less expensive online, as well as a different phasing for key global priorities namely SKYY Vodka ahead of the complete brand relaunch, which will occur in 2021. The SG&A had a slight increase in value by 3.5%, but given the top line decline drove a margin dilution of 100 basis points and that was totally attributable to lower absorption of fixed structure costs.

Now if we move on to Page 33 and the SEMEA region, net sales came in at €463.6 million, EBIT €32.5 million, on a reported basis the decline accounted for 7% in net sales and 63.2% in EBITDA. Organically EBIT adjusted show a strong organic decline 58.8% in value.

And to the right-hand side, you can see 870 basis point margin dilution. And was clearly heavily impacted the region by COVID within the high-margin aperitif business in the biggest market Italy.

Gross profit level at the decline in value organically accounted for 20.1%, stronger than top line leading to 130 basis point margin dilution, due as I said to unfavorable sales mix driven by the on-premise closure hitting in particular the high-margin aperitif business in Italy combined with a lower absorption of fixed production costs. In the region, the A&P in value was broadly stable, up 0.4% driving further 420 basis point margin dilution and reflecting the sustained marketing investments behind key brands.

Key initiatives were the Venice Film Festival which was sponsored by Aperol and the Averna new campaign launch, which occurred at the back end of last year and drove uplift in A&P spend in the second part of the year. SG&A decreased in value by 10.1%, but remains significantly dilutive 330 basis points, as a consequence of lower absorption of fee structure cost given the strong top line decline.

That effect was partly mitigated by certain cost containment actions, which were basically aiming at reducing as much as the group variable costing in particularly travel expensing -- expenses, the company hiring freeze increase and also little bonuses had a positive impact on the SG&A trend. With regards to page 34, Northern and Central and Eastern Europe, on a reported basis net sales came in at €403.7 million.

EBIT €133.2 million, reported change an increase in top line of 2.5% and increase in bottom-line of 0.3%. Organically, EBIT adjusted grew by, 3.2% in value lower than sales leading steel to some margin dilution, accounting for 110 basis points.

Gross profit level in value the increase accounted for, 5.4% generating 80 basis points dilution, which was driven by unfavorable geographic sales mix particularly, worthwhile calling out the outperformance of the Russian market, which is very dilutive to the regional and to the group margin performance. A&P, increased by 10% in value leading to 40 basis points dilution with sustained marketing investments behind key brands.

And those investments accelerated in the second half of the year as it depend in the Italian -- in the SEMEA region. The SG&A increased 6.1% in value, slightly lower than net sales-generating 10 basis points accretion.

Moving on to the fourth and last region APAC, page 35, net sales came in at €130.8 million, EBIT €16.5 million. On a reported basis, top line, increased by, 1.8% and bottom-line by 5.8%.

Organically, EBITDA adjusted grew by 9.1%, faster than the top line generating 50 basis points accretion at EBIT level. Gross profit in value was up 5.1%, ahead of sales driving 20 basis points accretion and that was driven by favorable sales mix, with improved profitability on local priorities in Australia, namely Wild Turkey ready-to-drink.

A&P was slightly up in value, up 1.5% generating 40 basis point margin accretions. And SG&A increasing value in APAC by 5.1% driving a dilution of 10 basis point that is attributable to one end the new route-to-market initiatives, and on the other hand to the transfer of the regional offices from Sydney to Singapore.

If you move on to page 37, we have the analysis of the EBIT adjusted. Here we have a very interesting waterfall chart, where we basically go to the root causes of the EBIT decline from 2019, €408 million to the 2020 EBIT of €321.9 million.

The key driving factors, as you can see of the decline were first and foremost agave, which had a negative impact in value of €6 million. And then, clearly the US tariffs, which accounted for a negative €19 million.

That negative effect was partly offset by the, price increase that we took in the US market, which generated an EBIT uplift of €12 million. So the net effect of the tariffs was €7 million negative.

And then, destocking which in the US accounted for €30 million, top line and €19 million in bottom-line that you see here. And then, we have the proper gross profit decline, excluding those external factors which accounted for €63.4 million, driving a net 130 basis point, EBIT margin decline.

We then had some tailwinds in A&P and SG&A for €6.9 million and €5.4 million respectively. And then, in aggregate a negative effect of FX and perimeter accounting for €3.1 million in value and 20 basis points in margins.

If you move on to page 38, EBIT adjusted. Gross profit on a reported basis was down 8.5% in value, with 300 basis point dilution.

Organically, the gross profit decline accounted for 8.5% in value, leading to 280 basis point margin dilution. As we saw, with the effect that we've already mentioned, the first and foremost an unfavorable sales mix driven by the over performance of lower-margin Espolòn.

The underperformance of the high-margin aperitif portfolio in core Italian market destocking in the, US market. And again, of course the impact of tariffs as well as the effects of the lower absorption of fixed production costs.

A&P on a reported basis was down 3.1% in value 10 basis point dilution. Organically, the decline in A&P accounted for 2.2% in value with a 30 basis point dilution.

The SG&A on a reported basis were up, basically 0.2% in value were flat with 90 basis point dilution. Organically, we had a decline in value of the SG&A line by 1.4%, with 60 basis point dilution, as a consequence of lower absorption of fixed structure costs, and notwithstanding the cost containment measures that have been taken.

The EBIT adjusted on a reported basis was down, 21.1% in value with a 400 basis point dilution. Organically, the EBITDA adjusted was down 20.4% in value with 380 basis point margin dilution, excluding the effect of the US destocking, it clearly is not a recurring effect.

The EBIT adjusted on an organic basis would have declined by 15.7% in value, with a 300 basis point margin dilution. Now if we move on to page 39, we have the analysis of operating adjustments, previously called, one-offs.

They totaled €90.1 million of which, a €35.4 million attributable to brand impairment losses non-cash, €16 million on Bulldog, €15.5 million on GlenGrant and €3.9 million on Rhum Agricole, as a consequence of the negative impact of COVID-19 on those brand performance. And clearly, those brands are particularly skewed towards GTR and on trade channels, which were impacted the most.

We then had €15.9 million in transaction fees connected to the transfer of the registered office to the Netherlands €9.9 million, as well as transaction fees linked to the new route-to-market initiatives, as well as M&A initiatives, totaling €6 million. We then have €21.4 million of restructuring costs.

The biggest component is the restructuring of the Jamaican sugar business, which accounted for €13.5 million. And then we had a multitude of other smaller reorganization activities, both at central level, as well as in the market, accounting in total for €7.9 million.

In closing we have €17.4 million of other costs related to donations made by the group to fight pandemic, some special projects, few legal disputes and also cost connected to the IT restoring operations following the malware attack in November the last -- the IT restoring accounted for just €2 million. Page 40, profit before tax.

Net financial charges came in at €38.9 million, €5.9 million higher than in 2019, due to a negative variance from FX. We incurred in €4.1 million losses this year, whilst we benefited from €2.8 million gain in 2019.

If we exclude the negative variance on FX, the net financial charges showed a saving of €1 million despite the higher average net debt in 2020 versus 2019. And that was due to a lower average cost of net debt.

The average cost of debt is coming down from 4.1% to a 3.5%. This was due -- the decrease was due to the reduced average coupon on existing gross debt, thanks to the liability management transactions which were implemented last year, as well as thanks to the bond issue, €500 million bond issue that was completed in October last year, which led to a decrease in the average cost of nominal coupon on bonds and long-term loans from 2.15% to 1.4%.

The reduction of earn out liabilities draw a positive effect of €18.1 million. The biggest chunk of it is the write-off of the earn out on Bulldog acquisition accounting for €19.4 million.

We then have some small losses on JVs, €2.8 million in Japan, which was negatively impacted by the lower absorption of fixed costs in a context of low sales level. Bottom line, profit before tax was down -- was down by 40.9% achieving €209.6 million, but the PBT adjusted came in at €278.9 million, down 24.7%.

Group net profit adjusted. The taxation totaled €22.7 million on a reported basis.

But if we stripped out the positive tax adjustment, which totaled €55.1 million, the recurring income taxes equal to €77.9 million. Worthwhile noting that the positive tax adjustments that have mentioned, the €55.1 million, include a one-off benefit of €29.9 million relating to the remeasurement of deferred tax liabilities as a result of the step-up of the fiscal variance of certain brands and goodwill to their corresponding book values.

This is a very interesting new law in Italy, which were in another exploiting which will drive some significant positive cash effect. It is a positive €120 million cash effect in 18 years, which would reduce the recurring cash tax rate from 23.2% that you see here in 2020 to 22.2% in coming years, with deferred taxes on goodwill and trademark that you see here reported at €13 million.

They will grow to the level of €19 million in coming years. So after the expiry of patent box, as you know, drove about €100 million of cash savings.

We have this new law, which will drive €120 million in the coming 18 years. Page 33.

We have the cash flow, the free cash flow analysis. As always, cash is king.

Free cash flow came in at €168.6 million, down €89.8 million. But if you look at what is important, the recurring free cash flow, it came in at €261.7 million, very much in line with 2019 at €167.3 million.

So against a lot, the free cash flow generation on a recurrent basis was quite strong and unchanged. Looking at the -- and I will comment that the recurring more than anything else.

The key drivers of the free cash flow -- recurring free cash flow performance. We have a decrease in the EBITDA adjusted that accounted for, as you can see to the right-hand side €79.9 million, from 2019 EBITDA adjusted of €479.8 million to 2020 EBITDA adjusted of €399.9 million.

Clearly, the total EBITDA negatively impacted by the already mentioned €90 million operating adjustments. Then with regards to taxes the -- on a recurring basis, taxes paid came in at €84.8 million.

So, broadly unchanged versus last year, €81.1 million. With regards to changing working capital, here we find the offset to the EBITDA reduction where, in 2019, we had an increase in operating working capital that is a negative in the cash flow, for €29.6 million.

And this year we had an operating working capital compression of €43.4 million, so we have a positive variance on the change in working capital of €73 million. That basically leaves the cash flow from operating activities in 2020 to €351.5 million versus €356.3 million of 2019.

So even there at the level of cash flow from operating activities, we have a very stable results. With regards to financial expenses €25.3 million recurring in 2020 versus €27.9 million so a tiny reduction.

With regards to CapEx in recurring you see the maintenance CapEx that remained almost unchanged 64.4% versus 61%. And this is why we achieved a free cash flow on a recurring basis of €261.7 million.

The current free cash flow and EBITDA adjusted clearly jumps up from 55.7% in 2019 to 65.4% in 2020. If we move on to page 44.

The analysis of working capital. Overall as we saw before operating working capital decreased in value by €64 million.

But if you look at the organic performance, the decline accounted for €43.4 million that we saw before in the cash flow. The increase in inventory accounted for €47.7 million with aging with a step-up of €20.1 million mostly linked to Glen Grant and Bisquit Cognac maturing inventory uplift.

And then the other inventory increased as a consequence of the weaker demand in the last quarter of 2020. Flip side of the coin, the business slowdown in Q4 drove a decrease in receivable of €42 million.

We then have an increase in payable of €49 million that is due to phasing. Operating working capital as a percentage of sales came in at 34.8%, clearly down from 2019 by 200 basis points.

Going forward, we're expecting that the level of 2019 that was 37.7% operating working capital will not be the level for 2021, but we believe more 1% reduction at 36.7% is what we are currently envisaging for next year on working capital as a percentage of sales. If you follow me to page 45, we have the analysis of CapEx.

They totaled €79.8 million in 2020 of which €64.6 million of maintenance CapEx, basically in line with the guidance that you see to the left-hand side, while we had €15.1 million extraordinary CapEx versus guidance of €30 million due to shift of certain projects into 2021. The new guidance for 2021 on CapEx is an overall amount of €100 million with maintenance CapEx broadly unchanged at €60 million and an uplift in extraordinary CapEx at €40 million due on one hand to the carryforward effect of CapEx from 2020.

On top of that we had new investments on extra projects including brand houses and a few other projects. If you move on to page 46.

We have the analysis of net debt. Net indebtedness came in at €1,103.8 million up €326.4 million over 2019.

Positive cash flow -- free cash flow €261 million on a recurring basis, 168.6% on a reported basis. We call out substantial payment commitment for an overall amount of €459.1 million of which €125 million attributable to acquisition.

We then have €62.9 million of dividends and €271.2 million purchase of own shares. This is a portion of the overall share buyback program that you may remember accounts for €350 million.

So we still have €80 million to buy in 2021. Worthwhile highlighting, the fact that the amount of €271.2 million does include the investments on the share buyback of withdrawn shares in the context of the re-domiciliation that accounted for €64.7 million.

And I would like to call out footnote number four, where we're saying that considering the spot price per share at the back end of this year i.e. 9.34% we have a theoretical gain on the share buyback program at year end of €45.3 million tier that is recognized in equity and not in the P&L as it should be.

Page 47, the debt maturity profile is sound and strong. We have long-term euro bonds and term loan that account for the whole amount of the debt €1,150 million with a very compelling nominal coupon 1.42% and a very good interest rate hedging with fixed interest rate accounting for 78% of the overall gross debt.

I think Bob this is it on numbers. I would hand back to you.

Yes. Thanks, Paolo.

I know most of their listeners are dying to ask their questions. I'd like to take some time to reemphasize some key corporate initiatives, which will be continuing this year and then close up with the outlook.

As we said at the beginning of this presentation, digital transformation has really become fundamental for us. We've made a big, big step forward next year and we're going to continue driving that at speed this year.

So it's not going to be impacting only marketing and sales, but the whole company throughout all of the functions. We're going to drive this forward.

And clearly we're also going to strengthen our security as well in a significant manner. Moving on to business development.

We are focused -- continuing to focus on Asia. A quick update on the Aperol micro battles.

The micro battles unfortunately started half a year later due to the lockdown of China in the first half of last year. But they've given us quite a bit of satisfaction.

We've had very good consumer and trade feedback from western style restaurants and bars, which could really end up being a meaningful volume on itself. And currently, we're also in field with micro battles in Asian Socials karaoke bars et cetera and we're learning a lot on how best to position the brand and the drink in that channel.

So on the basis of that we're going to have a scale-up of those tests in the first half of this year and then really go out into the market in the second half of next year. Encouraged by these very nice results in the Chinese consumer and trade appeal for the brand, we've also decided to make a big change in our route to market.

We've had a fantastic relationship with our previous distributor, who are a class-act company, but we felt we needed much more feet on the ground and expertise in the on-premise to satisfy our ambition on Aperol and the rest of the portfolio. So as of March 1, the distribution and the trade marketing of our brands will move on to a company called Telford, which has been very successful with a few western brands in recent years in the on-premise.

So that gets us quite excited. With regards to South Korea, we've anticipated the controlling interest in the joint venture.

The team is a great team that will remain with us. But we've extended our controlling interest of 51%, as that geography starts becoming more important for us.

Last and but not least, we'll be also moving part of our portfolio to a new distribution setup in New Zealand. In terms of major initiatives, we're really formalizing and becoming much more communicative with regards to our sustainability road map.

Historically, Campari has always done the right thing from a safety and ability perspective. But probably, we weren't very good at communicating what we do, and certainly, not doing it in an organized fashion.

So we're starting to do that both internally and externally. And the blocks are – which we identified are quite clear.

It starts with people, which are our most important assets. You'll see, we run regular internal surveys with the Great Place to Work.

And you can see how we've been really improving our trust index over the years, as well as the overall rating. And we've been gaining a Great Place to Work accolades in many, many markets.

And this fuels obviously a vertuous cycle as we keep on improving things going forward. Our commitment with a big focus and rollout this year is on our inclusion equity and diversity program, which will make quite a difference not that much in from an operational standpoint, but I think it will really clarify that the true culture within the company from a performance standpoint.

We're driving forward, our learning project by the learning distillery. This will become almost in-house university for all Camparistas.

And we're also rolling out an employee a ownership plan, which will impact all Camparistas irrespective of the level and where they work. So clearly, beyond those, which were already heavily exposed to the – to our LTI programs.

Now, everybody else will be aligned and that will reinforce even more I think our performance and meritocracy based culture. In terms of responsible practices, this is probably an area where we've communicated on a regular basis in the past.

We will continue doing that and take it to the next level. With regards to the environment, we're formally committing to significant reductions in greenhouses water and waste management between now and 2025, we aim to reduce greenhouse gas emissions by 20%.

Water use by 25% and move on to a zero waste landfill position by the end of 2025. And on community, this again is something which has been in the DNA of the company since its founding in 1860.

We will continue our culture and education program as well as our charitable activities, which are significant. So this brings us to our outlook.

I think it can be summed up very simply by saying that, looking forward, we have cautious confidence in the short-term and are quite optimistic about the buoyant long-term business momentum fueled by very healthy brands and strong consumer pool. 2020 performance showed, we believe very strong business resilience and brand momentum and key off-premise brand market combinations, clearly underlining consumers' love for our brands and our cocktails.

And these trends are really sustained and continuing into this year. Looking into this year and beyond, on an organic basis, as I said earlier our brands are quite healthy and have a strong consumer pull.

So we feel good about that. I can comment in details, it is normal that we remain cautious at least for the first half of the year due to the uncertainty related to the ongoing restrictions, as well as the vaccine rollout, particularly in Europe and how that will be affecting the on-premise channel across our geographies as well as global travel retail.

We have no doubts that home consumption remain very sustained and we will view this by continuous marketing investments as well as initiatives our advertainment efforts and digital activities are really paying off. With regards to destocking activities, we're happy to say that we've completed them in the US.

So our shipments are expected to progressively align with consumption trends. And we will continue to leverage, if not take to the next level, all digital and online investments, which are again being very, very rewarding for us.

And we would strengthen our online channel approach to sales. Net in net, we're adapting very well and very quickly to the new normal, particularly e-commerce and will bear the benefits of that in the years to come.

Lastly, we remain quite confident about the long-term consumption trends and growth opportunities, as well as the strength and resilience of our brands, especially in an environment where we believe that come the reality will be – will make a big return once the large majority of populations have been vaccine. The one call out though is that with regards to perimeter and ForEx, we expect to be negatively impacted this year.

So the group's EBIT adjusted in 2021 will be impacted by a €9 million hit on premature, mostly due to the termination of agency brands, particularly one large agency in Germany, which will also enable us to concentrate much, much more on our own portfolio and brands. And lastly, a 13 million hit in ForEx monthly arising from the weak US dollar, as well as some emerging market currencies.

So this is it on our side. I see there are a lot of questions, so let's open the session to your questions.

Thank you. Good afternoon.

Thanks, Bob. Thanks, Paolo.

I've got three questions please. Bob could I just start and just pick up on your very final comments there around the perimeter impacts in 2021.

Are you able to share a little bit more detail there? What's the top line impact perhaps of those changes as well as that €9 million EBIT impact?

And are there other agency brands that you perhaps would be looking to exit relationships with in future perhaps on 2021? That's the first question.

And secondly, you obviously talked about the strong growth you're seeing in the e-commerce sort of business. I wonder if you could just comment a little bit about the margin structure of your different businesses in different markets that you're seeing there?

And how does it really compare to the margins you enjoy in the more traditional trade channels? And then thirdly, maybe one for Paolo around just the moving parts of the margin in 2021.

I know a lot of it will be dependent on the speed of recovery in the top line. But if we think about some of the things that you can control, obviously the absence of USD stock this year, how do we think about the right level of A&P spend?

And any comments perhaps around agave and raw material cost there? So lots of questions.

Thank you, Simon. It's always good to have them.

Let me start with the first two. The perimeter impact from the discontinuation of the agency brands is €33 million at the top line €9 million from the bottom line.

And most of it is due to a very large agency, which we've had for the past five, six years in Germany. It has been a very good partnership, but both sides decided it will be better to part ways, because we want to really focused on the great opportunities we have across our extended portfolio.

And I think the other party wanted more focus. So net in net, I think this is going to really improve both our relationship with customers and the dedication we give to our complete portfolio, not just the aperitif in Germany.

Now with regarding to e-commerce, it's become very -- quite important for us and we'll be driving that forward nicely going forward. Frankly, on marginality and trading terms standpoint, there isn't much of a difference versus our existing off-premise customers.

The only difference though I would say is that the mix is actually richer because we tend to sell more premium brands there. So because of that it tends to be slightly more profitable than our regular off-premise.

Yes. With regards to the margin trend in 2021, well clearly Simon as you correctly pointed out there is a lot of volatility and many moving parts around.

So it's very difficult to give at this stage a clear guidance. But if we go back for a second on slide 37, where we have the waterfall showing the big effect.

So the first one is agave. Agave was a negative €6 million last year.

For 2021, we're not expecting any impact from agave. So we're at the moment on wait and see, but our base case for the time being is neutral agave impact, which means that if there will be any increase in agave, we will offset it via price increase.

And potentially, there might be some opportunities, but it's still neutral at this stage. With regards to the second building block of the waterfall the US tariffs, it's a big, big opportunity.

It's a €19 million opportunity, if the US administration decided to discontinue tariff. Clearly, the price increase that accounted for in value €12 million is testing to stay.

So this is an opportunity of €19 million, if and when. Sorry going back to agave, we're expecting to be neutral, but we always remind investors that the overall effect, negative effect of agave at year-end, if we look at agave price where it should be in a normal market condition, the overall opportunity is €30 million.

So it's a second big bucket of opportunity. With regards to destocking, clearly we said market has been fully stopped.

We're not expecting any restock at all. So no positive.

If anything marginally positive, but for sure no negative effects. With regards to gross margin, then organically we believe there are very good chances of achieving gross margin expansion next year.

So we will start recovering the loss of gross margin that we saw last year. And with regards to A&P and SG&A, we're not expecting any meaningful impact.

So broadly in line with top line. So that's the current stance will be clearly more precise as the time goes by, presumably H1 we'll be in a position of once we have at least Q2 under our belt to give a guidance for the full year.

So that's really helpful. And can I just check Paolo that you're still expecting about a €6 million benefit in terms of the restructuring of the Jamaican sugar business this year?

Yes. Thank you for reminding me that.

Yeah, it's confirmed.

Perfect. That's great guys.

Thank you.

Good afternoon. I guess the first question I'd like to ask is on A&P, where you held the ratio broadly flat, despite the on-trade clearly being very challenged.

I guess that means, you've pivoted your investment towards off-trade pretty quickly, when lots of other alcohol players have ended up reducing A&P due to the on-trade weakness. I'd love it if you could comment on how you're able to pivot that quickly?

And then secondly on the SKYY brand relaunch, I guess you show in the slide how you've changed the bottle. I'd love to know broadly what are you doing differently?

How will the relaunch affect your pricing strategy if at all? And what would you see as a successful outcome of the relaunch of that brand?

Thank you.

Thanks for your questions. Yeah.

I mean effectively we've been very, very agile last year. I mean, when the first lockdown occurred, we pivoted within two weeks across the globe, across all of our brands.

And we've put a big focus on the off trade, on e-commerce and move from off-line marketing to digital marketing. This was centrally driven and we very quickly develop new assets for all of the markets.

And we've really benefited from that. At 17.5%, we've moved a lot of money from off-line to online into entertainment efforts into storytelling efforts in the e-commerce into really creating almost on-premise opportunities in the consumer's home, it goes through all sorts of activities as well as events.

So the additional benefit though is that, whereas we've maintained spending overall, the ROI we've got under spending has been far superior. I mean the efficiency the targeting and you see that in the acceleration and the big leap which we've had in off-premise growth and taking market share versus competition.

Moving on to SKYY, I mean SKYY is a complete relaunch. I mean you have a fine-tuned liquid you have a completely new positioning packaging.

We're not going to touch pricing. I mean pricing is not really the area to go in U.S.

vodka. Potentially, we'll be able to reduce I think promotionality.

We have to see how it goes. And we would look at improving size mix as well and sell more of the smaller sizes which are more profitable.

I mean success for us means starting to take market share in U.S. vodka.

The tests were very, very positive across all the blocks. But obviously the proof will be in the pudding.

Understood. Thank you, Bob.

Thanks very much. Two questions for me.

Firstly on the slides you focused a lot about how you've gained share and improved your performance in the off trade. Given Campari has traditionally been quite an on trade business how much of that would you expect to maintain as we start to return to the on trade hopefully with the benefit of the vaccine, or do you see Campari in the future being more skewed towards the off-trade than it was pre-pandemic?

And then secondly it's great to see that you're going to be disclosing more of your environmental credentials. Can I just ask a small one about your water usage?

A lot of your competitors have got targets around where they use and return water in water-stressed areas. I was wondering as well as the targets you have around water use, do you have any internal targets around returning water in water-stressed areas?

Yes. Let me take the second one first.

I mean we have really the benefit of not having any plants in any water-stressed area. So that's why we haven't put any targets against that.

I mean we're -- all of our plants in distilleries in areas where there's plenty of water. But obviously also there clearly we're releasing clean waters back into the system.

So we feel very good about that. Now with regards to the offers on debate, we estimate that throughout 2020 we had a 10% shift on a group level of our sales from the on-premise to the off-premise.

We would expect that at least in the next two to three years consumers will continue to consume quite a bit of spirits at home. I mean having gone through overcoming, let's say their hang ups with regards to producing high-quality cocktails at home, we think that that trend is here to stay at least for the short to mid-term and we would expect to continue taking market share and growing over proportionately there.

Because as we said the off-premise which is a combination of bricks-and-mortar as well as e-commerce has really revealed itself as a very interesting channel to do brand building. And it's been very rewarding for us and we'll continue doing that.

So we would expect that momentum to continue. And we look forward to when we'll be able to continue to start again to spoil cocktail lovers in the on-premise because we see that every time that on-premise opens irrespective of the country we've got a very, very big return to the reality which is on top of what is happening in the off premise.

So it's a good position to be in.

That’s great. Thank you very much.

Hi Bob, Paolo, three brand questions please. The first on Aperol you talked about unparalleled affection wisth incredibly strong off-trade growth in certain markets Germany, U.S., Russian and U.K.?

And you also talked about creating this on-premise opportunity in consumers' homes. Do you have any sense as to whether the greatest from increased frequency of existing consumers, or have you been able to recruit new consumers into the brand franchise?

The second one is on Espolòn as a brand. It's now 5% of net sales just below Grand Marnier.

I think you talked about some better performance in Canada, Russia, Australia at what stage are you ready to make this a regional priority to a global priority, or another way do you think you can leverage your distribution platform to grow tequila meaningfully outside of the U.S. into the rest of the world?

And then the third is on Grand Marnier. As you've seen Cognac had incredibly strong growth in the U.S.

in 2020. I appreciate that it's been quite trickly getting momentum given the destock in the U.S.

as well as the brand is more exposed to the on-trade. But to what extent do you think you can get consumers into the brand as a sort of orange flavored cognac?

Thanks Ed. With regards to Aperol, I'm pleased to say that we've been able to actually attract new consumers into the franchise.

I mean the data is showing that because what we've done is both in the regular off-premise as well as in the on premise we've offered them ready kits. So you would have your Aperol with the prosecco, as well as glasses.

It made it as easy as possible for them and very entertaining by our entertainment efforts and they have paid off. We've received many compliments particularly in the e-commerce arena from our customers on that.

And we've done the same to be honest also on the Campari franchise obviously at another rate. So Aperol is responding very well to our digital efforts and our efforts to recreate as much as possible an experience for consumers back at home.

With regards to Espolòn, I think we're very, very close to upgrading the brand into another cluster. It's a great brand.

It's resonating across all consumer segments in whichever country we go into at this moment in time we're trying to reserve as much volume possible for the U.S. which is our number 1 priority.

That might slow down some international rollouts. But there is no question that this is going to become quite a meaningful brand for us.

And that we believe there's an opportunity for tequila outside of the U.S. which doesn't necessarily have to grow through the Margarita.

Actually what we're really pushing internationally is the Paloma, which is Espolòn Blanco with fruit juice, and that's resonating very, very strongly. With regards to Grand Marnier, actually if you consider the Grand Marnier in the US was overly skewed to the on-premise the fact that we were able to grow by 38% in the off-premise shows that we've been attracting new consumers into the franchise.

And that is also validated by the data we get. So, new consumers stuck at home, wanting to have margaritas and we've done a big margarita push.

And again, here we were able to create virtual kits around our brand and offering ready-made solutions to the consumers, have really brought younger consumers into the franchise. So we look very forward to that.

At the same time, what's going to be very important is also the premiumization we're growing through. And that is a difference, if you like type of consumption of the brand, it's much more closer to cognac consumption and that seems to be resonating also very nicely.

Great. Thanks very much.

Thank you.

Hi, Bob. Hi, Paolo.

I have three questions please. The first one on Italy to understand a bit the situation there, Q4 was clearly impacted by the lockdowns.

So what is the situation with wholesaler stock levels in Italy? You referred I think to the fact that this year, there wasn't a normal pipeline filled there.

And I know it's very early days now, but the restrictions have been eased in Italy a few weeks ago. Have you seen a clear improvement there?

And what you think about Italy this year? I appreciate visibility is low.

Then more broadly on the on trade, if you sort of think of your main markets, now the -- I mean a lot of accounts have obviously been hit hard by the situation. What percentage of on trade do you think won't reopen unfortunately over -- in your main markets?

And my last question please is on China. If I could just get a little bit more detail on some of the things you were saying on your plans for China.

So based on what you've learned with your test and with the micro battles, will the positioning do you think the positioning of apparel there in terms of price in terms of where you serve it? Will it be different from other markets?

And also, could you give a sense of the breadth and the distribution reach that you'll be able to achieve with Telford in terms of cities or feed on the ground or something like that?

All right, Andrea, thank you. Now, with regards to Italy, I mean the situation in Italy is pretty simple.

It's a little bit of a shop and go situation. At the moment, the regions turn into yellow and the on-premise is allowed to open during daytime, there's a huge boom.

I mean we see -- we also own outlets, and we see people queuing up to get in there. So there's a very, very strong demand for conviviality and the ability to sit around a table and sip an Aperol Spritz or a Negroni or an Americano.

So, the pent-up demand is there. Currently we're in a positive phase.

Frankly, we really don't have any visibility as to what's going to happen in the next six months. As you know, in Continental Europe, we're behind the UK, with regards to the rollout of the vaccines.

So we'll have to wait and see when the opening of the markets become permanent. But if they do, we know that we're going to have a very nice boost.

Let's keep our fingers crossed. With regards to wholesalers and as well as the on-premise outlets, with this stop-and-go situation they've been very, very careful is to not build any stocks.

So, it really is a time touch-and-go situations. So we've come into very, very low stocks in the wholesale segment globally, but particularly also in Western Europe.

If the market is open let's see what happens. Certainly will have an impact on our supply chain, but we're ready for that.

I don't have any precise data on the percentage of on trade, which will not reopen or hasn't reopened, but I would estimate depending on the market, it's going to be anywhere between 10% and 25%. And this is also what I'm hearing from our key distributors as well as key wholesalers.

In terms of learning in China, I mean the good thing is that we found out that actually the global Aperol model works 80-20 in China. The drink doesn't have to be changed.

It is the Aperol Spritz with our proportion. In Western style restaurants and in bars, it is the signature serve in the wine glass and with training we see that the staff is able to deliver the right drink.

The pricing is slightly more premium versus beer than what we would have in other markets. If you look at just that opportunity, I mean somewhere in three to five years, we believe we can have a business as big as the ones we have in France.

And this is only in that limited channel. The big difference is going to be cracking the Chinese on-premise outlets, particularly the informal restaurants, so-called Asian Socials the karaoke places.

There it seems as if the ready-to-drink proposition is more meaningful works a lot easier. And we can deliver a much better drink.

So we're still going through that, but it shows us a potential in that area. It takes a lot more explanation to do to the end consumer.

But then again, with our new partner, which is about I would say close to 10 times as many feet on the ground as our previous partner in the on-premise and particularly, very targeted into both this -- the western part of the market as well as the modern Chinese, I think that will do us a lot of good. We've kicked off of the training already a month before.

So the ready in the starting blocks as of the month of March. And as I said, we'll use the first half of the year to scale up the tests we've done last year, and then roll out in key cities in a broader way in the second half of the year.

Thank you.

Thank you.

Hi, Bob and Paolo. I guess most of the questions have been answered.

But one question Bob coming back to the US reopening. The spirits category has been a big beneficiary of COVID in terms of the increased penetration at home.

Where are you seeing states like, let's say, Florida or Texas, which has started to reopen earlier than others, are you see people bringing those habits with them back to the on trade?

That's a very good question, Trevor. What we're saying is that currently this in-home consumption seems to be building momentum.

Also in states which are opening, because I think to a large extent climatically in quite a few states. I mean, if you take Texas it's probably not the best time to go outdoors.

And at the same time consumers have grown confidence. They've seen that there is -- they get more out of their dollar in in-home consumption.

And we're seeing that penetration grow. And with the arrival of e-commerce much more of an exploratory mode.

It is much easier to explore the virtual aisle, which is also richer in terms of experience because there's a lot of storytelling and entertainment happening there, which then gives them the incentive to be a little bit more courageous and try new things. So, we would expect that trend to continue for a while.

And I guess a follow-up combined with something you said earlier. It sounds as if you're definitely reexamining your model about how to build Aperol for the off-trade to have a much bigger role than that?

Yes, definitely. I mean, the Aperol model has been built on the on-premise.

We've been very, very successful on that. But now that we're seeing that we're also successful with the off-premise clearly this brings us to modify our approach in many markets.

Great. Thank you very much, Bob.

Yes.

Good afternoon, Bob. Good afternoon, Paolo.

Just two questions for me please. And then just one clarification.

Firstly, could you give us some update on the inventory IT systems due to the malware attack, the call back in autumn seem to be quite dramatic situation. So -- and now you have quite a small charge in the P&L from that.

But are you sort of rethinking our approach towards your digital infrastructure 2019 investments? I guess, I right with where you're talking about the gains in e-commerce?

Secondly, just could you clarify the impact on the tax rates. I appreciate the new recognition of goodwill, you said, it's going to have a lower impact in terms of the cash tax rates going forward.

But just in terms of the adjusted tax rate in the P&L, is that still going to be around sort of 27%, 28%? And then finally, I think, just going back to your point around Paloma occasion for the Espolòn brand.

Do you have any particular partners for that? Particularly thinking of some UK listed mixes company who've made a big push behind that great free so the on location.

So do you think you can push that yourself, or you would be looking to go partner with other sort of soft drink brands to help fast expansion?

I'll take that last question. I mean, with regards to the Paloma, we work with different partners in different markets, including the UK listed company.

So we're pretty agnostic there. We believe that the focus needs to be more on the tequila than on the type of soft drink you're using.

Yes. With regards to your first question, the impact on IT from the malware attack, all systems have been fully restored.

We're back to normality since the beginning of January. So, basically we went to suffer a little bit for a couple of months.

The costs are I would say contained a couple of million euros not more than that. With regards to future costs, we have a plan of further lifting our cybersecurity measures.

And the cost of that plan is as well as the investments that will be made to support the digital transformation are fully reflected in our CapEx guidance as well as your leading the OpEx, we do not have a guidance, but still there is nothing that will be seen as a better surprise going forward from a CapEx and OpEx perspective. So I think it was quite a tough period of time for us, but I think we're definitely touching were part of it.

With regards to the second question that is the tax rate impact, so basically just to give you a little bit of color basically in Italy the government allowed Italian corporates to realign to their book value, the fiscal values of intangibles both trademark and -- trademarks and goodwill. So basically we took the -- being the key tax contributor in Italy, we have strong interest in exploiting that opportunity.

So basically what happens, we will pay a 3% tax to uplift the fiscal value of the tax of the tangibles. The cost of that tax is about €15 million.

And in doing so we would achieve tax savings over the €18 horizon of €135 million, which means that we have a net positive effect of about €120 million. How does that reflect into our P&L and cash flow?

So, basically you have a cash flow compression of about €6 million from 2021 onwards. And that cash flow -- sorry, cash flow compression a cash flow increase of €6 million per annum from 2021 onwards corresponding to the total amount of €120 million.

So basically, this is to say that in the P&L on the contrary the tax saving is then offset by the accrual of deferred taxes on goodwill and trademark amortization other €6 million that I'm mentioning. So basically in that sense the recurring effective tax rate will stay unchanged at the current level of 27.9%, while what really matters is the recurring cash tax rate will drop from 22.2% to -- from 23.2% to 22.2%, 1% below the current level with positive effect on cash flow of €6 million.

Perfect. Thanks for the explanation.

You’re welcome.

Thank you very much for taking my questions. My first question is on the US.

Could you tell us what your depletions were in Q4? I'm trying to understand how much of that 13% related to inventories.

I'll ask my next question after.

Yes. Basically our depletions in Q4 more or less reflected the shipments.

They were depending on the brand either slight bower slightly below but no big change.

Super. Thank you very much.

And then on China just a point – a couple of points of clarification. You mentioned you go national in the market in the second half of next year.

Do you mean 2x 2022? And when you say the size of France do you mean Aperol in France or the whole of France?

No. I mean first of all the Aperol brand in France, but I talked about three to five years' time.

The second fact is when we're going national, national means going to a half a dozen large cities. I mean China is absolutely huge and we want to focus on Tier 1 cities first.

That will start happening in the second half of 2021.

Great. And sorry final question for me.

Just on the inventory destocking you seem to be flagging in Western Europe and I presume mostly Southern Europe. Can you help us – can you give us anything to help us get a sense of the scale, I don't know how many inventory days wholesalers normally run at but if you can give us a sense of what they're currently running at?

Just to help quantify that would be great. Thank you.

Well, unfortunately, Southern Europe is not as data-driven as the US. So we don't have that functional data.

But clearly we see it from at the moment the markets reopen and we go into a yellow zone for instance there are big orders coming in. So there's – that means that they're not sitting on any stock.

And at the same time we're seeing also a very divergent let's say performance between sell-out in the off-premise and sell-in in the off-premise. Again their key customers are lagging behind the true trend of our brands.

And this is Continental Europe.

Great. Thank you very much.

Good morning to you Bob. I have two let's say quick follow-up.

The first one is on the A&P SG&A on sales trend you expect for the year. What I would like to defend is if there is any specific assumption behind because considering let's say increasing exposure to online versus let's say off-line I would have take some improvement on let's say the – on margin considering the A&P on sales and also on the SG&A side if there is considering let's say the step-up on the you made last year if there is again some specific investments external level you're doing keeping the credit level steady?

Yes. I'll take the A&P question.

Yes clearly it is much more efficient and efficacious to go the digital route versus – so online versus off-line. But looking forward we would see our A&P unchanged as a percentage of sales at around 17.5%, which means that all the efficiency is reinvested to accelerate the momentum of our brands.

Yes. With regards to the SG&A as a percentage of sales, again this stands at this stage we believe that we'll – SG&A on say will remain broadly flat in 2021.

With regards to new route to market initiatives, we do not envisage you know any meaningful risk in SG&A as a percentage of sales. Clearly what can make a difference is the potential M&A deal but that would be in any case recognized as a separate component in perimeter.

So in the organic performance of SG&A would stay – its growth trajectory would stay in line with top line.

Okay. And sorry forgot let's say a question on let's say the mix and the shift to on-premise or plans that you're seeing here.

Is it possible to cure any idea of the impact at the gross margin level of this will 10% shift at group level you experienced in terms of gross margin dilution?

We would expect it to be roughly neutral.

Okay. Thanks.

Yes, hi. Good afternoon, everybody.

Good afternoon.

Hi. A follow-up from just a previous question which were a bit similar but I wanted to have a bit more of color on the route to market initiatives that you have mentioned are going to kick in at the beginning of 2021.

Then regarding the channel mix I was wondering if you can elaborate on the channel mix, which would probably have been needed to say to reabsorb the 130 basis points is in gross margin. We had in 2020 to the extent that it is possible to have this kind of connection let's say?

And very last question is about non-recurring items. If you have already any projection for 2021 of any one-off element of which could be reported below the EBIT line?

Thank you, Paola. I'll take the first question.

I mean to market changes. Obviously with our emphasis on Asia quite a bit is changing there.

Last year, that we kicked off our joint venture, which really started trading in September. So we stopped to previous distributor and are gradually resuming normal trading there.

So there was an impact of that destocking. And in anticipation of the move in China, we also did the same thing there.

And we will start trading with the new distributor as of -- I mean when I'm saying trading they will start trading because obviously, we've been shipping inventory to them and they'll start trading on our behalf on March 1st.

Yes. With regards to your second...

So you were

Sorry, we can't hear you, Paola.

Sorry. Have you heard my question by chance?

No. Sorry I had the problem with my headphone.

No, I was wondering so it's -- when you talk about new route to market initiatives you were referring about the external distributors here and there...

As well as one part of the -- our portfolio will be changing distribution in New Zealand, but I mean it's not going to be material on the group.

Okay. So nothing regarding your direct distribution?

No.

Okay. Thanks.

So with regards Paolo to your second question that is around the gross margin trend and the mix -- channel mix. For us, we're more exposed to sales mix in brands and geographies and in channel as we said before.

As you know, the on off-trade per se is not moving the needle. The key driving factors if we excluded all the other one-offs of agave tariff and whatever.

Driving factors of margin dilution last year where the outperformance of Espolòn, that is dilutive due to the current level of the agave price. This is testing to stay next year because we we're very positive with the brand.

It has very strong momentum. Also the category is growing.

So we think this is a trend is defined to stay in 2021. And potentially there is an opportunity as I said before going forward the €30 million recovery in profitability on the Espolòn brand as you know the agave price will decline.

Then we have two factors that are potentially positive in terms of mix that is, the last year we had very strong underperformance of the operative business particularly in Italy where we had huge on-trade consumption. This is potentially a positive for next year.

And we all know that our operative portfolio is driving gross margin accretion. Then the second factor is the destocking in the US that accounted for €90 million.

As I said next year, we're not expecting that to repeat again. Then we have tariffs is a question mark.

And lower absorbing on fixed costs I believe next year we will see some positive operational leverage in fixed costs versus 2020 because volumes will grow that versus last year and this is a positive. So in essence the three drivers of mix improvement next year is the non-recurring effect of destocking a better performance on appetitive and positive operational leverage in fixed production costs.

Okay. Thanks.

With regards to your third question, recurring expenses not that we know at the moment. So these are one-off.

And for the time being we do not see anything meaningful.

Okay. Paolo, thank you very much.

Hello. I'm really sorry for follow-ups.

Two ones for me. Obviously, most of your peers have cut marketing while you've increased over the last second half of the year.

Any views on what happens when they come back to the market? And then secondly you mentioned cost containment.

How much of that should we think comes back in 2021? And how much is temporary structure I guess?

Yes. I'm not sure I got your first question.

I think it's fair to say that in Q4 when we actually maintained or actually increased the A&P across brands and markets. Most of our peers focus much more on promotions in the off-premise and focusing really on short-term tactical, commercial means.

So we'll have to wait and see what they're up to this year. But having said that we always manage this business for the mid-to-long term and we're not going to be impacted by what our peers do in the short-term.

With regards to your second question there is cost containment measures. Some of them will still be in placed in 2021 at least in the first part of the year.

If we think at D&E for example, if you think that hiring discipline is testing to stay probably not hiring freeze, but very prudent approach to new hiring. And selectively uncertain strategic direction like digital marketing transformation or Asia this is where we may want to invest a little bit more.

There are other one-off factors that are not recurring in -- positive one-off factoring costs that are not recurring in 2021. If you think for example bonus compressions that we all hope will be in a position of paying higher bonuses, which means that the business is improving.

So it's a -- it will be -- it will not be as big as last year the savings as the business gets to its normality we will start managing the business more in a normal manner.

Great. Thank you very much.

Really appreciated.

We're married. Thank you very much for joining us.

I appreciate that and stay well. Bye-bye.