Annual Report & Financial Statements 2023 for the year ended 31 December 2023 GOING TO EXCEPTIONAL LENGTHS OUR PURPOSE Fever-Tree is built on the unwavering belief that there is always a better way – a refusal to compromise and a commitment to never settle for the status quo. This founding principle remains as true today as it was at the very outset. We are dedicated to the pursuit of excellence, continuously innovating our products and packaging. But our passion extends beyond crafting exceptional mixers and soft drinks; it involves challenging ourselves to make a meaningful positive impact in how we source our ingredients and the communities in which we operate. And in doing so inspire and engage not only our colleagues, customers, and partners but also our consumers. OUR CULTURE Rooted in the entrepreneurial values of our co-founders, Fever-Tree’s culture thrives even as the business expands in depth, breadth, and complexity. We remain committed to maintaining and championing this entrepreneurial ethos. Our organisational structure remains informal and open, fostering a culture where every team member, regardless of role or seniority, feels empowered to make a genuine difference in our ongoing international success. OUR STORY: GOING TO EXCEPTIONAL LENGTHS IN PURSUIT OF THE BEST For the latest investor relations information, visit our website: www.fever-tree.com/investors CONTENTS CEO’S REVIEW p20 SUSTAINABILITY REVIEW p32 OUR STRATEGIC BLUEPRINT p14 OVERVIEW Highlights 02 At a Glance 04 Chairman’s Statement 06 Going to exceptional lengths in… 10 STRATEGIC REPORT Our Business Model 12 Our Strategic Blueprint 14 Delivering Against our Blueprint 16 Underpinning the Opportunity 18 Chief Executive’s Review 20 Q&A with Kate Stables 22 Business Review 24 Sustainability Review 32 Financial Review 58 Section 172 and Stakeholder Engagement 62 Principal Risks and Uncertainties 66 Viability Statement 71 Going to exceptional lengths in… 72 GOVERNANCE Board of Directors 74 Corporate Governance Statement 76 Nomination Committee Report 80 Audit Committee Report 82 Remuneration Committee Report 86 Directors’ Report 102 Statement of Directors’ Responsibilities 104 Going to exceptional lengths in… 106 FINANCIAL STATEMENTS Independent Auditor’s Report 108 Consolidated Statement of Profit or Loss and Other Comprehensive Income 115 Consolidated Statement of Financial Position 116 Consolidated Statement of Changes in Equity 117 Consolidated Statement of Cash Flows 118 Notes to the Consolidated Financial Statements 119 Company Statement of Financial Position 144 Company Statement of Changes in Equity 145 Notes to the Company Financial Statements 146 OTHER Company Information 150 Notice of Annual General Meeting 151 Overview Strategic Report Governance Financial Statements 01 2023 £364.4m 2022 £344.3m 2021 £311.1m 2023 £30.5m 2022 £39.7m 2021 £63.0m 2023 £59.9m 2022 £95.3m 2021 £166.2m 2023 HIGHLIGHTS THE FEVER-TREE BRAND IS STRONGER THAN EVER, MAINTAINING OUR POSITION AS THE NUMBER ONE MIXER BRAND GLOBALLY Financial highlights Operational highlights REVENUE £364.4m (2022: £344.3m) Expansion of our global production footprint, to reduce emissions and drive efficiencies through our supply chain. Successful launch of Cocktail Mixer range and expansion of our Adult Soft Range, enabling our portfolio to be relevant across an even greater number of drinking occasions. Established Fever-Tree Australia with a local team based in Sydney and Melbourne. ADJUSTED EBITDA £30.5m (2022: £39.7m) CASH £59.9m (2022: £95.3m) Footnote: Analysis on pages 1 to 105 of this front end of the Annual Report refers to adjusted EBITDA. The Group believes adjusted EBITDA to be a key indicator of underlying operational performance, adjusting operating profit for several non-cash items and other items deemed not to have an impact on the sustained operating performance of the business. As a consequence of these adjustments, the Group believes that adjusted EBITDA represents normalised operating profits. Adjusted EBITDA for the year ended 31 December 2023 is operating profit of £20.8m before depreciation of £6.3m, amortisation of £1.7m and share based payment charges of £1.7m. Adjusted EBITDA is an appropriate measure since it represents to users a normalised, comparable operating profit, excluding the effects of the accounting estimates, non-cash items and non-recurring items as mentioned above. The definition for adjusted EBITDA as defined above is consistent with the definition applied in previous years. This measure is not defined in the International Financial Reporting Standards, which forms the basis of the presentation of the Financial Statements included on pages 115 to 118. Since this is an indicator specific to the Group’s operational structure, it may not be comparable to adjusted metrics used by other companies. Adjusted EBITDA is not intended to be a substitute for metrics determined in accordance with International Financial Reporting Standards. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 02 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 Sustainability highlights 2023 awards and recognition Voted ‘Number One Top Selling Mixer’ and ‘Number One Top Trending Mixer’ for the 10th year in a row Mixer brand of the year for the 4th year in a row For international trade Received ‘very good to work for’ rating, placing the Brand in the top 5 food and drink companies to work for 5% REDUCTION IN EMISSIONS RELATED TO OUR PRODUCTS SOLD IN THE UK IN 2022 DRINKS INTERNATIONAL THE KING’S AWARD NEW YORK INTERNATIONAL SPIRITS COMPETITION BEST COMPANIES TO WORK FOR 100% RENEWABLE ELECTRICITY USED ACROSS ALL FEVER-TREE OFFICES 10th YEAR OF SUPPORTING MALARIA NO MORE UK See our sustainability section to find out more / pages 32 to 57 Overview Strategic Report Governance Financial Statements 03 FEVER-TREE IS THE WORLD’S LEADING SUPPLIER OF PREMIUM CARBONATED MIXERS. 2023 SAW THE US BECOME THE GROUP’S LARGEST MARKET BY REVENUE AT A GLANCE For more details see our website / www.fever-tree.com/products QUALITY, FLAVOUR AND CHOICE ARE CENTRAL TO OUR PRODUCT RANGE Premium Indian Tonic Our very first product. Designed to enhance the very best gins, vodkas and fortified wines, like vermouth, fino sherry and white port. Flavoured Tonics Designed to provide choice to consumers reflecting the growing range of gins and other spirits that are increasingly available in the On and Off-Trade. Ginger Ales, Ginger Beers & Colas Mixers for pairing with dark spirits such as whisky, bourbons and rums. Our products FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 04 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 Lemonades Perfectly balanced to be mixed with vodkas and gins or equally delicious as a sophisticated drink on its own. Sodas Premium sodas designed to be paired with a variety of spirits from gins and tequilas through to vermouths and Italian Liqueurs, creating longer, lighter mixed drinks. Adult Soft Drinks Our sophisticated sparkling soft drinks are low in sugar and calories with no compromise on flavour. The range includes our Cloudy British Apple, Sicilian Lemonade and Sparkling Mexican Lime. Cocktail Mixers Our new range includes classic cocktails such as the Margarita, Mojito, Passion Fruit Martini, Espresso Martini and Bloody Mary, each expertly crafted with the same expertise as our award-winning mixers. UK Europe US Rest of the World Global reach and % split Revenue % Share of Revenue UK £114.8m 32% US £117.0m 32% Europe £105.4m 29% Rest of the World £27.2m 7% TOTAL REVENUE £364.4m See our regional business reviews / pages 24 to 31 Overview Strategic Report Governance Financial Statements 05 CHAIRMAN’S STATEMENT IT IS A GREAT PLEASURE AND HONOUR TO BECOME CHAIR OF FEVER-TREE The operational challenges faced by the Group in recent years against a volatile macroeconomic and geopolitical backdrop has accelerated management focus on continual improvement of the underlying foundational systems and capabilities of the Group. I believe that our global supply chain capability, procurement processes, operating business models and talent development structures have improved significantly over the last two years. We have learnt important lessons and are increasingly better placed to capitalise on the global potential of the brand in years to come. In the US specifically, we are confident that we have sufficient capabilities, flexibility and contingencies in place to both ensure continuity and capture growth. These efforts require strong leadership, teamwork, changes to ways of working, and new behaviours which have taken up significant human and financial resource during 2023. In the shorter term, these initiatives, coupled with a gradually improving and less volatile inflationary environment, allow us to be confident about our margin recovery pathway. This is my first report as Chair of Fever-Tree following the retirement of Bill Ronald. Bill joined the company in 2013 when the business generated turnover of £23million and employed 16 people. Bill oversaw the remarkable growth of the Group from its grass roots to a truly global premium beverage business, an achievement he, and the management team, should be commended for. It was a privilege to work with him on the Board, we will miss his wise counsel, personal warmth, and calm leadership. Strategic performance 2023 was another challenging and volatile year for many consumer goods companies, and Fever-Tree was no exception. The macro economic backdrop remains tough, particularly as it follows a number of exceptionally difficult years, and it is a credit to the wider Fever-Tree team that once again faced the year with agility, enthusiasm, resilience, and commercialism, delivering a good result in difficult circumstances. I strongly believe that these efforts continue to underpin the potential of Fever-Tree and will hold us in good stead in the years to come. On behalf of the Board, thank you for your enormous contribution. Board Engagement As part of the Board’s ongoing support of the Group’s sustainability initiatives. Clare Swindell presented at Fever-Tree’s quarterly Women’s network lunch, sharing her experience and advice on a range of topics including imposter syndrome/assertiveness/presence at work, as well as balancing work and family life. For more details see our colleagues section of our sustainability review / pages 56 and 57 Placed Top 5 IN FOOD AND DRINKS COMPANIES BY ‘BEST COMPANIES’ FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 06 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 Fever-Tree has significant headroom to grow our share of the global mixer market.” Domenic De Lorenzo Non-Executive Chairman As importantly, over the long term these initiatives improve our capability to fully support our global growth ambition. It would be wrong to assume that this deeper focus on capability, process, and cost management, implies a loss of attention on the potential growth trajectory of Fever-Tree. Despite the current headwinds, the fundamentals of our business remain very attractive, underpinned in part by the well documented long term sectoral tail winds in the related long alcoholic drinks category in our key markets. Fever-Tree’s intrinsic strengths such as quality of ingredient, depth of flavour, and strength of innovation means it is well placed to take advantage of the consumer’s appetite for premiumisation, quality and authenticity. The brand has significant headroom to grow our share of the global mixer market, and we have started to bolster our core mixer range with the introduction of products in adjacent categories, such as premium adult soft drinks and cocktail mixers, diversifying our growth platform to even more occasions. In terms of long-term strategic focus, Fever‑Tree remains very focused on driving and investing in the top line. The Board works closely with the founder-led executive management team, and as part of its responsibilities, carries out a formal review of the Group’s strategy on an annual basis. We remain strongly supportive of the actions taken by management during 2023 to anchor the necessary focus on the long-term opportunity of Fever-Tree. In the coming years, while we are mindful of continued global turbulence and ongoing cost inflation, as well as the need to rebuild our gross margin, we will continue to invest in the brand. This will include new product development and innovation, evolving our route to market platforms, accessing new scale markets, developing our relationships with key spirits partners, and in our execution capability. We believe that this investment is fundamental to the long-term superior performance of the business. Find out about our strategic blueprint / pages 14 and 15 Culture At its heart, Fever-Tree is a founder- led, highly entrepreneurial, positive and collaborative company, with the essential purpose of our mixers being to enhance the flavour, taste and sociability of various drinking occasions. The Board sees one of its core roles as fostering and embedding that culture. Therefore, as part of its responsibilities, the Board regularly reviews Fever-Tree’s culture, behaviours, skills, and people capabilities, considering the evolution of the business, and is satisfied that executive management are building the appropriate team and underlying people structures to meet Fever-Tree’s future challenges and opportunities. External validation of this view is also important, and this year the business conducted an engagement survey through ‘Best Companies’ and received ‘very good to work for’, placing us in the top five food and drink companies. Overview Strategic Report Governance Financial Statements 07 CHAIRMAN’S STATEMENT CONTINUED Coline was a strong and valuable contributor to the Board, especially regarding the development of the People function and the Remuneration Committee, and we will miss her careful consideration. • We are delighted to announce the appointment of David Lapp as a Non-Executive Director with effect from 1st January 2024. David recently retired from PepsiCo Beverages North America, where he was employed for over 35 years in numerous roles across that Group’s supply chain, including Chief Supply Chain Officer for PepsiCo Beverages North America, and most latterly as Senior Vice President of Manufacturing Strategy, PepsiCo North America. David has deep experience of all aspects of supply chain management, of the US Beverage Industry and global business expansion and will deepen and improve the Board’s capabilities as well as supporting Management as required. We look forward to working with him in the years to come. Following these changes, the Board will be made up of eight highly committed and experienced individuals with women representing 25% of the total. The Board is committed to the continued enhancement of Fever-Tree’s desired culture and within that the improvement of Fever-Tree’s diversity and inclusion levels throughout the organisation. We have an objective to add further to the Board’s capabilities while increasing the diversity of the Board in the coming years. See our Board of Directors / pages 74 and 75 The Board This year, there are a number of changes to the Board to report: • As noted in my introduction, the retirement of Bill Ronald as Chair and Non-Executive Director after 10 years of service, combined with my appointment as Chair with effect from 25th May 2023. As a result, of this appointment, I stepped down as Chair of the Audit Committee on the same date. • We were delighted to welcome Clare Swindell as a new Non- Executive Director and as Chair of the Audit Committee with effect from 25th May 2023. Clare was, until recently, Co-Chief Executive Officer of Camelot and prior to that she was Chief Financial Officer at dunnhumby and is also a non-executive director and chair of the audit and risk committee at John Lewis Partnership. She brings a wealth of experience across general management, finance, and operations in a number of related consumer sectors which further strengthens our Board’s capabilities. I am sure Clare will only improve on the performance of the Audit Committee and we wish her great success in her role at Fever-Tree. • We announced during the year that Coline McConville has relinquished her role as Non- Executive Director, as Chair of the Remuneration Committee and as Senior Independent Director. Coline joined the Company in November 2014, and formally resigned with effect from 31st December 2023. As a result, during this financial year, we announced the appointment of Kevin Havelock as Senior Independent Director and Laura Hagan as Chair of the Remuneration Committee with effect from 25th May 2023. Culture continued Diversity and equality of talent and an inclusive environment are fundamental building blocks to Fever-Tree’s culture and implicit values. During this financial year we have enhanced the capability, objectives and governance of the Group’s Diversity, Equality, and Inclusion Committee (‘DE&I Committee’), including direct oversight of the Board on the development of this initiative within Fever-Tree. There remains work to do in terms of diversity and equality at senior levels in the organisation, which is a focus for the Board, and I will look to report on our progress over my tenure. Sustainability The business continues to make progress across all five of our sustainability branches; climate, circular economy, conservation, communities, and colleagues. As part of this, we have long-standing projects and partnerships, including our commitment to reducing our greenhouse gas emissions per litre of product, along with our 10-year support for Malaria No More UK to help fight one of the world’s deadliest diseases. I am encouraged by the ongoing work that’s being done in this area of the business, which will be enhanced going forward by a new set of Sustainability KPIs to keep us even more accountable from 2024. See our sustainability section / pages 32 to 57 At its heart, Fever-Tree is a founder-led, highly entrepreneurial, positive and collaborative company.” FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 08 Dividend Reflecting the financial strength and continuing confidence of the Group, the Board is pleased to recommend a final dividend of 10.90 pence per share in respect of 2023 (2022: 10.68 pence per share) bringing the total dividend for the year to 16.64 pence per share (2022: 16.31 pence per share). If approved by shareholders at the AGM on 6 June 2024 the final dividend will be paid on 21 June 2024 to shareholders on the register on 17 May 2024. AGM The AGM is due to take place on 6 June 2024. Shareholders will be able to vote on resolutions by proxy by following the guidance provided in the AGM notice. Shareholders are also invited to submit any questions for the Board to agm@fever-tree.com. Domenic De Lorenzo Non-Executive Chairman 25 March 2024 Summary It is of course a great pleasure and honour to become Chair of Fever-Tree. The company has enormous potential underpinned by a wonderful brand, great people, and an increasingly capable global supply chain. In addition to protecting the interests of all our stakeholders, this Board is committed to helping your management achieve this potential effectively in the coming years with particular focus on making good strategic decisions for the long term, fostering an entrepreneurial, inclusive, and accountable culture, and helping build a highly effective, committed, and passionate team. Overview Strategic Report Governance Financial Statements 09 GOING TO EXCEPTIONAL LENGTHS IN EUROPE SICILY INGREDIENTS Features in: Sicilian Lemonade RL Sicilian Lemonade Rose Lemonade Lemon Tonic Water RL Lemon Tonic Water Our story We source our lemons across the island. There is a particular concentration of farms to the northwest of the island in Palermo – known as ‘Conca d’Oro’ or ‘Shell of God’ - because of the shining gold landscape caused by the abundance of lemons growing. The sun drenches the lemons through the day which is balanced with cool evenings, thus delivering a deliciously sweet lemon. Process & harvest Beautifully rugged and irregular lemons are handpicked by a small team as they contain more rich oils, whilst the ‘perfect’ lemons are sent to supermarkets. The lemon oils are subtracted by ‘Sfumatrice’ method. This process involves extracting both the oils from the peel and the juice from the fruit of the Sicilian lemons. The essential lemon oil that we use comes from the Winter Lemon Oil. This is from the Pima Fiore, or the finest of the oil, producing high quality and flavour rich oil. Flavour notes: Fresh and Zesty! FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 10 SICILIAN LEMON Citrus Lemonus We source some of the world’s finest lemons which are grown and hand-picked in the fertile groves of Sicily, where the ground is enriched by Mount Etna’s volcanic soil. To extract fresh, zesty, high- quality oils from the skin of the lemons, Sfumatrice equipment is used to gently press the fruit, a process normally reserved for the perfume industry. STRATEGIC REPORT Our Business Model 12 Our Strategic Blueprint 14 Delivering Against our Blueprint 16 Underpinning the Opportunity 18 Chief Executive’s Review 20 Q&A with Kate Stables 22 Business Review 24 Sustainability Review 32 Financial Review 58 Section 172 and Stakeholder Engagement 62 Principal Risks and Uncertainties 66 Viability Statement 71 Overview Strategic Report Governance Financial Statements 11 IN NO VA TI ON PA RT NE RS HI P S WHAT DRIVES US DELIVERING SUSTAINABLE FUTURE GROWTH AND A POSITIVE SOCIAL IMPACT OUR BUSINESS MODEL Read more / pages 4 and 5 Read more / pages 16 and 17 Read more / pages 14 and 15 Read more / pages 10 and 11 MARKET TRENDS AND CUSTOMER INSIGHTS Our teams study consumer trends & work with spirits partners to understand attitudes, motivations and drink preferences. SOURCING OUR INGREDIENTS We use the highest quality ingredients in our products, responsibly sourced from around the world. OUTSOURCED MANUFACTURING, PACKAGING AND DISTRIBUTION Our outsourced manufacturing, close to our end markets where possible, allows for scalability and operational flexibility. DISTRIBUTION TO ON-TRADE AND OFF-TRADE CUSTOMERS Our On and Off-Trade teams have well established, long-term relationships with our customers. INNOVATION We innovate to extend our flavours and formats and ensure our products reflect the drinking habits and taste profiles for the region. MARKETING AND PROMOTION We invest in multiple platforms to promote the brand, educate consumers and activate new products, increasingly alongside spirits partners. DRIVEN BY OUR PASSION AND COMMITMENT TO SUSTAINABILITY Read more / pages 32 to 57 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 12 WHAT THIS MEANS FOR OUR STAKEHOLDERS Our colleagues Expanding employment opportunities and fostering personal development in tandem with a robust, entrepreneurial culture. Read more / pages 56 and 57 Our supply chain partners As our business expands, the demand for our suppliers’ products and services grows, presenting increased opportunities for closer collaboration and partnerships. This also provides a platform for knowledge sharing to enhance efficiencies and expertise. Read more / page 63 Our customers As a premium product, we provide attractive margins to our On and Off-Trade customers as well as stimulating interest in the wider mixer category and long mixed drink trend. Read more / pages 14 and 15 Our consumers Consumers get the choice and quality they require to have the best drinking experiences both at home and in bars and restaurants. Read more / pages 16 and 17 Our investors Strong returns based upon first mover advantage and growth opportunities across the globe. Read more / pages 58 to 61 Our communities As we grow, we drive economic value through our supply chain, creating wider employment opportunities as well as investing in projects and partnerships in local communities, both where we source from but also where our products are consumed. Read more / pages 52 to 54 Overview Strategic Report Governance Financial Statements 13 1 3 FEVER-TREE’S STRATEGIC BLUEPRINT IS DRIVING SUCCESS ACROSS GLOBAL MARKETS OUR STRATEGIC BLUEPRINT FOCUS ON QUALITY & BREADTH OF PRODUCTS LOYAL, LIFETIME CONSUMERS How we do it The cornerstone of the brand is the quality and breadth of our products. No other brand goes to the lengths we do to source the very best ingredients from around the world and no other brand has the breadth of the portfolio we have, ensuring we have the right products, for the right trends, in the right markets. Innovation doesn’t just stop at our products, we are continually looking at ways to evolve our marketing and consumer engagement. In recent years this has included opening our first standalone bar in Edinburgh Airport in Scotland which has provided an excellent platform for the brand. How we do it The cornerstone of the distribution strategy is that we set out to recruit loyal, lifetime consumers. We do this by initially positioning the brand solely in the high- end On- and Off-Trade and engage first and foremost with opinion formers such as bar tenders, chefs and drinks journalists, winning their endorsement and driving brand awareness through word of mouth; the most valuable form of consumer recruitment. Central to all messaging is the ingredient quality and ‘3/4s’ message. Only once we have started to drive category growth we broaden our distribution footprint, always ensuring rate-of-sale drives further distribution gains. 2023 Progress Our focus on innovation allows us to tap into ever more occasions and with it the most popular drinking trends across our markets. The last 12 months has seen the brand expand into two adjacent categories outside of our core mixer range: Adult soft drinks and cocktail mixers, which have both already gained good distribution in the UK while our cocktail mixer range has also enjoyed a positive launch in the US. We also continue to expand our core mixer portfolio to cater to a greater number of spirit occasions and consumer tastes, such as the launch of Blood Orange Ginger Beer in the US. 2023 Progress The Brand has been Voted ‘Number One Top Selling Mixer’ and ‘Number One Top Trending Mixer’ for the 10th year in a row. This is a key endorsement from the top bartenders and bars from around the globe, helping to drive consumer recruitment in early stage markets in particular, as well as showcasing our premium positioning and reputation in our more mature markets. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 14 4 2 PREMIUM BUT ACCESSIBLE PRICE POINT FIRST MOVER ADVANTAGE How we do it Building the brand through the On-Trade allows us to establish a premium but accessible price point, which in turn drives category growth and premiumisation, delivering superior margins for all our customers throughout the chain. How we do it Our outsourced business model has provided the brand with the flexibility to move into new markets as and when the opportunity arises, in turn helping to create significant barriers to the competition. 2023 Progress The brand maintained its position as the number one mixer brand globally, with notable share gains in the US Tonic and Ginger Beer categories, as well as in the UK On-Trade. 2023 Progress We are now in over 90 markets around the globe and in the past 18 months have evolved our route to market in a number of regions including Japan, Canada and most notably Australia, reflecting the opportunity ahead. ALL UNDERPINNED BY AN OUTSOURCED OPERATIONAL MODEL THAT ALLOWS FOR STRONG CASH FLOW GENERATION AND OPERATIONAL FLEXIBILITY. OUR APPROACH ALLOWS THE GROUP TO KEEP INVESTING BEHIND AND FOCUS ON THE LONG-TERM OPPORTUNITY, ESPECIALLY IN OUR NEXT WAVE MARKETS, AS WELL AS GIVING US OPTIONALITY TO RETURN CASH TO SHAREHOLDERS. Overview Strategic Report Governance Financial Statements 15 +82% Fever-Tree has driven the growth of UK mixers1 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 800 600 400 200 0 Mixer category size Fever-Tree market share Schweppes market share Other premium brands Mixer market size (£m) Market share £406m £740m 10% 20% 30% 40% 50% 60% 0% 1 IRI. ...In the UK DELIVERING AGAINST OUR BLUEPRINT... STRATEGY IN ACTION KEY INGREDIENTS • First mover advantage • Premium price point • Strong relationships with customers and spirit partners • Ability to extend into adjacent categories Fever-Tree has not only grown its market share from 5% in 2014 to over 44% in 2023, but we have driven the growth of the entire mixer category, which has almost doubled in value over the same time period.” Fever-Tree has driven the growth of the UK mixer category and in turn has become clear market leader. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 16 Fever-Tree is no.1 Tonic and Ginger Beer brand in the US by value Fever-Tree’s US Off-Trade sales growth by category1 % growth YoY Total Mkt Share Tonics Ginger Beer Ginger Ales Club Soda Sparkling +24% +17% +23% +20% +47% +46% 1 Nielsen 52 weeks to 31 Dec 2023. ...In the USA For more details see our website / www.fever-tree.com/range/cocktails KEY INGREDIENTS • First mover advantage • Premium price point • Strong relationships with customers and spirit partners • Ability to extend into adjacent categories Fever-Tree is driving premium mixing trends, especially in the Ginger Beer and Tonic categories, where we now have a notable lead against the competition, with 26% and 25% value share in these categories respectively.” Our new Cocktail Mixer Range Aiming to revolutionise the simplicity of making popular cocktails, our new range is not only opening up a new portfolio of drinks for people to make at home, but also enabling the On-Trade channel to offer high quality cocktails that were previously limited to high‑end bars. The US is now Fever-Tree’s largest market and remains a significant opportunity for the brand. Overview Strategic Report Governance Financial Statements 17 FEVER-TREE REMAINS AT THE CENTRE OF A NUMBER OF SUPPORTIVE GLOBAL TRENDS UNDERPINNING THE OPPORTUNITY Spirits taking share from wine and beer The last two decades has seen consumers continue to turn away from beer and wine in favour of spirits. This trend has accelerated in recent years, most notably in the US, Fever-Tree’s largest market, as a surge in craft and premium spirits enter the marketplace. Spirits revenue market share grew from 28.7% in 2000 to 42.2% in 2023, surpassing beer with wine accounting for 16.1%. Premium segments driving spirits growth Despite the global economic headwinds seen in 2023, spirits growth continues to be driven by the premium end of the category. Consumer trends embedded by the COVID 19 pandemic, most notably increased interest in premium drinks and drinking less but better, has continued. In 2015, the super-premium segment of the market represented just c.15% of the overall global spirit’s market. By 2025, this is expected to increase to c.29%. In contrast, the standard segment is expected to drop to 42% (previously c.53%) and the value segment is expected to drop to c.9% (previously c.16%). In the latest Bacardi Global Consumer Survey, 7 in 10 respondents globally said that they would pay more for quality spirits when choosing a drink and 41% of US respondents aged 21–44 are looking to seek more premium spirits in 2024. Growing interest in cocktails Consumers are increasingly exploring a wider range of long mixed drinks both in the On-Trade and at home. In the UK On-Trade cocktails share of licenced sales increased from 6% to 10% post COVID 19 as consumers returned to the On-Trade looking to replicate the drinks they had been making at home. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 18 Beer Spirits Wine 41.8% 42.2% 16.1% 16.60% 17.00% 16.10% 16.00% 15.70% 16.90% 16.70% 32.10% 35.40% 41.30% 41.90% 28.70% 33.30% 39.60% 51.30% 47.50% 42.50% 42.10% 55.50% 49.80% 43.60% 2000 2010 2015 2015 2020 2025E 2020 2022 2023 2005 Spirits Super Premium Premium Standard Value Wine Beer 16.2% 53.3% 15.2% 15.2% 12.0% 8.57% 42.3% 19.8% 29.3% 49.1% 18.0% 20.9% ‘10 YEARS AT THE TOP’ For the last ten years, the industry experts at Drinks International have been tracking the growth of mixers as a category and reporting back on what’s happening in the very best bars around the world. Every year they ask the world’s most influential bartenders what drinks they are mixing up the most and more importantly, what mixers are they mixing with. We are delighted to announce that for the 10th consecutive year running, Fever-Tree has been voted the Top Trending and Best Selling mixer brand by the world’s best bars. For more details see our website / www.fever-tree.com/news OPPORTUNITY Given Fever-Tree’s position as the no.1 global premium mixer, we are ideally positioned to benefit from the on-going interest in spirits and how and where they are consumed. This growth is happening across many spirits categories including tequila, rum and whisky, supporting the growing popularity of our broad range of mixers including our sodas and gingers. OPPORTUNITY Our premium positioning, relationships with spirits companies across the globe and depth and breath of our distribution provides excellent opportunities to drive further distribution gains in our more mature markets while also taking advantage of evolving drinking habits in our next wave and early stage markets. OPPORTUNITY 2023 has seen Fever-Tree launch its range of Cocktail Mixers across a number of its regions for both its On and Off-Trade customers. We believe we have been able to revolutionise the simplicity of making these popular cocktails at home, ensuring that all that is required is to add the spirit, thus making a superb quality Margarita, Mojito or Espresso Martini is now as easy as making a G&T, opening up new opportunities for these serves in the Off-Trade and extending the reach of high quality cocktails across the On-Trade. 13 points of market share gain since 2000 2023 Spirits U.S. market share – supplier revenue Global spirits value by price tier, 2015–2025 (estimated) Overview Strategic Report Governance Financial Statements 19 CHIEF EXECUTIVE’S REVIEW This included signing a long-term agreement with a new primary glass supplier in UK and Europe as well as taking a measured and consistent approach to pricing across our markets. Taken alongside the softening inflationary pressures, most starkly seen in trans-Atlantic freight pricing, we saw a significant improvement in gross margin through the year and a doubling of EBITDA in the second half. This operational progress our team has delivered means I am confident that we are entering 2024 in the strongest position the business has ever been in from an operational perspective, setting the Group up for strong profitable growth going forward. But what has been just as pleasing has been our ability to remain focused on the opportunity ahead of us. Whilst the vagaries of the British weather as well as the recessionary environment in a number of key European markets impacted our overall revenue, 2023 has been a year when the Fever-Tree brand itself has once again grown in breadth and depth, with market share gains across our regions. Perhaps the most significant milestone has been the US becoming our largest market by revenue. This is a remarkable achievement and testament to the strength of the brand in the US where we have extended our no.1 position in both the Ginger Beer and Tonic categories as well as broadening our range and distribution. The G&T of course remains an integral growth driver for the Group with plenty of white space and growth opportunities for our tonic range across our markets but 2023 has also seen a step change in our non-tonic portfolio especially in our more mature markets such as the UK. Performance Overview As I reflect on our performance over the last 12 months, the word context comes to mind. Context in terms of the inflationary cost pressures we were facing as we begun 2023 and context in terms of our performance through the year especially versus our competition. Fever-Tree has of course not been the only business facing an extremely challenging inflationary environment. That said, our global footprint, growth profile and determination to continue to take advantage of the opportunity ahead of us meant we were perhaps more exposed than many especially in relation to trans- Atlantic freight rates and energy costs related to the production of our glass bottles. Whilst our ability to influence the wider macro-economic environment is limited, we recognised the need to drive operational change and efficiencies and with it an improvement in margins as the year progressed. However, we were also conscious of remaining resolutely focused on delivering top line growth and strengthening our market share across the globe. There is undeniably a fine balance to strike between the two and I am particularly proud of how our team has responded and delivered on both fronts as the year progressed. Whilst our gross margin for the full year was impacted by the factors mentioned above, we took proactive steps to deliver operational efficiencies and increasingly mitigated these cost headwinds as the year progressed. Not only have our gingers and sodas continued to see strong growth but the last 12 months has seen the launch of our range of cocktail mixers alongside the roll out of our Adult Soft Drink range. I have always been passionate about our innovation whether it be going out to find new ingredients or talking to our bartenders or spirits partners to help develop new ideas and our new cocktail mixer range is no different. Not only do they taste fantastic but they are providing consumers with an easy way into a category that is becoming ever more popular. See our business review / pages 24 to 31 People & Culture As the Group grows across multiple geographies, we remain focused on ensuring we have both appropriate resource and the correct systems to facilitate this growth. Reflecting our growth trajectory in Australia, we established a subsidiary operation in Australia, building a local team based in Sydney and Melbourne. We have also made good progress implementing a programme focused on updating our end-to-end operational processes, investing in new technology to underpin this, as well as training and up-skilling our team to ensure we are equipped to continue to deliver the growth opportunity. WE HAVE AN EXCELLENT PLATFORM FROM WHICH TO GROW THE BRAND GLOBALLY 2023 has seen a step change in our non-tonic portfolio.” FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 20 Whilst the business grows in depth, breadth and complexity, we are focused on maintaining and championing our entrepreneurial ethos. Ensuring that we maintain an informal and open structure, and a culture that enables all of our team members to feel that they can make a real difference to the business, whatever their role or seniority. Find out about our culture / pages 56 and 57 Sustainability Since we launched Fever-Tree’s Five Branches of Sustainability three years ago, we’re proud to have driven action across the ESG spectrum, both directly within our business and through our global supply chain. In 2023, we made further progress, detailed in our Sustainability Report from page 32, across all five branches – Climate, Circular Economy, Conservation, Communities and Colleagues. Increased collaboration across our supply chain, focus on innovative manufacturing practices, as well as a further transition to renewable energy sources enabled the Group to deliver a 5% reduction in greenhouse gas emissions related to our products sold in the UK in 2022. As we look ahead to 2024 and beyond, we will be enhancing our decarbonisation strategy to not only drive further reductions in our emissions but also define a transparent net zero roadmap. We are also proud to have extended our ten-year partnership with Malaria No More UK to fight one of the world’s oldest and deadliest diseases, whilst continuing to work with charities closer to home such as Future Frontiers, offering mentoring to young people in the communities where we work. Finally, for our Colleagues, Fever-Tree’s Diversity, Equity and Inclusion (DE&I) Committee meets regularly to discuss how best to foster an inclusive environment – to this end we have appointed a DE&I Lead this year, who you can hear from on pages 22 and 23. Hear from our DE&I lead / pages 22 and 23 Tim Warrillow Chief Executive Officer 25 March 2024 We are confident of delivering significant margin improvement as inflationary headwinds soften.” Tim Warrillow Chief Executive Officer Summary & Long-term Opportunity 2023 saw the brand deliver market share gains across our regions, ending the year with our highest ever market share by value in the UK, increasing our leadership position in the Tonic and Ginger Beer categories in the US and making a step change in our route to market in a number of exciting regions. Our innovation continues to successfully broaden and deepen our addressable market size, introducing the brand into more drinking occasions for our consumers. Our strategic blueprint is well aligned with the wider category trends most notably spirits gaining share from beer and wine, spirits growth being driven by premiumisation as well as consumers’ growing preference for quality ingredients and easy-to-make cocktails. Fever-Tree’s unrivalled position as the largest premium mixer brand globally puts us in prime position to capitalise on these long term trends and is why we also see opportunities across many of our markets beyond our core carbonated mixers and will continue to develop products to cater to trending categories such as cocktail mixers and sophisticated adult soft drinks, leveraging the power of the brand. Along with a focus on top line growth, the proactive steps we have taken during the course of 2023, combined with the softening inflationary environment, provides us with confidence that we have turned the corner on the impact of the unprecedented challenges in operating environment we have faced, and we look ahead to a period of strong, sustainable, profitable growth in 2024 and beyond. Overview Strategic Report Governance Financial Statements 21 Q. Can you tell us a little about your role and how this has developed over the past year? As Technology Director I oversee everything from technology strategy, leading our business transformation programme, systems development and infrastructure, security and operations support. While that might seem a broad remit, in reality it’s about ensuring that our technology is working hand in hand with our teams across the business, be it demand planning, finance, sales or customer service, helping to continuously improve and optimise ways of working for all. In 2023, I also became group lead for Diversity, Equity and Inclusion, a great opportunity to make sure that we enable everybody to be their authentic selves and meet their potential at Fever-Tree. OUR TECHNOLOGY DIRECTOR AND DE&I LEAD TALKS ABOUT HER ROLE & HOW TECHNOLOGY IS SUPPORTING THE BRAND’S GROWTH Q&A WITH KATE STABLES Q. Why is technology important for a brand like Fever-Tree? It is so exciting to see how we have become the largest premium mixer brand in the world. But with growth comes added complexity – for example we are now available in over 90 countries around the world – as a result we need to ensure our technology and systems keep pace with the growth we are seeing whilst remaining true to our entrepreneurial roots. This is where our technology team comes in! To give you one example, it is about ensuring our teams have access to real time, quality data and information that allows them to make smart decisions quickly, so our customers across the globe have the service level they expect from us. Q. How is the business transformation programme enabling Fever-Tree to become more agile? As a growing business, it is increasingly important we have effective technology in place across all departments and markets. We have created cross-functional, agile delivery teams that have worked together to implement the right systems, data, processes, and capabilities to support end-to-end operations. Technology and clear business processes allow the business to operate and collaborate more effectively, enabling improved data visibility and agile decision making. Additionally, we are now set up to deliver continuous improvement projects which ensures we can support continued growth and efficient operations for the long term. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 22 It is about ensuring our teams have access to real time, quality data and information that allows them to make smart decisions quickly, so our customers across the globe have the service level they expect from us.” Kate Stables Technology Director Q. AI seems to be the hot topic this year across all businesses, what role do you see it playing at Fever- Tree? Will AI be creating Fever-Tree drinks in the future? I don’t think our mixers will be created by AI anytime soon! Our teams will still be travelling the globe to find the best ingredients for our drinks! However, there is no doubt AI will be involved in the end-to-end delivery of Fever-Tree. From a technology standpoint we are already identifying and using ‘everyday’ AI during our daily routines and where our current technology partners are providing this capability. We have already started to identify where there are additional opportunities across the business, so watch this space. Q. Moving onto your role as group diversity, equity and inclusion lead, what are your reflections since taking on the role? It is a fascinating role and I have learnt so much in a short space of time. My main reflection is that it is an all-team effort. We have a DEI team of four core workstream leads, and work closely with our Regional Leadership teams, who all have a passion and commitment to our plans. This means we all work towards taking the right strategic actions for our business and our colleagues but ultimately, it is for everyone in the business to listen to each other, feedback on what’s important to us as individuals, understand and be aware of how we can all create an inclusive culture that celebrates our differences and fosters wellbeing. Q. What changes have you seen at Fever-Tree in this regard? A large focus has been on building awareness and engagement across the business, ensuring that we are maintaining an inclusive environment where everyone feels valued and welcome, and we have some fun along the way! To that end, over the last year we have celebrated an array of religious and cultural celebrations and festivals, made improvements to parental leave policy following consultation with working mothers and fathers, created our DEI reporting and outlined our three-year strategy and plan for continued DEI efforts at Fever-Tree. As a growing business, it is increasingly important we have effective technology in place.” For more details see our website / www.fever-tree.com/colleagues Overview Strategic Report Governance Financial Statements 23 During 2023, Fever-Tree grew revenues by 22.4% to deliver £117m sales (+24% at constant currency). The strong growth we have driven in the US has meant that it is now the largest revenue generating region for the Group, with a long runway still to go. The brand continues to grow strongly in the On-Trade and is now served in over 35,000 accounts following significant distribution gains in hotel chains such as Marriott and Hilton, alongside restaurant groups including TGI Fridays. We are focused on building long-lasting relationships with high quality On-Trade accounts and maximising our number of SKUs per account, as well as the significant number of untapped accounts, all of which will ensure we continue to drive growth in this important channel. THE BRAND HAS HAD AN EXTREMELY POSITIVE YEAR IN THE US MARKET BUSINESS REVIEW – US Fever-Tree’s sales accelerated in the Off-Trade this year. The brand’s sales grew by 24%1 with strong growth across all categories and especially through our can format, which is resonating well with the US consumer and grew by 100% during 2023, with distribution across all major national retailers. Fever-Tree’s unrivalled quality, broad portfolio range and superior rate-of-sale is enabling us to gain share of the total mixer market and extend our position as the largest premium mixer brand in the US, with a greater retail sales value than all the other premium brands combined1. We continue to increase our awareness and popularity through new product development specifically targeted at the US consumer and prioritise our customer relationships to ensure we are satisfying the ever‑increasing demand for the brand to deliver further growth in 2024. 2023 highlights Fever-Tree is driving premium mixing trends, especially in the Ginger Beer and Tonic categories, where we now have a notable lead against the competition, with 26% and 25% value share in these categories respectively1. We are also contributing more than any other brand to the growth of the Grapefruit and Club Soda categories across the US, extending our lead as the number one premium mixer, with a growth rate of three times the wider mixer category during 2023. 1 Nielsen 52 weeks to 30 December 2023. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 24 Strategic progress The Group is committed to investing behind the brand across marketing, new product development and people to capture the growth opportunity in the substantial US market. Our marketing activities include the use of pop-up bars across the country as well as collaborating with On‑Trade accounts to drive presence on cocktail menus, while in the Off‑Trade interactive displays are focused on sampling and co-promotional opportunities with spirit partners. Innovation is based on our understanding of the US consumer and our expertise in identifying local drinks trends, with a growing number of successful launches over the last few years, including our range of Sparkling mixers, such as Grapefruit which was specifically targeted at the fast growing interest in a tequila- based Paloma. In addition we continue to broaden our existing core flavour range, as an example, the introduction of our Blood Orange Ginger Beer to sit alongside our existing Ginger Beer offering, in just the same way as we have done with our Tonic range. It has proved a highly effective way to increase shelf space and with it stimulate growth by recruiting new consumers and prompting existing consumers to try something new. Beyond our core carbonated mixers, we have extended our range to include Margarita and Bloody Mary cocktail mixers. The non-carbonated mixer category is larger than the Tonic and Ginger Beer categories, without a dominant national brand, which alongside Fever-Tree’s premium mixing credentials and proven track record, makes us well‑placed to succeed in this category. We have already seen positive uptake of our new products, which now have almost 10,000 points of distribution at retail, with particularly good distribution in Publix. Overall, we have had an extremely positive year in the US market. The brand has gained further distribution whilst retaining its strong rate-of-sale, as well as introducing new products which are quickly becoming a significant part of our total sales. This success clearly demonstrates our ability to not only localise and benefit from US drinks trends, but our ability to execute innovation at speed. To this end we continue to extend our market- leading position, making us more attractive to customers and spirit partners, which in turn will help to drive further growth for the brand. Beyond our core carbonated mixers, we have extended our range to include Margarita and Bloody Mary cocktail mixers.” US REVENUE £117.0m (2022: £95.6m) One Tree Planted We know that forests are essential for a healthy planet. That’s why in the USA we’ve been supporting One Tree Planted who are on a mission of global reforestation. Since 2014, One Tree Planted has planted over 92.7 million trees in more than 80 countries. In the 2023 holiday season, Fever-Tree and One Tree Planted joined forces to mix with purpose, where in select restaurants and bars across America, one drink ordered equated to one tree planted. Meanwhile across the border, our Canadian colleagues chose to substitute physical gifts for the gift of reforestation during this year’s holiday season, funding the planting of 1,120 trees across four Canadian provinces. For more details see: / onetreeplanted.smugmug.com/Projects/ Business-Partner-Projects/Best-of-otp-partners/n-c2ppPd Overview Strategic Report Governance Financial Statements 25 Fever-Tree delivered £114.8m revenue in the UK. Whilst this was a slight decrease of 1% year-on-year, following a summer trading period impacted by adverse weather, the brand continues to lead the UK mixer category, with 45% combined value share across both channels, more than 50% larger than Schweppes1. In the Off-Trade, the total value of the mixer category declined by 5%, driven by the weaker performance of mainstream brands, whilst premium brands and own label did relatively better3. Fever-Tree remains the brand of choice for both our customers, retailers and consumers. The brand not only maintained its number one value share position of the total category, strengthening our position towards the end of the year, but we remain by far the largest premium brand, with c.90% of total premium mixer sales in the Off-Trade. The G&T remains the most popular spirit and mixer serve in the UK, despite the recalibration of the Gin category in recent years. And importantly, the wider spirits category continues to grow in popularity and diversity, providing more opportunities for Fever-Tree to be present on menus as part of a greater range of serves in the On-Trade, or gain more shelf space in the Off‑Trade. Overall, the UK spirits category continues to perform well, with rum and vodka the stand-out performers4, supporting the growing popularity of our Gingers and Flavoured Sodas, which grew in sales value by 11% and 31% respectively during the year. THIS YEAR HAS BEEN A GOOD DEMONSTRATION OF THE EVOLUTION OF OUR PORTFOLIO BEYOND TONICS BUSINESS REVIEW – UK This year has been a good demonstration of the evolution of our portfolio beyond Tonics. Our non- Tonic categories grew by 20% year-on- year and now represent approximately 25% of our total UK sales value, up from around 10% in 2019. Our ability to successfully cater to the latest consumer trends through our focused innovation process, ensures that the brand continues to strengthen in our home market, giving me confidence that the brand will remain as popular as ever in the years to come. Strategic progress Innovation remains pivotal to the strength of the brand. Our ability to excite consumers and capture the latest trends is central to our ongoing leadership of the premium mixer category and our ability to extend into adjacencies. To this end, 2023 has been a strategically important year as we have entered two categories beyond our core mixers; cocktail mixers and adult soft drinks, both of which have significant growth potential. 2023 highlights Fever-Tree continues to gain value share of the mixer category in the On-Trade, which remained impacted by softening consumer sentiment during 2023. We now have our highest ever share in this channel at 51%2 , driven by our strong customer relationships and the co-promotional programmes we develop with various spirit partners to target a number of different drinking occasions. 1 CGA & IRI 13 weeks to 16/06/2022. 2 CGA. 3 IRI YTD 10/07.22 (Other premium brands: Schweppes 1783; Fentimans; London Essence; Merchant’s Heart; Double Dutch). 4 Nielsen YTD 12/09/2023. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 26 Malaria No More UK and Fever-Tree – A decade of working together The historic role that quinine has played in combating malaria means that the cause is inextricably linked to our brand and is a key reason we continue to support the fight to eradicate malaria. 2023 marked a decade of partnership between Fever-Tree and Malaria No More UK. Malaria is one of humankind’s oldest and deadliest diseases. Fighting it has led to some of global health’s greatest and most historic strides. And yet, today, a child still dies from malaria every minute and the progress is threatened by challenges such as drug and insecticide resistance and the impacts of climate change. For more details see our website / www.fever-tree.com/communities Our range of premium cocktail mixers are enabling consumers to make great tasting cocktails at home just as easily and quickly as making a G&T; they are such high quality that this also provides the On- Trade with the ability to easily make fantastic tasting cocktails that justify premium pricing. We launched our cocktail mixer range during the first half of 2023 and have seen extremely positive response from consumers and our customers across the On- and Off-Trade, winning over 4,000 points of distribution in the UK’s leading retailers, as well as in a number of the largest UK On-Trade chains, including national brands such as Young’s and Fullers. We are very encouraged by the initial performance of the range and how it is opening the Fever-Tree brand to an even greater number of drinking occasions and tapping into the growing consumer interest in cocktails and other long mixed drinks. The initial response to our adult soft drink range has also been very positive, reaffirming our belief that our products’ natural ingredients, adult flavour profiles and the sophistication of the brand means we are ideally positioned to extend into this category. Our products have already gained over 9,000 points of distribution at UK retail and are outperforming most of the established brands in the category and we believe there is a significant opportunity to leverage the strength of the Fever-Tree brand to gain further distribution and market share within the adult soft drinks category. The Group continued to invest in marketing through various channels and platforms. We extended our national radio advertising campaign, with a focus on a broad range of serves beyond the G&T to highlight more of our portfolio, with a focus on our cocktail mixers during the festive season helping to drive significant uplift in sales during that important sales period. As you can see above, the Group continues to make significant strategic progress in the UK. I am particularly pleased with the early success we have seen in our new adjacent categories whilst maintaining our leadership position within our core mixer category. And although we are not immune to a softer consumer environment, our position as a premium but affordable product and our innovation expertise which allows us to capture new consumer trends, positions the brand for sustained success in our home market. UK REVENUE £114.8m (2022: £116.2m) Overview Strategic Report Governance Financial Statements 27 Fever-Tree brand revenue (excluding the revenue we get from GDP’s distributed brands) was £94.6m, an increase of 6% year-on-year. Many of our markets were impacted by a tough consumer environment in the second half of the year, particularly in Germany. These versatile mixers pair well with a range of spirits, but principally with vodka and tequila with Spritz serves and cocktails like the Paloma becoming more popular in recent years. Alongside the Sparkling range, our Rhubarb & Raspberry Tonic and Mediterranean Tonic continue to perform well within our core mixers, and we have extended our leadership of the Ginger Beer category, growing to over a third of the value share of Ginger Beer across European retail3. Our marketing campaigns throughout the year have been used to promote our broad range mixers, with a particular focus on Tonics, Ginger Beer and Sparkling Pink Grapefruit, which cater to popular drinking occasions across the region. For Tonics and Ginger Beer, where we have dominant market shares and good consumer awareness in growing categories, we have increased our investment in above the line campaigns, such as billboards in Paris, to drive further awareness and remain front of mind. THE BRAND HAS EXTENDED ITS MARKET-LEADING POSITION AND LAUNCHED NEW PRODUCTS BUSINESS REVIEW – EUROPE In 2023 we maintained our 15% value share of branded mixers at retail2 and continue to drive premiumisation in the Off-Trade, gaining 2ppts of value share of premium mixers to remain the only premium mixer with strong distribution and broad consumer appeal across the region. The On-Trade channel experienced lower consumer spending this year, but Fever-Tree performed well within the channel, growing distribution and setting the brand up for accelerated growth for when the macro environment becomes more positive. We have seen particularly encouraging results from diversifying our portfolio and making sure that accounts carry mixers beyond our Tonics, such as Ginger Beer and Sparkling Pink Grapefruit. Strategic progress As part of Fever-Tree’s portfolio expansion, we have launched a new range of Sparkling mixers, such as Pink Grapefruit and Lime & Yuzu in a number of our European markets. 2023 highlights Despite the subdued near-term macroenvironment, the long- term trends remain positive. The European spirit category is growing and premiumising, with long-mixed drinks continuing to gain popularity, especially across Italy and France1, two significant growth markets for the brand in the near term. 1 IWSR. 2 Nielsen 2023 (Europe top 15 markets). 3 Nielsen & IRI. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 28 Münchner Tafel Across Germany the Tafel Deutschland Network supports more than 960 locally organised food banks, receiving over two million visitors to their facilities annually. Fever-Tree Germany supports the Münchner Tafel (their Munich based organisation) with regular volunteer days, collecting food donations at supermarkets to be redistributed to people affected by poverty. In 2023, 22 fabulous volunteers helped to support through four food drive days at local Off-Trade Fever-Tree customer outlets, collecting 141 crates of food and nearly €1,000 in cash donations. For more details see our website / www.fever-tree.com/sustainability We have also continued to invest in TV advertisements in several markets, all of which showcase our ingredient quality and versatility beyond the G&T. We are pleased with our progress in Europe this year. The brand has extended its market-leading position and launched new products aimed at the latest consumer trends in each market, supported by our investment in multi-channel marketing campaigns and co-promotions, which help to drive incremental distribution, visibility and sales. There are several markets that are showing significant potential over the medium- and long-term, which, alongside the positive trends towards spirit growth and premiumisation, gives us further confidence in the opportunity across Europe. EUROPE FT BRAND REVENUE £94.6m (2022: £89.2m) Overview Governance Financial Statements 29 Strategic Report Fever-Tree delivered revenues of £27.2m in our Rest of the World Region, a decrease of 14% year-on-year (-10% at constant currency) as revenues were temporarily impacted by a one-off inventory buy-back as part of the transition to our new subsidiary set-up in Australia, where we expect to see ongoing good growth from next year onwards. 2023 highlights The brand continued to gain in strength in Australia, finishing the year the largest premium mixer in Australia, delivering good unit growth ahead of the category and share gains across all our core products1. Our Sodas and Ginger Ale performed particularly well, growing by over 64% and 24% year-on-year as we diversify outside of Tonics, and we look forward to 2024 with optimism having set ourselves up to take full advantage of this market going forward. In Canada, we have started to see the benefits of moving to a larger distributor to support our significant growth ambitions for this market. Their strong coverage has already enabled Fever-Tree to win over 2,500 new distribution points at grocery during 2023, with further new listings committed for 2024 at Canada’s leading retailers; Loblaws and Metro. This is helping to drive significant sales growth in the market and during 2023 Fever-Tree became the largest Ginger Beer brand by value in Canada, a significant achievement that the brand can build on to drive further growth across a range of categories. THE GROUP CONTINUES TO MAKE SIGNIFICANT STRATEGIC PROGRESS ACROSS OUR REST OF THE WORLD REGION BUSINESS REVIEW – REST OF THE WORLD Strategic progress The Group continues to make significant strategic progress across our Rest of the World region, including the major step we took in Australia to set-up our own subsidiary in this market. This exciting step will allow us to take greater control of our sales, marketing and distribution to accelerate the brand’s progress in this attractive market. As part of this change, we have started to work alongside a new distribution partner, have secured a local warehouse, and aim to start production with a local bottler during 2024. The brand continued to perform well in the Australian market, growing ahead of the total mixer category in the Off-Trade, with particularly strong growth in sodas and Ginger Ale as we start to diversify our portfolio. REST OF THE WORLD REVENUE £27.2m (2022: £31.5m) 1 Woolworth & Coles retail scanner data. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 30 In Canada, we are driving awareness of the brand through sampling at trade and consumer shows to improve visibility and teach the distributors, customers, and consumers about the Fever-Tree story. This directly resulted in a number of new On-Trade listings, as well as extending our visibility more broadly across the region. The brand also started a new partnership with Canada’s flagship airline, Air Canada, which included a 30 second video shown on back- of-seat screens to entice consumers to purchase Fever-Tree as part of their Holiday celebrations. Last year, we took the decision to upgrade our route-to-market in Japan and started to work with Asahi Breweries as our new distribution partner in January. This move is reflective of Asahi’s belief in the significant future opportunity of the premium mixer and adult soft drink category. We made good progress this year, performing ahead of our initial expectations, and remain excited about the sizeable opportunity ahead. Across our Rest of the World region more broadly, we continue to ensure we have first mover advantage ahead of the competition. The brand has a good presence in high-end bars and hotels in cosmopolitan cities across Asia, and we are developing our relationships with international and local spirits companies, as well as investing in our own activations and marketing campaigns. In Australia, we have continued to drive distribution growth and optimise our range.” A good example of this is our Fever- Tree & Friends ‘bar takeovers’ across a number of bars and hotels across Asia, including Bangkok and Manila to build brand awareness and loyalty amongst the top tier bar tender community. Overall, we have made good progress across this broad region, with a number of markets showing exciting potential for future long-term growth. Overview Strategic Report Governance Financial Statements 31 2019 2020 2021 FEVER-TREE IS COMMITTED TO DOING BUSINESS IN A WAY THAT IS BENEFICIAL TO ALL STAKEHOLDERS, THE NATURAL ENVIRONMENT, AND THE WIDER COMMUNITY TO DRIVE A POSITIVE LONG-TERM IMPACT SUSTAINABILITY REVIEW Our branches prioritise the key areas of Climate, Circular Economy, Conservation, Communities and Colleagues, driving us to make a positive contribution across society and the environment. You can read more about our progress towards each of the branches in this report. We are on a journey to drive sustainability from within, year-on-year. Below are some our highlights from the past five years. Three years ago, we launched Fever-Tree’s Five Branches of Sustainability – the framework that guides our initiatives to care for the world in which we live and the people with whom we work. Published our first carbon footprint & product life cycle analysis Planted London’s first Tiny Forest in partnership with Earthwatch Europe Launched our sustainability framework: The five branches Road to Rwanda employee malaria fundraising event Trialled reusable and refillable packaging with major UK retailer First solar panels installed at co-packer manufacturing site Announced first operational science-based emissions reduction targets Achieved carbon neutrality across all mixers sold in the UK Began student mentoring scheme with Future Frontiers Water recovery & recycling system installed at major co-packer FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 32 2022 2023 Fever-Tree’s Five Branches of Sustainability were developed in alignment with the United Nations’ Sustainable Development Goals (SDGs). The SDGs, also known as the Global Goals, are the 17 goals set by the UN in 2015 as the global blueprint to achieve peace and prosperity for all by 2030. We recognise the role that we play with a highly complex interconnected ecosystem of actors, which is why each of our branches is aligned with a SDG, enabling us to come together to do our bit to help tackle the challenges facing the globe. Introducing our key SDGs Primary can co-packer powered by 100% renewable electricity Introduced salary- sacrifice scheme incentivising electric vehicles for UK employees Began trials of a dispense serve system for our On-Trade customers Key supplier switched from diesel to HVO fuel Germany office powered by renewable energy DE&I committee established Celebrated the 10th anniversary of our partnership with Malaria No More UK On-site boreholes installed at a number of co-packer sites Procured 100% renewable electricity across global operations Overview Strategic Report Governance Financial Statements 33 33 CLIMATE CIRCULARITY CONSERVATION We have developed a series of Sustainability Key Performance Indicators (KPIs) to track our ESG progress from 2024 onwards. These KPIs are a central part of our ESG strategy, structured by Fever-Tree’s Five Branches of Sustainability, and are designed to demonstrate our future ambition across the ESG spectrum, enabling us to assess and communicate our efforts in a tangible, transparent and accountable manner. SUSTAINABILITY – OVERVIEW CLIMATE KPIs • Establish our net zero roadmap in 20241 • 50% reduction in Scope 1 & Scope 2 GHG emissions by 20302 • 100% renewable electricity in our operations year-on-year Supporting UN SDGs Read more / pages 36 to 45 CIRCULARITY KPIs • Establish a roadmap to increase recycled content from 2024 • Fully recyclable primary packaging • Zero waste to landfill across operations & manufacturing Supporting UN SDGs Read more / pages 46 and 47 CONSERVATION KPIs • 220 Tiny Forests supported, with 1,200 Tree Keepers engaged with biodiversity and conservation by 2025 • Champion water stewardship across our supply chain, evolving our water management strategy by 2025 Supporting UN SDGs Read more / pages 48 to 50 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 34 COMMUNITIES COMMUNITIES KPIs • Support projects that increase awareness, reach and uptake of anti-malarial interventions • 100% of employees engaged with community and citizenship programmes by 2025 • 100% of direct ingredient suppliers on Sedex by 2025 Supporting UN SDGs Read more / pages 52 to 55 COLLEAGUES KPIs • 100% of management to complete DE&I training by 20253 • Internal colleague pulse survey to be conducted in 2024 Supporting UN SDGs Read more / pages 56 and 57 a) The targets are to be launched in 2024 – hence we shall begin reporting progress in the next Annual Report for FY24. b) Operations refer to the Fever-Tree Group’s directly owned/leased buildings. c) These pragmatic targets refer to the performance of the Fever-Tree Group as it is structured in 2023. Subject to review should there be major structural changes with required integration. d) When years are referenced in KPIs, our target is to reach the goal by the end of that year (e.g. by 2025 specifically refers to by 31 December 2025). 1 Net zero by 2050 is a given. We are working to get there sooner. 2 Versus a 2018 baseline. 3 Including unconscious bias training offered to all managers in 2024. OUR FIVE BRANCHES GUIDE OUR INITIATIVES TO CARE FOR THE WORLD WE LIVE IN AND THE PEOPLE WE WORK WITH COLLEAGUES Overview Strategic Report Governance Financial Statements 35 FEVER-TREE DRINKS PLC | Annual Report and Financial Statements 2023 CLIMATE SUSTAINABILITY – CLIMATE This was largely driven by our ambition to reach 100% renewable electricity in operations by 2025. Up from 77% globally in 2022, this year we’ve transitioned to 100% renewable electricity sources across all global Fever-Tree offices. This was obtained through a sequential shift – starting with the UK, rolling out to Germany in 2022, and now having expanded to Australia & the USA in 2023 to complete our full global transition. We’re also empowering colleagues to embed sustainable choices throughout their personal lives. We offer all UK-based employees the opportunity to utilise electric vehicles and our cycle-to-work scheme as a salary sacrifice benefit. This encourages cleaner modes of transport – across employee commuting and beyond. Meanwhile, our US team have a financial incentive scheme reimbursing employees for planetary positive lifestyle changes. The scheme is used to fund a host of sustainable swaps – from electric vehicles and e-bikes, to home solar panel installations and renewables, as well as gardening kits and home composting systems – initiatives big and small are being rewarded that have a positive impact on our environment. In 2023 we once again partnered with the Carbon Trust to carry out a lifecycle assessment analysing the cradle-to-grave emissions of all products sold in the UK in 2022 in accordance with the GHG Protocol Corporate Standard. Each assessment looks at all emissions associated with our drinks across their lifecycles; from those connected to the sourcing of our ingredients and the manufacturing of our mixers, to the journey they go on to reach our customers, how they are consumed, and finally their eventual disposal. Measuring our footprint enables us not only to quantify progress made, but also identify hotspots for further decarbonisation, aiding greenhouse gas reductions year-on-year. Over the course of 2022, we reduced the absolute greenhouse gas emissions of products sold in the UK by 4.6% below 2021 levels, largely driven by our intensified focus on supply chain collaboration, manufacturing innovation and renewable energy use. This reaffirms our commitment to meet the Paris Agreement goals – limiting global warming to 1.5°C above pre-industrial levels. In 2021, we set a science-based target, approved by the Science Based Targets initiative (SBTi) and aligned to 1.5°C warming scenario, to reduce our Scope 1 and 2 emissions by 50% by 2030 from a 2018 base year. NET ZERO ROADMAP in 2024 50% reduction in Scope 1 & Scope 2 GHG emissions by 2030 100% renewable electricity in our operations year-on-year FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 36 From 2021 to 2023, we invested in high-quality carbon offsets from where we source key ingredients, such as the Isangi REDD+ Project in the Democratic Republic of Congo, to enable all drinks sold in the UK to be carbon neutral – a status that is independently verified by the Carbon Trust. Obtaining carbon neutrality for our UK products has been a significant first step in accelerating our understanding of our UK emissions, enabling clear reporting across the business, and in doing so laid a solid foundation for supply chain climate engagement. Looking to the future, as of 2024 we have taken the decision to step back from our carbon neutral position for UK products, and in turn have moved away from carbon offsetting. The progress we have made means we now in a position to look within our supply chains and focus on value chain decarbonisation through ‘insetting’ where we can have the most meaningful impact. From 2024, our focus is on enhancing the scope, scale and speed of decarbonisation – broadening our decarbonisation strategy to cover Scopes 1–3 with a global lens, expediting action across all life cycle stages, and defining a transparent net zero roadmap. Not only are Fever-Tree’s global offices powered by 100% renewable electricity1; we are also working with our manufacturing partners to harness the movement towards renewables. All UK co-packers now utilise renewable energy, with both of our largest bottling and canning co-packers being powered by 100% renewable electricity. Meanwhile, our second largest bottling co‑packer has installed solar panels on the plant roof supplying 20% of their energy demands, with plans to increase this further in the years ahead. We’re proud to have our global offices powered by 100% renewable energy. 1 100% renewable electricity gained across global Fever-Tree operations (situated in UK, USA, Germany and Australia) via a combination of renewable energy tariffs and the purchase of renewable energy credits. From 2024, our focus is on enhancing the scope, scale and speed of decarbonisation.” Overview Strategic Report Governance Financial Statements 37 37 Strategic Report Product Carbon Footprint for 200ml Indian Tonic Water sold in UK in 2022 To understand our impact on the environment, we conducted a comprehensive product carbon footprint assessment for all drinks sold in the UK in 2022 with the Carbon Trust. This assessment considered emissions from the entire value chain of our drinks, including liquid ingredient sourcing, packaging, manufacturing, downstream distribution, use, and end-of-life disposal. The following graphic represents the analysis or Fever- Tree’s 200ml Indian Tonic Water sold in the UK.1 1. N.B. For the purpose of comparison, the bottle graphic on this page reflects the product carbon footprint of Fever-Tree’s 200ml Indian Tonic Water sold in the UK. Whereas the remaining carbon lifecycle stage analysis in this report instead reflects a weighted average across our full UK product portfolio, analysing the average carbon footprint per litre sold in the UK. Weighted Average Carbon Footprint Across UK Portfolio Weighted Average per Litre (kg CO2e/litre) Reduction Assessment Process 2021 2022 % change YoY Liquid 0.111 0.115 +3.24% Packaging 0.271 0.254 -6.32% Co-Packers 0.058 0.036 -37.31% Downstream Distribution 0.063 0.059 -6.13% Use Phase 0.073 0.082 +13.19% EOL 0.020 0.022 +8.91% Total 0.596 0.569 -4.61% SUSTAINABILITY – CLIMATE CONTINUED Co-Packers 0.012kg CO2e/unit (2021: 0.018kg CO2e/unit) Use phase 0.019kg CO2e/unit (2021: 0.015kg CO2e/unit) Distribution 0.015kg CO2e/unit (2021: 0.017kg CO2e/unit) End of life 0.007kg CO2e/unit (2021: 0.006kg CO2e/unit) Packaging 0.074kg CO2e/unit (2021: 0.084kg CO2e/unit) Liquid 0.027kg CO2e/unit (2021: 0.026kg CO2e/unit) Year-on-year carbon footprint comparisons are derived from the weighted average of Fever-Trees UK-sold product carbon footprints, comparing 2021 vs 2022 analysis (verified by the Carbon Trust). TOTAL CARBON FOOTPRINT 0.153kg CO2e/unit (2021: 0.166kg CO2e/unit) Our emissions FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 38 Ingredients In 2022 our ingredients accounted for 20% of Fever-Tree’s UK product emissions, including both the embodied emissions of ingredients as well as their associated inbound transport emissions. Comparing 2021 to 2022, this lifecycle stage increased marginally by 3%. However, looking ahead we expect emissions related to our use of spring water to reduce significantly due to the introduction of on-site boreholes at two of our co-packers across 2023 and 2024. Looking ahead… We will continue to work closely with suppliers to obtain ever more granular data across priority ingredients enabling us not only to develop increasing detailed emissions data, but also identify opportunities for further emissions reduction through our ingredient supply chain. Packaging Packaging accounted for 46% of our UK emissions, having seen a 6% year-on-year reduction in 2022 vs 2021 – largely driven by decarbonisation measures across packaging production sites and the implementation of circular solutions, such as utilising recycled content in our primary packaging and utilising recyclable materials. We’re continually working with packaging suppliers to explore new emission reduction opportunities, including electrification of internal processes, chemistry innovations, and the utilisation of renewable energy sources. In addition, together we are exploring new ways to adopt principles of the circular economy, including supporting material recovery in production, and incorporating recycled content in our packaging. Looking ahead… Our priority will be obtaining a more granular view of our global packaging related emissions to inform opportunities to further drive decarbonisation. This will be supplemented by a programme of work looking to further embed sustainability and circularity requirements into procurement practices. More detail is outlined in visit our Circular Economy summary on / page 46 Manufacture The manufacturing footprint from activities at our co-packer sites accounted for 7% of UK emissions – having seen a substantial reduction by 37% year-on-year since 2021. We’ve been working closely with our co-packers to harness a range of more sustainable solutions during the manufacturing process. As well as continuing to encourage the transition to renewable electricity in production, our co-packers have made real progress in implementing infrastructure upgrades, improving energy efficiency and reducing fuel consumption within the manufacturing process. This year a major bottling co-packer invested in two new boilers, driving 20% greater efficiency, thus reducing gas usage and associated carbon emissions. We’ve also been working with our manufacturing partners to embrace circular technological advancements – for example, one of the warehousing sites used for our products made a series of sustainability-led substitutes across their on-site assets, such as transitioning to lithium battery powered pallet trucks, driving an annual saving of 4,056kg CO2e in 2023. These efforts combined have had a significant impact in driving down our manufacturing lifecycle stage emissions. Looking ahead… In late 2023 we began work with an external advisor, ClimatePartner, to assess our entire Group footprint across the full value chain, looking at what it will take for Fever-Tree to reach net zero emissions. We expect major global hotspots for decarbonisation to come from further engaging co-packers on the rollout of renewable energy and production initiatives that deliver sustainability wins alongside operational efficiency gains. Overview Strategic Report Governance Financial Statements 39 Downstream distribution Distribution represented 11% of UK emissions in 2022. This year, on a mission to drive fuel and water efficiencies, we localised spring water access to a borehole on-site at a major co-packer. Not only has it reduced water wastage by tapping close to source, but in doing so we’ve saved an estimated 27 million litres of water being transported approximately 250,000 road miles per year, taking 916 truck journeys off the road over the course of the year. In addition, we’ve been working on route and capacity optimisation. For example, in Germany we maximised the number of cases of returnable bottles that we stack in pallets. Thanks to this measure, we now transport more crates per truck than ever before, delivering significant freight savings and efficiency gains in 2023. We’re now able to fit between 264 and 528 more cases per truckload, depending on the bottle format1. In the UK, we’ve been assessing the necessity of each transportation leg and grasping opportunities to deliver route-to-market delivery efficiencies. Looking ahead… We will continue working with internal and external teams to further enhance the accuracy of global supply and demand planning, delivering sustainability gains through more efficient inventory and logistics management. We are assessing the viability of investing in trucks powered by low carbon fuels, and exploring the implementation of electric forklifts at our warehousing site. We’ll also be investing in additional bottling sites and localising sourcing where possible to further drive down distribution emissions. Use phase & end-of-life In the UK in 2022, the use phase of our products accounted for 13% of emissions, whilst end-of-life treatment was responsible for 4%. Whilst we have limited control over our products downstream, we’re working to guide consumers on responsible consumption and end‑of-life treatment by encouraging consumers to recycle our packaging though the use of on-pack recycling labels. Looking ahead… We’re seeking to capitalise on technological developments and innovation to drive down emissions, including trialling an On-Trade dispense solution. In addition, our teams will continue to seek out projects with positive sustainability outcomes, such as an ongoing shelf-life extension project driving down product and packaging waste. SUSTAINABILITY – CLIMATE CONTINUED 1. Our transport optimisation efforts enabled 264 more cases of 200ml bottles per truck, 528 more for 500ml bottles, and 368 more for 750ml bottles. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 40 BOARD Biannual review & ratification of Risk Register Biannual review of Risk Register RISK COMMITTEE Biannual assessment of Climate Risk ESG COMMITTEE Biannual reporting CLIMATE RELATED RISK ANALYSIS & OPPORTUNITIES Whilst it is not mandatory for our business to report in line with the TCFD framework, this year we conducted our first climate risk analysis, softly aligned to TCFD. This has allowed us to better understand potential financial impacts from climate change on the business, providing us with the opportunity to report progress made to mitigate climate‑related risks, and identify opportunities driven by the heightened focus on climate change. Figure 1.0 Fever-Tree risk review governance structure A) Governance Describe the Board’s oversight of climate-related risks and opportunities. The Board provides overall leadership, independent oversight and retains control of key Group decisions. It has ultimate authority for setting climate- related goals and targets. Climate risk analysis is conducted biannually by the Global Sustainability team (via an annual deep dive, supplemented by a lighter touch reflection on any key changes after six months) and submitted to the Risk Committee upon review by the ESG Committee. Within the Risk Committee, the Group’s CFO and Company Secretary record the most material risks in our Group Key Risk Register, formed of our most significant risks from across the business. This register is finally reviewed, challenged and ratified by the Board on a biannual basis including material climate risk, following the structure indicated in Figure 1.0. Describe management’s role in assessing and managing climate- related risks and opportunities. The ESG Committee, established in 2022, has led in the development of the Group’s ESG strategy, policies, and programmes – including analysis of climate-related risks and opportunities. The ESG Committee, including senior employees from across the business, is responsible for overseeing ESG-related matters overseen by Fever-Tree’s ESG Director. Its purpose is to ensure appropriate frameworks are in place to establish and maintain good governance of ESG matters. ESG Committee duties are as follows: • managing ESG risks (established and emerging), including climate- related risks and opportunities; • setting the Group ESG strategy and monitoring progress towards ESG KPIs; • ensuring the Group adheres to all ESG related disclosures and regulatory reporting requirements; and • working with the Group DE&I Committee to monitor company diversity, and ensure the promotion of an equitable and inclusive culture. B) Strategy Describe the climate-related risks and opportunities the organisation has identified, and the resilience of the organisation’s strategy. Risks In 2023, Fever-Tree conducted a preliminary assessment of climate‑related risks to our business. The risks have been categorised into three main areas – regulation and policy related risks; reputational and market related risks; and physical risks (immediate and long-term). No material issues or weaknesses in the organisation’s strategy have been identified for the short- term, however a series of resilience strategies have been established to mitigate specific medium to long- term climate-related risks. A more detailed climate risk scenario analysis is in plan for 2024 and beyond to build out a more holistic medium to long-term view of climate risks and associated resilience strategies. Overview Strategic Report Governance Financial Statements 41 i. Regulation and policy risks • Governments seeking to introduce new climate-related regulations and laws to accelerate the transition to a low carbon economy may increase the transition risks facing our core markets. Examples include carbon pricing, extended producer responsibility (EPR) and the introduction of deposit return schemes (DRS) for packaging, which could have financial and/or operational impacts. • Regulation related to water stress, water scarcity or waste outputs could impact and potentially restrict our production capability. • Legislation that requires us to reformulate or change our products, marketing, sourcing, packaging formats or operational practices might lead to higher input costs, taxes/charges, insurance premiums, and potentially reduced sales/profitability. Risk remediation • Greater share of mind has been allocated to preparing for the requirements of climate-related regulations, with regular updates at ESG Committee meetings to keep members abreast of any developments. • With regard to incoming climate- related reporting requirements, work is underway to update the Group’s global carbon footprint (Scopes 1-3). Understanding our global baseline will enable the identification of carbon hotspots and opportunities for significant decarbonisation across our value chain. • In relation to packaging-related regulations, including the UK DRS and EPR, the business has established working groups to ensure compliance. ii. Reputational and market risks • Public perception of the Fever- Tree brand could be at risk as societal expectations of a company’s contribution to, or detraction from, the transition to a lower-carbon economy change. • As ESG-related matters are increasingly considered, we may see shifts in supply and demand for certain commodities, products and services, in response to the rise in conscious consumerism. • We may see increased interest from regulators, the media and investors. Any negative impact on the brand would mainly be in the form of reputational damage. Risk remediation • In 2024, we will build the Group’s net zero roadmap. This will not only drive value chain decarbonisation throughout our supply chain but also deliver potential partnership opportunities with our suppliers and customers. • Regarding our material footprint, all primary packaging is infinitely recyclable and a significant proportion of our glass bottles and aluminium cans are made from recycled materials. This is something we continue to monitor and seek opportunities to increase without risking structural integrity. • To mitigate potential reputational damage, we have integrated thorough sustainable claims guidance within our marketing claims approval process. iii. Physical risks (immediate and long-term) • Year-on-year, the world is experiencing increased frequency and severity of extreme weather events such as cyclones, hurricanes, fires, and floods. The immediate implications of climate-related events could include decreased production capacity, reduced revenues from supply chain interruption and lower outputs, higher costs due to worker absenteeism or use of alternative suppliers, and write-offs or early retirement of damaged assets. In the medium-long term, this could in turn lead to continuous disruptions on the supply chain, raw material shortages, price increases, inflation and/or delays. • Simultaneously, we see increased chronic physical risks as an outcome of long-term shifting climate patterns, such as changes in precipitation patterns and extreme variability in weather and temperature. Climate change may represent a risk to the Group’s ability to source ingredients from around the world, as well as potentially impacting the Group and its partners’ ability to produce, distribute and sell our products. There is a risk that climate change could impact the future availability, quality and cost of ingredients required to manufacture our products. Risk remediation • We have preliminary SBTi approved science-based carbon reduction targets, set in line with the latest climate science necessary to meet the goals of the Paris Agreement and limit the temperature increase to 1.5°C above pre-industrial levels. Further decarbonisation plans are incoming across Scopes 1, 2 and 3, assessing the potential for a future Group net zero emissions target. • We have developed a network of suppliers who can supply ingredients and materials from different origins to diversify our risk and protect supply. With high priority raw materials, we have mitigation actions in play such as maintaining higher levels of stock. Opportunities The changing climate and increased attention to corporate ESG performance can also present business opportunities. Our initial assessment has provided three main categories of climate-related opportunities – regulation related opportunities; new growth spaces; and operational efficiencies. iv. Regulation related opportunities • With incoming regulation heightening awareness of lower carbon and more sustainable choices, the Group could see a marked improvement to the cost of sustainable solutions in the market. For example, with the introduction of Deposit Return Schemes (DRS), we could benefit from increasing availability of recycled glass and aluminium, driving supply and potential market pricing benefits. SUSTAINABILITY – CLIMATE CONTINUED FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 42 Action taken • We are working with supply chain partners to develop circularity initiatives, including a roadmap to increase the use of recycled content and reduce our packaging production footprint through transformational production methods that are estimated to potentially reduce emissions related to our can production by 41% from 2022 to 2030. v. New growth spaces • Customers, consumers, investors, and governments are increasingly demanding products with greater longevity and reusability. There could be an opportunity to appeal to the rise in conscious consumerism and explore new revenue streams by developing lower emission products with clearly referenced sustainability benefits. Action taken • The Group is increasing consideration of circular solutions that could simultaneously reduce waste, enable carbon reductions, and engage new demographics. • We are working to increase direct communication with consumers on sustainability plans, through both traditional and social media channels. For example, voluntarily reporting on our sustainability progress to ensure transparency with external stakeholders. vi. Operational efficiencies • There could be an opportunity to harness technology innovations that assist the transition to lower carbon solutions throughout our supply chain. For example, using renewable energy sources, LED lighting, circular economy solutions, industrial motor technology, water usage and treatment solutions, retrofitting buildings, efficient heating measures and electric vehicles could not only improve our energy, water and waste footprint, but simultaneously drive cost efficiencies. • By encouraging supply chain partners to harness low-carbon and renewably powered processes, we would make progress towards our carbon reduction targets, as well as benefitting from a reduction in associated carbon taxes/expenses, long-term energy cost savings, and reputational gains. Action taken • We are working closer than ever with supply chain partners to collaborate on climate- related initiatives. This includes exploring innovative technologies, available now and in the future, to minimise the environmental impact of packaging production. For aluminium, an example is the installation of a carbon dioxide vaporisation tank which is warmed using end-of-life effluent. For glass, our partners are exploring decarbonisation through hydrogen and biomethane powered production. • Our offices, production sites and packaging manufacturing plants are increasingly powered by renewable electricity – something we will continue to advocate for across our supply chain. • We are exploring logistics and fuel efficiencies, including maximising utilisation of container loads, decreasing wasted miles and bolstering transportation efficiencies. Most notably, we’ve worked with key co-packers to develop on-site boreholes to source spring water close to source, significantly reducing the need to transport water to their sites. C) Risk management Describe the organisation’s processes for identifying and assessing climate-related risks. We conduct an annual climate risk deep dive, with a biannual reflection on any key changes, considering the effects that climate risks could have on our business model and long-term strategic objectives. Within our Climate Risk Register, each risk is quantified against a set of criteria, considering both the likelihood of occurrence and the potential impact on the Group, both before and after the application of mitigation measures. Describe the organisation’s processes for managing climate-related risks. We use the Climate Risk Register to identify mitigating actions for each risk. Each action’s effectiveness is reviewed and evaluated by the ESG Committee on a biannual basis. New actions are executed to further reduce the net score of each risk, especially for those that sit outside of the Group’s risk appetite. D) Metrics and targets Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process. In 2018, we undertook an initial assessment of our Scope 1, 2 and 3 greenhouse gas emissions for the purposes of establishing a baseline from which to set science-based climate targets. We have established key performance indicators to measure our progress in addressing climate risks and opportunities. These include: • Reducing our Scope 1 and 2 emissions by 50% by 2030 from a 2018 base year (Science Based Target, aligned to 1.5-degree warming scenario). • Reducing per litre product emissions on an annual basis. We have worked to develop further Key Performance Indicators supporting our sustainability ambitions, launched in this Annual Report. In 2024, we will undertake another global group carbon footprint analysis that will enable us to form a robust emissions reduction approach, including a Net Zero roadmap and cradle-to-grave decarbonisation strategy across the full value chain. Overview Strategic Report Governance Financial Statements 43 SUSTAINABILITY – CLIMATE CONTINUED Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks. Methodology ClimatePartner UK Ltd has assisted in the methodology, collection and calculation of Fever-Tree’s Scope 1, 2 and 3 emissions – reported here for Streamlined Energy and Carbon Reporting (SECR) for the fiscal reporting period starting 1 January 2023 and ending 31 December 2023. ClimatePartner can confirm this has been conducted in accordance with the GHG Protocol Corporate Accounting and Reporting Standard and the UK Government’s Environmental Reporting Guidelines1. The following energy and greenhouse gas sources were included in the calculations: • Scope 1 (direct) includes heating of buildings, company cars and vans, and site vehicles including those operated by subcontractors. • Scope 2 (indirect) includes purchased electricity based on meter readings from bills received. • Scope 3 (indirect) includes fuel used for business travel. Where sufficient real-world data (subcontractor fuel usage, and water usage at building sites) was unavailable a reasonable estimate has been used with the aim of improving data collection and quality in future reporting periods. The following method was used to calculate the information disclosed: activity data x emission factor = greenhouse gas emissions. The figures were calculated using Ecoinvent database conversion factors, expressed as tonnes of carbon dioxide equivalent (tCO2e). All seven Kyoto protocol GHGs were included: CO2, N2O, CH4, HFCs, PFCs, SF6 and NF3. The calculations were made using the operational control approach which was selected to fully capture the greenhouse gas emissions that sit within the scope of Fever-Tree’s commercial activity. This approach fulfils the mandatory requirement of SECR reporting to capture ‘emissions from activities for which the company owns or controls including combustion of fuel & operation of facilities’2. There have been some minor changes in the FY23 calculations versus the FY22 analysis: Due to a new carbon accounting partnership this year with ClimatePartner, we are using a new database and have gained access to a wealth of different emissions factors. This has led to variances in conversions between kWh to CO2e versus previous years. For simplicity, we’ve streamlined the scope 3 categories included. Where categories have been removed, we’ve used totals comparing like-for-like emissions categories year-on-year. For the first year, we’ve included Australia emissions, reflecting the establishment of our own operations in the region in 2023. Analysis In 2021, we set a science-based target, approved by the Science Based Targets initiative (SBTi) and aligned to 1.5°C warming scenario, to reduce our Scope 1 and 2 emissions by 50% by 2030 from a 2018 base year – which we remain committed to. Yet, as would be expected given our mainly outsourced business model, the majority of our emissions will sit within Scope 3. To give an indication, based on our global carbon footprint analysis conducted 2018/19, 99.98% of emissions were from scope 3 sources. Whilst we recognise that we have a responsibility to report on direct emissions in line with SECR, and drive greenhouse gas reductions where we have direct control, the main focus for Group decarbonisation will be collaborating to reduce Scope 3 emissions in line with our net zero roadmap which will be developed during 2024. SECR: Scope 1: The increase in our scope 1 footprint this year was driven by a change in vehicle ownership by the Germany team, shifting from rentals to leases in 2023. By transitioning emissions accounting from scope 3 to scope 1, this has increased Germany’s scope 1 footprint by 78%. This change has now led the German footprint to account for 91% of global scope 1 emissions, skewing results due to a shift in scope categorisation. And, whilst in the UK we use a hybrid vehicle fleet, electric or hybrid vehicles are partially used by our Germany colleagues – highlighting an opportunity for future improvement. Scope 2 market-based: Action to reduce our scope 2 footprint this year was guided by our ambition to reach 100% renewable electricity in operations by 2025, driving market- based scope 2 emissions to zero. Up from 77% globally in 2022, in 2023 we transitioned to renewable electricity sources across all global Fever-Tree offices. This was obtained through a sequential shift – starting with renewable energy tariffs in the UK, rolling out to Germany in 2022, and now having expanded to Australia and the USA through renewable energy certificates in 2023 to complete our full global transition. Going forward, the main focus for driving absolute reductions will be by transitioning our global fleet to hybrid or electric vehicles. Scope 2 location-based: Whilst location-based emissions look to have increased, this is not reflective of the decrease seen in absolute KwH energy consumption (due to a change in conversion factors used by ClimatePartner), and not reflective of the real changes made in renewable electricity sources – hence why we prefer to focus our attention on market-based reporting. Scope 3: The main driver behind the increase in scope 3 emissions is improved US datapoint accuracy. Whilst the reporting looks to reveal a 79% increase in US business travel emissions, in reality we have improved travel and fuel data reporting processes and have been able to better reflect the travel emissions for our colleagues based in America. 1 UK Government Environmental Reporting Guidelines: assets.publishing.service.gov.uk/ government/uploads/system/uploads/ attachment_data/file/850130/Env-reporting- guidance_inc_SECR_31March.pdf. 2 UK Government Environmental Reporting Guidelines, page 51. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 44 Closer look at our emissions STREAMLINED ENERGY AND CARBON REPORTING STATEMENT Reporting Year Site 2022 UK 2022 USA 2022 Germany 2022 TOTAL 2023 UK 2023 USA 2023 Germany 2023 Australia 2023 TOTAL ENERGY CONSUMPTION (kWh) Gas 459.00 – 176.00 829.00 27,774.14 – – Electricity 131,431.00 21,132.00 16,491.00 104,299.90 10,895.00 15,312.00 5,730.50 Total energy consumption (kWh) 131,890.00 21,132.00 16,667.00 169,689.00 105,128.90 38,669.14 15,312.00 5,730.50 164,840.54 EMISSIONS (tCO2e) Scope 1 Emissions from combustion of fuel for company owned or leased vehicles 10.20 – 103.82 10.08 0.28 184.63 – Total Scope 1 10.20 – 103.82 114.02 10.08 0.28 184.63 – 194.99 Scope 2 Gas 0.08 – 0.03 0.17 7.58 – – Electricity (location-based) 25.42 5.32 3.96 24.99 1.67 6.23 4.64 Electricity (market-based) 8.09 – – – – – – Total Scope 2 (location-based*) 25.42 5.32 3.96 34.70 25.16 9.25 6.23 4.64 45.28 Total Scope 2 (market-based) 8.09 – – 8.09 0.17 7.58 – – 7.75 Scope 1 & 2 Total Scope 1+2 (location-based*) 35.61 5.32 107.78 148.72 35.24 9.53 190.86 4.64 240.27 Total Scope 1+2 (market-based) 18.28 0.00 103.82 122.10 10.25 7.86 184.63 0.00 202.74 Scope 3 Emissions from business travel in rental cars or employee vehicles where company is responsible for purchasing the fuel 29.02 70.14 93.99 23.56 125.89 – 1.92 Total Scope 3 29.02 70.14 93.99 193.15 23.56 125.89 – 1.92 151.38 Scopes 1–3 Total Scopes 1–3 (location-based*) 64.64 75.46 201.77 341.86 58.80 135.42 190.86 6.57 391.65 Total Scopes 1–3 (market-based) 47.31 70.14 197.81 315.25 33.81 133.75 184.63 1.92 354.12 INTENSITY (TCO2E / UNIT PRODUCED) Revenue £m 116.19 95.60 26.60 238.39 114.78 117.00 24.96 11.90 268.64 Intensity ratio (Scopes 1 + 2, location-based): tCO2e / £m revenue 0.31 0.06 4.05 0.62 0.31 0.08 7.65 0.39 0.89 Intensity ratio (Scopes 1 + 2, market-based): tCO2e / £m revenue 0.16 – 3.90 0.51 0.09 0.07 7.40 – 0.75 Intensity ratio (Scopes 1–3, location-based): tCO2e / £m revenue 0.56 0.79 7.59 1.43 0.51 1.16 7.65 0.55 1.46 Intensity ratio (Scopes 1–3, market-based): tCO2e / £m revenue 0.41 0.73 7.44 1.32 0.29 1.14 7.40 0.16 1.32 * Location-based electricity reporting uses the average grid fuel mix in the country of purchase to calculate GHG emissions. This is mandatory for SECR. Whereas market- based electricity reporting is more accurate, using the supplier-specific fuel mix of the reporting company’s tariff. As we continue annual reporting with ClimatePartner, we hope to continue to improve the data quality and inputs year-on-year. Overall: Looking at the intensity ratio to assess the overall emissions proportional to growth, we’ve remained consistent at 1.33 tonnes CO2e (Scopes 1-3, market- based)/£million revenue. Given that more data was entered this year and more stringent conversion factors were used, this ratio under-represents the progress made. Overview Strategic Report Governance Financial Statements 45 FEVER-TREE DRINKS PLC | Annual Report and Financial Statements 2023 CIRCULAR ECONOMY SUSTAINABILITY – CIRCULAR ECONOMY We recognise the importance of using packaging that minimises our impact on the wider environment. That’s why we continually seek new ways to enhance the life cycle of our packaging and manufacturing procedures. Packaging Our glass bottles and aluminium cans are non-toxic and infinitely recyclable. Upstream, we are engaging with our packaging partners to identify opportunities to minimise the environmental impact of the materials that we use – from redesign and light-weighting, to supporting material recovery in production and incorporating recycled content in our bottles and cans. 2023 has seen our primary aluminium can provider increase the recycled content in their cans to 62%, with a roadmap in place targeting 85% recycled content by 2030. Meanwhile, we’ve increased supply from a major glass provider at the forefront of the decarbonisation movement – including significant investment in new melting technologies, lower carbon fuel sources, automation and closed loop manufacturing. Our approach to sustainable packaging extends to our secondary and tertiary packaging efficiencies. One example from this year is our analysis of necessary packaging elements, leading to the removal of cardboard can pads from 8-pack cases. We’ve also lightweighted cardboard sleeves on bottles, reducing the weight of 4-pack sleeves by 30g. Meanwhile, we’re also engaging downstream partners, exploring new ways to adopt principles of the circular economy – including trialling an On-Trade dispense system to minimise packaging. Alongside our utilisation of reusable glass bottles in Germany, we are additionally engaged with the potential implementation of a Deposit Return Scheme in the UK. Waste We are committed to zero waste to landfill, both within our own operations and across our manufacturing partners – meaning that any waste produced is either reused, recycled, composted, or sent to energy recovery. Once produced, we try our best to ensure that shorter dated product also does not go to waste – often through stock donations to charitable partners, such as St John’s Ambulance. Establish a roadmap to increase recycled content from 2024 Fully recyclable primary packaging Zero waste to landfill annually FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 46 Our glass bottles and aluminium cans are non-toxic and infinitely recyclable. Looking ahead… We will continue to develop circularity initiatives with partners in 2024, including developing a roadmap to further reduce the footprint of packaging production. This could translate to increased recycled content in our packaging, further lightweighting our can portfolio, increasing the proportion of renewable energy used in packaging production, and collaborating on circularity and recycling initiatives with our partners. We will continue to highlight the recyclability of our packaging and encourage responsible end-of-life disposal to customers and consumers alike, ensuring market specific recycling messaging on our product packaging. Overview Strategic Report Governance Financial Statements 4747 FEVER-TREE DRINKS PLC | Annual Report and Financial Statements 2023 CONSERVATION SUSTAINABILITY – CONSERVATION High quality ingredients rely on a well-managed environment. Therefore, we know that conserving the earth plays a big role in sourcing the highest quality ingredients for our drinks. Our commitment to sustainability includes ensuring that we play our part in the protection of the habitats and landscapes where we source our ingredients, manufacture our products, as well as where we live and work. We recognise the importance of collaborating with external partners to drive change – both inside and outside of our value chain. Over the year, we’ve developed our partnerships with conservation focused organisations. In the UK, alongside Mitchells & Butlers, one of our largest On-Trade customers, we have extended our partnership with Earthwatch Europe to promote greater community understanding of biodiversity, and support their portfolio of Tiny Forests planted across the UK. Whilst in North America, we’ve been using conservation to engage customers and consumers through One Tree Planted. 220 Tiny Forests supported with 1,200 tree keepers engaged with biodiversity and conservation by 2025 Champion water stewardship across our supply chain, evolving our water management strategy by 2025 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 48 Tiny forests are small, dense, fast-growing woodlands planted in urban areas which positively enrich biodiversity, absorb carbon and pollutants, and enable people to reconnect with nature. Fever-Tree’s support funds Tree Keepers who engage the local community with forest planting, maintenance and analysis. For the second year running, we’ve been collaborating with Mitchells & Butlers (M&B) to expand the impact of the Tiny Forest movement, driving consumer awareness through menu placement, planting and monitoring days, and developing sustainable spritzes for their guests to enjoy. Working with M&B has given access to an extensive audience of consumers and colleagues alike to help educate on the importance of conservation and biodiversity, and supports their broader sustainability objectives, in line with our own. During 2023, at the Fever-Tree Tiny Forest in Hammersmith in West London, we engaged local volunteers through the rollout of six Science Days, allowing colleagues and members of the local community to step into the shoes of scientists, monitoring carbon capture, biodiversity and urban wildlife surveying. This year we were excited to see a step change from a disused urban area to a thriving biodiverse forest – recording five new species of butterflies and storing 54kg carbon above the ground – a 500% increase since sapling planting in 2021. We’re proud to have supported Earthwatch since 2020, working in partnership to develop Tiny Forests up and down the UK. We are delighted to have Fever-Tree as our longest standing Tiny Forest partner. Through Fever-Tree’s support we have been able to plant London’s first Tiny Forest in 2021 with Hammersmith and Fulham Council and since grow the movement to over 200 Tiny Forests to date, supporting over 120,000 trees. Fever-Tree’s support has been crucial in enabling Earthwatch to grow and nurture our volunteer Tree Keepers who care for and maintain their local Tiny Forests, growing this network to over 720 individuals.” Louise Hartley Head of Nature in Cities at Earthwatch Europe Overview Strategic Report Governance Financial Statements 4949 One Tree Planted We know that forests are essential for a healthy planet. That’s why in North America we have a long-term partnership with One Tree Planted to drive multi-year awareness and action towards global reforestation. In the US, our 2023 On-Trade donation mechanism supported the planting of 12,761 long leaf pine trees, contributing to the restoration of 5,500 acres of existing longleaf forest across the South and Central United States. Meanwhile across the border, our Canadian colleagues chose to substitute physical gifts for the gift of reforestation during this year’s holiday season, funding the planting of 1,120 trees across four Canadian provinces. Farming techniques Building and maintaining long-term supplier relationships is crucial to our sourcing of high quality, sustainable ingredients. This extends to sourcing ingredients from across the globe, often using intergenerational traditional farming techniques. SUSTAINABILITY – CONSERVATION CONTINUED Water stewardship Whilst the impact of water use from our direct operations is minimal due to our outsourced business model, we continue to look for ways to improve water management across our supply chain. Although the manufacturing sites of our co-packer partners are not currently situated in regions of high water stress, we remain committed to only using the necessary amount of water, collaborating to drive water recovery and reduce usage. Whether this is through developing new on- site boreholes, or partnering on water circularity measures, we continue to work with our global partners to support initiatives to improve water efficiency and reduce wastage. Recent initiatives include the introduction of recovery and recycling of rinse water at a major co-packer, driving an estimated annual water saving of circa 12,500m3; as well as the introduction of double reverse osmosis technology at another key bottling co- packer that collects, filters and reuses water from the bottle rinsing line twice over to be fed into cleaning of the pasteuriser, driving over 17,000m3 in water savings over 2023. Conservation: Looking ahead… Whether through continued external partnerships protecting ecosystems, enhancing our support for responsible sourcing techniques, or further championing water stewardship – supporting conservation efforts and preserving natural resources will continue to be a pivotal component of our sustainability approach in the coming years. We are looking forward to a fourth year of partnership with Earthwatch next year and have exciting plans in the pipeline to build on our campaign with M&B. Also in 2024, we will look to develop a water management strategy and formalise our approach to water given our outsourced supply chain. And by 2025, we aim to have supported 220 Tiny Forests, engaging 1,200 Tree Keepers with biodiversity and conservation with Earthwatch. Find more on / pages 106 and 107 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 50 Overview Strategic Report Governance Financial Statements 5151 FEVER-TREE DRINKS PLC | Annual Report and Financial Statements 2023 Continue our support of projects that increase awareness, reach and uptake of anti-malarial interventions 100% of employees engaged in community & citizenship programmes by 2025 100% tier 1 direct suppliers on Sedex by 2025 COMMUNITIES SUSTAINABILITY – COMMUNITIES We are focused on trying to make a difference across all our communities, be it where we source from, to where we live and work, supporting projects and initiatives that can have a meaningful impact. We have a variety of initiatives supporting charitable organisations dedicated to creating a positive impact and giving back to communities across our markets. We enthusiastically promote employee community engagement, providing colleagues the opportunity to take pride in the positive influence that we can collectively have, supporting social causes championed through our partnerships with Malaria No More UK, Future Frontiers, FareShare, Münchner Tafel and more. Plus, we’ve been working to advance our strategy for responsible sourcing; fostering collaboration towards rigorous human rights due diligence to ensure ethical practices throughout our global supply chain. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 52 2023 marked a decade of partnership between Fever-Tree and Malaria No More UK. The historic role that quinine has played in combating malaria means that the cause is inextricably linked to our brand and 2023 marked a decade of partnership between Fever-Tree and Malaria No More UK. Over ten years Fever-Tree has contributed over £1.7 million to the eradication of a preventable and treatable disease. Malaria is one of humankind’s oldest and deadliest diseases. Fighting it has led to some of global health’s greatest and most historic strides. And yet, today, a child still dies from malaria every minute and progress is threatened by challenges such as drug and insecticide resistance and the impacts of climate change. In 2023 Fever-Tree’s funding helped Malaria No More UK and partners to initiate a project providing support to critical communities in three malaria-endemic counties in Kenya; building powerful campaigns specially designed to amplify and accelerate social behaviour change. By strengthening awareness and knowledge and shifting attitudes and behaviours, our aim is that communities believe in the importance of malaria prevention and control measures; are motivated to seek them out and are inspired and equipped to use them in ways that keep them and their family safe. Thanks to Fever-Tree’s support, during 2023 a series of insight gathering workshops have been held in the three counties, building an understanding of the barriers that community members experience in accessing malaria prevention and treatment and exploring the opportunity to harness the power of creative campaigns to help tackle and overcome these barriers. By working closely with a partnership of creative experts, government, health workers and malaria programme specialists, Malaria No More UK and its partners in the Zero Malaria Campaign Coalition, have been able to develop an insight-led campaign, that has been taken back to focus groups in the three counties to ensure its resonance with the key audiences. The campaign – ‘the Power of EveryONE’ – will be adapted for each county to ensure maximum impact and will be rolled out to support social behaviour change activities from early 2024 onwards whilst running concurrently as a national campaign. This new campaign will make sure that the community understands the importance of the insecticide treated mosquito nets, the importance of clearing the environment and making sure that it’s clean so no mosquitoes will breed. It will also complement what is being done by the community health promoters. This campaign is important to make sure that we get people talking about malaria, we mobilise the community. So we have everyone on board to make sure malaria is on top of the agenda.” John Mwangi Kakamega Malaria Youth Corps Coordinator Overview Strategic Report Governance Financial Statements 53 53 Future Frontiers Future Frontiers is a charity working to provide disadvantaged young people in the UK with the guidance, networks and opportunities they need to realise their potential at school and achieve post-16 qualifications that build towards achieving secure and fulfilling employment. In 2023, following the success of two previous years, Fever-Tree colleagues have been volunteering their time to mentor 12 pupils, offering career guidance though 42 hours of careers coaching to help them achieve their goals at school and make informed choices about their options for their future. We were thrilled to see that following their coaching, 93% of the young people supported agreed that they are clearer on what they need to do to achieve their ambitions. FareShare FareShare is an organisation built on the ethos that no good food should go to waste. They work tirelessly to redistribute surplus food to a network of charities across the UK, supporting people and strengthening local communities. This year, ten incredible Fever-Tree colleagues took on the London Royal Parks Half Marathon, running 21km in support of FareShare. Our amazing runners raised £5,187.95 to help tackle hunger and food waste, enabling FareShare to redistribute the equivalent of 20,752 meals to those in need. SUSTAINABILITY – COMMUNITIES CONTINUED Münchner Tafel Across Germany the Tafel Deutschland Network supports more than 960 locally organised food banks, receiving over two million visitors to their facilities annually. Fever-Tree Germany supports the Münchner Tafel (their Munich based organisation) with regular volunteer days, collecting food donations at supermarkets to be redistributed to people affected by poverty. In 2023, 22 fabulous volunteers helped to support through four food drive days at local Off-Trade Fever-Tree customer outlets, collecting 141 crates of food and nearly €1,000 in cash donations. Community initiatives and charity partners Other charities In the USA, we have a charitable match policy and day-of-service volunteering initiatives for employees to utilise. This has rallied support for a host of charities during 2023, totalling in $4,045 in donations this year for organisations including Test Strips Saves Lives, Hear Your Song, American Foundation for Suicide Prevention, Gay Men’s Health Crisis Inc, Planned Parenthood, and more. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 54 Finally, as a responsible business, we recognise our role in advocating for responsible drinking. In line with our legal and regulatory obligations, we pay consideration to ensure that we’re targeting the right audience and promoting responsible drinking, for example setting age limits on Instagram, and targeting adult programmes for our television advertising. We ensure that drink responsibly messaging is presented every time we promote an alcoholic serve. And we’re increasingly partnering with non- alcoholic spirit brands – including sampling and supporting events to drive trialling and penetration of non‑alcoholic alternatives. Healthier choices We believe in giving consumers the option to make healthier choices – whether through our wide-ranging portfolio, our role in sharing relevant messaging on healthier and moderated choices, or via our varied brand partnerships and collaborations. At Fever-Tree, we take pride in pioneering the premium mixer industry – including our Refreshingly Light range, introduced in 2018 for those aiming to reduce their sugar intake followed by the introduction of our Premium Soda range, expanding our offering to include a selection of lower-calorie mixers for our customers. We continue to offer lower sugar options to consumers across our portfolio. Fever-Tree is a brand centred on quality, not quantity. Drinking less but better with our premium mixer drinks. And in 2023, we elevated the soft drink category by launching sophisticated soft alternatives for adults. Offering choice is fundamental for all product ranging decisions, including ensuring there is sufficient focus on non-alcoholic alternatives and offering soft drink or non-alcoholic options within all event menus. Responsible sourcing This year, we have continued to review and enhance our approach to responsible sourcing, fostering a collaborative effort to improve ethical and sustainable practices across our global supply chain. This has included evolving our supplier risk analysis framework and human rights due diligence strategy, enabling us to pinpoint crucial suppliers and prioritise management of potential risks linked to the production of key ingredients, whilst facilitating the cultivation of stronger connections with suppliers and growers. As a minimum, we expect suppliers to link with us on Sedex and sign our Social, Ethical and Environmental Business Policy which outlines the employment standards we expect from our partners and their business practices. These standards adhere to the United Nations International Labour Organisation (ILO) conventions, the United Nations Business Council’s Guiding Principles (UNGP), and are aligned with the Ethical Trade Initiative (ETI)’s Base Code. Looking ahead… Our support of the fight against malaria will increase in the coming years, harnessing this incredible cause which has been intrinsically linked to our brand and origin story for twenty years, to drive further progress towards the elimination of the world’s most deadly disease. We shall work to strengthen malaria awareness campaigns in partnership with Malaria No More UK and others, closely monitoring increased reach and uptake of malaria interventions following our County Accelerator Dialogue pilots across Kenya. With regard to volunteering, we have a global target of 100% employee engagement in community & citizenship programmes by 2025 and in 2024, we’ll work closely with our teams across the globe to highlight the opportunities for local workforces to give back to their communities. Finally, we will seek to amplify our human rights due diligence efforts across our supply chain. Our goal is to have 100% of direct ingredient suppliers on Sedex by 2025 as a minimum effort – with a heightened focus next year on supplier collaboration and prioritising thorough in‑person audits and risk assessments for core ingredient supply chains. Overview Strategic Report Governance Financial Statements 55 FEVER-TREE DRINKS PLC | Annual Report and Financial Statements 2023 100% of management to complete DE&I training by 2025 Internal colleague pulse survey to be conducted in 2024 COLLEAGUES SUSTAINABILITY – COLLEAGUES Our colleagues are the key ingredient to Fever-Tree’s success. We value each and every person who works for us, with the ambition to foster an environment that our colleagues can feel proud to be part of. Diversity, Equity and Inclusion Fever-Tree seeks to offer an inclusive and secure working environment that embraces the authenticity of everyone at work. We encourage open sharing of viewpoints and ideas, creating a space free from judgement or bias. Our Diversity, Equity and Inclusion (DE&I) Committee works closely on initiatives to ensure we represent our employees and stakeholders responsibly and drive meaningful progress across all regions. In 2023 we appointed a Group DEI Lead and have dedicated Senior Management sponsorship. The Committee has updated and set our three-year strategy, with plans to deliver based on four focus areas: • Belonging & Engagement – coordinates a calendar of events and celebrations to help create an inclusive culture, that celebrates our differences and diversity and fosters creativity and wellbeing. • Governance & Training – reviewing our employee lifecycle and identifying initiatives and improvements to ensure we attract and retain top talent and support individuals to reach their potential. • Data & Analytics – collecting, analysing and making recommendations based on our people composition data and engagement feedback. • External Community – supporting alignment to our overall ESG objectives; ensuring we consider and represent our external community and stakeholders: our customers, consumers, charities, suppliers and shareholders. Our workstreams have been set up to practically enable our diversity and inclusion agenda, identify strengths and weaknesses around diversity and inclusion in the organisation, propose and align activities and identify positive action needed to effect change. The committee monitors the impact of initiatives and progress. Globally, we’ve enjoyed widespread involvement and engagement within events such as an International Women’s Day panel discussion, quiz night celebrating Pride, Black history film night, Diwali Celebrations external speakers, informative webinars, external mentoring network events, and many other informative events. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 56 Wellbeing Fever-Tree strives to support the everyday wellbeing of staff. As well as the many wellbeing tools available in our benefits package, we run regular hobby clubs including running, tennis, book club and netball. In 2023, we have offered meditation and wellbeing in nature workshops – and we are proud to have trained and accredited fifteen mental health first aiders across the company. Regarding Learning and Development, the end of 2023 saw the introduction of new skills-based training courses to help people in their roles. Activities like this all play a role in our culture and contribute towards colleague engagement and wellbeing. Our Best Companies engagement survey results reflect our progress with the People agenda as we were listed in the top 5 Food and Drink companies to work for in 2023, achieving the ‘Very Good to Work For’ badge. Looking ahead… In 2024, we will continue to deliver against our DEI committee objectives and plans, celebrating and raising awareness with a calendar of global events and active employee resource groups. Recognising there is no ‘one-size-fits-all’ approach, we are taking a localised approach to tailoring ongoing efforts for each region. A key priority will be better understanding our demographic data, agreeing DE&I related targets, and to ensure we have the right action plans to achieve them. We have committed to offer DE&I training to all employees by 2025 – including rolling out unconscious bias training to all managers in 2024. We will be rolling out a new internal pulse survey to better understand the needs of our colleagues and will work to continuously improve our Learning and Development offering. We look forward to building on the great successes of this year, supporting the development of all employees and enabling everyone to meet personal and career ambitions at Fever-Tree. Overview Strategic Report Governance Financial Statements 57 57 WE DELIVERED A STRONG IMPROVEMENT IN GROSS MARGIN IN THE SECOND HALF FINANCIAL REVIEW Importantly, brand strength has increased in our key markets, with market share gains across our regions and we end the year with our highest ever market share by value in the UK whilst increasing our leadership position in the tonic and ginger beer categories in the US. At the start of 2023, the inflationary cost pressures the Group faced in 2022 were further compounded by the impact of elevated European energy costs on glass costs and other categories. As a result of this, gross margin was further impacted in the first half of 2023. Proactive actions taken by the Group, including a wide-ranging efficiency programme and pricing actions across regions, alongside the recalibration in Trans- Atlantic shipping rates, increasingly mitigated gross margin headwinds as the year progressed. As a result, whilst full year gross margin reduced year-on-year, within this result we delivered a strong improvement in gross margin in the second half of the year, which underpins confidence in further gross margin recovery in 2024 and beyond. At the end of the first half, a one-off production issue in the US resulted in the recognition of a £3.3m provision against inventory. This issue was ring-fenced to specific production batches and did not impact customer relationships or our ability to supply the market and at year end we have recognised a receivable in-line with expected compensation in relation to this matter. In the second half of the year the Group took the decision to not renew the contract with our West Coast bottling partner and instead have contracted with an additional East Coast bottling partner, whilst the continued recalibration of Trans- Atlantic shipping rates now allows for UK production to service the US more profitably than in recent years. As a result of these actions, the Group remains confident that we have sufficient capabilities, capacity and contingencies to service US growth and drive margin recovery over the coming years. Underlying operating expenditure increased to 23.7% of Group revenue (2022: 23.0%) which alongside the impacts on gross margin resulted in a reduction in EBITDA margin to 8.4% (2022: 11.6%). The Group generated an adjusted EBITDA of £30.5m, a reduction of 23.3% on 2022 (2022: £39.7m). Working capital increased as a proportion of revenue to 28.5% (2022: 23.6%), driven by an increase in receivables, reflecting improved year end trading compared to 2022. Increased working capital, alongside the lower level of EBITDA achieved, resulted in a reduction of operating cash flow conversion to 15.2% (2022: 36.2%). Reduced operating cash flow drove a reduction in cash held to £59.9m (2022: £95.3m), which has subsequently improved post year end as the elevated level of year end receivables has been collected. As a reflection of our confidence in the on-going financial strength of the Group, the Board is recommending a final dividend of 10.90 pence per share, an increase of 2% year-on-year. The Group made good progress in 2023 with revenue of £364.4m (2022: £344.3m), delivering growth of 6%. Whilst performance in the UK was impacted by unseasonably poor summer weather, underlying sales momentum across our key growth markets remained positive, most notably in the US. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 58 Our strong balance sheet is a competitive advantage over many of our premium mixer competitors globally.” Andrew Branchflower Chief Financial Officer As we look ahead to 2024, despite on-going macroeconomic and geopolitical volatility, we will continue to invest behind the brand, and focus on delivering revenue growth whilst increasing brand strength and market share. Alongside this, we expect to deliver strong gross margin recovery in 2024 as we benefit from improved glass pricing following our tender process in 2023, continued focus on driving efficiencies across our network and further pricing actions across key markets. This combination of brand strength and gross margin recovery will establish a platform for strong, profitable growth in 2024 and beyond. Gross margin Gross margin of 32.1% represents a reduction from the 34.5% gross margin reported in 2022. The Group was materially affected by the impact of elevated European energy costs on glass bottle costs, alongside wider inflationary pressures on underlying product costs. The Group took proactive steps to mitigate these impacts, including pricing actions across markets and margin improvement initiatives including a re-tender of our UK and European glass supply. Alongside this, Trans-Atlantic freight rates reduced as the year progressed. Whilst the combination of these factors drove an improvement in gross margin in the second half of 2023, they were not sufficient to fully off-set the impact of the significant headwinds in underlying product costs across the full year. Against a backdrop of continued macroeconomic and geopolitical uncertainty, we continue to focus on margin improvement initiatives which will establish a resilient platform for profitable growth over the medium term. These actions can be broadly grouped into four key areas: 1. Expanding our production footprint: establishing capacity closer to our key growth markets to minimise transport costs, optimise our inventory holdings and facilitate quicker reactions to market dynamics. • In 2023 we established an additional East Coast US bottling relationship, signed an agreement for local bottling in Australia to begin in late 2024 and signed an agreement with our secondary UK bottler to also provide canning capacity for the Group. 2. Optimising our existing footprint: working closely with our current partners to drive efficiency and effectiveness as we manage our increasing complexity. • In 2023 we have worked in partnership with our primary UK bottling partner to increase volume and run size to unlock improved pricing in 2024. Overview Strategic Report Governance Financial Statements 59 FINANCIAL REVIEW CONTINUED 3. Procurement: leveraging our global scale, widening and on- shoring our supplier base and ensuring our contracts are calibrated for both the current disruptive environment and our longer term growth as we scale through our regionalised production footprint. • In 2023 we successfully conducted a re-tender for our UK and European glass volumes. • A more strategic relationship with the new primary glass supplier to the Group will allow greater visibility and involvement in energy hedging going forward. A partial recalibration of European energy pricing has allowed for an improved hedged energy position for 2024 compared to 2023. • The partnership will also provide opportunities to partner on viable carbon reduction initiatives in the future whilst allowing for transparent and improved glass bottle pricing for 2024. 4. Technology: underpinning all of the above is a wide-ranging programme to embed technology across our global operations that will give us best in class ways of working, data and insights to manage near term disruption, as well as underpinning our future growth. • This programme of work will provide the foundation for driving further efficiency, cost saving and working capital improvements in 2024 and beyond. We are confident that the benefit of the actions taken in 2023, along with a focus on further profit- driving initiatives in 2024, including continued execution of our pricing strategy across key markets, will drive a significant improvement in gross margin in 2024 and allow for further recovery in 2025 and beyond. Operating expenditure* Underlying operating expenses increased by 9.4% in 2023 to £86.5m (2022: £79.1m), increasing to 23.7% as a proportion of Group revenue (2022: 23.0%). Our marketing spend was 9.2% of Fever-Tree brand revenue (2022: 9.8%) as we continue to invest behind the brand, whilst staff costs and other overheads increased to 14.8% of Group revenue (2022: 13.5%), with head count increasing as we established a subsidiary operation in Australia. The Group generated an adjusted EBITDA of £30.5m, a 23.3% decrease from 2022 (2022: £39.7m). The dilution in gross margin, coupled with marginally increased levels of underlying operating expenditure as a proportion of revenue, has resulted in a retraction in adjusted EBITDA margin to 8.4% (2022: 11.6%). It is notable within this result that adjusted EBITDA doubled in the second half of 2023, underpinning confidence in continued margin recovery in 2024. Depreciation charges increased to £6.3m (2022: £4.3m), reflecting a full year of depreciation of the US warehousing right-of-use assets recognised in 2022 under IFRS 16. Amortisation charges remained in line at £1.7m (2022: £1.5m) whilst share based payments reduced to £1.7m (2022: £3.3m), reflecting a revaluation of the achievability of long-term incentives currently issued to the Executive Directors. As a result of these movements, the 23.3% decrease in adjusted EBITDA translates to a 32.0% decrease in operating profit to £20.8m (2022: £30.6m). Tax The effective tax rate in 2023 was 30.6% (2022: 19.7%), this includes an adjustment in respect of a prior period arising from an intercompany reclassification between tax jurisdictions. Excluding this adjustment the underlying effective tax rate for 2023 was 25.1%, which was in-line with expectations. Earnings per share The basic earnings per share for the year are 13.20 pence (2022: 21.36 pence) and the diluted earnings per share for the year are 13.18 pence (2022: 21.32 pence). In order to compare earnings per share year on year, earnings have been adjusted to exclude amortisation and the UK statutory tax rates have been applied (disregarding other tax adjusting items). On this basis, normalised earnings per share for 2023 are 15.37 pence per share and for 2022 were 22.59 pence per share, a decrease of 32.0%; for further detail see note 9 of the Consolidated Financial Statements on page 133. Balance sheet and Working Capital Inventory levels increased to £67.6m (2022: £60.1m), driven by an increased value of finished goods held, reflecting the significant inflationary impacts on product costs in 2023, rather than an increased quantity. Trade and other receivables increased ahead of revenue growth to £91.5m (2022: £72.4m). This increase reflects an uplift in year-end trading year-on-year, driven by both underlying growth in some markets and phasing of orders in other markets. The ageing profile of trade receivables has remained consistent year-on-year, and whilst we recognise that the current macroeconomic environment continues to contribute to an elevated level of credit risk, our strong relationships and proactive engagement with customers alongside appropriate levels of credit insurance position us well to continue to manage the on-going credit risk. The movement in trade and other receivables was partially offset by a marginal increase in trade and other payables to £55.3m (2022: £51.3m). * Underlying operating expenditure is defined as total administrative expenditure less depreciation, amortisation and share based payment expenses. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 60 As a result of the above movements, most notably the increase in trade receivables, working capital increased by £22.6m to £103.8m (2022: £81.2m), and 28.5% of revenue (2022: 23.6%). The increase in working capital, alongside the 23.3% reduction in EBITDA resulted in cash generated from operations decreasing to 15.2% (2022: 36.2%). Capital Expenditure Due to the structure of the Group’s business model, capital expenditure requirements remain low, with additions of £9.8m in the year (2022: £7.1m). The additions in the year included continued investment in reusable packaging in Germany. Intangible assets include additions of £7.0m in the year (2022: £2.5m), relating to the global operations technology programme. Cash position The working capital increase at year end, driven mainly by increased receivables following strong December trading, alongside the retraction in EBITDA margin in 2023 resulted in a reduced level of cash generated from operations which contributed to a reduction in cash at year end to £59.9m (2022: £95.3m). Despite this reduction, the Group continues to retain a strong cash position, and we expect a good recovery in cash position in 2024 as working capital recalibrates and as EBITDA margins improve. Our strong balance sheet is a competitive advantage over many of our premium mixer competitors globally. It provides the platform to remain agile and invest behind opportunities as they arise and has allowed the Group to remain focused on driving strategic progress whilst navigating the challenges and disruption in the external environment in recent years. The Group’s capital allocation framework remains unchanged. We intend to retain sufficient cash to allow for investment against the opportunity ahead and primarily foresee this investment taking the form of operational expenditure, including upweighted marketing spend across our growth regions at the appropriate stage, whilst we also intend to retain sufficient cash reserves to allow us to upweight and accelerate investment in key markets. Whilst not a priority or essential component of the Group’s plans, we also remain vigilant with regards to M&A opportunities that would further assist with the delivery of our strategy. Where the Board considers there to be surplus cash held on the Balance Sheet it will consider additional distribution to shareholders, as demonstrated historically by the payment of a £50m special dividend in 2022. Dividend The Group remains committed to a progressive dividend policy. After profit for the year of £15.7m (2022: £24.5m), the Board is recommending a final dividend of 10.90 pence per share, bringing the total dividend for 2023 to 16.64 pence per share, an increase of 2% year-on-year. If approved by shareholders at the AGM on 6 June 2024 the final dividend will be paid on 21 June 2024 to shareholders on the register on 17 May 2024. Performance indicators The Group monitors its performance through a number of key indicators. These are formulated at Board meetings and reviewed at both an operational and Board level. Progress against these key indicators was closely monitored during the year. Due to the on-going challenges posed by macroeconomic volatility, targeted performance was adjusted accordingly as the year progressed. Group revenue growth was strong but marginally behind expectations, whilst the gross margin and adjusted EBITDA margin were both down year on year and behind the Board’s expectations. Andrew Branchflower Chief Financial Officer 25 March 2024 GROUP REVENUE GROWTH % +5.8% (2022: +10.7%) GROUP GROSS MARGIN % 32.1% (2022: 34.5%) ADJUSTED EBITDA MARGIN % 8.4% (2022: 11.6%) Overview Strategic Report Governance Financial Statements 61 Under Section 172 of the Companies Act 2006 (‘Section 172’), a Director is required to act in the way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole. The following pages comprise our Section 172 statement, which describes how the Board have had regard to the matters in Section 172 in carrying out their duties over the course of 2023. S.172 AND STAKEHOLDER ENGAGEMENT During 2023, we continued to identify six key stakeholders as critical for the success of our future business; the interests of whom the Board considers and balances in making their decisions. We set out below the key priorities for each stakeholder group and the ways in which we engaged with them during the course of 2023. This list is not intended to be an exhaustive list of all stakeholder priorities and engagement activity, but to provide a summary that illustrates the importance stakeholder groups play in the Board’s decision-making. Workforce Key priorities Board engagement Impact on Group activity • Providing a safe, diverse and inclusive working environment with opportunities to develop and make an impact, that also allows an open dialogue about how the business can continue to innovate and remain relevant. • A focus on mental, physical and financial wellbeing, including monitoring the impact of continued increases in the cost of living and providing support to our workforce through a variety of initiatives. • The Board’s engagement with our workforce includes formal and informal meetings. • The Chief People Officer reported to the Board on employee engagement, wellbeing, and on the Group’s performance framework and measurement metrics. • Kevin Havelock, our designated Non- Executive Director for workforce engagement, met with employee groups from multiple markets during the year and provided feedback to the Board on team culture and alignment with Group values. During the year and informed by workforce engagement, the Board supported a number of initiatives to further enhance our desired culture and diversity including: • The work of the global DE&I Committee, which included initiatives such as celebrations of key times in the year including Pride, Black History Month, International Women’s Day, and numerous initiatives working with both our internal and external communities. For example, we continued our mentoring and outreach programme for students in the vicinity of our London office and partnered with Sum of Us to provide a series of DE&I seminars to our workforce in the USA reflecting key months of awareness throughout the year. • An upgraded employee benefits package including an updated maternity and paternity leave policy in the UK. • A continued apprenticeship scheme in the UK office. • Training 15 employees from cross-departmental areas as Mental Health First Aiders. • Enabling global mobility opportunities for employees and cross departmental moves. • Bringing 12 people together for training for those new to management. Further information Nomination Committee Report / page 80 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 62 Suppliers Key priorities Board engagement Impact on Group activity • Close engagement with the business to better understand demand and mitigate supply chain risk. • Prompt and accurate payment for goods and services. • Development of mutually beneficial growth and collaboration on the delivery of our innovation agenda. • Our outsourced business model and commitment to innovation relies on a network of strong and long-term supplier partnerships. The Board is updated on supply chain matters, including the status of key relationships, at every board meeting. • The Board also continued to track the impact of recent economic and political events on supply chains. These included the conflict in Ukraine and the Middle East, and rising energy costs and inflation, all of which continue to pose a formidable test for supply chains globally. These created challenges to demand forecasting, material sourcing, production planning and logistics. The Group’s continued ability to work with suppliers to react resiliently to changing circumstances and successfully mitigate disruption has been a testament to the strength of its partnerships. The Board endorsed various measures used to react to recent supply chain challenges and mitigate their effects including: • Monthly cross-functional meetings between business teams both regionally and globally regarding the supply and management of key materials to anticipate issues as early as possible and mitigate effects accordingly. • Collaborative working between marketing, technical, innovation and supply chain teams to re-engineer raw materials or components as well as trialling new product specifications to address shortages and cost-inflation of particular commodities and raw materials. • Supporting key suppliers in their internal projects and adjusting ways of working accordingly, in order to preserve our long-term partnerships. • Full reviews of our supplier relationships in key categories and the formalisation of this partnership approach with new multi-year contracts. Further information Business Model / page 12 Sustainability Review / page 40 International Distributors Key priorities Board engagement Impact on Group activity • Regular communication and strong partnerships. • Clear marketing plans and tailored branding support. • Joint investment to drive long-term growth. • Outside of the UK, US, Germany and Australia, the Group operates through a network of international distributors. The Board is updated on international performance by the CEO at every Board meeting. The Board also undertook a market visit to Milan, accompanied by the International Director and Italy company team, and met with our local distributor whilst there. • Each Board member takes the opportunity at meetings to challenge international strategy and provide market insights based on their own local knowledge and experience. • The Board endorsed further investment in the Group’s international teams during the year, including building regional capabilities in category management and brand management, and supported a number of key initiatives, including: – Continuing to strengthen our route to market with new distribution relationships in multiple markets, including Australia, Japan, France, Greece and India. – The continued extension of our international portfolio with the successful launch of Blood Orange Ginger Beer in retail in the Netherlands, Belgium and Switzerland, the launch of an open basket format for Spanish retail, and the development of our Sparkling Pink Grapefruit in the On-Trade in multiple markets to capture the emerging Paloma trend, and investment in the tequila category outside of North America. – Brand partnership successes, including co-promotions with a range of different spirits brands globally. – TV media campaigns in Italy, the Netherlands and Switzerland and a continued digital media presence in various markets, including Italy and the Benelux region. – The continued roll-out of branded bar concepts in various markets, such as Cambodia. Further information Business Model / page 12 Our Strategic Blueprint / page 14 Overview Strategic Report Governance Financial Statements 63 S.172 AND STAKEHOLDER ENGAGEMENT CONTINUED Consumers Key priorities Board engagement Impact on Group activity • Sourcing the finest ingredients to create the best quality drinks. • Innovating to cater for new and different occasions. • Being a responsible brand committed to producing products ethically and sustainably. • Our Board is regularly informed of consumer needs, preferences and concerns and building further consumer brand awareness and household penetration has been a key theme of Board discussions during the year. • The Group’s marketing strategy and product innovation programme formed the basis of multiple sessions with the Board. Consumer considerations and feedback directly informed the Board’s support for a number of initiatives including: • Reacting to changing consumer demands with the launch of adjacent categories such as our range of Cocktail Mixers (in the UK, US, Australia, Germany, Belgium, and Denmark) and our range of Adult Premium Soft Drinks (UK), as well as new mixer flavours such as Blood Orange Ginger Beer (Belgium, Austria) and the continuation of spirit partnerships across our major markets. • Continuing to create engaging content for our consumers through our social media channels. • The launch of a new radio campaign through the summer and Christmas months in the UK, as well as extended media plans (led by TV) in Australia, the Netherlands, Belgium, and Switzerland. • Overseeing the continuous roll out of our improved packaging graphics. • Continuation of the successful operation of the Fever‑Tree Bar at Edinburgh Airport. Further information Our Strategic Blueprint / page 14 Sustainability Review / page 40 Environment and Communities Key priorities Board engagement Impact on Group activity • A commitment to doing business in a way that pays consideration to both the environment and the wider community that we affect. • Behaving as a socially responsible business that sources conscientiously and engages with local communities across the supply chain. • The Board considers environmental objectives as a strategic priority and is encouraged by a number of exciting sustainability initiatives in development. • The Board considers the impact of Fever-Tree’s operations on the communities we impact and the environment within its decision making. • Fever-Tree’s ESG Director and Sustainability Manager presented to the Board on strategic plans relating to both climate ambitions and anti-malarial projects for 2024. • Our Social, Ethical and Environmental Business Policy is embedded in our partnerships and underpins our business model. • The Board continues to support many community-led initiatives within the business including: – Continuing our long-standing partnership with Malaria No More, including donating funds to launch Malaria No More’s Zero Malaria Campaign Coalition. – Hosting a reception for UK parliamentarians to encourage further investment in The Global Fund (which aims to fight AIDS, tuberculosis and malaria), as well as supporting the Global Fund’s Country Accelerator Dialogue scheme, piloting antimalaria behaviour change campaigns across three counties in Kenya in coordination with the Kenyan National Awareness Control programme. – A continued partnership with UK charity Future Frontiers, which connects young people from disadvantaged backgrounds with mentors from our UK business. – Building on our relationship with Earthwatch by supporting its portfolio of 150 ‘Tiny Forests’ across the UK. – Partnering with other local charities, including supplying organisations like St. John’s Ambulance with Fever-Tree stock to support various events they run. • The Board also supported the Group’s efforts to embed a community focus into our supply chain processes, including continuing efforts to update and develop our Ingredients Supplier Due Diligence framework and associated tools. Further information Business Model / page 12 Sustainability Review / page 53 Our Strategic Blueprint / page 14 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 64 Investors Key priorities Board engagement Impact on Group activity • Regular IR engagement on top of formal roadshows globally. • Focus on communicating specific headwinds impacting the business in the short-term, our strategy to mitigate these, and the long- term plan to deliver sustainable growth. • Consistent engagement with sell-side analysts, including a roundtable immediately after our Interim Results in September. • The Executive Directors met with investors throughout the year, including two formal roadshows following Preliminary and Interim Results, as well as roadshows to meet with our investors in the US. • The new Chair met with investors following his appointment in May. • The Group’s Investor Relations Director sends monthly summaries of share price movements, share register changes and sell-side views to the Executive Directors, as well as sharing updates with the whole Board regularly (Investor Relations is a standing item on the Board’s agenda at each meeting). • The Investor Relations Director conducted almost 400 investor engagements during 2023 with both current and potential shareholders. Investor meetings are a two-way dialogue between the company and its investors, and any feedback is taken into consideration when we are communicating the strategy of the business and guiding the market to ensure the important messages are known and understood. • The Board proposed a final dividend and approved an interim dividend during the year, in each case in line with the Company’s dividend policy. Further information Corporate Governance Statement / page 78 Audit Committee Report / page 85 Remuneration Committee Report / page 95 Overview Strategic Report Governance Financial Statements 65 Managing Risk We recognise that maximising our potential and growth opportunities in accordance with our strategy requires a robust and effective risk management framework. Our approach to managing risk is simple and practical. The Audit Committee, under delegated authority from the Board, oversees our internal controls and risk management framework, including reviewing the controls in place to mitigate any potential adverse impacts. The Board is ultimately responsible for facilitating the effective identification, evaluation, management and mitigation of risks for the Group. Each functional area of the Group is tasked with monitoring emerging or changing risks in their field with risk and mitigation owners appointed. This includes the formation of sub-Committees for particular areas of risk, which meet through the year to monitor trends and challenge the impact of mitigation efforts relating to that risk. The output of these processes is subject to periodic review with the Executive Directors and reported back to the Board. In addition, the Board receives presentations from different departments within the Group on an ongoing basis to keep the Board informed on strategic and operational performance, and conducts an annual deep dive to review the controls in place to mitigate risks faced by the Group. When we look at risks, we specifically consider the effects they could have on our business model, our culture and our long-term strategic objectives. We consider both short-term and long-term risks, as well as environmental, social and governance risks. Each risk is independently quantified against set criteria, considering both the likelihood of occurrence and the potential impact on the Group both before and after the application of mitigation measures. We use these results to identify specific actions and further available mitigation measures, and the implementation of these in operations by each of our Group companies. These assessments are recorded in a Group Key Risk Register, formed of our most significant risks from across the entire business. This register is then finally reviewed, challenged and then ratified by the Board on a bi-annual basis. An overview of the principal risks facing Fever-Tree is summarised on the following page. The Board’s assessment of the long-term viability of the Group is also reviewed annually and more detail on this can be found in the Audit Committee Report on pages 82 to 85. PRINCIPAL RISKS AND UNCERTAINTIES FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 66 The Board sets out below the principal risks and uncertainties that the Directors consider could impact the business. This list is not intended to be an exhaustive list of all the risks faced by the business. The Board recognises that the nature and scope of risks can change and that there are other risks to which the Group is exposed. Political And Consumer Economic Environment – Macroeconomic Volatility The combination of global inflationary pressures, ongoing conflict in Ukraine and the Middle East, the UK’s exit from the EU in 2020 and wider political uncertainty around the globe has heightened the risk of a worsening of economic conditions in the Group’s key geographic markets. Impact of risk A worsening of the conditions outlined above and associated disruption could lead to further input cost inflation and reduced consumer confidence. Input cost inflationary pressures across categories will impact the Group’s margins and profitability. The instability in Ukraine and the Middle East is having an ongoing impact on shipping routes and pricing, as well as energy pricing and availability with a number of potential impacts, including: increased shipping costs, delays and/or unavailability of shipping due to conflict in the Middle East impacting the Suez Canal, potential disruption to glass manufacturing due to availability of gas for production lines, increases in the cost of glass bottles, increases in gas costs impacting the availability and cost of CO2, the ability of On-Trade outlets to continue trading, and more widely, can impact consumer confidence and discretionary spending. Reduced consumer confidence and spending could impact demand for products and affect the Group’s ability to increase or maintain the prices of its products in its key markets and therefore mitigate the impact to profitability of input cost inflationary pressures. In more mature markets where the Group is a market leader, it may be more exposed to downturns in consumer confidence than it was during phases of accelerated growth and rapid gains in market share. Actions to mitigate risk The Group’s outsourced business model provides a strong degree of operational flexibility which underpins an ability to adapt our business operations to address and mitigate disruption caused by conflict, Brexit, gas availability, input price pressure and more. In addition to this, the Group has where possible built contingency stocks of raw materials, packaging and finished goods across its UK, US, European and Rest of World regions and continues to work on a number of strategic initiatives which will help to mitigate the impact of supply chain disruption and on-going inflationary pressures. The Group continues to work on improving both pricing with suppliers and security of supply as we plan ahead for the future. As announced previously, the Group has recently entered into several long-term agreements with suppliers to give more control over security of supply and medium- to long-term pricing, in addition we have entered into hedging agreements on core input commodities within these contracts to further protect our pricing from volatility. Furthermore, we have continued to expand our manufacturing footprint geographically, with new co-packing agreements in the US and Australia, providing some mitigation to the impact of any potential shipping disruption. The positioning of the Group’s products as an affordable luxury alongside its diverse customer, channel and regional mix would be expected to mitigate the impact at Group level of worsening economic conditions on consumer demand in specific markets. There is also an expectation that the Group will be in a position to increase pricing to different degrees across markets whilst maintaining its relative price point to the competition. Overview Strategic Report Governance Financial Statements 67 PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED Competition The Group continues to face competition from other beverage companies in the mixer category. This could intensify in the Group’s core markets through other companies further increasing focus and investment in their existing brands, introducing their own brands or acquiring local brands. In the UK, the Group’s priority is to continue to grow in the face of aggressive pricing policies and marketing strategies from its competitors, who are focused on taking share from the brand. Outside of the UK, the Group’s emphasis remains on continuing to capitalise on its first mover advantage in the vast majority of markets, to drive category growth and increased market share by building brand and category awareness and further catalysing the longstanding consumer trends towards premiumisation and long mixed drinks. Impact of risk Increased competition and unanticipated actions by competitors could lead to a decline in the Group’s market share or pressure on pricing and marketing spend, which may have an adverse effect on the Group’s profitability and hinder its growth potential. Actions to mitigate risk The Group has consistently faced strong, robust competition over its lifetime, from both large multinationals and more focused, copycat local brands. The Group’s first mover advantage in almost all of its markets, product quality, brand strength and diverse territorial, channel, customer and product mix all combine to mitigate the risk of increased competition affecting overall Group performance. The Group continues to invest significantly in product innovation, finding and securing the best sales forces and operational personnel and identifying the optimum supply and distribution partners for each of the Group’s markets so that it is best placed to deal with competitive challenges. The Group’s available levels of investment aids its ability to defend and react to competitor actions whilst the challenging on-going macroeconomic conditions are weighing more heavily on the Group’s smaller competitors who may not have the same strength of balance sheet or procurement scale to continue to invest strongly in the opportunity. As a result of all of these factors, the Group has continued to grow its market share within the mixer category across regions whilst it has seen a number of its competitors lose share, pull back from investment and face de-listings. Supply Chain – Business Continuity The Group operates an asset-light, outsourced business model, working with third party bottlers, canners, logistics and distribution partners. In addition, the Group is dependent on the supply of a number of key ingredients for its products, such as quinine and fresh green ginger, for which there are a limited number of suppliers. Direct material costs (which include the costs of raw materials such as sugar and packaging materials, including glass) represent the largest component of the Group’s cost of sales. The Group could be affected if there were a significant disruption to any of the Group’s key raw material suppliers, production, storage, or distribution partners, or to the wider global supply chain market, as has happened in 2022 and 2023. Further, commodity price changes may result in increases in the cost of raw materials, packaging, and logistics for the Group’s products due to a variety of factors outside the Group’s control. Impact of risk In the event of such disruption the Group may not be able to arrange for alternative supply, production, storage, or distribution on as favourable terms, or with sufficient speed to ensure continuity of business. Actions to mitigate risk The Group now bottles/cans with ten (10) different partners, across UK, continental Europe, and the US. A number of other initiatives have further diversified the Group’s supply chain: (i) a new canning line is being installed at one of our UK partners during 2024; (ii) we are bringing online a new bottler in the US; and (iii) we are working towards the start of local production in Australia. This increasing footprint of bottlers, as well as additional local capabilities in key markets, allows the Group to absorb capacity requirements from long term future growth and shorter-term unbudgeted growth. In addition, in the US we hold our stock across three locations on the West Coast, East Coast and in Texas. The Group also works with multiple glass suppliers and wherever possible retains contingency levels of glass to cover unexpected shortages of supply. In addition, the Group maintains a buffer stock of key ingredients and raw materials to allow sufficient time to reformulate in the event of disruption to supply. We continue to hold buffer stocks of key ingredients such as quinine and ginger to mitigate disruption. At a macro level there has been ongoing inflation in raw material and logistics costs. To mitigate against this, the Group has recently entered into several long-term agreements with suppliers to give more control over security of supply and medium to long-term pricing. In addition, as part of these long-term contracts we have entered into several hedging agreements on the largest input commodities such as natural gas and aluminium further mitigating potential volatility. The Group may look to mitigate the impact of rises by increasing its sales price to distributors and customers where appropriate. The Group also takes out and maintains business interruption cover insurance to mitigate the financial risk of any potential disruption in supply. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 68 Supply Chain – Inconsistent Quality Or Contamination Of The Group’s Products The quality of the Group’s products is a key component of Fever-Tree’s brand strength. The Group’s products are produced by a network of outsourced production partners based around the world, and the products include key ingredients sourced from multiple partners. The network of different bottling partners and ingredients suppliers must combine to consistently deliver products of the highest quality which are safe for consumption by Fever-Tree’s consumers. The ongoing growth of the Group’s sales in the US and other international markets increases our potential exposure to a significant product liability judgement. Impact of risk A lack of consistency in the quality of products or contamination of the Group’s products, whether occurring accidentally or through deliberate third-party action, could harm the integrity of, or consumer support for, the brand. A significant product liability issue or a widespread product recall could negatively impact the reputation of the affected product and/or the Group’s brand for a period of time depending on product availability, competitive reaction, and consumer attitudes. Even if a product liability claim is unsuccessful or is not fully pursued, resulting negative publicity could adversely affect the Group’s reputation and brand image, which may have a material adverse effect on the Group’s prospects, results of operations and financial condition. Actions to mitigate risk Our manufacturing partners are high quality operators with excellent QA levels and our Technical and Quality Director runs a rigorous due diligence process when on- boarding any new bottlers/canners alongside an on-going quality audit programme. The Group maintains localised resource in its technical team to support regional production and supply partners, including a local US Quality team, as well as UK and EU Quality managers. In-person site visits are back at a normal cadence following disruptions caused by COVID-19. Key management are regularly trained on crisis management and crisis team ways of working. Alongside this, we periodically undertake crisis challenge simulation exercises with external consultants to provide a test of processes and crisis team ways of working. The Group has also undertaken work on its communication strategy in the event of a product issue arising with the help of external advisers. The Group also takes out an maintains appropriate insurance coverage to mitigate the potential financial risk of a product quality issue arising. Environmental As the Group grows, we are increasingly mindful of the potential for our operations to have an impact on the wider environment. Failure to identify areas for improvement and/or current risks in our supply chain not only could have a negative impact on the environment but also the brand’s public perception. Equally, changes in the wider environment driven by climate change represent a potential risk to the Group’s ability to source ingredients from around the world, as well as potentially impacting our ability to produce our products. Impact of risk A shortage of ingredients due to a poor annual harvest or further supply constraints resulting from climate changes over time could impact our ability to produce and sell our products. Regulatory or consumer perception shifts could have a marked impact on our supply chain, brand reputation and packaging formats in future years and/or require incremental future investment to comply with, and meet them, respectively. Actions to mitigate risk Climate risk analysis is conducted biannually by the Global Sustainability team (via an annual deep dive, supplemented by a lighter touch reflection on any key changes after six months) and submitted to the Risk Committee upon review by the ESG Committee. In 2023, Fever-Tree conducted an updated assessment of climate-related risks to our business. The risks have been categorised into three main areas – regulation and policy related risks; reputational and market related risks; and physical risks (immediate and long-term). No material issues or weaknesses in the organisation’s strategy have been identified for the short-term, however a series of resilience strategies have been established to mitigate specific medium to long-term climate-related risks. A more detailed climate risk scenario analysis is planned for 2024 and beyond to build out a more holistic medium to long term view of climate risks and associated resilience strategies. We have preliminary SBTi approved science-based carbon reduction targets, set in line with the latest climate science necessary to meet the goals of the Paris Agreement and limit the temperature increase to 1.5°C above pre-industrial levels. Further decarbonisation plans are incoming across Scopes 1, 2 and 3, assessing the potential for a future Group net zero emissions target. We have developed a network of suppliers who can supply ingredients and materials from different origins to diversify our risk and protect supply. With high priority raw materials, we have mitigation actions in play such as maintaining higher levels of stock. More detail on the climate risk analysis can be found on pages 41 to 43. Overview Strategic Report Governance Financial Statements 69 PRINCIPAL RISKS AND UNCERTAINTIES CONTINUED Social And Ethical The Group and components of its supply chain operate in certain international markets which may have inherent risks relating to enforcement of obligations, cultural differences, security of staff, lawful working conditions, fraud, bribery and corruption. Impact of risk There is increased focus on these issues from regulators, consumers and investors and any form of non-compliance in this area could have a significant negative impact on the brand as well as the Group’s operations. Actions to mitigate risk This year, we have continued to review and enhance our approach to responsible sourcing, fostering a collaborative effort to improve ethical and sustainable practices across our global supply chain. This has included building out our supplier risk analysis framework and human rights due diligence strategy, enabling us to pinpoint crucial suppliers, perform third party audits and prioritise management of potential risks linked to the production of key ingredients, whilst facilitating the cultivation of stronger connections with suppliers and growers. As a minimum, we expect suppliers to link with us on Sedex and sign our Social, Ethical, and Environmental Business Policy, which outlines the employment standards we expect from our partners, as well as requirements relating to the compliance, health and safety and environmental practices within their businesses. These standards adhere to the United Nations International Labour Organization (ILO) conventions, the United Nations Business Council’s Guiding Principles (UNGP) and are aligned with the Ethical Trade Initiative (ETI)’s Base Code. Key Management The Group’s success is linked to the efforts and abilities of key personnel and its ability to retain such personnel as well as attracting other highly skilled individuals. The executive management team, which includes one of the founders of the business, has significant experience in the industry and has made an important contribution to the Group’s growth and success. Impact of risk Critically, this is a founder-led business and the loss of the services of the founder on the executive management team could have an adverse effect on the Group’s operations. Equally, the loss to the Group of a member of the executive management team could have an adverse effect on operations. Actions to mitigate risk The Remuneration committee sets appropriate remuneration packages for the executive to ensure they are incentivised to stay with the business. Whilst investors and other stakeholders continue to attach importance to our remaining founder and other members of the executive team remaining actively involved in the business, as the Group and its workforce grows dependence on these individuals’ contribution should gradually lessen. The Chief People Officer works to ensure the senior management team is appropriately remunerated against market rates, with additional LTIP performance incentives to encourage retention and high performance. Should any member of the senior management team leave, the ambition would be to identify an internal candidate as a replacement, but where that is not currently possible or appropriate, we work to ensure we cultivate a continual view of the current market for external candidates. As the Group grows, further work is being undertaken to preserve the business’s culture and ensure its purpose, strategy and values are well understood by the workforce. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 70 IT The Group uses information technology systems for the processing, transmission and storage of electronic data relating to its operations and financial reporting. A significant portion of communications among the Group’s personnel, customers and suppliers relies on the efficient performance of information technology systems. Owing to its outsourced model, the Group is also reliant on the proper functioning of IT systems at its major suppliers. The Group acknowledges that the incidence and sophistication of cyber-attacks across the industry has increased notably in recent times. Impact of risk If the Group, or any of its significant stakeholders or partners, were subject to a cyber-attack or other issue impacting the ability for its IT systems to effectively operate, this could have a material adverse effect on the Group’s operations. Actions to mitigate risk The Group employs a Technology Director, supported by an experienced team and strategic service partners to develop, monitor, protect, and continuously improve the security of our IT infrastructure. Guided by regular and thorough external assessments, penetration testing and vulnerability analysis, the Group ensures that good levels of protection and controls are in place to avoid exposure to known threats. A focused IT Security strategy, plan and governance is in place to continually review and address key, known and emerging threats realised by: (i) monitoring the robustness of management controls and agreeing additional investment and improvements as required; (ii) an established 24/7 Security Operations Centre; (iii) reviews, updates and compliance audits of employee and IT policies; (iv) security training to improve employee awareness and vigilance to security risk; (v) ongoing internal and external (key supplier) compliance audits; and (vi) robust incident response, business continuity and disaster recovery plans and testing. The Group has Cyber and Crime insurance policies in place which mitigate its financial exposure to these risks. As required by the FRC’s UK Corporate Governance Code, the Board has assessed the Group’s prospects and viability over a three- year period to 31 December 2026. A three-year assessment period was selected as it corresponds with the Board’s normal strategic planning horizon as well as the period over which senior management are remunerated via long-term incentive plans. The three-year period balances the long-term nature of investments in the beverages industry with an assessment of the viability of the key drivers of near-term business performance as well as external factors impacting our business. In making this assessment, the Board took account of the Group’s current financial position, annual budget, three-year plan, forecasts, and sensitivity testing on the performance of the business over the medium term. The Board also considered several other factors including the Group’s operational business model, its risk management and internal control effectiveness and whether the principal risks and uncertainties, alone or combined, would be likely to impact the Group’s viability during the three-year period under consideration. Therefore, the Board applied three scenarios: • The potential for continued macroeconomic uncertainty and an increase in competitor activity to impact the Group’s revenue and cost base. • The potential for geopolitical uncertainty and events, causing inflationary and logistic challenges, impacting the Group’s cost base. • A significant business interruption issue, which could result from, for instance, a cyber attack, a fire at a key production partner or from a disruption in availability of a key ingredient due to an extreme weather event. Against these conservative, prudent scenarios, and before considering the opportunity for mitigating actions such as the utilisation of existing redundancy in our production model, or making reductions in variable operating expenditure, the forecasts for the period to December 2026 indicate that the Group would continue to hold significant cash balances. Based on this assessment, notwithstanding the remaining level of uncertainty related to the wider macroeconomic and geopolitical environment, the Board has a reasonable expectation that the Group will continue to operate and meet its liabilities as they fall due during the period to 31 December 2026. This Strategic Report was approved on behalf of the Board on 25 March 2024. Andrew Branchflower Chief Financial Officer VIABILITY STATEMENT Overview Strategic Report Governance Financial Statements 71 GOING TO EXCEPTIONAL LENGTHS IN THE UK WORCESTERSHIRE INGREDIENTS Flavour notes: From high tannic acid varieties for a crisp, dry and bittersweet taste! Features in: Sparkling Cloudy British Apple with Garden Mint Our story We use the Dabinett apple which accounts for over 70% of the cider apples produced in the UK and are renowned for their bittersweet crisp flavour; more traditionally used in cider the concentrate is perfect for making drinks. They are high in tannins with adds texture, colour and complex flavour. Process & harvest Our apples are harvested & processed locally, within 12–24 hours when the fruit is at peak ripeness to preserve its flavours. Grown in foothills of the Malvern Hills the area is renowned for its deep fertile soil which retains moisture and does not require irrigation. The trees last for 30 years or longer when well-maintained, planted with wide gaps between them to allow for sunlight. The mild maritime climate, combined with the fertile soils makes this area a great place to grow apples – they ripen slowly creating wonderful intense and complex flavours and aromas. There is no waste, rotten apples and the pulp after pressing is used in animal feed and used within the county. 72 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 DABINETT APPLES Dating from 1900, Dabinett apples are a British cider apple variety, with small, yellow green fruit – flecked with red and an intense flavour profile. We source our apples from two farms in the foothills of the Malvern Hills, renowned for its rich fertile soil. GOVERNANCE Board of Directors 74 Corporate Governance Statement 76 Nomination Committee Report 80 Audit Committee Report 82 Remuneration Committee Report 86 Directors’ Report 102 Statement of Directors’ Responsibilities 104 Overview Strategic Report Governance Financial Statements 73 Alex O’Connell (36) Company Secretary Alex is the Company Secretary and General Counsel at Fever‑Tree. Before joining us in 2021, he worked in Legal and Corporate Affairs at AB InBev, and at Freshfields Bruckhaus Deringer LLP as a corporate lawyer in London and Singapore. He is secretary of the Board of Directors and of each of its Committees. He is a graduate of Cambridge University, where he studied Classics. Domenic joined the Group as a Non-Executive Director on 17 May 2018 and became Chair of the Board and Nomination and Disclosure Committees following Bill Ronald’s retirement at the most recent AGM in May 2023. Domenic is a qualified chartered accountant and brings with him a wealth of management experience in the beverages and consumer goods sector having spent 20 years at SABMiller, the former FTSE 100 beverage company, focusing on strategy and corporate development before reaching the position of Chief Financial Officer and Executive Board Director. Domenic is a Non-Executive Director of Asahi Breweries Europe Group and is a senior consultant to Asahi Group Holdings. See the Nomination committee report / pages 80 and 81 Domenic De Lorenzo (59) Non-Executive Chair Tim has been the CEO of the Group since 2014. Tim has a business management degree from Newcastle University, specialising in food marketing. During university he started his first business, a waitering agency. In 1998 he joined a London-based advertising and branding agency. Subsequently, he launched the Business Development Consultancy which included identifying opportunities in the premium food and drink sector. It was in this role that he made contact with Charles Rolls, which resulted in the co-founding of Fever-Tree in 2004. Tim Warrillow (49) Co-Founder and Chief Executive Officer Kevin joined the Group as a Non-Executive Director on 11 January 2018 and took over from Coline McConville as Senior Independent Director following the most recent AGM in May 2023. Kevin has more than 25 years’ drinks industry experience and was Global President of Refreshment at Unilever from 2011 until the end of 2017, responsible for the Group’s €10 billion revenue global beverages and ice cream business. Kevin held a wealth of senior leadership positions for Unilever around the world, including Chairman for Unilever UK, Unilever France and Unilever Arabia as well as President, Unilever North America. He was a Unilever Executive Committee member, sat on the Group’s Sustainability Board and was Co-Chair of the Pepsi/Lipton tea joint venture. Kevin is a Trustee of the Eden Project and sits on the board of The All-England Lawn Tennis Club and Championships. Kevin is also the Group’s designated Non-Executive Director who is responsible for engaging with employees and ensuring that the employee voice is represented in the boardroom. Kevin Havelock (66) Senior Independent Non-Executive Director Andrew joined the Board on 16 October 2014. Andrew is a graduate of Cambridge University, where he studied natural sciences, and qualified as an ACA in 2007. He worked for a boutique firm specialising in start-ups and fast-growing businesses and prior to joining the Group, was Head of Finance at the Design Council. Andrew joined the Group in September 2012, in the run-up to the investment in the Group by Lloyds Development Capital and was appointed Finance Director in September 2013. Andrew Branchflower (44) Chief Financial Officer BOARD OF DIRECTORS FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 74 Member of the Remuneration Committee Member of the Audit Committee Member of the Nomination Committee Member of the Disclosure Committee Committee chair Laura joined the Group as a Non-Executive Director on 20 May 2021 and took over from Coline McConville as Chair of the Remuneration Committee following the most recent AGM in May 2023. With over 25 years of experience, Laura has held senior positions at Gymshark as Chief People Officer, at Tate & Lyle Plc as Chief HR Officer and at Dyson Limited as Group HR Director. Earlier in her career she worked as a management consultant for Arthur Andersen. See the Remuneration committee report / pages 86 to 101 Laura Hagan (51) Independent Non-Executive Director Jeff joined the Group as a Non-Executive Director on 11 January 2018. Jeff has significant experience across the North American beverage industry, gathered over almost 30 years, with particular expertise in sales and distribution in the US. His experience spans the beer, spirits, premium non-alcoholic carbonated soft drink and health and wellness beverage categories for a range of global brands. His leadership roles have included CEO of Red Bull Distribution, North America, President of Vita Coco and North American CEO of Mast-Jägermeister. He is now working as CEO of Ghost Tequila, a high growth tequila business in the US. Jeff Popkin (59) Independent Non-Executive Director Clare joined the Group as a Non-Executive Director and Chair of the Audit Committee on 25 May 2023. Clare is a qualified Chartered Accountant with extensive experience within the consumer brand sector. She was Co-CEO for Camelot, operator of The National Lottery, until January 2024, having joined as CFO in 2017 before being appointed to the board in 2019. Prior to that she was Group CFO at dunnhumby, having previously spent over 17 years at Tesco where she worked across a wide range of operational and financial positions, including CFO for Tesco.com and Group Audit Director. In March 2024 Clare joined the Board of the John Lewis Partnership where she is Chair of the Audit and Risk Committee. See the Audit committee report / pages 82 to 85 Clare Swindell (54) Independent Non-Executive Director David joined the Group as a Non-Executive Director on 1 January 2024. David brings over 35 years of extensive industry expertise in the beverage sector including bottling, manufacturing, supply chain management and strategy across the North American and European markets. David served as Senior Vice President and Chief Supply Chain Officer for PepsiCo Beverages North America (PBNA) where he was accountable for leading the end-to-end supply chain operations for PBNA. Most recently he was Senior Vice President of Manufacturing Strategy across food and beverages for PepsiCo’s North American business. Prior to these roles, he served 22 years at Pepsi Bottling Group across the business’ manufacturing and warehouse operations – culminating in the role of Global VP, Manufacturing and Warehouse Operations – before joining PepsiCo when it acquired the business in 2010. David Lapp (58) Independent Non-Executive Director Overview Strategic Report Governance Financial Statements 75 AN INTRODUCTION FROM OUR CHAIR CORPORATE GOVERNANCE STATEMENT Our Board recognise the important role a robust governance framework plays in the successful delivery of our long-term strategy. Although drafted with larger, main market listed companies in mind, the Group continues to adopt the 2018 UK Corporate Governance Code (the ‘Code’). The Group has complied with all of the provisions set out in the Code during the year, subject to the limited exception detailed and explained on page 92 (Directors’ Remuneration Policy – Shareholding Guidelines – Provision 36). A key focus of the Code is the requirement for detailed expositions on stakeholder engagement and how the Directors have had consideration to and applied their duties under s.172 of the Companies Act 2006. Our statements on these topics are detailed on pages 62 to 65. This is my first year as Chair, having taken over from Bill Ronald. I will express my gratitude to Bill once more here, in particular for leading our excellent Board up to this point. We were also sad to see the retirement of Coline McConville at the end of 2023, following a distinguished term as Senior Independent Director and Remuneration Committee Chair – thank you Coline for all of your efforts for Fever-Tree. It was not all sad news, and these two vacancies have led to two excellent appointments to the Board. Clare Swindell joined the Board as a Non-Executive Director and Chair of the Audit Committee following the AGM in May 2023. Clare has already established herself as a valuable Board member and a focused Audit Chair. We also welcomed David Lapp at the beginning of 2024 and are excited to have his expertise with us as we continue our journey. Congratulations and thank you also to Kevin Havelock for taking over as Senior Independent Director, and to Laura Hagan for taking over as Remuneration Committee Chair, in each case following the AGM in 2023. Their ongoing support is invaluable. Domenic De Lorenzo Chair Leadership Role of the Board The Board is responsible to the shareholders and sets the Group’s strategy for achieving long-term success in accordance with our purpose and values. The Board is also ultimately responsible for establishing the Group’s governance structure, the effectiveness of internal controls, risk management, and the direction of the Group in accordance with our purpose and values to help deliver our strategy. We look to provide the framework for our Group companies to follow these principles and provide guidance at Group level on measures to implement them. The day-to-day responsibilities for the running of each of our Group companies is delegated to the executive and senior management. However, there are a number of matters where, because of their importance to the Group, it is considered appropriate to have enhanced oversight from the Board. The Board therefore has a documented formal schedule of matters reserved for its approval, which is reviewed annually. This includes matters relating to: • The Group’s strategic aims and objectives. • The structure and capital of the Group. • Financial reporting, financial controls and dividend policy. • Internal controls, risk and the Group’s risk appetite. 76 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 • The approval of unusual and/or significant capital expenditures or disposals. • Effective communication with shareholders. • Any changes to Board membership or structure. The Board understands the importance of the Group’s governance framework to ensure it effectively focuses on strategy, performance, responsibility and accountability to ensure that every decision we make is of the highest quality. All of its decisions are discussed within the context of the risks involved. Effective risk management is central to achieving our strategic objectives and further details of the Group’s internal processes are set out on pages 66 to 71. Division of Responsibilities Chair and CEO The Chair is responsible for leadership of the Board and ensuring its effectiveness in all aspects of its role. The Chief Executive Officer is responsible for delivering the strategy and commercial objectives agreed by the Board. There is a clear division of responsibility between the Chair and the CEO to ensure that there is a balance of power and authority between leadership of the Board and executive leadership. The Company Secretary, Alex O’Connell, is the secretary of each Committee. Audit Committee The Audit Committee is chaired by Clare Swindell and its other members during the year were Coline McConville, Kevin Havelock, Laura Hagan and Jeff Popkin. Domenic De Lorenzo stepped down from the Committee following his appointment as Chair of the Board in May 2023. All members are independent. The Audit Committee has primary responsibility for assisting the Board in the fulfilment of its obligations regarding the monitoring of the adequacy and effectiveness of the Group’s risk management and internal financial control and audit system; reviewing the integrity of the Group’s financial statements and reporting; and assessing the scope, resources, performance, effectiveness and independence of the external Auditors. It receives and reviews reports from the Group’s management and Auditor relating to the annual accounts and the accounting internal control systems in use throughout the Group. The Audit Committee met four times last year and has unrestricted access to the Group’s Auditor. The Chair, Chief Executive Officer and Chief Financial Officer attend the Committee meetings by invitation. The Audit Committee Report on pages 82 to 85 contains more detailed information on the Committee’s role. I am pleased to present this year’s Corporate Governance Report, my first as Chair.” Domenic De Lorenzo Chair Non-Executive Directors and SID The Chair promotes a culture of openness and debate by facilitating the effective contribution of Non-Executive Directors, as well as maintaining good working relationships between all Directors, with Non-Executive Directors communicating directly with Executive Directors and senior management between formal Board meetings. Kevin Havelock is the Senior Independent Director (SID). He provides a sounding board for the Chair and serves as an intermediary for the other Directors when necessary. As the SID, Kevin is available to shareholders, as may be appropriate in certain circumstances. Kevin meets the other Non-Executive Directors at least annually to appraise the Chair’s performance, providing feedback as appropriate. Role of Committees The Board has delegated specific responsibilities to the Audit, Remuneration, Nomination and Disclosure Committees, details of which are set out below. Each Committee has written terms of reference setting out its duties, authority and reporting responsibilities. Copies of the terms of reference for each Committee are available on the Company’s website or on request from the Company Secretary. The terms of reference of each Committee are reviewed regularly by the Board to ensure they remain appropriate and reflect any changes in legislation, regulation or best practice. Overview Strategic Report Financial Statements Governance 77 Remuneration Committee The Remuneration Committee is chaired by Laura Hagan. Its other members during the year were Domenic De Lorenzo, Kevin Havelock, Coline McConville and Clare Swindell, all of whom are independent. The Remuneration Committee reviews the performance of the Executive Directors and makes recommendations to the Board on matters relating to their remuneration and terms of employment. The Remuneration Committee also makes recommendations to the Board on proposals for the granting of share options and other equity incentives pursuant to any share option scheme or equity incentive scheme in operation from time to time. The remuneration and terms and conditions of appointment of the Non-Executive Directors of the Group is set by the Board. The Chief Executive Officer and Chief Financial Officer are invited to attend for some parts of the Committee meetings where their input is required although they do not take part in any decision on their own benefits and remuneration. The Remuneration Committee Report on pages 86 to 103 contains more detailed information on the Committee’s role and the Directors’ remuneration and fees. Nomination Committee The Nomination Committee is chaired by Domenic De Lorenzo. Its other members during the year were Coline McConville, Kevin Havelock, Jeff Popkin, Laura Hagan and Clare Swindell. Bill Ronald stepped down from the Committee following his retirement from the Board in May 2023. The Nomination Committee is responsible for, amongst other things, reviewing the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board and making recommendations to the Board with regard to any changes. The Committee ran the processes for selecting Clare Swindell and David Lapp as appointees to the Board, subject to final Board approval of their candidacies. The Nomination Committee also considers the wider leadership needs of the organisation, including ensuring that appropriate succession planning is in place. The Nomination Committee Report on pages 80 and 81 contains more detailed information on the Committee’s activity during the year. Disclosure Committee The Disclosure Committee is chaired by Domenic De Lorenzo and its other members during the year were Tim Warrillow and Andrew Branchflower. Clare Swindell took over from Bill Ronald following the AGM. The Disclosure Committee supports the Board in overseeing the Group’s compliance with its disclosure obligations taking advice from internal and external advisers as appropriate. The Disclosure Committee is responsible for reviewing and approving the release of announcements by Fever-Tree on an ad hoc basis, where such announcements have not been approved by the Board. Further, the Committee has been established to keep disclosure procedures at the Group under periodic review. Board and Committee meetings The Board meets regularly to help ensure it discharges its duties effectively. Non-Executive Directors communicate directly with the Chair, Executive Directors and senior management between formal Board meetings. The Board has a schedule of regular business, financial and operational matters, and each Board Committee has compiled a schedule of work, to ensure that all areas for which the Board has responsibility are addressed and reviewed during the course of the year. The Board held six scheduled Board meetings during the year. Directors are expected to attend all relevant Board and Committee meetings. In addition, the Board undertook a dedicated strategy trip to Milan in October 2023, which included in depth reviews of Group strategy and budgets, as well as a deep dive on the Italian market, a series of customer visits and a meeting with our local distributor. The table below sets out attendance at all Board and Committee meetings held during the year to 31 December 2023. CORPORATE GOVERNANCE STATEMENT CONTINUED Name Board Audit Remuneration Nomination Disclosure Bill Ronald 3/3 – – – 1/1 Tim Warrillow 6/6 – – – 2/2 Andrew Branchflower 6/6 – – – 2/2 Domenic De Lorenzo 6/6 1/1 3/3 2/2 2/2 Coline McConville1 5/6 3/4 2/3 1/2 – Kevin Havelock 6/6 4/4 3/3 2/2 – Jeff Popkin2 6/6 3/4 2/2 – Laura Hagan 6/6 4/4 3/3 2/2 – Clare Swindell 3/3 3/3 2/2 2/2 1/1 1. Coline McConville missed one session of three meetings, plus one separate committee meeting, due to unavoidable prior commitments. 2. Jeff Popkin missed one committee meeting due to an unavoidable prior commitment. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 78 Development When new Directors join the Board a formal, rigorous and transparent induction programme takes place, which is tailored to their existing knowledge and experience. This year the Board ensured that Clare Swindell met with the wider executive team, relevant advisers including our Auditor, and was given access to a wide range of documents to enable her to get up to speed quickly. The Company Secretary ensures that all Directors are kept abreast of changes in relevant legislation and regulations, with the assistance of the Group’s other professional advisers where appropriate. Executive Directors are subject to the Group’s performance development review process, through which their performance against predetermined objectives is reviewed by the Chair and their personal and professional development needs considered. Non‑Executive Directors are encouraged to raise any personal development or training needs with the Chair or through the Board evaluation process. Information and Support The Chair, aided by the Company Secretary, is responsible for ensuring that the Directors receive accurate and timely information. The Company Secretary compiles the Board and Committee papers which are circulated to Directors one week prior to meetings. The Company Secretary also ensures that any feedback or suggestions for improvement on Board papers are fed back to management. Directors have access to independent professional advice at the Group’s expense. In addition, they have access to the advice and services of the Company Secretary who is responsible for advice on corporate governance matters to the Board. The Company Secretary provides minutes of each meeting, and every Director is aware of the right to have any concerns minuted. Evaluation Each year the Board carries out an evaluation process. As well as reflecting during the year on items raised by the 2022 external evaluation, an internal evaluation of the Board took place in 2023, conducted by the Chair and Company Secretary. Overall feedback was positive, particularly on the Board’s cohesive and collegiate ways of working, the Board’s representation of the Fever-Tree culture, and the Board’s understanding and leadership of the wider Fever-Tree business, including ESG and DE&I initiatives. Topics raised and considered for evolution in 2024 included renewed focus on Board diversity and succession planning, and how information is presented and time allocated within agendas. In addition, the Senior Independent Director met informally with the other Non-Executive Directors to evaluate the Chair’s performance. Feedback, which was positive, was shared by the Senior Independent Director with the Chair. Annual General Meeting The Annual General Meeting of the Company will take place on 6 June 2024. The Notice of Annual General Meeting and the ordinary and special resolutions to be put to the meeting can be found on pages 151 to 157. In accordance with the Code, all Directors will be submitted for re-election at the Annual General Meeting. Board Effectiveness The Board continuously evaluates the balance of skills, experience, knowledge and independence of the Directors. The Board scrutinises its performance through an annual effectiveness review, on which more detail is provided below. Profiles of the skills and experience of the Directors are included in their biographical details on pages 74 and 75. Appointments to the Board The Nomination Committee leads the process for the appointment of new Directors to the Board. Pages 80 and 81 set out more detailed information on the Nomination Committee, its role and principal activities during the financial year. Commitment All Directors have been advised of the time required to fulfil the role prior to appointment and were asked to confirm that they can make the required commitment before they were appointed. This requirement is also included in their letters of appointment. The Board is satisfied that the Chair and each of the Non-Executive Directors are able to devote sufficient time to the Group’s business. In the appropriate circumstances, the Board may authorise Executive Directors to take Non-Executive positions in other companies and organisations, provided the time commitment does not conflict with the Director’s duties to the Company, since such appointments should broaden their experience. The acceptance of appointment to such positions is subject to the approval of the Chair. Currently, the Executive Directors do not have any external appointments. Overview Strategic Report Governance Financial Statements 79 Members of the Nomination Committee During the year, the Committee consisted of myself, Coline McConville, Laura Hagan, Kevin Havelock, Jeff Popkin and Clare Swindell. Bill Ronald left the Committee on his retirement from the Board following the AGM in May 2023. All current members are independent. Although only members of the Committee have the right to attend meetings, other individuals, such as other board members and external advisers, may be invited to attend for all or part of any meeting. The Nomination Committee met formally twice during 2023 with all members present apart from one unavoidable apology, and also on an ad hoc basis when required. Duties The Committee’s principal duties are to: • monitor the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board and make recommendations to the Board with regard to any changes; • give full consideration to succession planning for directors and other senior executives in the course of its work, taking into account the challenges and opportunities facing the Group, and the skills and expertise needed on the Board in the future; • keep under review the leadership needs of the organisation, both executive and non-executive, with a view to ensuring the continued ability of the organisation to compete effectively in the marketplace; • keep up to date and fully informed about strategic issues and commercial changes affecting the group and the market in which it operates; and • be responsible for identifying and nominating candidates to fill board vacancies as and when they arise, for the ultimate approval of the Board. The Committee’s full Terms of Reference are available on our website. They are regularly reviewed to ensure they follow best practice. Below is a summary of the Committee’s principal activities undertaken during the year. Ways of Working and Evaluation One of the Committee’s first activities of the year was to review it and the Board’s ways of working following the appointment of a new Chair to the Board and new Chairs of all of the Committees. Following a constructive discussion, some opportunities for evolution were identified, which are being implemented currently. Later in the year, we also carried out an internal evaluation of the Board, building on our successful external evaluation in 2022. Further details of that are set out on page 79. On behalf of the Board, I am pleased to present the Nomination Committee report for the year ended 31 December 2023. NOMINATION COMMITTEE REPORT Committee Composition Domenic De Lorenzo (Chair of Committee) Clare Swindell Kevin Havelock David Lapp Jeff Popkin Laura Hagan 80 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 Appointments and Succession Planning The Committee oversaw the processes to fill two vacancies, created by Bill Ronald’s and Coline McConville’s retirement respectively. In both instances we worked with our independent adviser, Spencer Stuart. As already announced, following comprehensive processes which yielded two fantastic shortlists, we were delighted to welcome first Clare Swindell and later David Lapp to the Board, having joined us directly following the AGM, and on 1 January 2024, respectively. Clare and David bring strong and relevant experience to our group, built on long and distinguished executive careers. As explained above, the Committee is also responsible for considering succession planning of directors and senior executives, recognising that robust succession plans are fundamental to the long-term prospects of the business, as well as important for maintaining Fever- Tree’s fantastic culture. This topic was covering in detail at one of our sessions in 2023, with valuable input from our CEO and Chief People Officer. Even allowing for the Group’s relatively small headcount, we were thrilled to see several internal promotions to senior roles during the year, and as a Committee we continue to be impressed by the calibre of internal talent and our next generation of potential leaders. Diversity As a Board we continue to believe that we have an excellent mixture of talent, experience, industry expertise, regional knowledge, character, judgement and diversity of background, which has produced a strong chemistry and an environment that is both appropriately challenging and supportive. As a Committee we continue to be impressed by the calibre of internal talent.” Domenic De Lorenzo Nomination Committee Chair This belief has been extended by the impact we know we can expect from our two newest appointments. We recognise the value of increased diversity in multiple areas at Board level in achieving our strategic objectives and in driving innovation and growth. Whilst Board appointments will continue to be based on merit and relevant skill, the Directors appreciate that different backgrounds, experiences and opinions can promote more balanced and nuanced debate and lead to improved decisions. Two changes during 2023 have left our Board at 25% female representation and we acknowledge a need to evolve our Board accordingly over time. At employee level, 2023 was a very positive year for our global DE&I Committee, which met multiple times and continues to evolve. The Committee has taken on new leadership in the form of our Technology Director, Kate Stables. The Committee is then sponsored by our Chief People Officer and Company Secretary, with a regular reporting line to the Board. 2023 saw events held to celebrate multiple events, including International Women’s Day, Black History Month, Diwali and more. The Committee is supported by four working groups, with a wide menu of plans for 2024. We are also expanding unconscious bias training to all managers to promote diversity in hiring. As at 1 January 2024, the gender balance of those in senior management positions and their direct reports was 61% male and 39% female (FY22: 60:40). If we expand that to all managers in the business, the split is 47% male and 53% female (FY22 49:51). This shows us that we have a strong female talent pool to further identify potential and develop into the senior management positions, which alongside a focus on inclusive recruitment processes, and other DE&I committee plans, should allow us to balance gender in the organisation. We are looking to identify targets and timelines to achieve improved balance over the course of the next year. Fever-Tree adopts an Equal Opportunities Policy, which aims to develop and sustain a diverse and inclusive workforce, including with regards to gender, age, expertise, nationality, sexual orientation, experience and otherwise. Employee engagement The Committee was briefed by our Chief People Officer on the results of the 2023 employee engagement survey, where the Company achieved a ‘very good’ to work for score. The Committee were impressed with both the result and also, just as importantly, the commentary from the Executive on plans to improve employee engagement moving forwards. Nomination Committee in 2024 The Committee is scheduled to meet at least twice in 2024, continuing the good work of 2023. Domenic De Lorenzo Nomination Committee Chair Overview Strategic Report Governance Financial Statements 81 Governance Other members of the Audit Committee during the year were Domenic De Lorenzo (Chair until 25 May 2023, at which point he was appointed Chair of the Board of Directors and so stood down from the Committee), Coline McConville, Kevin Havelock, Jeff Popkin and Laura Hagan, each of whom is independent. The Chair of the Board, the Chief Executive Officer, the Chief Financial Officer, the Company Secretary, the Group Finance Director, the Head of Internal Audit and the external Auditor, BDO, regularly attend meetings of the Committee. The Audit Committee Chair met with BDO, the Chief Financial Officer and the Head of Internal Audit regularly during the year. There is ongoing engagement with BDO to ensure that their views, opinions, and comments are reflected within the Committee’s deliberations and dealings. The Committee met four times during this year, with full attendance apart from Coline McConville and Jeff Popkin each missing one session due to unavoidable prior commitments. The Board has satisfied itself that the membership of the Audit Committee includes at least one Director with recent and relevant financial experience and that the committee as a whole has competence in the sector in which the company operates. See pages 74 and 75 for details of the relevant experience of Directors. The Audit Committee is committed to continuing to focus on fulfilling our duties effectively and to a high standard, providing the necessary independent oversight with the support of management and the external auditors. AUDIT COMMITTEE REPORT On behalf of the Board, I am pleased to present my first Audit Committee report for the year ending 31 December 2023. During the year, the Audit Committee continued to implement the recommendations from the 2022 external Board evaluation, including increasing the number of Audit Committee meetings held to four per year, and holding an annual Board session to review key individual risks. A separate internal Audit Committee effectiveness review is planned for early 2024 to assess current performance. Role, objectives and duties of the Audit Committee The Audit Committee assists the Board in fulfilling its oversight responsibilities. The role of the Audit Committee is to: • monitor and review the integrity and adequacy of the Group’s financial statements and reporting, including any significant financial reporting judgements contained in them; • advise on whether the Group’s financial statements and public disclosures, when taken as a whole, are fair, balanced and understandable, and enable shareholders to assess the Company’s position, performance, business model and strategy; • review the adequacy and effectiveness of the Group’s internal financial control, audit and risk management processes, business viability, whistleblowing, integrity and policy breach allegation investigations; and • oversee the appointment, performance, independence, and remuneration of the external Auditor, and make recommendations to the Board on these topics. Committee Composition Clare Swindell (Chair of Committee) Kevin Havelock Jeff Popkin Laura Hagan This report summarises the Committee’s objectives, role and responsibilities and discusses our key activities during this financial year. Membership and effectiveness I joined the Board of Fever-Tree on 25 May 2023 following the conclusion of the AGM, succeeding Domenic De Lorenzo as Chair of the Audit Committee. David Lapp 82 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 Key activities of the Audit Committee in this financial year The key activities of the Audit Committee are summarised in the table below: Audit Committee role Principal outputs review Actions Oversight of financial and corporate reporting • All external financial reporting, including: – Trading updates – Interim and preliminary results – Annual Report and consolidated financial statements • Compliance with accounting standards/policies and relevant regulation • Review of material areas of accounting judgement and estimation • Review on the ‘quality of reported earnings’ • Evaluation of the carrying value of material assets and liabilities • ‘Fair, balanced and understandable’ review of the interim results statement and the annual report and related disclosures Internal control and audit • Internal Audit plan and reports • Control testing results • Policy breaches and whistleblowing reports • Approval of annual Internal Audit plan and reports • Monitoring of Internal Audit effectiveness and independence • Review of effectiveness of overall internal control environment • Review of financial system IT controls • Assessment of IT and major project controls Risk management process • Risk framework and appetite • Emerging and principal risks • Approval of risk strategy • Review of effectiveness of risk management process External Audit • External Audit plan and report • Auditor independence and non-audit work review • Terms of engagement and fees • Key audit issues and recommendations • Approval of External Auditor’s plan and report • Review of key Audit findings, insights and recommendations • Audit performance and effectiveness review including fee proposal • Approval of independence statement and any non-audit work • Review of recommendations on Annual Report disclosures • Review of recommendations on internal control environment During the year, the Committee discharged its role with regard to all of the above with no significant issues arising. In addition, the Committee has continued to place emphasis on the Group’s approach to risk appetite and mitigations, especially regarding principal and emerging risks. In light of the ongoing elevated global business volatility, the Committee has, in this financial year, continued to focus on risks relating to supply chain disruption and business continuity, cyber security and IT system development, environmental risk including climate change, talent retention and development, and the Group’s financial control environment. The main responsibilities of the Audit Committee are set out in its Terms of Reference, which are available on the Group’s website (www.fever-tree. com) and are available on request from the Company Secretary. The Committee’s terms of reference are reviewed regularly and will next be updated in March 2024. The Committee reports to the Board on its activities, identifying any key issues including recommendations as to the steps to be taken and on how it has discharged its responsibilities. Financial and corporate reporting During the financial year, the Committee reviewed the Annual Report and the associated preliminary results announcement, and the interim results announcement, including the interim financial statements, focusing on: • key areas of judgement and complexity; • critical accounting policies; The Audit Committee, together with management, continue to monitor and evaluate potential future regulatory changes.” Clare Swindell Audit Committee Chair Overview Strategic Report Financial Statements 83 Governance AUDIT COMMITTEE REPORT CONTINUED • the nature and size of any one off or abnormal items impacting the quality of earnings or cashflows; • the adequacy and accuracy of financial disclosures; • the viability and going concern assessments of the Group; and • adequacy and movements in key provisions including taxation and any changes required in these areas or policies. The Audit Committee worked with management, and considered the work of the external Auditor on the above matters to ensure suitable positions were reached. The Committee did not uncover any material issues or concerns regarding the above matters. In accordance with the UK Corporate Governance Code, a key focus of the Committee is to assess whether the Annual Report and annual financial statements are ‘fair, balanced and understandable’. This topic is considered with regards to all financial statements. The Committee has also recently considered guidance received from the FRC on the subject and taken recommendations from the external Auditor. The Committee has recommended to the Board that the Annual Report and annual financial statements are ‘fair, balanced and understandable’. Effectiveness of the Group’s internal control systems and risk management process The Group continues to review its system of financial and operating internal controls to ensure compliance with best practice, whilst also having regard to its size and the resources available. The Audit Committee receives regular reports from the Chief Financial Officer, the Finance Director and the Head of Internal Audit on internal audits, control assurance work, policy breaches (if any), actions taken to improve control design and effectiveness, and the development of automated financial controls. During the year, the Head of Internal Audit worked alongside KPMG within a co-source model to deliver the Internal Audit plan. The plan this year continued to build on the progress achieved last year in integrating and embedding internal audit into the organisation. The Internal Audit function’s primary activities included: • a review of Accounts Receivable Insurance Protocols; • a review of the governance, risk management, and reporting processes in relation to material ESG risks; and • a high level assessment of the maturity of the risk management framework, processes and controls in relation to fraud and bribery. The last item was particularly relevant given the introduction of the ‘failure to prevent fraud offence’ into UK law via the Economic Crime and Corporate Transparency Act late in 2023. The Board, and Fever-Tree as a whole, have a zero-tolerance approach to fraud and bribery, and this assessment helped to ensure our controls were appropriate to support that commitment. The Audit Committee assesses the effectiveness of Internal Audit by reviewing its annual audit plan at the start of the financial year, monitoring its ongoing performance throughout the year, and assessing completion rates and feedback provided following completion of the annual audit plan. Having carried out this assessment, the Audit Committee is of the view that the quality, experience and expertise of the function is appropriate for the business. The Audit Committee agreed with the recommendation to continue with a co-source model with KPMG as our partner for the next financial year and the Audit Committee has reviewed and approved the internal audit plan for the upcoming financial year. The Committee notes that BDO obtained an understanding of the Group’s internal controls for the purposes of forming their audit opinion as set out on pages 108 to 114. No significant deficiencies in our internal controls were reported by the external Auditor, nor reported to the Audit Committee. The Committee reports no material breaches to policy including Treasury and Tax during this financial year. The Group has in place a whistleblowing policy which sets out the formal process by which an employee of the Group may, in confidence, raise concerns about possible improprieties in financial reporting or other matters. Whistleblowing is a standing item on the Committee’s agenda, and updates are provided at each meeting. During the year, there were no major incidents for consideration. The Audit Committee, under delegated authority from the Board, oversees the effectiveness of the Group’s risk management framework. The Board is accountable for the effective identification and evaluation of risks for the Group and reviewing the controls in place to mitigate any potential adverse impacts. Each functional area of the Group is tasked with monitoring emerging or changing risks in their field. This includes the formation of sub-committees for particular risks that meet regularly to monitor trends and challenge the impact of mitigation efforts relating to that risk. The output of these processes is subject to periodic review with the executive directors and internal Risk Committee, and is reported back to the Board regularly throughout the year. Each risk is independently quantified against set criterion, considering both the likelihood of occurrence and the potential impact on the Group both before and after the application of controls and mitigations. These assessments are recorded in the Group’s Key Risk Register, formed of our most significant risks from across the entire business. This register is finally reviewed, challenged and then ratified by the Board on a periodic basis. In addition, the Board receives presentations from different departments within the Group on an ongoing basis to keep the Board informed on strategic and operational performance and the controls in place to mitigate risks faced by the Group. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 84 The Board met with senior finance and operational management during the year to go through certain key risks and to review the mitigation actions in place. Areas of specific focus included a review of: • the approach to managing product quality and mitigating brand, product liability and product recall risk in a global, outsourced business model; • the process for consideration of emerging macro risks including building the scenario planning capability internally to understand the wider impacts of significant macro events (such as conflict, regulation, environmental changes), and how to mitigate any exposures; • the approach to ensuring an ethically compliant supply chain; and • current strategic and operational transformation initiatives, including technology and internal controls enhancements. These meetings are a key part of the risk management process. The Board were impressed with the content provided, and no major issues were raised. During the year the Audit Committee also reviewed and approved the processes for identifying, evaluating and managing the principal and emerging business risks that the Group faces, including those that would threaten the Group’s business model, competitive position, reputation and future performance. We have continued to develop our risk management processes, specifically considering the current highly volatile global political and economic environment, to ensure that they remain relevant resulting in a particular focus this year on product quality, social-ethical supply chain and scenario planning for emerging macro risks. On this basis, the Audit Committee is satisfied that it has carried out a robust assessment of Fever-Tree’s risk management process and internal control systems. It is emphasised that the objective of these processes is to manage, rather than eliminate the risk of failure to achieve business objectives. Accordingly, they can only provide reasonable, but not absolute, assurance against material misstatement or loss. External audit independence and effectiveness During the year, the Audit Committee reviewed the external audit plan and the findings of the external Auditor from its audit of the consolidated financial statements. The Audit Committee assesses the ongoing effectiveness and quality of the external Auditor and audit process through several methods, commencing with a review of the detailed audit plan presented to the Audit Committee at the start of the audit cycle. The key audit risks identified by BDO were reviewed by the Committee and the work performed by the Auditor was used to test management’s assumptions and estimates relating to such risks. The effectiveness of the audit process in addressing these matters was assessed through reports presented by the Auditor to the Audit Committee which were discussed by the Committee. No major areas of concern were highlighted by the Auditor during the current financial year. Following completion of the external audit process, feedback on its effectiveness was provided through review meetings with the Group’s finance team and management in advance of management and the Auditor providing assessments of Auditor effectiveness and quality to the Audit Committee for consideration. This year, the overall performance of the Auditor was assessed as satisfactory. In relation to the provision of non- audit services, the Auditor is precluded from engaging in services that would compromise its independence or violate any professional requirements or regulations affecting its appointment as auditor. Any non-audit services proposed to be provided by the external Auditor require justification as to why such appointment is in the best interests of the Group and how independence would be safeguarded, and above a certain de minimis fee level, require approval by the Committee. BDO did not provide non- audit services to the Group in 2023. The breakdown of the external auditor’s fees between audit and non-audit services as approved by the Committee is provided in note 5 of the Group’s consolidated financial statements. On the basis that no fees were charged for non-audit services, the Committee is satisfied with the Auditor’s independence, and will keep this under review moving forwards. As part of their normal cycle of reviews, the Financial Reporting Council (‘FRC’) completed a review of the 31 December 2022 annual report. Overall the findings of the review were positive, with limited improvements required. There were no key findings, with minor improvements recommended on a small number of specific areas, namely Alternative Performance Metrics and minor enhancements to disclosures in the areas of revenue, lease liabilities and critical accounting estimates. These recommendations were implemented during this audit cycle. Looking ahead The Audit Committee, together with management, continue to monitor and evaluate potential future regulatory changes. These include proposed reforms to the UK audit and corporate governance regimes, requirements concerning the assurance of non- financial information, increased disclosure requirements in respect of internal controls and provision of consistent and reliable information on ESG, including specifically climate- related information. A number of these proposed regulatory changes were withdrawn during the year however, we note the publication of the updated UK Corporate Governance Code in January 2024. In order to continue to deliver on the expectations of our stakeholders for transparent, high quality and relevant reporting, management, under the supervision of the Committee, will recommend and implement a number of changes in its approach to external reporting over the coming years. These will be reported on in due course and when appropriate. Clare Swindell Audit Committee Chair Overview Strategic Report Governance Financial Statements 85 This is my first report as Remuneration Committee Chair, and I would like to thank Coline McConville for her stewardship of the Committee since IPO in 2014. Fever-Tree is listed on the Alternative Investment Market (AIM) and therefore provides these remuneration disclosures on a voluntary basis. As such, the charts and tables included here are unaudited, but, in general, our disclosures have been prepared in accordance with best practice for an AIM company of our size. 2023 was a challenging year for many businesses and Fever-Tree was not immune from the impact of the tough macro economic environment and inflationary headwinds. However the brand continued to make good progress in 2023 growing market share across all its key markets, particularly in the US. The increasing diversification of the portfolio has ensured that the brand remains the clear market leader in the UK and has also allowed us to capture growth opportunities across the US, Europe and Rest of the World. The Group delivered revenue growth of 6% to £364.4m and adjusted EBITDA for the full year of £30.5m. Whilst the Group’s gross margin was materially affected by the impact of elevated European energy costs on glass bottle costs, alongside wider inflationary pressures, the Group took proactive steps to mitigate the impact of these headwinds and these operational efficiencies alongside a reduction in inflationary cost pressures saw a significant improvement in EBITDA in the second half of the year which is expected to continue in 2024. REMUNERATION COMMITTEE REPORT Annual bonus and long-term incentive payouts based on performance in 2023 For the year under review, annual bonuses were based 60% on turnover, 20% on adjusted EBITDA and 20% on a scorecard of strategic measures, including innovation and margin improvement as well as environmental and sustainability measures. The performance targets were set to be stretching in the context of the external environment, ensuring that the maximum pay out would only be achieved if exceptional performance was delivered. Revenue for 2023 was £364.4m. Despite this representing c.6% growth on 2022, performance was below the threshold target set for the annual bonus. Adjusted EBITDA performance of £30.5m was also below threshold. Overall, therefore, there is no annual bonus pay-out in respect of the financial performance measures for 2023. The Committee considered performance against the strategic and ESG objectives and noted the significant positive progress in the year, in particular in relation to the diversification of the portfolio via successful innovation initiatives, the measures taken to improve adjusted EBITDA margin including via improved productivity and efficiency, and the continued progress against the Group’s sustainability strategy. Overall, it was determined that the strategic and ESG element would pay out at 100% of maximum, resulting in an overall bonus of 20% of maximum. Further details of performance outcomes are provided on page 99. Committee Composition Laura Hagan (Chair of Committee) Kevin Havelock David Lapp Clare Swindell Domenic De Lorenzo On behalf of the Board, I am pleased to present the 2023 Directors’ Remuneration Report, which sets out the remuneration paid to the Directors in 2023 and the remuneration approach for 2024. 86 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 The 2021 LTIP awards are due to vest in April 2024 following the completion of the three-year performance period to the end of 2023. 2021 was the first year in which awards consisted of a ‘core’ LTIP award based 75% on turnover and 25% on adjusted EBITDA, and an additional award based 100% on international revenue growth targets which was designed to continue to incentivise the continued expansion of our international business. The targets were set, taking into account internal and external reference points, to be stretching with regard to our strategic priorities and the economic environment at the time. For the ‘core’ LTIP award, revenue and adjusted EBITDA performance was below threshold, meaning this part of the award will lapse in full. For the additional LTIP award, international revenue growth was also below threshold, meaning this part of the award will lapse in full. The Committee did not exercise any discretion in relation to the above outcomes. Remuneration arrangements for 2024 Since Fever-Tree’s IPO in November 2014, executive remuneration has been structured slightly differently from typical UK market practice, with lower base salaries and higher long-term incentive opportunities, primarily reflecting the high- growth nature of the business. The Committee periodically reviews the remuneration approach to ensure that it remains fit for purpose, and for a number of years has debated when the best time to rebalance towards a more market aligned approach would be. This included three years ago, when it was ultimately determined that the additional LTIP award should be introduced to further incentivise the growth of the international business. While remaining growth-focused, Fever-Tree is an established business with high-performing and highly sought-after Executive Directors. The Committee therefore believes now is the right time to adopt an updated remuneration approach which appropriately rewards our Executive Directors while continuing to incentivise operational performance and the creation of long-term value for all stakeholders. In this context, the Committee is proposing several changes to the executive remuneration framework for 2024. These include: • No material increase in overall quantum at maximum, but a re-balancing of the remuneration framework, with an increase in salary for both Executive Directors and the removal of the additional award under the LTIP. Our Executive Directors are high-performing, experienced professionals with a deep knowledge of the business, and their skills and experience in leading a fast-growing business are highly sought-after. The Committee therefore believes that it is important to provide them with a competitive level of fixed pay and as such base salaries are being increased to £565,000 (+28%) and £385,000 (+35%) for the CEO and CFO, respectively. In determining salary positioning, the Committee undertook an extensive review of market practice, with multiple reference points considered to reflect the complexity of the business and growth and brand and geographical development experienced since IPO. Salaries have been positioned at the market mid-point taking into account the various reference points. The Committee believes this positioning is appropriate taking into account the size, complexity and increasingly global nature of the organisation as well as the experience and skills of our talented Executive Directors. Considering this increase in salary, the additional LTIP award will be removed from 2024 and the maximum LTIP opportunity therefore reduced from 450% to 300% of salary. International revenue growth, which has been the focus of the additional LTIP award, remains a critical part of the forward-looking strategy. However, over the last three years, there has been a step-change in the international business, with international revenue now accounting for broadly two- thirds of total revenue. It is therefore no longer considered necessary to separately incentivise international revenue growth as this is fully captured within overall Group revenue, which will continue to be included as a key performance measure in both the annual bonus and LTIP going forward. This is my first report as Remuneration Committee Chair, and I would like to thank Coline McConville for her stewardship of the Committee since IPO.” Laura Hagan Remuneration Committee Chair Overview Strategic Report Financial Statements 87 Governance Notwithstanding the rebalancing, the remuneration framework remains weighted towards the long-term, with maximum remuneration levels only available for performance against stretching long-term targets. The Committee will continue to set targets commensurate with the opportunity available. Overall, as a result of this re- balancing, there is no material increase in total compensation at maximum, and the Committee is comfortable that the overall package is appropriately positioned considering the experience and performance of the Executive Directors and that it will continue to incentivise management to deliver our growth focused business strategy. • Re-balancing of the annual bonus performance framework to acknowledge that alongside top-line growth, the continued delivery of expected margins is a key priority for the business. The weighting of adjusted EBITDA in the annual bonus has therefore been increased from 20% to 30%, with a corresponding reduction in the weighting of revenue from 60% to 50%. Revenue and adjusted EBITDA are considered by the Board to be the most important key performance indicators for Fever-Tree, and they are well-aligned with both Fever-Tree’s short- and long-term strategy. Fever-Tree continues to operate in a segment which is attractive to new entrants, and it is therefore critical to drive market penetration and consequent revenue growth as fast as possible. This remains a key focus for the business at the current time, and why revenue continues to be the focus within our incentives. The upweighting of adjusted EBITDA, however, recognises that Fever-Tree is now a more established business and also reflects feedback received from some shareholders. In addition, the non-financial element of the annual bonus (weighted at 20%) will focus on strategic priorities which will aim to have a positive in-year and long- term impact on profitability and value creation. For 2024, this will include items linked to new product development and innovation, route to market optimisation and production capabilities. In light of the continued market uncertainty we have reduced the payout for threshold performance to 10% of the maximum annual bonus opportunity (down from 25%). 50% of the bonus will continue to be paid for target levels of performance with 100% paying out at maximum levels of performance. • Introduction of an ESG metric within the LTIP, with a weighting of 10%. Sustainability is core to our forward-looking strategy – our authentic and ambitious approach to sustainability provides a clear point of difference for customers and consumers alike, demonstrating that we are considered a brand with a conscience. The Committee therefore considers the introduction of an ESG metric within the LTIP important in supporting the delivery of our long-term sustainability agenda. For 2024, the LTIP will therefore be based 70% on Group revenue, 20% on adjusted EBITDA and 10% on ESG measures (previously split only between revenue and adjusted EBITDA with the additional LTIP based on international revenue). Targets set for this metric will be tangible and measurable over the respective three-year LTIP period. For 2024, ESG performance will be assessed against a scorecard of sustainability measures tied to our five Sustainability branches and our KPIs as set out in the Sustainability Review starting on page 32. The Committee believes that the above changes to our remuneration framework are necessary to appropriately reward our Executive Directors, while continuing to incentivise the delivery of operational performance and long- term value creation. The Committee consulted with shareholders representing c.65% of our share capital on these arrangements, and I am grateful to all those who participated for their thoughtful and helpful input. The majority of shareholders consulted were supportive of the proposed changes to reposition our remuneration including increasing base salaries to around the market mid-point compared to other companies of a similar size and complexity, to reward our exceptional executive directors, and support their on-going retention. Shareholders provided feedback on some of the structural features of our remuneration arrangements and performance measures which the Committee carefully considered. Following feedback received during the consultation, we have decided to increase our shareholding guidelines for the Executive Directors to 300% of salary (currently 200% of base salary) to enhance alignment with shareholders and to support sustainable long-term decision making. We will report on progress against this next year. Laura Hagan Remuneration Committee Chair REMUNERATION COMMITTEE REPORT CONTINUED CHAIR’S STATEMENT Closing remarks Fever-Tree continues to be a growth-focused business with a performance-oriented culture. The Committee aims to continue to foster and encourage this culture through its approach to remuneration. This is the seventh year that the Committee has voluntarily put the Directors’ Remuneration Report to a shareholder advisory vote, reflecting shareholders’ expectations in this area and the Remuneration Committee’s continued desire to be open and transparent. I very much look forward to your support and I am happy to answer any questions you may have regarding our remuneration philosophy and arrangements. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 88 This section of the report sets out the remuneration policy for Executive Directors and outlines how this policy will be implemented for 2024. The Remuneration Committee has addressed the principles of clarity, simplicity, risk, predictability, proportionality, and alignment to culture when determining the Executive Director remuneration policy. As discussed in the Chair’s Statement and outlined in the table below, Fever-Tree has evolved its approach to executive remuneration for 2024 to ensure that it appropriately reflects the current size and complexity of the business as well as the experience and skills of our talented Executive Directors. Overall, the Committee considers the remuneration package competitive and in line with other companies of a similar size and complexity, while being appropriate in the context of our approach to remuneration throughout the organisation. Base salaries are now market competitive, maximum incentive awards are capped, and incentive targets are set to be stretching while not encouraging excessive risk-taking. Element (purpose and link to strategy) Operation Opportunity Performance metrics Implementation of Remuneration Policy for 2024 Base salary To reflect size and scope of the role and individual’s performance and contribution. Reviewed on an annual basis, with any increases normally taking effect from 1 January. Payable in cash. The Committee reviews base salaries with reference to: • the size and scope of the individual’s roles; • the individual’s performance and experience; • business performance and the external economic environment; • market practice at other companies of a similar size and complexity; and • salary increases across the Group. There is no maximum salary increase. The Committee retains discretion to make appropriate adjustments to salary levels to ensure they remain appropriate in the context of the size and scope of the role and the size and complexity of the business. Company and individual performance are considered when setting Executive Director base salaries. For 2024, as outlined in the Committee Chair’s Statement, we have rebalanced the overall remuneration framework towards a more market aligned approach. This includes increases in base salary for both our Executive Directors to a market mid-point considering the size and complexity of the business. Base salaries will be increased by 28% and 35% for the CEO and CFO, respectively, with effect from 1 January 2024 to: CEO - £565,000 CFO - £385,000 Pension To provide a market-competitive pension Executive Directors may participate in the Group pension scheme. Salary is the only element of remuneration that is pensionable. Pension allowance (introduced for Executive Directors from 1 January 2019) was initially 5% of salary and will increase by 1% of salary per annum up to a maximum of 10% of salary. This approach is in line with the policy for other employees in the Group. Not performance related. Maximum pension contribution or cash allowance for 2024 is 10% of salary. DIRECTORS’ REMUNERATION POLICY Overview Strategic Report Governance Financial Statements 89 Element (purpose and link to strategy) Operation Opportunity Performance metrics Implementation of Remuneration Policy for 2024 Benefits To provide market- competitive benefits. Benefits may include car allowance and private health insurance. Other benefits may be introduced as appropriate and include relocation and other expatriate benefits. Benefits vary by role and individual circumstances; eligibility and cost are reviewed periodically. Not performance related. No changes. The only benefit currently provided is private health insurance. Annual bonus To incentivise the delivery of annual financial performance and the achievement of strategic business priorities, thus delivering value to shareholders. Performance is measured on an annual basis for each financial year. Performance measures are reviewed prior to the start of the year to ensure they remain appropriate and align with the business strategy. Stretching targets are set. At the end of the year the Committee determines the extent to which these were achieved. Awards are paid in cash. Clawback (of any bonus paid) provisions apply (see below). The Committee determines the maximum bonus opportunity each year to ensure that the overall remuneration package remains competitive. 10% of the maximum annual bonus opportunity will be paid at threshold performance, 50% at target performance and 100% at maximum performance, with straight-line vesting between each. Performance measures are selected, and their respective weightings may vary from year to year, depending on financial and strategic priorities. Measures may include personal performance objectives provided no less than 75% of the annual bonus is based on financial measures. The Committee has discretion to adjust the formulaic bonus outcomes both upwards (within the policy limits) and downwards to ensure alignment of pay with the underlying performance of the business over the financial year. The maximum opportunity remains unchanged at 150% of salary for all Executive Directors. For 2024, the performance measures will be: • 50% on turnover. • 30% on adjusted EBITDA. • 20% on strategic measures linked to new product development and innovation, route to market optimisation and production capabilities. Further detail on the re-balancing of the performance framework can be found in the Committee Chair’s Statement. REMUNERATION COMMITTEE REPORT CONTINUED DIRECTORS’ REMUNERATION POLICY FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 90 Element (purpose and link to strategy) Operation Opportunity Performance metrics Implementation of Remuneration Policy for 2024 LTIP To drive sustained long-term performance that supports the creation of shareholder value. Annual awards of shares or nil-cost options may be made to participants. Award levels and performance conditions are reviewed before each award cycle to ensure they remain appropriate. Awards made under the LTIP will have a performance period of at least three years and a minimum vesting period of three years. Dividend equivalents may accrue on LTIP awards and are paid on those shares which vest. Malus (of any unvested LTIP) and clawback (of any vested LTIP) provisions apply (see below). The LTIP provides for annual awards of up to 300% of salary for Executive Directors. The Committee reserves the right to review the maximum opportunity to ensure that the overall remuneration package remains competitive. Under each measure, threshold performance will result in 25% of maximum vesting for that element, rising on a straight-line basis to full vesting for achieving Stretch performance. Vesting of LTIP awards is subject to Company performance and continued employment. The Committee has discretion to adjust the formulaic LTIP outcomes both upwards (within the policy limits) and downwards to ensure alignment of pay with the underlying performance of the business over the performance. For 2024, the additional LTIP element has been removed as part of the broader re-balancing and the maximum LTIP opportunity is therefore reduced from 450% to 300% of salary for the Executive Directors. For 2024, the LTIP will vest subject to the following performance measures: • 70% on turnover. • 20% on adjusted EBITDA. • 10% on a scoreboard of ESG measures linked to Sustainability pillars set out in our Sustainability Review starting on page 32. Further details on the re-balancing and the introduction of ESG can be found in the Committee Chair’s Statement. Notes to the policy table Malus and clawback Malus and clawback provisions may be applied in the following circumstances: • Material misstatement of results; • An act or omission by the participants which would enable the Company to summarily dismiss them; • An error in assessing the performance conditions; • Serious reputational damage to the Company or any other Group Company (2019 awards onwards); • Material corporate failure in the Company or any other Group Company (2019 awards onwards); and • Any other instance where the Remuneration Committee regards it appropriate. Performance measures For 2024, as in prior years, the annual bonus and the LTIP award will continue to be based primarily on turnover and adjusted EBITDA as these are considered by the Board to be the most important key performance indicators for Fever- Tree, and are well aligned with Fever-Tree’s short and long-term strategy. Fever-Tree operates in a segment which is attractive to new entrants and it is therefore critical to drive market penetration and consequent revenue growth as fast as possible. The Committee is mindful of shareholder guidance around similar performance measures being used in both the annual bonus and the LTIP; however, for the reasons outlined, the Committee considers that this approach remains appropriate especially given the recent introduction of strategic measures with the annual bonus and the introduction of an ESG metric within the LTIP. Overview Strategic Report Governance Financial Statements 91 Performance measures continued In terms of the annual bonus, the strategic measures focus on those in-year priorities which will have a long-term positive impact on profitability and value creation. For the LTIP, the ESG metric is being introduced to support the delivery of our long-term sustainability agenda. Targets applying to the annual bonus and LTIP awards are reviewed annually, based on internal and external reference points, and are set to be stretching but achievable with regard to the particular strategic priorities in a given year. Annual bonus targets are considered commercially sensitive and will be disclosed one year after the end of the performance period. Taking shareholder feedback into account, we now disclose our stretching LTIP targets within one year of grant rather than at vesting. Shareholding Guidelines The Committee continues to recognise the importance of Executive Directors aligning their interests with shareholders through building up significant shareholdings in the Company. As noted in the Chair’s Statement, following feedback received from shareholders during the recent consultation, it is proposed that our shareholding guidelines are increased to require Executive Directors to acquire a holding equivalent to 300% of base salary (previously 200% of salary) within five years of joining the Company or the guideline increasing. The Committee believes that this enhanced shareholding guideline will further align executives with shareholders and support sustainable decision making. Until the relevant shareholding levels are acquired, vested but unexercised awards are included in shareholding guidelines on a net of tax basis. Details of the Executive Directors’ current personal shareholdings are provided in the Annual Report on Remuneration and are substantially in excess of the requirement. Taking into account shareholder feedback, the Committee has again considered whether it would be appropriate to introduce annual bonus deferral, an additional LTIP holding period and/or post-employment shareholding guidelines. After careful consideration, the Committee concluded that the current leaver provisions under the LTIP along with the significant shareholdings in the business of both Executive Directors, supported by the increased shareholding guidelines, ensure the continued alignment of the interests of our Executive Directors and our shareholders both within employment and post-cessation of employment. The Committee is however mindful of shareholder expectations in this area and will keep its approach in these areas under review. Non-Executive Director Policy Table Details of the policy on fees paid to our Non-Executive Directors and how this policy will be implemented for 2024 are set out in the table below: Element (purpose and link to strategy) Operation Opportunity Performance metrics Implementation of Remuneration Policy for 2024 Fees To attract and retain Non- Executive Directors of the highest calibre with broad commercial and other experience relevant to the Company. The Chair and Non-Executive Directors receive a basic fee for their respective roles. Additional fees may be payable to Non-Executive Directors for additional services such as acting as Senior Independent Director or as Chair of any of the Board’s Committees, etc. Fee levels are reviewed from time to time against similar roles at comparable companies, taking into account time, commitment and responsibility of the role, with any adjustments normally effective 1 January in the year following review. The fees paid to the Chair are determined by the Committee, whilst the fees of the Non- Executive Directors are determined by the Chair, CEO and CFO. There is no maximum fee increase. It is expected that increases to Non- Executive Director fee levels will be in line with salaried employees over the life of the policy. However, in the event that there is a material misalignment with the market or a change in the complexity, responsibility or time commitment required to fulfil a Non- Executive Director role, the Board has discretion to make an appropriate adjustment to the fee level. Not performance related. With effect from 1 January 2023, the Chair’s fee was increased to £183,750. For 2024, this will be increased by 5% to £192,937. Fees for Non-Executive Directors were also increased by 5% as follows: • Basic Non-Executive Director fee – £60,637. • Senior Independent Director additional fee – £7,717. • Audit and Remuneration Committee Chair fee – £11,025. These increases compare to a typical increase of 5% given to the wider UK workforce for 2024. REMUNERATION COMMITTEE REPORT CONTINUED DIRECTORS’ REMUNERATION POLICY CONTINUED FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 92 Pay Scenario Charts The charts below provide estimates of the potential future reward opportunity for the two current Executive Directors based on remuneration arrangements in 2024 as described in the policy table. The potential is split between the different elements of remuneration under four different performance scenarios: ‘Minimum’, ‘On Target’, ‘Maximum’ and ‘Maximum (including share price growth)’. In illustrating potential reward opportunities, the following assumptions have been made: Component ‘Minimum’ ‘On-target’ ‘Maximum’ ‘Maximum (including share price growth)’ Base salary (from 1 January 2024) CEO – £565,000 CFO – £385,000 Pension (from 1 January 2024) 10% of base salary Other benefits £3,061 (based on disclosed single figure for 2023) Annual bonus No bonus payable Target bonus (50% of maximum) Maximum bonus LTIP* No LTIP vesting Threshold vesting (25% of maximum) Maximum vesting (300% of maximum) Maximum vesting plus 50% share price growth over the performance period * LTIP awards granted in a year normally vest on the third anniversary of the date of grant. The projected value of LTIP amounts excludes the impact of any dividends over the vesting period. Approach to Recruitment Remuneration In the case of appointing a new Executive Director, the Committee may make use of any or all of the existing components of remuneration, as described in the policy table. In determining appropriate remuneration for a new Executive Director, the Committee will take into consideration all relevant factors (including quantum, nature of remuneration and the jurisdiction from which the candidate was recruited) to ensure that the pay arrangements are in the best interests of Fever-Tree and its shareholders. The Committee may consider it appropriate to grant an award under a structure not included in the Policy, for example to buy out incentive arrangements forfeited on leaving a previous employer. In doing so, the Committee will consider all relevant factors, including the form of awards, expected value and vesting timeframe of forfeited opportunities. When determining any such buy-out award, the guiding principle is that awards would generally be on a like-for-like basis unless this is considered by the Committee not to be practical or appropriate. £4,500k 100% 100% 19% 42% 29% 27% 21% 29% 54% 42% 21% 16% 19% 27% 29% 29% £1,472k £3,167k £4,015k £2,737k £2,159k £1,004k £427k £625k Minimum Minimum Maximum Maximum Target Fixed pay LTIP Annual bonus Share price growth Target Maximum (including share price growth) Maximum (including share price growth) 54% 42% 16% 21% 42% 21% £3,000k CEO CFO £2,500k £2,500k £3,500k £1,500k £1,500k £4,000k £2,000k £2,000k £3,000k £1,000k £1,000k £500k £500k £0k £0k Overview Strategic Report Governance Financial Statements 93 Service Contracts Executive Directors The Executive Directors signed new service contracts with the Company on admission to AIM. These are not of fixed duration and are terminable by either party giving 12 months’ written notice. Executive Directors’ contracts may be terminated early by making a payment in lieu of notice. Any payments in lieu of notice will normally be based on base salary only but may also include pension and benefits. Executive Director Date of service contract Tim Warrillow 3 November 2014 Andy Branchflower 3 November 2014 Non-executive directors The Non-Executive Directors signed letters of appointment with the Company for the provision of Non-Executive Directors’ services, which may be terminated by either party giving one month’s written notice. The Non-Executive Directors’ fees are determined by the Board. Non-Executive Director Initial agreement date Expiry date of current agreement Domenic De Lorenzo 17 May 2018 25 May 2026 Kevin Havelock 11 January 2018 11 January 2027 Jeff Popkin 11 January 2018 11 January 2027 Laura Hagan 20 May 2021 20 May 2027 Clare Swindell 25 May 2023 25 May 2026 David Lapp1 1 January 2024 1 January 2027 1 David Lapp joined the Board as a Non-Executive Director with effect from 1 January 2024. Exit Payment Policy In the event that an Executive Director leaves, LTIP awards will normally lapse, unless the individual is considered a ‘good leaver’. ‘Good leavers’ retain an interest in LTIP awards, with performance normally tested at the end of the relevant three-year performance period and awards normally pro-rated for time based on the proportion of the vesting period served. An individual would normally be considered a ‘good leaver’ if they leave for reasons of death, ill-health, injury, redundancy, retirement with the agreement of the Company, or such event as the Remuneration Committee determines. Similarly, in respect of the annual bonus, if an Executive Director leaves, they would normally lose any entitlement for bonus, unless a ‘good leaver’. ‘Good leavers’ retain an interest in the bonus and the award is normally pro-rated for time and performance. Consideration of Conditions Elsewhere In the Company Fever-Tree remains in many ways a small group of companies, with around 375 employees globally. The Committee normally considers the range of base pay increases across the Company when determining the base salary increases for Executive Directors. The Remuneration Committee does not consult with employees over the effectiveness and appropriateness of the executive remuneration policy and framework; however, Remuneration Committee members are also Board members and therefore receive updates from the Executive Directors on their discussions and consultations with the wider employee population and senior colleagues present to the Board on a regular basis. This includes the Chief People Officer who also attends Remuneration Committee meetings. During the year, the Board received a detailed update on our people strategy, including our approach to retention and remuneration throughout the Company. In line with the UK Corporate Governance Code, Kevin Havelock was appointed in 2018 as the Company’s designated Non-Executive Director who is responsible for engaging with employees and ensuring that the employee voice is represented in the boardroom. During 2023, he attended employee group meetings throughout the Group’s network. Feedback received through these channels was fed into Board discussions. Whilst we acknowledge the proposed increase in base salary for the CEO and CFO is above the typical increase given to the workforce this year, we are very proud of the support we have given to our wider workforce, especially since the beginning of the pandemic. Amongst a number of other matters, we have implemented competitive salary increases for at least 3 years, supplemented by an additional one- off cash payment to all staff in September 2022. REMUNERATION COMMITTEE REPORT CONTINUED DIRECTORS’ REMUNERATION POLICY CONTINUED FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 94 Consideration of Shareholder Views The Committee is committed to ongoing dialogue with shareholders, where appropriate, and welcomes feedback on Directors’ remuneration. When reviewing executive remuneration arrangements for 2024, the Remuneration Committee consulted with shareholders representing c.65% of our share capital. The majority of our shareholders confirmed that they were supportive of the proposed changes to repositioning remuneration arrangements, including increasing base salaries to a more market mid-point level taking into account the size and complexity of the business, to reward our exceptional executive directors and support their on-going retention. All views received during this process were taken into account when finalising the remuneration policy and its implementation for 2024 (for example, through the increase in shareholding guidelines from 200% to 300% of base salary). The Committee will continue to monitor trends and developments in corporate governance and market practice to ensure the structure of executive remuneration at Fever-Tree remains appropriate in the context of both the Company’s growth and the governance environment. The Committee will continue to regularly engage with shareholders as appropriate. Annual Report on Remuneration The following section provides details of how Fever-Tree’s remuneration policy was implemented during the financial year ending 31 December 2023. Remuneration Committee Membership and Activities in 2023 The Remuneration Committee’s members at 31 December 2023 were Laura Hagan, who is the Chair of the Committee, Kevin Havelock, Clare Swindell and Domenic De Lorenzo. David Lapp joined the Committee on 1 January 2024. All members of the Committee are independent Non-Executive Directors (Domenic De Lorenzo was independent on appointment). Jeff Popkin is also regularly invited to attend meetings. The Committee operates under the Group’s agreed Terms of Reference which sets out its duties, including reviewing all senior executive appointments and determining the Group’s policy in respect of the terms of employment, including remuneration packages of Executive Directors and other designated members of senior management (including the Company Secretary). The Committee’s Terms of Reference are available on the Company’s website (www.fever-tree.com) and on request from the Company Secretary. The Remuneration Committee met formally three times during 2023 and also on an ad-hoc basis when required. Remuneration Committee activities during the year were as follows: • Approval of the Directors’ Remuneration Report for 2022. • Review and approval of Executive Director performance against annual bonus targets for 2022. • Review and approval of Executive Director performance against 2020 LTIP targets. • Determination of performance targets for incentives for 2023. • Review of developments in corporate governance and best practice. • Review and development of Executive Director remuneration arrangements for 2024, including preparing for consulting with shareholders on the same. • Review of remuneration arrangements for senior management and the wider Group. Advisers During the year, the Committee sought internal support from the Chief Executive Officer, Chief Financial Officer and Chief People Officer, who attended Committee meetings by invitation from the Committee Chair, to advise on specific questions raised by the Committee and on matters relating to the performance and remuneration of senior managers. The Chief Executive Officer, Chief Financial Officer, Chief People Officer and Chair were not present for any discussions that related directly to decisions on their own remuneration. The Committee has appointed Deloitte to provide independent advice on executive remuneration matters. Deloitte is a signatory to the Code of Conduct for Remuneration Consultants in the UK. The fees paid to Deloitte in relation to advice provided to the Committee for 2023 were £35,150. The Committee evaluates the support provided by Deloitte annually and is comfortable that they do not have any connections with Fever-Tree that may impair their independence. No non- remuneration related advice was provided by Deloitte to the Group in the year. Overview Strategic Report Governance Financial Statements 95 Single Total Figure of Remuneration for Directors The table below sets out a single figure for the total remuneration received by each Director for the year ended 31 December 2023 and the prior year: Basic salary / fees (£k) Taxable benefits (£k) Pension (£k) Annual bonus (£k) LTIP (£k) Total (£k) 2023 2022 2023 2022 2023 2022 2023 2022 20231 20222 2023 2022 Executive Director Tim Warrillow 443 418 3 4.5 40 33 133 106 0 465 619 1027 Andy Branchflower 285 268 3 4.5 26 21 85 68 0 299 399 661 Non-Executive Director Domenic De Lorenzo3 138 65 – – – – – – – – 138 65 Kevin Havelock4 62 55 – – – – – – – – 62 55 Jeff Popkin 58 55 – – – – – – – – 58 55 Laura Hagan4 64 55 – – – – – – – – 64 55 Clare Swindell5 41 – – – – – – – – – 41 – Former Non-Executive Director Coline McConville6 65 72 – – – – – – – – 65 72 Bill Ronald6 75 175 – – – – – – – – 75 175 1 LTIP awards granted in 2021 vest on 28 April 2024 based on performance to 2023. The ‘core’ and ‘additional’ LTIP awards are due to lapse in full. 2 LTIP awards granted in 2020 vested on 20 May 2023 based on performance to 2022. These awards vested at 47% of maximum. The values in the single figure table have been restated to reflect the share price at vesting of 1442p. 3 Domenic De Lorenzo was appointed Chair of the Board with effect from 25 May 2023. 4 Kevin Havelock and Laura Hagan respectively succeeded Coline McConville as Senior Independent Director and Chair of the Remuneration Committee with effect from 25 May 2023. 5 Clare Swindell was appointed to the Board on 25 May 2023. 6 Coline McConville and Bill Ronald stepped down from the Board on 31 December 2023 and 25 May 2023 respectively. Incentive Outcomes for the year Ended 31 December 2023 Annual Bonus in Respect of 2023 Performance For 2023, the maximum annual bonus award was 150% of salary for Tim Warrillow and Andy Branchflower. Performance was measured based 60% on turnover, 20% on adjusted EBITDA and 20% on a scorecard of strategic measures, including innovation and margin improvement as well as environmental and sustainability measures. The performance targets were set to be stretching in the context of the external environment, ensuring that the maximum pay out would only be achieved if exceptional performance was delivered. Revenue for 2023 was £364.4m. Despite this representing c.6% growth on 2022, performance was below the threshold target set for the annual bonus. Adjusted EBITDA performance of £30m was below threshold. Overall, therefore, there is no annual bonus pay-out in respect of the financial performance measures for 2023. REMUNERATION COMMITTEE REPORT CONTINUED DIRECTORS’ REMUNERATION POLICY CONTINUED FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 96 The Committee considered performance against the strategic and ESG objectives and noted the significant positive progress in the year, in particular in relation to the diversification of the portfolio via innovation initiatives, the measures taken to improve adjusted EBITDA margin, and the continued progress against the Group’s sustainability strategy. Key externally disclosable achievements include: Strategic achievements Structural projects to enable our business to continue to grow organically and profitably: • Launch of Australian subsidiary. • Internal technology transformation project on time and ahead of budget. Product innovation initiatives to enable us to grow revenue via adjacent categories: • Ongoing progress on internal R&D projects. • Cocktail Mixer launch in multiple markets. New supply chain partnerships to support security of supply and manage costs: • New long-term contracts with multiple key suppliers following competitive tenders including the successful re-tender of our UK and European glass supply. • New long-term contracts with multiple bottling/canning partners. ESG achievements 5% reduction of emissions related to Group’s products sold in the UK. Procured 100% renewable electricity across global operations. On-site boreholes installed at a number of co-packer sites significantly reducing spring water transportation. Launch of DEI Committee with appointed DEI Lead. Best companies engagement survey – received ‘very good to work for’ and ‘top 5 food and drinks company to work for’ awards. 10th year of supporting Malaria No More UK which, in 2023, included funding a project to drive behavioural change across East African communities. 200+ Tiny Forests supported in the UK in through Earthwatch collaboration alongside 13.8k+ native trees planted in North America, in partnership with One Tree Planted. Built out the Group’s supplier risk analysis framework and human rights due diligence strategy. Introduction of new Sustainability Key Performance Indicators (KPIs) to track the Group’s ESG progress from 2024 onwards. More detail on these and other achievements is included in our Sustainability Review starting on page 32. Overall, it was determined that the strategic and ESG elements would pay out at 100% of maximum, resulting in an overall bonus of 20% of maximum. Fever-Tree has grown rapidly since its establishment and our strategic focus is on continuing to drive rapid expansion to cement our market-leading position. Our market is highly competitive, and the Committee strongly believes that the financial targets set for our incentive arrangements could provide market intelligence to our competitors which could be damaging to our business and therefore ultimately to shareholders. Consequently, and in line with previous years, we have not disclosed our annual bonus financial targets for 2023, but we plan to do so next year, provided the Board is comfortable that this information is no longer commercially sensitive. Overview Strategic Report Governance Financial Statements 97 Annual Bonus Targets For 2022 Last year, we committed to disclose within this report the annual bonus targets for 2022, unless the Board considered that these targets continue to be commercially sensitive. In keeping with this commitment, we have provided these performance targets below. Overall, the Executive Directors received a bonus of 17% of maximum in respect of 2022. Weighting Threshold 25% payout Target 50% payout Maximum 100% payout Actual performance achieved for 2023 Payout (% of maximum) Turnover 60% £355.0m £362.9m £378.6m £344.3m 0% Adjusted EBITDA 20% £63.0m £64.0m £66.0m £39.7m 0% ESG 20% Scorecard approach 85% Total 17% In 2022, when determining the outcome under the ESG element of the annual bonus, the Committee considered progress against ESG objectives to be strong, providing a good foundation to build from in future years, and the Committee judged that overall this element should pay out at 85% of maximum. More detail can be found in last year’s Annual Report. LTIP Vesting in Respect of 2023 Performance LTIP awards granted in 2021 vest on 28 April 2024 based on performance to the end of 2023. These awards consisted of a ‘core’ LTIP award based 75% on turnover and 25% on adjusted EBITDA, and an additional LTIP based on international revenue. The targets were set, taking into account internal and external reference points, to be stretching with regard to our strategic priorities and the economic environment at the time. For the ‘core’ LTIP award, revenue and adjusted EBITDA performance was below threshold, meaning that this award will lapse in full. Similarly for the additional LTIP award, international revenue growth was below threshold, meaning that this award will also lapse in full. Performance Targets for the 2021 LTIP Award ‘Core’ LTIP award Weighting Target 25% vesting Maximum 100% payout Performance achieved Portion vesting Turnover 75% £372.9m £421.9m £364.4m 0% Adjusted EBITDA 25% £85.4m £100.0m £30m 0% Total 0% Additional LTIP award Weighting Target 25% vesting Maximum 100% payout Performance achieved Portion vesting International Revenue1 100% £244.8m £275.4m £238m 0% Total 0% 1 Defined as Group revenue less UK revenue less GDP portfolio brand revenue. The overall vesting outcome for the 2021 LTIP award was 0% of maximum. REMUNERATION COMMITTEE REPORT CONTINUED DIRECTORS’ REMUNERATION POLICY CONTINUED FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 98 Scheme Interests Awarded in 2023 2023 LTIP In 2023, a ‘core’ LTIP award was granted at a face value of 300% of salary to both Executive Directors. The awards will vest on 3 May 2026 subject to the achievement of a stretching performance condition based 75% on turnover and 25% on adjusted EBITDA. In addition to the ‘core’ LTIP award, an additional LTIP award was also granted to both Executive Directors with a face value of 150% of salary. This additional award will vest on 3 May 2026 subject to stretching international revenue growth targets. The three-year performance period began on 1 January 2023 and will end on 31 December 2025. Executive Director Date of grant Face value1 End of performance period Performance measures Tim Warrillow 3 May 2023 164,865 shares (£1.99m) 31 December 2025 ‘Core’ LTIP award - 75% on turnover and 25% on adjusted EBITDA Additional LTIP award – 100% on international revenue growth (25% vests for threshold performance, increasing on a straight line to full vesting for stretch performance) Andy Branchflower 3 May 2023 105,991 shares (£1.28m) 1 Face value based on the average ordinary share price in the Company for the two months immediately preceding the date of grant of £12.08. Performance targets for the 2023 LTIP Award LTIP performance targets for the above awards were set, taking into account internal and external reference points, to be stretching but achievable with regard to our strategic priorities and the economic environment. Core LTIP award Weighting Target 25% vesting Maximum 100% payout Turnover 75% £446.2m £500.0m Adjusted EBITDA 25% £64.9m £74.3m Additional LTIP award1 Weighting Target 25% vesting Maximum 100% payout International revenue1 100% £328.7m £356.4m 1 Defined as Group revenue less UK revenue less GDP portfolio brand revenue. Exit Payments Made in the Year There were no payments for loss of office in the year. Payments to Past Directors There were no payments to past Directors in the year. Overview Strategic Report Governance Financial Statements 99 Pay for Performance The following chart compares the total shareholder return performance (TSR) of the Group vs. the FTSE 250 and AIM 100 indices since IPO. The AIM 100 index has been chosen as this is the index of which the Company is a constituent. The FTSE 250 has been chosen as it includes other companies of comparable market capitalisation to Fever-Tree. REMUNERATION COMMITTEE REPORT CONTINUED DIRECTORS’ REMUNERATION POLICY CONTINUED The chart shows the value by 31 December 2023 of £100 invested in Fever-Tree on 7 November 2014, compared with the value of £100 invested in the FTSE 250 Index and the FTSE AIM 100 Index on the same date. The table below shows the CEO’s single figure pay since 2014 and what percentage of the maximum bonus and LTIP vesting was achieved each year. 2014 £000 2015 £000 2016 £000 2017 £000 20181 £000 2019 £000 2020 £000 2021 £000 2022 £000 2023 £000 CEO single figure (£000) 487 460 725 842 4,098 1,373 904 823 1027 619 Annual bonus payout (% of maximum) 100% 100% 100% 100% 100% 0% 81% 65% 17% 20% LTIP vesting (% of maximum) – – – – 100% 100% 0% 0% 47% 0% 1 The CEO single figure for 2018 includes the value of the 2016 LTIP award. This award, which vested in full, had a value of £3,176k given share price growth of over 300% between the date of grant and date of vest. £1,800 £1,600 £1,200 £800 £1,400 £1,000 £600 £200 £0 £400 11 Jul 14 31 Dec 15 31 Dec 14 31 Dec 16 01 Jan 16 31 Dec 17 31 Dec 18 31 Dec 19 31 Dec 20 31 Dec 21 31 Dec 22 12 Dec 23 Fever-Tree FTSE 250 AIM 100 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 100 Directors’ Interests and Shareholding The table below shows the shareholding of each Director against their respective shareholding requirement as at 31 December 2023: Director2 Ordinary shares at 31 December 2023 Options held (including nil-cost options granted under the LTIP) Shareholding req. (% salary) Requirement met? Vested but not exercised Unvested and subject to continued employment Options exercised Tim Warrillow 5,575,172 32,224 348,260 – 200% Yes Andy Branchflower 141,488 20,718 223,898 – 200% Yes Dom De Lorenzo 4,550 – – – – – Kevin Havelock 216,000 – – – – – Jeff Popkin 73,955 – – – – – Laura Hagan 634 – – – – – Clare Swindell1 0 – – – – – 1 Clare Swindell was appointed to the Board on 25 May 2023. 2 Coline McConville and Bill Ronald stepped down from the Board on 31 December 2023 and 25 May 2023 respectively. They held 11,406 and 411,416 shares respectively on the date of their stepping down. Directors’ Interests in Shares and Options The individual interests of the Executive Directors under the Group’s share option schemes are as follows: Date of grant Share price1 Exercise price Number of shares/ options Awarded Face value at grant Performance period Release date Tim Warrillow LTIP 03/05/23 1,208p 0.25p 164,865 £1,991,569 01/01/2023 – 31/12/2025 03/05/26 LTIP 27/04/22 1,751p 0.25p 107,330 £1,879,348 01/01/2022 – 31/12/2024 27/04/25 LTIP 20/05/21 2,381p 0.25p 76,065 £1,811,283 01/01/2021 – 31/12/2023 28/04/24 Andy Branchflower LTIP 03/05/23 1,208p 0.25p 105,991 £1,280,371 01/01/2023 – 31/12/2025 03/05/26 LTIP 27/04/22 1,751p 0.25p 69,004 £1,208,260 01/01/2022 – 31/12/2024 27/04/25 LTIP 20/05/21 2,381p 0.25p 48,903 £1,164,493 01/01/2021 – 31/12/2023 28/04/24 1 Based on the average mid-market price of an ordinary share in the Company for the two months immediately preceding the date of grant. Overview Strategic Report Governance Financial Statements 101 DIRECTORS’ REPORT The Directors present their report together with the audited financial statements for the year ended 31 December 2023. The Corporate Governance Statement on pages 76 to 79 also forms part of this Directors’ Report. Dividends The Board is pleased to recommend a final dividend of 10.90 pence per share, bringing the total dividend for 2023 to 16.64 pence per share (2022: 16.31 pence per share). In January 2024, the Directors became aware that the interim dividend paid to shareholders in August 2023 was paid otherwise than in accordance with the Companies Act 2006. A resolution has been tabled for the AGM on 6 June 2024 to authorise the appropriation of the distributable profits to the payment of the relevant dividend and remove any right for the Company to pursue shareholders or directors for repayment. Subsequent to the year end, a dividend was paid by a group company to the parent company in order to ensure sufficient distributable reserves are available, and interim parent company accounts will be filed at Companies House. Directors The Directors of the Group during the period and to the date of this report are as follows: WDG Ronald (retired 25.3.23) D De Lorenzo TDG Warrillow AJ Branchflower CL McConville (retired 31.12.23) LK Hagan KJ Havelock J Popkin CL Swindell (joined 25.3.23) D Lapp (joined 1.1.24) Brief biographical details of the current directors are given on pages 74 and 75. Directors’ Interests The Directors’ interests in the Company’s shares and options over ordinary shares are shown in the Remuneration Report on page 101. No Director has any beneficial interest in the share capital of any subsidiary or associate undertaking. Directors’ Indemnity Provisions As permitted by the Articles of Association, the Directors have the benefit of an indemnity which is a qualifying third party indemnity provision as defined by s236 of the Companies Act 2006. The indemnity was in force throughout the financial period and at the date of approval of the financial statements. The Group also purchased and maintained throughout the financial period Directors’ and Officers’ liability insurance in respect of itself and its Directors. Political Donations The Group made no political donations in the financial period. Disclosure of Information to Auditor As far as the Directors are aware, there is no relevant audit information (that is, information needed by the Group’s auditor in connection with preparing their Report) of which the Group’s Auditor is unaware, and each Director has taken all reasonable steps that they ought to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Group’s Auditor is aware of that information. Financial Instruments The financial risk management objectives of the Group, including credit risk, interest rate risk and currency risk, are provided in note 3 to the Consolidated Financial Statements on pages 126 to 129. Subsidiaries The Company has twelve subsidiaries; a complete list is provided at note 14 to the Consolidated Financial Statements on page 137 and 138. Share Capital Structure As at 31 December 2023, the Company’s issued share capital was £291,716.62 divided into 116,686,649 ordinary shares of 0.25p each. Further details of the Company’s issued share capital are given in note 20 on page 141. The Company’s ordinary shares rank pari passu in all respects with each other, including for voting purposes and for all dividends. Each share carries the right to one vote at general meetings of the Company. Further information on the voting and other rights of shareholders, including deadlines for exercising voting rights, are set out in the Company’s Articles of Association and in the explanatory notes that accompany the Notice of the Annual General Meeting, which are available on the Company’s website (www. fever-tree.com). Restriction on Shares The Company’s ordinary shares are freely transferable and there are no restrictions on the size of a holding. Transfers of shares are governed by the provisions of the Articles of Association and prevailing legislation. The ordinary shares are not redeemable; however, the Company may purchase any of the ordinary shares, subject to prevailing legislation and other relevant rules. The Directors are not aware of any agreements between holders of the Company’s shares that may result in the restriction of the transfer of securities or on voting rights. No shareholder holds securities carrying any special rights or control over the Company’s share capital. Authority to Allot and Purchase Own Shares At the 2023 Annual General Meeting, the Directors were granted the authority to allot ordinary shares in the Company up to an aggregate nominal value of £97,136.40. The Company was also authorised by shareholder resolution at the 2023 Annual General Meeting to purchase up to 10% of its issued share capital. No shares were allotted or purchased by the Company during the year under these authorities. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 102 Significant Shareholders As of 31 December 2023, the Company is aware of the following holdings of significant shareholders in the Company (as defined in the AIM Rules). Name Holding (shares, millions) % Lindsell Train Investment Mgt 18.1 15.5 Capital Group 9.9 8.5 Fundsmith 8.7 7.5 Nordflint Capital Partners 7.3 6.3 Directors 6.0 5.2 Mr Charles Rolls 5.1 4.4 Baillie Gifford & Co 4.1 3.6 Share Option Schemes Details of employee share schemes are set out in note 21 to the Consolidated Financial Statements on pages 141 and 142. Appointment and Retirement of Directors The rules for appointing and replacing Directors are set out in the Company’s Articles of Association. Directors can be appointed by ordinary resolution of the Company or by the Board. The Company can remove a Director from office by passing an ordinary resolution. Articles of Association The Company’s Articles of Association can only be amended by special resolution and are available at www. fever-tree.com/en_GB/investors. Going Concern After making enquiries, the Directors have a reasonable expectation that the Group and parent company have adequate resources to continue in operational existence for at least 12 months from the date of approval of the financial statements. Significant Events since the end of the Financial Year There have been no material events affecting the Group since 1 January 2024. Strategic Report This is set out on pages 12 to 71 and includes the Group’s Sustainability Review (which includes the Group’s Streamlined Energy and Carbon Reporting), a description of how the Group engages with its key stakeholders and an indication of potential future developments. Research and Development The Group carries out such research and development as it deems necessary to support its principal activities. Directors’ Statement The Directors believe that the annual report and financial statements, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s position, performance, business model and strategy. The Directors have carried out a robust assessment of the Group’s emerging and principal risks. There are disclosures in the annual report that describe the principal risks and the procedures in place to identify emerging risks and explain how they are being managed or mitigated. Auditor BDO LLP has expressed their willingness to continue in office as Auditor and a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting. Annual General Meeting The Annual General Meeting will be held on 6 June 2024 at 11.00am. The ordinary business comprises receipt of the Directors’ Report and audited financial statements for the year ended 31 December 2023, approval of the Directors’ remuneration report for the year ended 31 December 2023, the re-election of Directors, the reappointment of BDO LLP as Auditor and authorisation of the Directors to determine the Auditor’s remuneration. The Notice of Annual General Meeting and the ordinary and special resolutions to be put to the meeting will be separately announced by the Company. Approval This Directors’ Report was approved by the Board and was signed on its behalf on 25 March 2024. Andrew Branchflower Chief Financial Officer Overview Strategic Report Governance Financial Statements 103 The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group’s Consolidated Financial Statements in accordance with the UK adopted international accounting standards and the Company Financial Statements in accordance with FRS 101 ‘Reduced Disclosure Framework’. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group for that period. The Directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market. In preparing these financial statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • state whether they have been prepared in accordance with the UK adopted IFRSs, subject to any material departures disclosed and explained in the financial statements; and • prepare the financial statements on a going-concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein. Approval This Statement of Directors’ Responsibilities was approved by the Board and was signed on its behalf on 25 March 2024. Andrew Branchflower Chief Financial Officer STATEMENT OF DIRECTORS’ RESPONSIBILITIES FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 104 Overview Strategic Report Governance Financial Statements 105 GOING TO EXCEPTIONAL LENGTHS IN FRANCE INGREDIENTS Uniquely floral aroma =FEATURES IN Mediterranean Tonic Water RL Mediterranean Tonic Water Our story The well-drained soil and long, sun-filled days in southern France allow these plants to thrive and the flavours to deepen, providing the tonic with its uniquely floral aroma. On one of his ingredient hunting trips, co-founder Charles met four generations of one of the last French families still cultivating the finest lemon thyme oils. The Vidal family have been farming in the Drôme region for centuries and so good is their reputation, their oils are seen as a benchmark for quality all over the world. Process & harvest Lemon thyme is harvested once a year in May/ June when the hillsides are covered in thick carpets of blue, pink and white, the flowers are cut and carted to a nearby open-sided distillery, 1,500 meters away from the fields where the lemon thyme grows. Here, straw fires heat pots of water beneath racks of the blossoms; as the steam rises, a rich thyme scent infuses the air. 106 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 LEMON THYME Thymus Citriodorus The rocky hillside farms of the Provençal region of southern France benefit from the warm air flowing inland from the Mediterranean Sea, creating perfect growing conditions for aromatic shrubs like lemon thyme. The well-drained soil and long, sun- filled days allow these plants to thrive and the flavours to deepen, producing a uniquely floral aroma. FINANCIAL STATEMENTS Independent Auditor’s Report 108 Consolidated Statement of Profit or Loss and Other Comprehensive Income 115 Consolidated Statement of Financial Position 116 Consolidated Statement of Changes in Equity 117 Consolidated Statement of Cash Flows 118 Notes to the Consolidated Financial Statements 119 Company Statement of Financial Position 144 Company Statement of Changes in Equity 145 Notes to the Company Financial Statements 146 Overview Strategic Report Governance Financial Statements 107 Opinion on the financial statements In our opinion: • the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2023 and of the Group’s profit for the year then ended; • the Group financial statements have been properly prepared in accordance with UK adopted international accounting standards; • the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements of Fevertree Drinks Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended 31 December 2023 which comprise the Consolidated Statement of Profit or Loss and Other Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Cash Flows, notes to the Consolidated financial statements, the Company Statement of Financial Position, the Company Statement of Changes in Equity and notes to the Company financial statements, including a summary of material accounting policies. The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law and UK adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice). Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remain independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. Conclusions relating to going concern In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the going concern basis of accounting included: • The Directors’ assessment of going concern: we obtained an understanding of the process undertaken by the Directors to prepare the going concern assessment and how the impacts of global geopolitical uncertainty, the inflationary environment and the new emerging disruptions to supply chains and freight costs have been evaluated and incorporated into the forecasts; • Assessment of assumptions within the cash flow forecasts: we challenged the assumptions used in the forecasts, in particular the sales growth rates, gross margins and cash flows generated from operations against actuals achieved in recent financial years. We considered the Group’s assessment of the impact of the current macro-economic and geopolitical environment, and we have corroborated the Group assumptions used to external references where possible; • Testing that the forecasts were consistent with the latest approved budgets and testing the numerical accuracy of the going concern model; • Cash balances: we selected a sample of the Group’s cash balances and agreed these to post year end bank statements and compared these to the amounts included in the forecast. • Sensitivity analysis: evaluation of sensitivities over the Group’s cash flows to changes in the significant inputs and assumptions used. The analysis considered reasonably possible adverse effects that could arise as a result of a decrease in sales or a greater than anticipated increase in operating costs. • Post year end trading performance: comparison of the post year end trading results to the forecasts so as to evaluate the accuracy and achievability of the forecasts prepared. • Disclosures: evaluation of the adequacy of the disclosures (note 1) in relation to the specific risks posed and scenarios the Group has considered in reaching their going concern assessment. INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FEVERTREE DRINKS PLC FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 108 Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. Overview Coverage* 94% (2022: 102%) of Group profit before tax 91% (2022: 88%) of Group revenue 97% (2022: 88%) of Group total assets * Our 2022 audit covered over 100% of Group profit before tax due to losses within non-significant components of the Group. Key audit matters Revenue recognition – completeness of customer arrangement accruals 2023 2022 Materiality Group financial statements as a whole £3.6m (2022: £2.3m) based on 1% of group revenue (2022: 5% of the average Profit before tax over the previous three year period). An overview of the scope of our audit Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement. A full scope audit was completed by the Group audit team in respect of three significant components. For the four non- significant components identified, the Group audit team performed specified audit procedures over certain in-scope balances in relation to three of these. The financial information of the remaining non-significant component was subject to desktop review procedures. Except for inventory counts completed by third party managed warehouses that were attended by BDO network firms in certain overseas locations, all audit and desktop review procedures were completed by the Group audit team. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. The matter was addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Overview Strategic Report Governance Financial Statements 109 Key audit matter How the scope of our audit addressed the key audit matter Revenue recognition – completeness of customer arrangement accruals £17.4m (2022: £10.8m) accruals for customer arrangements included in Accruals in note 17: Trade and other payables) Note 1 sets out the accounting policies for customer arrangements under the Revenue Recognition policy Note 2 sets out the Critical accounting estimates and judgements for customer arrangements The Group agrees promotional sales- related discount arrangements with certain distributors and customers and, for some agreements, also contributes towards marketing and campaign expenditure to support and develop the Fever-Tree brand. The accounting for these arrangements is complex and judgemental. This gives rise to scope for misstatement in the measurement and recognition. As these amounts are material and revenue is a key performance indicator, we consider there to be a risk of management override. Management could manipulate reported revenue and profit through incomplete recording of the discounts and contributions. Due to the significance of the impact of these arrangements on revenue and profit, and the level of judgement and estimate required, we therefore identified completeness of customer arrangement accruals as a significant area of focus for our audit and hence a key audit matter. Our audit procedures included the following: • We selected a sample of significant new and modified contracts with customers and distributors, and obtained an understanding of the arrangements in place together with management’s accounting treatment of them. We challenged whether the accounting treatment of these contracts were in accordance with the relevant accounting standards. • We tested a sample of revenue and marketing expense entries back to agreed arrangements with customers and distributors. This enabled us to check whether the Group’s accounting policy had been correctly applied. • We tested whether amounts were recorded in the correct accounting period, by recalculating a sample of accruals for both marketing commitments and price arrangements in place around the year end. • We obtained corroborative third-party evidence or suitable documentation prepared by the Group to confirm the accounting treatment for these customer arrangements, including around year end to confirm that they have been recognised in the correct accounting period. Key observations: Based on our audit procedures we have not identified evidence of inappropriate management override in the recording or presentation of revenue relating to customer arrangements, and consider the judgements made by management in the completeness and accuracy of recognising these arrangements to be appropriate. Our application of materiality We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. INDEPENDENT AUDITOR’S REPORT CONTINUED TO THE MEMBERS OF FEVERTREE DRINKS PLC FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 110 Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows: Group financial statements Parent company financial statements 2023 £m 2022 £m 2023 £m 2022 £m Materiality 3.6 2.3 1.7 0.7 Basis for determining materiality 1% of revenue 5% of 3 year average profit before tax Restricted to below 2% of total assets (to reduce aggregation risk). Rationale for the benchmark applied We have reviewed several KPIs used by management and the Group’s key stakeholders. We consider the growth of the brand to be the most significant KPI and have therefore determined revenue as the most appropriate basis for materiality. A key factor underlying the change is to ensure the materiality appropriately reflects the scale of the business, which enables the audit team to identify significant areas for audit focus. In the prior year, we considered the benchmark of profit before tax as the most relevant measure of financial performance and the key metric for users of the Groups’ financial statements. This is no longer deemed to be an appropriate measure for basing materiality due to the significant fluctuations in the price of raw materials rendering profit before tax a volatile measure. We consider an asset based measure to best reflect the nature of the Parent Company which acts as a holding company for the Group’s investments in subsidiary undertakings. Performance materiality 2.52 1.61 1.19 0.49 Basis for determining performance materiality 70% of materiality Rationale for the percentage applied for performance materiality Based on our experience and knowledge of the Group and Parent Company, Group structure, planned testing approach, and history of misstatements. Component materiality For the purposes of our Group audit opinion, we set materiality for each significant component of the Group based on a percentage of between 47% (2022: 30%) and 90% (2022: 90%) of Group materiality dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged from £1.7m (2022: £0.7m) to £3.2m (2021: £2.1m). In the audit of each component, we further applied performance materiality levels of 70% of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated. Reporting threshold We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £125,000 (2022: £90,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds. Overview Strategic Report Governance Financial Statements 111 INDEPENDENT AUDITOR’S REPORT CONTINUED TO THE MEMBERS OF FEVERTREE DRINKS PLC Other information The directors are responsible for the other information. The other information comprises the information included in the annual report and accounts other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Corporate governance statement As the Group has voluntarily adopted the UK Corporate Governance Code 2018 we are required to review the Directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the Parent Company’s compliance with the provisions of the UK Corporate Governance Statement specified for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit. Going concern and longer-term viability • The Directors’ statement with regards the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified (set out on page 103); and • The Directors’ explanation as to its assessment of the entity’s prospects, the period this assessment covers and why the period is appropriate (set out on page 71). Other Code provisions • Directors’ statement on fair, balanced and understandable set out on page 103; • Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks (set out on page 103); • The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems (set out on pages 66 to 71); and • The section describing the work of the Audit Committee (set out on pages 82 to 85). Other Companies Act 2006 reporting Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below. Strategic report and Directors’ report In our opinion, based on the work undertaken in the course of the audit: • the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and • the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors’ report. Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or • the Parent Company financial statements are not in agreement with the accounting records and returns; or • certain disclosures of Directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 112 Responsibilities of Directors As explained more fully in the Statement of Directors’ responsibilities, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) 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 financial statements. Extent to which the audit was capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: Non-compliance with laws and regulations Based on: • Our understanding of the Group and the industry in which it operates; • Discussion with management, those charged with governance, internal legal counsel, and the Audit Committee; • Obtaining an understanding of the Group’s policies and procedures regarding compliance with laws and regulations; and • We considered the significant laws and regulations to be the applicable financial reporting frameworks (UK adopted international accounting standards, FRS 101 and the Companies Act 2006), the UK Corporate Governance Code), relevant tax compliance regulations, the AIM rules. The Group is also subject to laws and regulations where the consequence of non-compliance could have a material effect on the amount or disclosures in the financial statements, for example through the imposition of fines or litigations. We identified such laws and regulations to be the health and safety legislation and employment law in the jurisdictions in which the group operates. Our procedures in respect of the above included: • Review of minutes of meeting of those charged with governance for any instances of non-compliance with laws and regulations; • Review of correspondence with regulatory and tax authorities for any instances of non-compliance with laws and regulations; • Review of financial statement disclosures and agreeing to supporting documentation; • Involvement of corporate tax, VAT, and employment tax specialists and experts in the audit; and • Review of legal expenditure accounts to understand the nature of expenditure incurred. Overview Strategic Report Governance Financial Statements 113 Fraud We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk assessment procedures included: • Enquiry with management, those charged with governance, the Audit Committee, and internal audit regarding any known or suspected instances of fraud; • Obtaining an understanding of the Group’s policies and procedures relating to: – Detecting and responding to the risks of fraud; and – Internal controls established to mitigate risks related to fraud. • Review of minutes of meeting of those charged with governance for any known or suspected instances of fraud; • Discussion amongst the engagement team as to how and where fraud might occur in the financial statements; • Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; • Considering remuneration incentive schemes and performance targets and the related financial statement areas impacted by these. Based on our risk assessment, we considered the areas most susceptible to fraud to be through management override of controls and revenue recognition – customer arrangements. Our procedures in respect of the above included: • Testing a sample of journal entries, focusing on journal entries containing characteristics of audit interest, year-end consolidation journals, journals processed by users with privileged IT systems access rights and those relating to revenue. • Involvement of forensic specialists in the audit to inform our fraud risk assessment. • Testing and challenging the key estimates and judgements, including in revenue recognition, made by management in preparing the financial statements for indications of bias or management override when presenting the results and financial position of the Group. We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members who were all deemed to have appropriate competence and capabilities and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it. A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Use of our report This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Sophia Michael Senior Statutory Auditor For and on behalf of BDO LLP, Statutory Auditor London, UK 25 March 2024 BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127). INDEPENDENT AUDITOR’S REPORT CONTINUED TO THE MEMBERS OF FEVERTREE DRINKS PLC FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 114 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2023 Note 2023 £m 2022 £m Revenue 4 364.4 344.3 Cost of sales (247.4) (225.5) Gross profit 117.0 118.8 Administrative expenses (96.2) (88.2) Adjusted EBITDA 30.5 39.7 Depreciation 11 & 13 (6.3) (4.3) Amortisation 12 (1.7) (1.5) Share based payment charges 21 (1.7) (3.3) Operating profit 5 20.8 30.6 Finance income 7 2.0 0.8 Finance expense 7 (0.6) (0.4) Profit before tax 22.2 31.0 Tax expense 8 (6.8) (6.1) Profit for the year 15.4 24.9 Items that may be reclassified to profit or loss Foreign currency translation difference of foreign operations – (0.1) Effective portion of cash flow hedges 0.3 (0.3) Related tax – – Total other comprehensive income 0.3 (0.4) Total comprehensive income for the year 15.7 24.5 Earnings per share Basic (pence) 9 13.20 21.36 Diluted (pence) 9 13.18 21.32 Overview Strategic Report Governance Financial Statements 115 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2023 Note 2023 £m 2022 £m Non-current assets Property, plant and equipment 11 23.7 25.6 Intangible assets 12 58.2 53.2 Deferred tax asset 19 1.7 1.9 Other non-current assets 16 4.3 1.8 Total non-current assets 87.9 82.5 Current assets Inventories 15 67.6 60.1 Trade and other receivables 16 91.5 72.4 Derivative financial instruments 18 0.6 – Corporation tax asset 6.2 1.3 Cash and cash equivalents 59.9 95.3 Total current assets 225.8 229.1 Total assets 313.7 311.6 Current liabilities Trade and other payables 17 (55.3) (51.3) Derivative financial instruments 18 – (1.8) Lease liabilities 13 (3.4) (3.4) Corporation tax liability (2.1) (0.8) Total current liabilities (60.8) (57.3) Non-current liabilities Other payables – Long term (0.3) – Lease liabilities – Long term 13 (11.8) (13.5) Deferred tax liability 19 (3.0) (1.6) Total non-current liabilities (15.1) (15.1) Total liabilities (75.9) (72.4) Net assets 237.8 239.2 Equity attributable to equity holders of the company Share capital 20 0.3 0.3 Share premium 22 54.8 54.8 Capital redemption reserve 22 0.1 0.1 Cash flow hedge reserve 22 (0.2) (0.5) Translation reserve 22 (0.3) (0.3) Retained earnings 22 183.1 184.8 Total equity 237.8 239.2 The financial statements were approved and authorised for issue by the Board of Directors on 25 March 2024 and were signed on its behalf by: Andrew Branchflower Chief Financial Officer FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 116 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2023 Share capital £m Share premium £m Capital redemption reserve £m Cash flow hedge reserve £m Translation reserve £m Retained earnings £m Total £m Equity as at 31 December 2021 0.3 54.8 0.1 (0.2) (0.2) 226.8 281.6 Profit for the year – – – – – 24.9 24.9 Foreign currency translation difference of foreign operations – – – – (0.1) – (0.1) Other comprehensive income – – – (0.3) – – (0.3) Total comprehensive income for the year – – – (0.3) (0.1) 24.9 24.5 Contributions by and distributions to owners Dividends issued – – – – – (68.8) (68.8) Share based payments – – – – – 3.3 3.3 Tax on share based payments – – – – – (1.4) (1.4) Shares issued – – – – – – – Equity as at 31 December 2022 0.3 54.8 0.1 (0.5) (0.3) 184.8 239.2 Profit for the year – – – – – 15.4 15.4 Foreign currency translation difference of foreign operations – – – – – – – Effective portion of cash flow hedges – – – 0.3 – – 0.3 Total comprehensive income for the year – – – 0.3 – 15.4 15.7 Contributions by and distributions to owners Dividends issued – – – – – (19.1) (19.1) Share based payments – – – – – 1.7 1.7 Tax on share based payments – – – – – 0.3 0.3 Shares issued – – – – – – – Equity as at 31 December 2023 0.3 54.8 0.1 (0.2) (0.3) 183.1 237.8 Overview Strategic Report Governance Financial Statements 117 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2023 Note 2023 £m 2022 £m Operating activities Profit before tax 22.2 31.0 Finance expense 7 0.6 0.4 Finance income 7 (2.0) (0.8) Depreciation 11 & 13 6.3 4.3 Amortisation of intangible assets 12 1.7 1.5 Share based payments 1.7 3.3 Increase/(decrease) in impairment losses on receivables and inventories net of recoveries 15 & 16 0.5 (3.1) Net exchange difference 3.2 – 34.2 36.6 Increase in trade and other receivables 16 (22.3) (1.6) Increase in inventories 15 (10.0) (23.5) Increase in trade and other payables 17 4.8 0.5 (Increase)/decrease in derivative asset/liability 18 (2.1) 2.4 (29.6) (22.2) Cash generated from operations 4.6 14.4 Income taxes paid 8 (8.4) (5.9) Net cash flows (used in)/from operating activities (3.8) 8.5 Investing activities Purchase of property, plant and equipment 11 (2.6) (4.6) Interest received 7 2.0 0.8 Investment in intangible assets 12 (7.0) (2.5) Acquisition of subsidiary, net of cash acquired – (3.7) Net cash used in investing activities (7.6) (10.0) Financing activities Interest paid 7 (0.1) (0.1) Dividends paid 23 (19.1) (68.8) Payment of lease liabilities 13 (4.0) (1.8) Net cash used in financing activities (23.2) (70.7) Net decrease in cash and cash equivalents (34.6) (72.2) Cash and cash equivalents at beginning of period 95.3 166.2 Effect of movements in exchange rates on cash held (0.8) 1.3 Cash and cash equivalents at end of period 59.9 95.3 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 118 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023 1. Accounting policies Basis of preparation Fevertree Drinks Plc (the ‘Company’) is a company incorporated in the United Kingdom under the Companies Act 2006. It is a public company limited by shares, domiciled in England and Wales, in the United Kingdom. The address of its registered office is 186–188 Shepherds Bush Road London W6 7NL. These consolidated financial statements comprise the Company and its subsidiaries (together referred to as the ‘Group’). The consolidated financial statements have been prepared in accordance with UK adopted international accounting standards in conformity and compliance with the requirements of the Companies Act 2006. There are a number of amendments to accounting standards, or IFRIC interpretations that are effective for the year ended 31 December 2023. The Group has concluded that none of these amendments have a material impact on the consolidated financial statements: • IFRS17 – Insurance Contracts. • IAS8 – Definition of Accounting Estimates: Introduced definition of accounting estimates to distinguish changes in accounting estimates from changes in accounting policies. • IAS1 – Disclosure of Accounting Policies: Update from disclosure of significant accounting policies to material accounting policies. • IAS12 – Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction: Updating scope for exemption relating to leases and decommissioning obligations. The consolidated financial statements are presented in Sterling. Amounts are presented in millions, rounded to the nearest £100,000, unless otherwise stated. Percentages presented are rounded to the nearest decimal, unless otherwise stated. The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below. The policies have been consistently applied to all of the years presented, unless otherwise stated. Going Concern On-going macroeconomic and geopolitical volatility that resulted in considerably high input costs seen throughout 2023 have been reflected in the Directors’ assessment of the going concern basis of preparation. This has been considered by modelling the impact on the Group’s cashflow for the period to end of June 2025. In completing this exercise, the Directors established there were no plausible scenarios that would result in the Group no longer continuing as a going concern. The Directors have concluded that the Group has adequate resources to continue in operational existence for at least the 12 months following the publication of the financial statements, that it is appropriate to continue to adopt the going concern basis of preparation in the financial statements, that there is not a material uncertainty in relation to going concern and that there is no significant judgement involved in making that assessment. Basis of consolidation Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. Intragroup balances including unrealised profit in stock, where inventory purchased from Group companies has not been sold on to third parties, are eliminated upon consolidation. Business combinations Business combinations are reflected through the acquisition method of accounting. Identifiable assets and liabilities, including intangible assets and contingent liabilities, are recognised at fair value as at the date of acquisition. The consideration payable is also measured at fair value. The difference between the fair value of consideration transferred and the identifiable net assets received is recognised as goodwill. Any payments to former owners, contingent on continued employment are recognised as administrative expenses as are all transaction related costs. Revenue recognition Revenue is measured based on the consideration specified in a contract with a customer. There are two main types of products which generate revenue– premium carbonated mixers and premium non-carbonated mixers. However, it is noted that revenue recognition policy for all products is the same given their similarity of arrangement. Overview Strategic Report Governance Financial Statements 119 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2023 1. Accounting policies continued Revenue recognition continued Revenue is recognised when the Group’s performance obligations are fulfilled i.e., when control over goods is transferred to customers. Customers obtain control of the goods when they are delivered to and have been accepted at their premises or made available for ex-works collection, depending on individual customer arrangements. Invoices are generated at that point in time and are usually payable within 30 days. Revenue is recorded based on the price specified in sales invoices, net of any agreed discounts and rebates, and exclusive of value added tax on goods supplied to customers during the year. There are a variety of discounts and rebates provided to customers, which are assessed on a case-by-case basis as to whether the resulting payment to customers is for a distinct good or service (such as marketing) or for a promotional discount. If a payment to a customer is judged to be for a distinct good or service, this is accounted for as a cost in administrative expenses. If the payment is judged to represent a discount, this is accounted for as a reduction in the underlying transaction price. Management restrict revenue to the amount that is highly unlikely to subsequently be reduced by promotion or discount. Accruals are included in the consolidated statement of financial position in respect of expected amounts necessary to meet the claims of the Group’s customers based on discount and rebate agreements in place. None of the discounts or rebates result in a material right being provided to the customer, as there are no cases where customers are given the option to purchase at a discount in the future as a result of their historical purchases. Returns are permitted in limited circumstances. Expenditure Expenditure is recognised in respect of goods and services received when supplied in accordance with contractual terms. A provision is made when a present obligation exists for a future liability relating to a past event and where the amount of the obligation can be reliably estimated. Goodwill Goodwill arising on the acquisition of a business represents any excess of the fair value of the consideration over the fair value of the identifiable assets and liabilities acquired. The identifiable assets and liabilities acquired are incorporated into the consolidated financial statements at their fair value. Goodwill is not amortised but tested for impairment annually. Any impairment is recognised immediately in profit or loss and is not subsequently reversed. On disposal of a business, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. Impairment of non-financial assets Impairment tests on goodwill, other intangible assets with indefinite useful lives and assets under construction are undertaken annually at the reporting date. Other non-financial assets are subject to impairment tests if there is any indication of impairment. Where the carrying value of an asset is judged to exceed its recoverable amount (i.e. the higher of value in use or the fair value less costs to sell), the asset is written down accordingly. With the exception of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognised may no longer exist. Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset’s cash generating unit (i.e. the lowest group of assets, in which the asset belongs, for which there are separately identifiable cash flows). Goodwill is allocated on initial recognition to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination giving rise to the goodwill. Impairment charges, and the reversal of previous impairment charges, are expensed/credited to profit or loss. An impairment loss recognised for goodwill is not reversed. Externally acquired intangible assets Externally acquired intangible assets, including software, are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives. The amortisation expense for both externally acquired and internally generated intangible assets is recognised within administrative expenses and charged as follows: Computer Software – 20% per annum straight-line FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 120 1. Accounting policies continued Intangible assets acquired as part of a business combination Intangible assets acquired in a business combination are identified and recognised separately from goodwill where they satisfy the definition of an intangible asset. The cost of such intangible assets is their fair value at the acquisition date and comprises the Group’s brand names and customer relationships acquired. All intangible assets acquired through business combination are amortised over their estimated useful lives. The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of the intangibles acquired in a business combination are as follows: Intangible asset Useful economic life Brands 20 years Customer relationships 10 years Subsequent to initial recognition, intangible assets acquired in a business combination are measured at cost less accumulated amortisation and, where appropriate, provision for impairment in value. Amortisation is included within administrative expenses. Intangible assets under development Costs that are directly attributable to the development phase of an asset are initially recognised at cost and are not amortised until after the asset has been put into use. Costs (such as labour costs) pertaining to the development of intangible assets are also capitalised in alignment with IAS 38 up to the point that the asset is ready for use. Subsequent labour costs incurred during the testing phase of the asset are expensed as staff costs. Property, plant and equipment Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs. Subsequently, property, plant and equipment are stated at cost less the accumulated depreciation and, where appropriate, provision for impairment in value or estimated loss on disposal. Depreciation is provided on all items of property, plant and equipment so as to write off their carrying value over the expected useful economic lives. It is included within administrative expenses and is charged at the following rates: Leasehold assets/right of use assets – over the life of the lease Fixtures and fittings – 33% per annum straight-line Re-usable packaging – 20% per annum straight-line Plant, equipment, and vehicles – 10%–20% per annum straight-line Cash and cash equivalents Included within cash and cash equivalents are demand deposits and short-term deposits used for short-term cash requirements. The carrying amount of these assets approximates to their fair value. Overview Strategic Report Governance Financial Statements 121 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2023 1. Accounting policies continued Financial assets The Group classifies its financial assets into the categories, discussed below, based upon the purpose for which the asset was acquired. The Group has not classified any of its financial assets as fair value through other comprehensive income (FVOCI). Fair value through profit or loss (FVTPL) This category comprises only in-the-money derivatives (see ‘Financial liabilities’ section for out-of-the-money derivatives) not used for hedge accounting purposes. They are carried in the consolidated statement of financial position at fair value with changes in fair value recognised in the consolidated statement of comprehensive income. Other than these derivative financial instruments, the Group does not have any assets classified as FVTPL. Amortised Cost The Group’s assets at amortised cost comprise trade and other receivables included within the consolidated statement of financial position and cash and cash equivalents including cash held at bank. Trade and other receivables are classified as financial assets at amortised cost as they are held only with the purpose of collecting the contractual cash flows. They arise principally through the provision of services to customers (e.g. trade receivables), where the contractual cash flows comprise only the invoiced amounts, but also incorporate other types of contractual monetary assets in which payments comprise only principal and interest. They are initially recognised at fair value plus, where relevant, directly attributable transactions costs and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment. Impairment provisions are recognised based on the expected credit loss model, with the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised separately in the consolidated statement of profit or loss and other comprehensive income. On confirmation that the trade receivables will not be collectable, the gross carrying value of the asset is written off against the associated provision. Financial liabilities The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability was acquired. Fair value through profit or loss This category comprises only out-of-the-money derivatives (see ‘Financial assets’ for in-the-money derivatives) not used for hedge accounting purposes. They are carried in the consolidated statement of financial position at fair value with changes in fair value recognised in the consolidated statement of comprehensive income. Other than these derivative financial instruments, the Group does not have any assets classified as FVTPL. Other financial liabilities The Group’s other financial liabilities comprise bank loans, trade payables and other borrowings, including short-term monetary liabilities. Bank loans are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest rate method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the consolidated statement of financial position. The interest expense includes initial transaction costs and premiums payable on redemption, as well as any interest coupon payable while the liability is outstanding. Trade payables, other borrowings and other short-term monetary liabilities, which are initially recognised at fair value, are subsequently carried at amortised cost using the effective interest method. Hedge accounting The Group designates a portion of its derivatives as cash flow hedges, hedging the currency risk of highly probable forecast future sales transactions by utilising forward contracts. The forward rate designation accounting approach is used, which includes the forward element of the derivative in the hedge designation. Changes in fair value of the effective portion of the hedge accounted derivatives are recognised in other comprehensive income before being recycled to the statement of profit or loss when the forecasted cash flow affects the profit or loss. Hedge effectiveness is forward looking and is tested on an ongoing basis. The Group utilises critical terms matching to assess effectiveness and any ineffectiveness is recognised immediately in the profit or loss. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 122 1. Accounting policies continued Share capital Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The Group’s ordinary shares are classified as equity instruments. Leased assets When entering into a contract the Group assesses whether or not a lease exists. A lease exists if a contract conveys a right to control the use of an identified asset under a period of time in exchange for consideration. The Group has elected not to separate non-lease components for the lease of office land and buildings. Leases of low value items and short-term leases (leases of less than 12 months at the commencement date) are charged to the profit or loss on a straight-line basis over the lease term in administrative expenses. Any renegotiations of leased assets are accounted for based on the nature of the modification to the lease contract. The Group recognises right-of-use assets as the amount of the initial lease liability at the lease commencement date, based on the present value of future lease payments. Where applicable, this is adjusted for any lease incentives received, and direct costs and lease payments incurred prior to or at commencement of the lease. Right of use assets are depreciated on a straight-line basis in line with the Group’s accounting policy for property, plant and equipment. The lease liabilities are recognised at amortised cost using the effective interest rate method. Discount rates used reflect the incremental borrowing rate specific to the lease. Where the contract terms of a lease have changed during the year, these are treated as modifications to the original lease, with an adjustment made to both the right of use asset, and the lease liability. The discount rate applied is reassessed on each lease modification. Deferred taxation Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on: • the initial recognition of goodwill; • the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and • investments in subsidiaries where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future. Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised. The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are not discounted. Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either: • the same taxable group company; or • different company entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets and liabilities are expected to be settled or recovered. Deferred tax is recognised as income or an expense and included in profit or loss for the period except in relation to deferred tax on share based payments. If the amount of a future tax deduction exceeds the amount of the cumulative remuneration expense, the excess of the associated deferred tax is recognised directly in equity. Overview Strategic Report Governance Financial Statements 123 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2023 1. Accounting policies continued Inventories Inventories are initially recognised at cost, and subsequently at the lower of cost and net realisable value after making allowance for obsolete and slow-moving items. Weighted average cost is used to determine the cost of ordinarily interchangeable items by considering the cost of similar items at the beginning of the period and the cost of similar items purchased or produced during the period. Operating segments Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been identified as the Board of Directors. The Board considers that although the Group’s activity is generated from global sales across four regions (as shown in the Chairman’s statement and note 4), there is ultimately one overarching reporting and operating segment. This is due to the key decisions and allocation of resources happening in a centralised manner; with the majority of the costs for the Group incurred by operations led from the Group’s head office. Management reviews the performance of the Group by reference to total results against budget. The total profit measures are operating profit, adjusted EBITDA and profit for the year, all disclosed on the face of the profit or loss. No differences exist between the basis of preparation of the performance measures used by management and the figures in the Group financial statements. Adjusted EBITDA Operating profit is adjusted for a number of non-cash items, including amortisation of the Fever-Tree brand intangible acquired in March 2013 and other intangible assets, depreciation, and the share based payment charge which recognises the fair value of share options granted. The intention is for adjusted EBITDA to provide a comparable, year on year indicator of underlying trading and operational performance, without considering the impact of financing, volatile share price performance or investing activities Adjusted EBITDA is the Group’s primary alternative performance measure (APM). This is not included as a defined measure within the International Financial Reporting Standards. Share based payments Where share options are awarded to employees, the fair value of the option at the date of grant is charged to the profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. Where share options are cancelled, their remaining unamortised fair value is fully written off through the profit or loss. Foreign currency Functional and presentation currency The consolidated financial statements of the Group are presented in Pound Sterling. The presentation currency of the consolidated financial statements is the same as the functional currency of the Company, being Pound Sterling. Transactions and balances Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which they operate (their ‘functional currency’) are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the profit or loss. Foreign operations The profit or loss and statement of cash flows of foreign operations are translated at the average rate of exchange during the period. The statement of financial position of a foreign operation is translated at the ruling rate at the reporting date. Exchange differences arising on opening net assets and arising on the translation of results at an average rate compared to a closing rate are both recognised in other comprehensive income and accumulated in the translation reserve. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 124 2. Critical accounting estimates and judgements Management has made estimates and accounting judgements within the financial statements; these are reviewed regularly and revisions to estimates are recognised prospectively. Customer arrangements An element of judgement is involved in determining whether payments to customers are in exchange for a distinct good or service under IFRS 15 or are instead a reduction in transaction price, namely in relation to discretionary marketing spend with our Europe and Rest of World distributors. Management carefully assesses what is received in each individual arrangement with customers to determine the correct accounting treatment. In the absence of clear evidence to the contrary, payments to customers are recognised as reductions to revenue. Management restricts revenue recognised to the amount that is highly unlikely to subsequently be reduced by customer arrangements. There is an element of judgement in determining whether all customer accruals have been recorded in the period. Invoicing from customers relating to revenue reductions is not in the control of the Group, so management needs to make their best estimate on what invoices are likely to be raised by customers relating to activity undertaken by them in the year. Other receivables Judgement has been applied on the likelihood and value of settlement of an insurance claim relating to damaged stock. All relevant circumstances have been taken into account when determining the receivable value. Inventory provision Under IAS2, inventories are carried at the lower of cost and net realisable value, and as such are subject to estimates around the provision applied to certain inventory items. The level of provision recorded is subject to estimation uncertainty when determining the expected sales price of goods to customers in future, as well as assessing if items are slow-moving or obsolete. Impairment assessments As required by IAS 36, all goodwill is tested annually for impairment. This is achieved by comparing the carrying amount of goodwill to the higher of fair value less costs to sell and value in use. Judgement is required in determining the value in use of the relevant cash generating units when applying the fair value less costs to sell (FVLCTS) model. These judgements include a determination of revenue growth, profitability, period of assessment and discount rate used. Management considers a range of potential inputs for each of these to ensure that the conclusion reached is appropriate. Lease liability and right of use assets The present value of future lease payments determines the recognition value of lease liability and right of use assets. IFRS 16 requires that the period considered for this calculation to be the period of the contract term, together with any options to extend or terminate if that extension or termination is likely to be exercised. Judgement is therefore required to determine a likely lease length per lease term. Estimated credit loss provision The measurement of estimated credit losses for trade receivables requires the use of assumptions about future macroeconomic conditions and credit behaviour and the impact that these have on specific customer behaviour, such as the likelihood of customers defaulting and the resulting losses. During the 2023 year, the Group assessed the default risk on a customer level and assigned a likelihood of default across all outstanding invoices, irrelevant of the age of such invoices. Overview Strategic Report Governance Financial Statements 125 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2023 3. Financial instruments and Risk Management The Board has overall responsibility for the determination of the Group’s risk management objectives and policies. The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. All funding requirements and financial risks are managed based on policies and procedures adopted by the Board of Directors. The Group uses derivative financial instruments including forward currency contracts to manage its exposure to certain financial risks. The Group is exposed to the following financial risks: • Credit risk • Liquidity risk • Pricing risk • Market risk The Group is exposed to risks that arise from its use of financial instruments. The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows: • Trade and other receivables • Cash and cash equivalents • Trade and other payables • Forward currency contracts To the extent that financial instruments are not carried at fair value in the consolidated statement of financial position, the carrying values approximate fair values at 31 December 2023 and 31 December 2022. Financial instruments by category Financial assets Financial assets at fair value Financial assets at amortised cost 2023 £m 2022 £m 2023 £m 2022 £m Cash and cash equivalents – – 59.9 95.3 Trade and other receivables – – 83.6 64.2 Derivative financial instruments in cash flow hedges 0.1 – – – Other derivative financial instruments 0.5 – – – Total financial assets 0.6 – 143.5 159.5 Financial liabilities Financial liabilities at fair value Financial liabilities at amortised cost 2023 £m 2022 £m 2023 £m 2022 £m Trade and other payables – – 55.0 50.4 Lease liabilities – – 15.2 16.9 Loans and borrowings – – – – Derivative financial instruments in cash flow hedges – (0.2) – – Other derivative financial assets – (1.6) – – Total financial liabilities – (1.8) 70.2 67.3 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 126 3. Financial instruments and Risk Management continued Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales. At 31 December 2023 the Group has net trade receivables of £77.8m (2022: £62.5m). The Group is exposed to credit risk in respect of these balances such that, if one or more customers encounter financial difficulties, this could materially and adversely affect the Group’s financial results. In order to minimise this risk, the Group endeavours only to deal with companies which are demonstrably creditworthy and this, together with the aggregate financial exposure, is continuously monitored. Companies which are not deemed to be creditworthy can only deal with the Group on a prepayment basis. The Group further mitigates credit risk by undertaking credit insurance through ‘A’ credit rated underwriters for some of its receivable balances. Supply of products by members of the Group results in trade receivables, which the management consider to be of low risk; other receivables are likewise considered to be low risk. The management do not consider that there is any concentration of risk within either trade or other receivables. The Group performs an expected credit loss assessment for all trade receivables to calculate a provision for expected credit loss, based on historical credit loss information, current conditions and forecasts of future economic conditions. The simplified approach is used, in accordance with IFRS 9. The resulting provision in respect of outstanding balances at 31 December 2023 is not material. Trade receivables are written off when there is no reasonable expectation of recovery; indicators of this include the counterparty going into administration or receivership. Credit risk on cash and cash equivalents is considered to be low as the counterparties are all substantial banks with investment grade credit ratings. Liquidity risk Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group actively manages its cash generation and maintains sufficient cash holdings to cover its immediate obligations. The Group actively manages its cash and currently holds substantial cash balances in Sterling, US Dollars and AUD Dollars and Euros. The Group should have access to additional equity funding if it was required. Trade and other payables are monitored as part of normal management routine. The contractual maturity profile (undiscounted) of the Group’s financial liabilities and derivatives is set out below. 31 December 2023 Within one year £m One to two years £m Two to five years £m Over five years £m Trade and other payables 55.0 – – – Lease liabilities 3.9 3.9 7.2 1.4 Derivative financial instruments outflow 127.7 – – – Derivative financial instruments (inflow) (128.3) – – – 31 December 2022 Within one year £m One to two years £m Two to five years £m Over five years £m Trade and other payables 50.4 – – – Lease liabilities 3.8 12.6 1.6 – Derivative financial instruments outflow 100.4 – – – Derivative financial instruments (inflow) (98.6) – – – Overview Strategic Report Governance Financial Statements 127 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2023 3. Financial instruments and Risk Management continued Liquidity risk continued Pricing risk Pricing risk is the risk that oscillation in the price of key input costs will affect the profitability of the business. The Group manages this risk by agreeing long-term prices with suppliers where possible. Market risk Market risk arises from the Group’s interest-bearing, tradable and foreign currency financial instruments. It is the risk that the fair value, or future cash flows, of a financial instrument will fluctuate because of changes in the interest rates (interest rate risk) or foreign exchange rates (foreign exchange risk). (a) Interest rate risk The Group’s policy is to balance exposure to interest rate risk with the cost and flexibility of funding. This policy is managed centrally. The requirement for interest rate hedging is reviewed periodically, being a mechanism available to manage interest rate risk. These reviews acknowledge that interest rate hedges will not necessarily protect the Group from the risk of paying rates in excess of current market rates nor eliminate cash flow risk associated with the variability in interest payments. Judgements are therefore exercised in the context of the market and the materiality of the potential risk compared to the cost. The Group does not currently have any debt facilities, nor does it engage in interest rate hedging. (b) Foreign exchange risk Foreign exchange risk is the risk that movements in exchange rates affect the profitability of the business. The Group is exposed to transaction foreign exchange risk as it operates predominantly within the USA and Europe where transactions are denominated in US Dollars and Euros respectively. The exposure is limited to the extent to which there is a mismatch between the currencies in which sales, purchases, receivables and borrowings are denominated and the respective functional currencies of Group companies. Forward contracts are used to manage foreign exchange risk. Those financial assets in currencies other than Sterling may be the subject of economic hedging arrangements using forward contracts. Receivables are carried in the consolidated statement of financial position at the rate of exchange at the period end. The derivative instruments are carried at fair value with that value being the contract value at the reporting date. At 31 December 2023 there were commitments to purchase foreign currency exchange forward contracts with a total Sterling value of approximately £128.3m (2022: £100.4m) mainly in Euros and US Dollars. All contracts mature within 12 months of the reporting date. Commitments to sell/(purchase) foreign currency exchange forward contracts: 2023 £m 2022 £m USD 66.7 57.1 EUR 44.0 30.5 CAD 2.1 3.3 AUD 15.5 9.5 128.3 100.4 Although the Board accepts that this policy does not protect the Group entirely from currency risk or from incurring an exchange rate in the future that is adverse to the then spot rate in operation, it considers that it achieves an appropriate balance against exposure to the risk. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 128 3. Financial instruments and Risk Management continued Liquidity risk continued Market risk continued (b) Foreign exchange risk continued The summary quantitative data about the Group’s exposure to currency risk (before the effect of balance sheet hedging) is as follows. This includes intragroup balances which eliminate on consolidation. 2023 Currency in m 2022 Currency in m Euro USD Euro USD Receivables 33.9 78.0 28.2 60.5 Payables (3.1) (2.2) (9.6) (1.3) Cash 7.2 8.4 7.3 2.4 Total 38.0 84.2 25.9 61.6 Effect of cash flow hedges At 31 December 2023, the Group held derivatives with a notional value of £16.2m (2022: £14.7m) designated as hedging instruments for cash flow hedging purposes. They all have maturities in 2024 and have a range of hedged rates between EUR 1.12–1.16 and USD 1.22–1.28. In respect of cash flow hedges the Group has recognised a net gain of £0.3m (2022: £0.3m loss) in other comprehensive income in the year due to changes in fair value, amounts transferred to profit and loss, and deferred tax related to hedging instruments. A loss of £40k (2022: £2.0m loss) has been transferred out of other comprehensive income to net revenue to offset the foreign exchange impact on the underlying transactions. There was no ineffectiveness recognised in the year. Capital management The Group’s capital is made up of share capital, retained earnings and other reserves. The Group’s objectives when maintaining capital are: • to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders; and • to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk. The capital structure of the Group consists of shareholders’ equity as set out in the consolidated statement of changes in equity. All working capital requirements are financed from existing cash resources. Overview Strategic Report Governance Financial Statements 129 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2023 4. Revenue Revenue streams During the period, the Group acquired an additional revenue stream, being the sale of cocktail shakers, which has been disclosed in non-carbonated sales. This is in addition to the sale of premium carbonated mixers and premium non‑carbonated mixers. An analysis of turnover by geographical market is given below: 2023 £m 2022 £m United Kingdom 114.8 116.2 United States of America 117.0 95.6 Europe 105.4 101.0 Rest of the World 27.2 31.5 364.4 344.3 Analysis of carbonated and non-carbonated sales: 2023 2022 Carbonated 99.2% 99.4% Non-carbonated 0.8% 0.6% 100% 100.0% In the year ended 31 December 2023 the Group had no customers contributing in excess of 10% of the Group’s sales. Contract balances The following table provides information about receivables from contracts with customers. Note 31 December 2023 £m 31 December 2022 £m Receivables, which are included in ‘trade and other receivables’ 16 79.6 64.4 No information is provided about remaining performance obligations at 31 December 2023 that have an original expected duration of one year or less. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 130 5. Profit from operations Operating profit is stated after charging: 2023 £m 2022 £m Foreign exchange loss/(gain) 0.7 (1.0) Depreciation 6.3 4.3 Amortisation of intangible assets 1.7 1.5 Lease payments directly through profit or loss (short-term leases) – 0.2 Logistics and warehousing 43.9 48.6 Discretionary marketing 33.9 34.0 Share-based payment charges 1.7 3.3 Insurance claim (5.3) – Net remeasurement of expected credit loss allowance 0.4 (1.1) An insurance claim relating to a product quality issue in the US has been recognised in cost of sales with a value of £3.6m and other operating income of £1.7m. These have been allocated against the original transactions that gave rise to the insurance claim. The claim has progressed to a sufficient degree to justify recognition under the relevant accounting standards. Auditor’s remuneration: 2023 £m 2022 £m Fees payable to Company’s Auditor and its associates for the audit of the Company and its subsidiaries 0.8 0.6 Non audit services – – Non audit services of £nil (2022: £3,938). Fees of €65,000 (2022: €65,000) are payable to an associate of the Group’s Auditor for the local statutory audit of the German subsidiary. 6. Staff costs 2023 £m 2022 £m Wages and salaries 30.6 27.6 Employers national insurance 3.2 2.2 Pensions 1.7 1.1 35.5 30.9 The average monthly number of employees (including Directors) during the period was as follows: 2023 2022 Sales and Marketing 165 133 Production and Administration 205 169 370 302 Directors’ remuneration included in staff costs 2023 £m 2022 £m Salaries 1.4 1.2 Bonuses 0.2 0.2 1.6 1.4 Total remuneration regarding the highest paid Director was £0.6m (2022: £0.6m). The total remuneration regarding the highest paid Director includes the gain on exercise of share options (where applicable), which is not included in staff costs. There were no director exercises of share options in 2023. The Directors’ gain on exercise of share options was £nil (2022: £nil). All of the share options that vested in 2023 had performance criteria attached and as is disclosed in the single figure table, performance targets were not met for the 2020 grants that vested in 2023. Overview Strategic Report Governance Financial Statements 131 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2023 7. Finance income and expenses 2023 £m 2022 £m Finance income Interest income 2.0 0.8 2.0 0.8 Finance expense Interest on lease liabilities 0.6 0.2 Bank loan interest and other charges – 0.2 0.6 0.4 8. Income tax 2023 £m 2022 £m Current tax expense Current tax on profits for the period 4.1 6.8 Adjustment in respect of prior period 1.0 (0.1) 5.1 6.7 Deferred tax expense Origination and reversal of temporary differences 1.4 – Adjustment in respect of prior period 0.3 (0.6) Total tax expense 6.8 6.1 The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to profit for the year are as follows: 2023 £m 2022 £m Profit for the year 22.2 31.0 Expected tax charge based on corporation tax rate of 23.5% in 2023 (19% in 2022) 5.2 5.9 Expenses not deductible for tax purposes 0.2 0.6 Effect of tax rate change on opening balance 0.1 – Adjustment in respect of prior period 1.3 (0.6) Differences in tax rates – 0.2 Total tax expense 6.8 6.1 During the year corporation tax relief of £nil (2022: £nil) was recognised within equity in relation to share options exercised in the period. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 132 9. Earnings per share 2023 £m 2022 £m Profit Profit used in calculating basic and diluted EPS 15.4 24.9 Number of shares Weighted average number of shares for the purpose of basic earnings per share 116,632,907 116,556,818 Weighted average number of dilutive employee share options outstanding 197,351 222,486 Weighted average number of shares for the purpose of diluted earnings per share 116,830,258 116,779,304 Basic earnings per share (pence) 13.20 21.36 Diluted earnings per share (pence) 13.18 21.32 Normalised EPS 2023 £m 2022 £m Profit Reported profit before tax 22.2 31.0 Add back: Amortisation 1.7 1.5 Adjusted profit before tax 23.9 32.5 Tax – assume standard rate (25%) (2022: 19%) (6.0) (6.2) Normalised earnings 17.9 26.3 Number of shares 116,632,907 116,556,818 Normalised basic earnings per share (pence) 15.37 22.59 Number of diluted shares 116,830,258 116,779,304 Normalised diluted earnings per share (pence) 15.34 22.54 Normalised EPS is an APM in which earnings have been adjusted to exclude amortisation and the UK statutory tax rates in force at the year end have been applied (disregarding other tax adjusting items for comparability). The treatment is consistent period on period. This has been provided to assist users compare performance period to period, without the impact of amortisation. As this is an APM, this may not be comparable to other companies. 10. Non-current assets Non-current assets by geographic location are as follows: 2023 £m 2022 £m UK 56.4 46.1 US 18.5 19.6 Europe 6.7 13.1 Rest of the World 0.3 – Balance as at 31 December 81.9 78.8 Non-current assets exclude deferred tax and financial instruments. Non-current assets in Europe are substantially all situated in Germany. Overview Strategic Report Governance Financial Statements 133 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2023 11. Property, plant and equipment Property, plant and equipment comprises owned and leased assets, as follows: 2023 £m 2022 £m Owned property, plant and equipment 9.1 9.1 Leased property, plant and equipment (right-of-use assets, see note 13) 14.6 16.5 Total property, plant and equipment 23.7 25.6 Owned property, plant and equipment is detailed as follows: Leasehold property improvements £m Re-usable packaging £m Plant, equipment and vehicles £m Fixtures and fittings £m Totals £m Cost At 31 December 2021 0.9 11.6 0.6 1.1 14.2 Additions – 1.0 2.9 0.7 4.6 Disposals – – – (0.1) (0.1) At 31 December 2022 0.9 12.6 3.5 1.7 18.7 Additions 0.1 1.4 1.1 0.2 2.8 Disposals – – – (0.1) (0.1) Exchange differences – – (0.1) – (0.1) At 31 December 2023 1.0 14.0 4.5 1.8 21.3 Depreciation At 31 December 2021 0.7 5.3 0.4 0.9 7.3 Charge for the year 0.1 2.1 0.1 0.3 2.6 Disposals – – – (0.1) (0.1) Exchange differences (0.1) (0.1) – – (0.2) At 31 December 2022 0.7 7.3 0.5 1.1 9.6 Charge for the year 0.1 2.0 0.3 0.2 2.6 At 31 December 2023 0.8 9.3 0.8 1.3 12.2 Net book value At 31 December 2023 0.2 4.7 3.7 0.5 9.1 At 31 December 2022 0.2 5.3 3.0 0.6 9.1 At 31 December 2021 0.2 6.3 0.2 0.2 6.9 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 134 12. Intangible assets Goodwill £m Brands £m Customer relationships £m Assets under development £m Software £m Totals £m Cost At 31 December 2021 32.2 14.4 7.4 0.9 0.3 55.2 Acquisition of P&M 4.2 – – – – 4.2 Additions – – – 2.4 0.1 2.5 Exchange differences – – 0.4 – – 0.4 At 31 December 2022 36.4 14.4 7.8 3.3 0.4 62.3 Additions – – – 7.0 – 7.0 Reclassifications – – – (1.5) 1.5 – Exchange differences (0.2) – (0.2) – – (0.4) At 31 December 2023 36.2 14.4 7.6 8.8 1.9 68.9 Amortisation At 31 December 2021 – 6.3 1.1 – 0.1 7.5 Charge for the year – 0.7 0.8 – – 1.5 Exchange Differences – – 0.1 – – 0.1 At 31 December 2022 – 7.0 2.0 – 0.1 9.1 Charge for the year – 0.7 0.8 – 0.2 1.7 Exchange Differences – – (0.1) – – (0.1) At 31 December 2023 – 7.7 2.7 – 0.3 10.7 Net book value At 31 December 2023 36.2 6.7 4.9 8.8 1.6 58.2 At 31 December 2022 36.4 7.4 5.8 3.3 0.3 53.2 At 31 December 2021 32.2 8.1 6.3 0.9 0.2 47.7 Brands represent the fair value at the 12 March 2013 acquisition date of the ‘Fever-Tree’ brand. The fair value was determined by applying the ‘relief from royalty’ method to the estimated cash flows to be earned from the brand. The key management assumptions are around growth forecasts (over 20 years and at an ongoing growth rate of 3%), discount factors (a discount factor of 20% was used) and royalty percentage utilised. A brand useful life of 20 years is considered appropriate and projected cash flows have been discounted over this period. Customer relationships represent the fair value on acquisition of the customer base of Global Drinks Partnership GmbH (GDP) on 1 July 2020. They were valued using the multi-period excess earnings method using a 5-year forecast followed by long-term growth at 1% reflecting local industry and inflation assumptions. A 10-year useful economic life is considered appropriate considering historic customer retention. Management did not identify any indicators of impairment in relation to individual intangible assets. Assets under development predominantly include the implementation of a new end-to-end operational processes programme, and an innovative business product. The programme embeds technology across the Group’s global operations, which improves working efficiencies, data quality, and provides insights to aid in making business decisions. The programme commenced in 2021 and full implementation is expected to be finalised in 2024 where the associated economic benefits will begin to flow to the company. Some components have been completed in the current period and have been reclassified to Software. Goodwill has been recognised from the acquisition of Fevertree Limited on 12 March 2013, the acquisition of Global Drinks Partnership GmbH (GDP) on 1 July 2020 and the acquisition of Powell & Mahoney LLC (P&M) on 1 August 2022. The Goodwill recognised from all acquisitions represents the difference between the consideration paid and the fair value of assets acquired, and liabilities assumed on each occasion. Overview Strategic Report Governance Financial Statements 135 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2023 12. Intangible assets continued In line with IAS 36, the cash-generating unit(s) to which goodwill has been allocated is tested for impairment at least annually by comparing the carrying amount of the unit(s), including the goodwill, with the recoverable amount of the unit(s). Goodwill has been allocated to the following CGUs: CGU 2023 £m 2022 £m Global CGU1 36.2 32.2 P&M CGU – 4.2 36.2 36.4 1 The impairment model for this group of CGUs is based on fair value less costs to sell using the quoted price of the Company’s shares as an estimate of the fair value less costs of disposal. This exercise showed significant headroom in the year. There is no reasonably possible change in key assumptions that would cause the recoverable amount of this group of CGUs to exceed their carrying amount. Goodwill allocated to the P&M CGU for the prior year has been allocated to the Global CGU in the current year. This represents the realisation of synergies identified on the acquisition of Powell & Mahoney (P&M). 13. Leases The Group leases its office premises in London, New York, Australia and Germany, warehouses in the US and a small fleet of motor vehicles used by its UK-based sales team and German-based team. During the financial year, there were a number of additions and modifications to the Group’s leases portfolio. These included but are not limited to, the addition of the Australian office lease, beginning in July 2023 with a lease term of three years, the modification of the US head- office, extending the term by five years and five months and the modification of the US NFI leases to reflect changes to the annual indexation rate. Right-of-use assets: Leasehold property £m Motor vehicles £m Total £m Balance at 31 December 2021 2.5 0.2 2.7 Additions/Modifications 15.1 – 15.1 Depreciation charge for the year (1.6) (0.1) (1.7) Exchange differences 0.4 – 0.4 Balance at 31 December 2022 16.4 0.1 16.5 Additions/Modifications 2.3 0.4 2.7 Disposals (0.3) (0.1) (0.4) Depreciation charge for the year (3.6) (0.1) (3.7) Exchange differences (0.6) 0.1 (0.5) Balance at 31 December 2023 14.2 0.4 14.6 Lease liabilities: Lease liabilities at 31 December 2023 £m 2022 £m Current lease liabilities 3.4 3.4 Non-current lease liabilities 11.8 13.5 15.2 16.9 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 136 13. Leases continued Undiscounted future cash flows 2023 £m 2022 £m Not later than one year 3.9 3.8 Later than one year and not later than five years 11.1 12.6 Later than five years 1.4 1.6 16.4 18.0 Amounts recognised in the profit or loss 2023 £m 2022 £m Interest on lease liabilities 0.6 0.2 Depreciation charge for right-of-use assets 3.7 1.7 Charge relating to short-term leases – 0.2 Amounts recognised in consolidated statement of cash flows 2023 £m 2022 £m Lease payments 4.0 1.8 Changes in liabilities arising from financing activities 2023 £m 2022 £m Opening Balance 16.9 2.8 Lease payments (4.0) (1.8) Interest expense 0.6 0.2 Additions/Modifications 2.7 15.1 Disposals (0.3) – Exchange differences (0.7) 0.6 15.2 16.9 14. Subsidiaries The subsidiaries of the Company, which have been included in the consolidated financial statements, are as follows: Name Principal activity Incorporated UK Incorporated Company number Registered address 2023 Ownership % 2022 Ownership % Fevertree Limited Development and sale of premium mixer drinks UK 05291668 186–188 Shepherds Bush Road London W6 7NL UK 100% 100% Fevertree USA Inc.* Development and sale of premium mixer drinks USA 251 Little Falls Drive, Wilmington, Delaware, 19808 USA 100% 100% Fevertree USA Holding Co. Inc.* The activities of a holding company USA 251 Little Falls Drive, Wilmington, Delaware, 19808 USA 100% 100% Fevertree USA Production Co. Inc.* Development and sale of premium mixer drinks USA 251 Little Falls Drive, Wilmington, Delaware, 19808 USA 100% 100% Fevertree UK Limited* Development and sale of premium mixer drinks UK 11129807 186–188 Shepherds Bush Road London W6 7NL UK 100% 100% Fevertree US Limited** The activities of a holding company UK 11129532 186–188 Shepherds Bush Road London W6 7NL UK 100% 100% Fevertree Europe Limited* Development and sale of premium mixer drinks UK 11129528 186–188 Shepherds Bush Road London W6 7NL UK 100% 100% Fevertree ROW Limited* Development and sale of premium mixer drinks UK 11129523 186–188 Shepherds Bush Road London W6 7NL UK 100% 100% Fevertree Australia Pty Ltd*** Distribution of premium mixers and other drinks Australia 35 Oxford Cl. West Leederville WA 6007 Australia 100% 100% Overview Strategic Report Governance Financial Statements 137 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2023 Name Principal activity Incorporated UK Incorporated Company number Registered address 2023 Ownership % 2022 Ownership % Fevertree Germany Limited** Development and sale of premium mixer drinks UK 11914001 186–188 Shepherds Bush Road London W6 7NL UK 100% 100% GDP Global Drinks Partnership GmbH* Distribution of premium mixers and other drinks Germany Marienstr. 17 80331 München DE 100% 100% Powell & Mahoney Ltd* Development and sale of premium mixer drinks USA 39 Norman St, Salem, Massachusetts, 01970 USA 100% 100% * Denotes indirectly held subsidiary. ** Denotes indirectly held subsidiaries for by virtue of section 479A of the Companies Act 2006, are exempt from the requirements of the Companies Act 2006 relating to the audit of individual accounts. *** Denotes indirectly held subsidiary which commenced trading in July 2023. 15. Inventories 2023 £m 2022 £m Raw materials 16.1 17.8 Finished goods 51.5 42.3 67.6 60.1 The cost of inventories recognised as an expense and included in the cost of sales amounted to £192.2m (2022: £164.0m). The amount charged to the consolidated statement of profit or loss and other comprehensive income in respect of impairment and write-off of inventories to net realisable values was £4.4m (2022: £6.0m). Stock impairment occurred due to expired stock, wastage and damages. The comparative 2022 impairment provision was also due to expired stock, wastage and damages. A provision of £3.6m has been recognised relating to a quantity of stock on hand in the US at period end. This relates to a product quality issue that was identified during the period which has been investigated and linked to specific production batches. An insurance receivable has been recognised against this claim which has fully offset the costs incurred. 16. Trade and other receivables 2023 £m 2022 £m Trade receivables 79.6 64.4 Expected credit loss provision (1.8) (1.9) Net trade receivables 77.8 62.5 Other receivables 5.8 1.7 Total financial assets other than cash and cash equivalents held at amortised cost 83.6 64.2 Prepayments 6.3 6.8 Recoverable VAT 1.6 1.4 Total trade and other receivables 91.5 72.4 There is no material difference between the net book amount and the fair value of current trade and other receivables due to their short-term nature. There is a moderate level of concentration of credit risk to the Group’s trade receivables as the Group has a limited number of distributors for its export markets. Within other non-current assets are long-term prepayments £4.3m made to suppliers for long-term contracts for supply chain activities (2022: £1.8m). These are amortised on a systematic basis, consistent with the specific supplier contracts. Within other receivables is a balance of £5.3m relating to an insurance receivable. 14. Subsidiaries continued FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 138 16. Trade and other receivables continued Expected credit loss assessment for customers as at 31 December 2023 The following table provides information about the exposure to credit risk and ECLs (expected credit losses) for trade receivables as at 31 December 2023. The simplified approach has been used, as required by IFRS 9. 31 December 2023 Weighted average loss rate rounded Gross carrying amount £m Impairment loss allowance £m Current (not past due) 2% 64.5 1.1 1–30 days past due 4% 7.6 0.3 31–60 days past due 3% 2.0 0.1 Over 60 days past due 5% 5.5 0.3 31 December 2022 Weighted average loss rate rounded Gross carrying amount £m Impairment loss allowance £m Current (not past due) 3% 53.1 1.4 1–30 days past due 3% 6.8 0.2 31–60 days past due 6% 1.6 0.1 Over 60 days past due 7% 2.9 0.2 Loss rates are based on actual credit loss experience. These rates are multiplied by scalar factors to reflect differences between economic conditions during the period over which the historical data has been collected, current conditions, credit insurance and the Group’s view of economic conditions over the expected lives of the receivables. Impaired receivables are only written off following the conclusion of administration proceedings. Movements in the allowance for impairment in respect of trade receivables during the year was as follows. 2023 £m 2022 £m Balance at 1 January 1.9 3.1 Amounts written off (0.5) (0.1) Net remeasurement of loss allowance 0.4 (1.1) Balance at 31 December 1.8 1.9 17. Trade and other payables 2023 £m 2022 £m Trade payables 22.3 24.7 Other payables 6.7 4.5 Accruals 26.0 21.2 Total financial liabilities, excluding loans and borrowings, classified as financial liabilities measured at amortised cost 55.0 50.4 Social security and other taxes 0.3 0.9 Total trade and other payables 55.3 51.3 There is no material difference between the net book amount and fair value of trade and other payables due to their short-term nature. Overview Strategic Report Governance Financial Statements 139 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2023 18. Derivative financial instruments 2023 £m 2022 £m Foreign currency exchange contracts: cash flow hedges 0.1 (0.2) Foreign currency exchange contracts: other 0.5 (1.6) Total derivative financial assets/(liabilities) 0.6 (1.8) The fair value of a derivative financial instrument is split between current and non-current depending on the remaining maturity of the derivative contract and its contractual cash flows. All contracts mature in less than 12 months; therefore, the instruments are classified as current. The fair value of foreign exchange contracts is based on external valuations. The maximum exposure to credit risk at the reporting date is the fair value of the derivative instruments in the consolidated statement of financial position. The increase in fair value on forward contracts not used for hedging purposes of £2.1m (2022: decrease of £2.8m) has been included within the total of commitments to buy/sell foreign currency exchange forward contracts of £128.3m within note 3, with the unrealised profits offsetting the foreign exchange movements in monetary assets. 19. Deferred Tax The movement on the deferred tax account is as shown below: 2023 £m 2022 £m Opening asset 1.9 2.8 Opening liability (1.6) (1.6) 0.3 1.2 Recognised in comprehensive income (1.4) – Prior year adjustments (0.3) 0.5 Recognised in equity 0.1 (1.4) Closing (liability)/asset (1.3) 0.3 Details of the deferred tax liability/(asset) are as follows: Fair valuation of intangible assets £m Share based payments £m Other £m Total £m At 31 December 2022 (3.8) 1.4 2.7 0.3 Comprehensive income debit/(credit) 0.3 – (1.7) (1.4) Prior year adjustments – – (0.3) (0.3) Recognised in equity – 0.2 (0.1) 0.1 At 31 December 2023 (3.5) 1.6 0.6 (1.3) After offsetting deferred tax assets and liabilities where appropriate within territories, the net deferred tax asset comprises deferred tax assets of £1.7m (2022: £1.9m) and deferred tax liabilities of £3.0m (2022: £1.6m). Other deferred tax assets and liabilities include a deferred tax asset of £1.3m related to GDP previous years’ tax losses, a deferred tax asset of £1.5m related to stock related differences, mainly based in the US, a deferred tax liability of £2.4m on property plant and equipment, a deferred tax asset of £2.8m on lease liabilities and a deferred tax liability of £2.6m on right of use assets. The March 2021 Budget announced an increase in the UK main rate of corporation tax from 19% to 25%, from 1 April 2023. This rate was substantively enacted in May 2021; accordingly, deferred tax balances as at 31 December 2022 and 31 December 2023 have been recognised at 25% for all timing differences reversing after 1 April 2023. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 140 20. Share capital 2023 2022 Number £m Number £m Ordinary shares of £0.0025 each At beginning of the period 116,563,677 0.3 116,550,000 0.3 Issued during the year 122,972 – 13,677 – At the end of the period 116,686,649 0.3 116,563,677 0.3 21. Share based payments Long Term Incentive Plan (‘LTIP’) All employees and full-time Directors of the Group are eligible to participate at the discretion of the Remuneration Committee. Share awards may be granted subject to objective performance conditions and vest over a vesting period determined by the Remuneration Committee at the time of the grant. Awards will normally lapse on cessation of employment. However, exercise is permitted for a limited period following cessation of employment for specified reasons such as redundancy, retirement or ill-health, and, in other circumstances, at the discretion of the Remuneration Committee. In the event of an amalgamation, takeover or winding up of the Company, unvested awards may vest over such number of shares as is specified by the Remuneration Committee. There are also provisions for the exchange of awards in specified circumstances. The awards immediately lapse on the tenth anniversary of the date of grant and in the event of the participant’s bankruptcy. Movements in the number of share options outstanding and their related weighted average exercise prices are as follows: 2023 Number of shares Weighted average exercise price £ LTIP Outstanding at beginning of the year 1,029,186 0.0025 Exercised (122,398) 0.0025 Forfeited (253,867) 0.0025 Granted 745,511 0.0025 Outstanding at end of the year 1,398,432 0.0025 Of which vested and exercisable 112,629 0.0025 2022 Number of shares Weighted average exercise price £ LTIP Outstanding at beginning of the year 679,201 0.0025 Exercised (13,677) 0.0025 Forfeited (117,896) 0.0025 Granted 481,558 0.0025 Outstanding at end of the year 1,029,186 0.0025 Of which vested and exercisable 51,840 0.0025 Overview Strategic Report Governance Financial Statements 141 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2023 21. Share based payments continued Employee Sharesave Scheme (‘SAYE’) In June 2019 the Group introduced a savings-related share scheme in which UK employees can save up to £500 from their net after tax salary over a period of three years to purchase options. These options can be exercised at the end of their three-year vesting period. Employees have the option to withdraw their savings at any time and forfeit their right to exercise the options at the end of the vesting period. This is managed in line with local government regulations. Movements in the number of share options outstanding and their related weighted average exercise prices are as follows: 2023 Number of shares Weighted average exercise price £ SAYE Outstanding at beginning of the year 116,022 9.18 Forfeited (38,870) 13.08 Granted 12,121 8.44 Outstanding at end of the year 89,273 7.38 Of which vested and exercisable – – 2022 Number of shares Weighted average exercise price £ SAYE Outstanding at beginning of the year 74,682 19.89 Forfeited (50,565) 20.98 Granted 91,905 6.96 Outstanding at end of the year 116,022 9.18 Of which vested and exercisable – – The weighted average grant date fair value of options granted during the period was determined at £12.56 (2022: £16.29) per option. The weighted average price of options exercised in the year was £13.76 (2022: £31.58). The outstanding options have a weighted average remaining contractual life of eight years and exercise prices between £0.0025 and £19.64. Options were valued using the Black-Scholes option-pricing model. No performance conditions were included in the fair value calculations. The fair value per option granted in the year and the assumptions used in the calculation are as follows: 2023 2022 Risk-free interest rate 3.73% – 4.69% 1.56% – 3.31% Expected life 5 years 5 years Expected volatility 20.25% – 31.46% 27.55% – 49.58% Expected dividend yield 1.24% – 1.43% 0.72% – 1.38% Share price at grant date £9.91 – £13.70 £9.56 – £18.07 For option grants the volatility range reflects the historical volatility based on share transactions since listing. The maximum vesting period was used as a basis to determine the expected life of the option. The expected life used in the valuation has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The risk-free rate was based on the Bank of England spot yields in effect at the time of grant. The expected dividend yield reflects managements and market expectations based on budget projections. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 142 22. Reserves Share premium is the amount subscribed for share capital in excess of nominal value. Retained earnings are the cumulative net profits in the profit or loss. Movements on these reserves are set out in the consolidated statement of changes in equity. Capital redemption reserve was created as a result of the share buy-back during 2014. The translation reserve captures exchange differences arising on the translation of non-GBP functional subsidiaries’ accounts on consolidation. The cash flow hedging reserve was created as a result of the implementation of hedge accounting. It captures the change in fair value for hedge accounted derivatives before the hedged item is reclassified to profit and loss. 23. Dividends Dividends paid 2023 2022 In respect of the prior financial year Pence per share 10.68 53.57 Total (£m) 12.4 62.2 In respect of the period ended 30 June Pence per share 5.74 5.63 Total (£m) 6.7 6.6 Total paid in the year (£m) 19.1 68.8 The Directors are proposing a final dividend of 10.90 pence per share, totalling £12,718,845 for 2023. This dividend has not been accrued in the consolidated statement of financial position. 24. Events after the reporting period There were no events after the reporting period to disclose. 25. Related parties transactions Compensation of key management personnel: 2023 £m 2022 £m Short-term employee benefits 1.2 1.2 Bonus 0.2 0.2 Share based payments 1.4 1.1 Employer’s national insurance 0.2 – 3.0 2.5 The key management personnel are judged to be Directors. For full details of Directors’ remuneration, see the Remuneration Committee Report on pages 86 to 101. 26. Ultimate controlling party In the opinion of the Directors there is no ultimate controlling party. Overview Strategic Report Governance Financial Statements 143 COMPANY STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2023S Company number 08415302 Note 2023 £m 2022 £m Fixed assets Fixed asset investments 4 66.0 64.6 Current assets Debtors 5 1.2 0.6 Cash and cash equivalents 14.0 41.4 15.2 42.0 Creditors: amounts falling due within one year 6 (21.7) (30.6) Net current assets (6.5) 11.4 Total assets less current liabilities 59.5 76.0 Net assets 59.5 76.0 Capital and reserves Called up share capital 8 0.3 0.3 Share premium 9 54.8 54.8 Capital redemption reserve 9 0.1 0.1 Retained earnings 9 4.3 20.8 Shareholders’ funds 59.5 76.0 As permitted by Section 408 of the Companies Act 2006, a separate profit or loss account of the Parent Company has not been presented. The Parent Company’s profit for the year was £0.7m (2022: £0.9m loss). The financial statements were approved and authorised for issue by the Board of Directors on 25 March 2024 and were signed on its behalf by: Andrew Branchflower Chief Financial Officer FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 144 COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2023 Share capital £m Share premium £m Capital redemption reserve £m Retained earnings £m Total £m Equity as at 31 December 2021 0.3 54.8 0.1 87.4 142.6 Loss and total comprehensive income for the year – – – (0.9) (0.9) Dividends paid – – – (68.8) (68.8) Share based payments – – – 3.5 3.5 Tax on share based payments – – – (0.4) (0.4) Shares issued – – – – – Equity as at 31 December 2022 0.3 54.8 0.1 20.8 76.0 Profit and total comprehensive income for the year – – – 0.7 0.7 Dividends paid – – – (19.1) (19.1) Share based payments – – – 1.7 1.7 Tax on share based payments – – – 0.2 0.2 Shares issued – – – – – Equity as at 31 December 2023 0.3 54.8 0.1 4.3 59.5 Overview Strategic Report Governance Financial Statements 145 NOTES TO THE COMPANY FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2023 1. Accounting policies Basis of preparation Fevertree Drinks Plc (the ‘Company’) is a company incorporated in the United Kingdom under the Companies Act 2006. It is a public company limited by shares, domiciled in England and Wales, in the United Kingdom. The address of its registered office is 186–188 Shepherds Bush Road, London, England, W6 7NL. The financial statements of the Company have been prepared in accordance with Financial Reporting Standard 101, Reduced Disclosure Framework (FRS 101), the Companies Act 2006. The Company’s financial statements are presented in Sterling. Amounts are rounded to the nearest million, unless otherwise stated. Percentages presented are rounded to the nearest whole number. In preparing these financial statements the Company has taken advantage of all disclosure exemptions conferred by FRS 101. Therefore, these financial statements do not include: • certain comparative information as otherwise required by IAS 1; • certain disclosures regarding the Company’s capital; • a statement of cash flows; • the effect of future accounting standards not yet adopted; • the disclosure of the remuneration of key management personnel; and • disclosure of related party transactions with wholly owned fellow group companies. In addition, and in accordance with FRS 101 further disclosure exemptions have been adopted because equivalent disclosures are included in the consolidated financial statements of Fevertree Drinks Plc. These financial statements do not include certain disclosures in respect of: • share based payments; and • the disclosure requirements of IFRS 15. In all respects, the Company applies the same accounting policies as the Group, which, as stated above, are outlined in the notes to the consolidated financial statements. In addition, the following accounting policies are also applied, given the Company’s function as holding company for the Group. Investments in subsidiaries Fixed asset investments are stated at cost less provisions for impairment. Creditors Creditors are presented as amounts falling due within one year unless payment is not due within 12 months after the reporting period. Creditors are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. Creditors are presented as amounts falling due within one year unless payment is not due within 12 months after the reporting period. Cash and cash equivalents Cash and cash equivalents include cash in hand and deposits held at call with banks. Share Capital Financial instruments issued by the Company are treated as equity only to the extent that they do not meet the definition of a financial liability. The Company’s ordinary shares are classified as equity instruments. Share based payments The Company operates equity-settled share-based option plans. The fair value of the employee services received in exchange for the participation in the plan is recognised as an expense in the profit or loss account, to the extent that the recipients are employees of the Company, and recognised as an investment in subsidiary where the recipients are employees of a subsidiary. The corresponding credit has been recognised in the profit or loss account reserve. The fair value of the employee service is based on the fair value of the equity instrument granted. Where the expense is charged to the profit or loss account, it is spread over the vesting period of the instrument. FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 146 1. Accounting policies continued Taxation Tax on the profit for the year comprises current and deferred tax. Tax is recognised in the Income Statement except to the extent it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised in line with those items. Current tax is the expected tax payable or receivable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred taxation Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the statement of financial position differs from its tax base, except for differences arising on: • the initial recognition of goodwill; • the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and • investments in subsidiaries and jointly controlled entities where the Company is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future. Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised. The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are not discounted. Deferred tax is recognised as income or an expense and included in profit or loss for the year except in relation to deferred tax on share-based payments. If the amount of a future tax deduction exceeds the amount of the cumulative remuneration expense, the excess of the associated deferred tax is recognised directly in equity. 2. Result from operations 2023 £m 2022 £m Share-based payments 0.3 1.3 Fees for the audit of this Company were borne by another Group company. The Auditor remuneration for the audit of this Company was £30,000 (2022: £30,000). 3. Staff costs 2023 £m 2022 £m Short term employee benefits 1.2 1.2 Accrued bonus 0.2 0.2 Employers national insurance 0.1 (0.4) Employers pension 0.1 – 1.6 1.0 The average monthly number of employees (including Directors) during the period was 2 (2022: 2). Overview Strategic Report Governance Financial Statements 147 4. Fixed asset investment 2023 £m 2022 £m Investment in subsidiary undertakings Balance as at 1 January 64.6 62.3 Additions 1.4 2.3 Balance as at 31 December 66.0 64.6 Additions relate to share based payments of the Company’s shares offered to employees of subsidiary entities, which are treated as a capital contribution by the Company. Refer to note 14 of the consolidated financial statements of the Group for the list of the Company’s subsidiaries. 5. Debtors 2023 £m 2022 £m Other receivables 0.4 0.1 Deferred tax asset 0.8 0.5 1.2 0.6 6. Creditors: Amounts falling due within one year 2023 £m 2022 £m Amounts owed to group undertakings 20.4 29.2 Other payables – 0.4 Accruals 0.6 0.1 Corporation tax liability 0.7 0.9 21.7 30.6 7. Share based payments Share based payment arrangements for Directors are set out in the Remuneration Committee Report, see pages 86 to 101. Details of the share options in existence are shown in note 21 of the consolidated financial statements. 8. Share capital Refer to note 20 of the consolidated financial statements for information on share capital. NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED FOR THE YEAR ENDED 31 DECEMBER 2023 FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 148 9. Reserves Refer to note 22 of the consolidated financial statements for a description of the reserves. In January 2024, the Directors became aware that the interim dividend paid to shareholders in October 2023 was paid otherwise than in accordance with the Companies Act 2006 because interim accounts had not been filed at Companies House prior to payment. A resolution has been tabled for the AGM on 6 June 2024 to authorise the appropriation of distributable profits to the payment of the relevant dividend and remove any right for the Company to pursue shareholders or Directors for repayment. The overall effect of this resolution is to return all parties to the position they would have been in had the relevant dividend been made in full compliance with the Companies Act 2006. It is expected that this will pass with an overwhelming majority, which has led to the Company recognising this dividend as though it had been appropriately paid in these accounts. For this reason, no receivable is recognised to recover the dividend paid, and the payment of the dividend has been recognised as a reduction in reserves in the period. 10. Related party transactions The Company has taken advantage of the exemption not to disclose related party transactions with wholly owned fellow Group companies. Related party transactions with key management personnel (including Directors) are shown in note 25 of the consolidated financial statements. 11. Events after the reporting period There were no events after the reporting period to disclose. Overview Strategic Report Governance Financial Statements 149 Registered and Head Office 186–188 Shepherds Bush Road, London, W6 7 NL Company Website www.fever-tree.com Company Secretary Alex O’Connell Advisers Nominated Adviser and Broker Investec Bank Plc 30 Gresham Street London EC2V 7QP Corporate Broker Morgan Stanley & Co. International Plc 25 Cabot Square Canary Wharf London E14 4QA Legal advisers Osborne Clarke One London Wall London EC2Y 5EB Auditors BDO LLP, 55 Baker Street London, W1U 7EU Registrars Link Group, 10th Floor, Central Square, 29 Wellington Street, Leeds, LS1 4DL COMPANY INFORMATION FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 150 NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the Annual General Meeting (the ‘AGM’) of Fevertree Drinks plc (the ‘Company’) will be held at the office of the Company at 186-188 Shepherds Bush Road, W6 7NL, on Thursday 6 June 2024 at 11:00 a.m. If you plan to attend the AGM in person, please notify the Company in advance by email to agm@fever-tree.com to assist us in planning and implementing arrangements for this year’s meeting. Please include your name as shown on the Company’s Register of Members. In the event that any changes to the arrangements for the AGM are required prior to the date of the meeting, we will announce these through a regulatory news service and on the Company’s website. Shareholders are invited to submit any questions for the Board by sending an email to agm@fever-tree.com. The AGM will be for the following purposes: Ordinary Business To consider and, if thought fit, pass the following resolutions which will be proposed as ordinary resolutions: 1. Report and accounts To receive the audited annual accounts of the Company for the year ended 31 December 2023 together with the Directors’ reports and the Auditors’ report on those annual accounts. 2. Directors’ Remuneration To approve the Directors’ remuneration report for the year ended 31 December 2023. 3. Declaration of dividend To declare a final dividend of 10.90p per ordinary share for the year ended 31 December 2023 payable on 21 June 2024 to shareholders who are on the register of members of the Company on 17 May 2024. 4. Re-election of Domenic De Lorenzo To re-elect Domenic De Lorenzo as a Director. 5. Re-election of Timothy Warrillow To re-elect Timothy Warrillow as a Director. 6. Re-election of Andrew Branchflower To re-elect Andrew Branchflower as a Director. 7. Re-election of Kevin Havelock To re-elect Kevin Havelock as a Director. 8. Re-election of Laura Hagan To re-elect Laura Hagan as a Director 9. Re-election of Jeff Popkin To re-elect Jeff Popkin as a Director. 10. Election of Clare Swindell To elect Clare Swindell as a Director, who having been appointed since the last AGM, offers herself for election. 11. Election of David Lapp To elect David Lapp as a Director, who having been appointed since the last AGM, offers himself for election. 12. Re-appointment of Auditors To re-appoint BDO LLP as Auditors of the Company to hold office from the conclusion of this AGM until the conclusion of the next general meeting at which accounts are laid before the Company. 13. Auditors’ remuneration To authorise the Directors to determine the remuneration of the Auditors. Overview Strategic Report Governance Financial Statements 151 Special Business To consider and, if thought fit, pass the following resolutions of which resolution 14 will be proposed as an ordinary resolution and resolutions 15 to 18 (inclusive) will be proposed as special resolutions. 14. Directors’ authority to allot shares That, in substitution for any equivalent authorities and powers granted to the Directors prior to the passing of this resolution, the Directors be and they are generally and unconditionally authorised pursuant to Section 551, Companies Act 2006 (the ‘Act’) to exercise all powers of the Company to allot shares in the Company, and grant rights to subscribe for or to convert any security into shares of the Company (such shares, and rights to subscribe for or to convert any security into shares of the Company being ‘relevant securities’) up to an aggregate nominal amount of £97,238.87 provided that, unless previously revoked, varied or extended, this authority shall expire on the earlier of the date falling 18 months after the date of the passing of this resolution and the conclusion of the next AGM of the Company, except that the Company may at any time before such expiry make an offer or agreement which would or might require relevant securities to be allotted after such expiry and the Directors may allot relevant securities in pursuance of such an offer or agreement as if this authority had not expired. 15. Directors’ power to issue shares for cash for pre-emptive issues and general purposes That, if resolution 14 is passed, the Directors be authorised to allot equity securities (as defined in the Act) for cash under the authority given by that resolution and/or to sell ordinary shares held by the Company as treasury shares for cash as if section 561 of the Act did not apply to any such allotment or sale, such authority to be limited to: (i) the allotment of equity securities in connection with an offer of, or invitation to apply for, equity securities: (A) in favour of holders of ordinary shares in the capital of the Company, where the equity securities respectively attributable to the interests of all such holders are proportionate (as nearly as practicable) to the respective number of ordinary shares in the capital of the Company held by them; and (B) to holders of any other equity securities as required by the rights of those securities or as the Directors otherwise consider necessary, but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient to deal with treasury shares, fractional entitlements or legal, regulatory or practical problems arising under the laws or requirements of any overseas territory or by virtue of shares being represented by depository receipts or the requirements of any regulatory body or stock exchange or any other matter whatsoever; and (ii) the allotment, otherwise than pursuant to sub-paragraph (i) above, of equity securities up to an aggregate nominal value equal to £29,171.66; such authority to expire on the earlier of the date falling 18 months after the date of the passing of this resolution and the conclusion of the next AGM of the Company but, in each case prior to its expiry the Company may make offers, and enter into agreements, which would, or might, require equity securities to be allotted (and treasury shares to be sold) after the authority expires and the Directors may allot equity securities (and sell treasury shares) under any such offer or agreement as if the authority had not expired. 16. Directors’ power to issue shares for cash for acquisitions and other capital investments That if resolution 14 is passed, the Board be authorised in addition to any authority granted under resolution 15 to allot equity securities (as defined in the Act) for cash under the authority given by that resolution and/or to sell ordinary shares held by the Company as treasury shares for cash as if section 561 of the Act did not apply to any such allotment or sale, such authority to be: (i) limited to the allotment of equity securities or sale of treasury shares up to a nominal amount of £29,171.66; and (ii) used only for the purposes of financing (or refinancing, if the authority is to be used within 12 months after the original transaction) a transaction which the Directors determine to be either an acquisition or a specified capital investment of a kind contemplated by the Statement of Principles on Disapplying Pre-Emption Rights most recently published by the Pre-Emption Group prior to the date of this notice, such authority to expire on the earlier of the date falling 18 months after the date of the passing of this resolution and the conclusion of the next AGM of the Company but, in each case, prior to its expiry the Company may make offers, and enter into agreements, which would, or might, require equity securities to be allotted (and treasury shares to be sold) after the authority expires and the Directors may allot equity securities (and sell treasury shares) under any such offer or agreement as if the authority had not expired. NOTICE OF ANNUAL GENERAL MEETING CONTINUED FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 152 17. Authority to purchase shares (market purchases) That the Company be and is hereby unconditionally and generally authorised for the purposes of Section 701 of the Act to make market purchases (within the meaning of Section 693(4) of the Act) of its ordinary shares of 0.25p each (‘Ordinary Shares’) provided that: (i) the maximum number of Ordinary Shares authorised to be purchased is 11,668,664; (ii) the minimum price which may be paid for any such Ordinary Share is 0.25p; (iii) the maximum price which may be paid for an Ordinary Share shall be the higher of: (a) an amount equal to 105% of the average middle market quotations for an Ordinary Share as derived from the London Stock Exchange Daily Official List for the 5 business days immediately preceding the day on which the Ordinary Share is contracted to be purchased; and (b) the higher of the price of the last independent trade and the highest current independent bid on the trading venue where the purchase is carried out; and (iv) this authority shall, unless previously renewed, revoked or varied, expire on the earlier of the date falling 18 months after the date of the passing of this resolution and the conclusion of the next AGM, but the Company may enter into a contract for the purchase of Ordinary Shares before the expiry of this authority which would or might be completed (wholly or partly) after its expiry. 18. Ratification of relevant distribution and releases That: 18.1 in relation to the dividend paid by the Company on 20 October 2023 (the ‘Relevant Distribution’) the Company hereby ratifies and confirms the payment of 5.74 pence per Ordinary Share by way of interim dividend paid on 20 October 2023 and the appropriation, for the purposes of the preparation of the Company’s audited financial statements for the financial year ended 2023, of the distributable profits of the Company to the payment of such interim dividend and the resulting entry for the distributable profits of the Company in such financial statements; 18.2 any and all claims which the Company has or may have arising out of or in connection with the payment of the Relevant Distribution against its shareholders who appeared on the register of shareholders on the relevant record date for the Relevant Distribution (or the personal representatives and their successors in title (as appropriate) of a shareholder’s estate if he or she is deceased) be waived and released, and a deed of release in favour of such shareholders (or the personal representatives and their successors in title (as appropriate) of a shareholder’s estate if he or she is deceased) (‘Shareholders’ Deed of Release’) be entered into by the Company in the form produced to the General Meeting and any Director in the presence of a witness, any two directors of the Company (each, a ‘Director’) or any Director and the Company Secretary be authorised to execute the same as a Deed Poll for and on behalf of the Company; and 18.3 any and all claims which the Company has or may have against each of its Directors (save for David Lapp, who joined the Board after the payment of the Relevant Distribution) and any former directors of the Company (‘Former Directors’), arising out of or in connection with the approval, declaration or payment of the Relevant Distribution be waived and released and that a deed of release in favour of each of such Directors and Former Directors (‘Directors’ Deed of Release’) be entered into by the Company in the form produced to the General Meeting and any Director in the presence of a witness, any two Directors or any Director and the Company Secretary be authorised to execute the same as a Deed Poll for and on behalf of the Company. By order of the Board Alex O’Connell Company Secretary Dated: 24 April 2024 Registered Office: 186–188 Shepherds Bush Road London W6 7NL Overview Strategic Report Governance Financial Statements 153 Notes: 1. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001 (as amended), only those members registered in the register of members of the Company at the close of business on 4 June 2024 (or if the AGM is adjourned, 48 hours before the time fixed for the adjourned AGM) shall be entitled to attend and vote at the AGM in respect of the number of shares registered in their name at that time. Any changes to the register of members after such time shall be disregarded in determining the rights of any person to attend or vote at the AGM. 2. Each of the resolutions to be put to the meeting will be voted on by a poll reflecting the number of voting rights exercisable by each member. The results of the poll will be published on the Company’s website once the votes have been counted and verified. 3. In the case of joint holders of shares, the vote of the first named in the register of members who tenders a vote shall be accepted to the exclusion of the votes of other joint holders. 4. A member that is a company or other organisation not having a physical presence cannot attend in person but can appoint someone to represent it. This can be by the appointment of a proxy (described in Note 6 below). Members considering the appointment of a corporate representative should check their own legal position, the Company’s articles of association and the relevant provision of the Act. 5. Copies of the executive Directors’ service contracts with the Company and any of its subsidiary undertakings are available on request. 6. You can vote either: • by logging on to www.signalshares.com and following the instructions; • You may request a hard copy form of proxy directly from the registrars, Link Group, at shareholderenquiries@ linkgroup.co.uk or on Tel: 0371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 09:00 – 17:30, Monday to Friday excluding public holidays in England and Wales. • in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures set out below. In order for a proxy appointment to be valid a form of proxy must be completed. In each case the form of proxy must be received by Link Group, PXS1, Central Square, 29 Wellington Street, Leeds, LS1 4DL by 11:00 a.m. on 4 June 2024. 7. CREST members who wish to appoint a proxy or proxies through the CREST proxy appointment service may do so for the AGM (and any adjournment thereof) by following the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members (and those CREST members who have appointed a voting service provider) should refer to their CREST sponsor or voting service provider, who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a ‘CREST Proxy Instruction’) must be properly authenticated in accordance with Euroclear UK & International Limited’s (‘Euroclear’) specifications and must contain the information required for such instructions, as described in the CREST Manual. The message (regardless of whether it relates to the appointment of a proxy or to an amendment to the instruction given to a previously appointed proxy) must, in order to be valid, be transmitted so as to be received by Link Group, RA10 by 11:00 a.m. on 4 June 2024. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which Link Group is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. NOTICE OF ANNUAL GENERAL MEETING CONTINUED FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 154 CREST members (and, where applicable, their CREST sponsors or voting service providers) should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider takes) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members (and, where applicable, their CREST sponsors or voting service providers) are referred, in particular, to those sections of the CREST Manual (available at www.euroclear.com) concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001 (as amended). Unless otherwise indicated on the Form of Proxy, CREST voting or any other electronic voting channel instruction, the proxy will vote as they think fit or, at their discretion, withhold from voting. 8. Copies of the final forms of the Shareholders’ Deed of Release and the Directors’ Deed of Release are available on request. Explanatory Notes Resolution 1 – Receiving the account and reports The Company must lay its annual accounts before a general meeting of the Company, together with the Directors’ reports and Auditors’ report on the accounts. At the AGM, the Directors will present these documents to the shareholders for the financial year ended 31 December 2023. Resolution 2 – Directors’ remuneration Shareholders have an opportunity to cast an advisory vote to approve the Directors’ remuneration report for the year ended 31 December 2023. The report is set out in full in the Annual Report. Resolution 3 – Declaration of dividend This resolution concerns the Company’s final dividend payment. The Directors are recommending a final dividend of 10.90p per ordinary share in respect of the year ended 31 December 2023 which, if approved, will be payable on 21 June 2024 to the shareholders on the register of members on 17May 2024. Resolutions 4–11 – Re-election (or election) of directors Resolutions 4–11 concern the re-election (or election as appropriate) of the directors of the Company who, in accordance with best practice in corporate governance, are offering themselves for (re-)election. The biographies for each of the directors is provided in the Annual Report. Resolution 12 – Re-appointment of Auditors This resolution concerns the re-appointment of BDO LLP as Auditors until the conclusion of the next general meeting at which accounts are laid, that is, the next AGM. Resolution 13 – Auditors’ remuneration This resolution authorises the Directors to fix the Auditors’ remuneration. Resolution 14 – Directors’ power to allot shares This resolution grants the Directors authority to allot shares in the capital of the Company and other relevant securities up to an aggregate nominal value of £97,238.87 representing approximately one third of the nominal value of the issued ordinary share capital of the Company as at 24 April 2024 being the latest practicable date before publication of this notice. The Directors do not have any present intention of exercising the authorities conferred by this resolution but they consider it desirable that the specified amount of authorised but unissued share capital is available for issue so that they can more readily take advantage of possible opportunities. Unless revoked, varied or extended, this authority will expire at the conclusion of the next AGM of the Company or the date falling 18 months from the passing of the resolution, whichever is the earlier. Overview Strategic Report Governance Financial Statements 155 Resolutions 15 & 16 – Directors’ power to issue shares for cash for pre-emptive issues and general purposes These resolutions authorise the Directors in certain circumstances to allot equity securities for cash other than in accordance with the statutory pre-emption rights (which require a company to offer all allotments for cash first to existing shareholders in proportion to their holdings). In relation to resolution 15, the authority will grant Directors the power to issue shares for cash where either the allotment takes place in connection with a rights issue or the allotment is limited to a maximum nominal amount of £29,171.66 representing approximately 10% of the nominal value of the issued ordinary share capital of the Company as at 24 April 2024 being the latest practicable date before publication of this notice. In relation to resolution 15, the powers will be limited to allotments and sales (i) up to an aggregate nominal amount of £29,171.66 representing approximately 10% of the nominal value of the issued ordinary share capital of the Company as at 24 April 2024 being the latest practicable date before publication of this notice and (ii) used only for the purposes of financing (or refinancing, if such refinancing occurs within 12 months of the original transaction) a transaction which the Directors determine to be an acquisition or a specified capital investment of a kind contemplated by the Statement of Principles on Disapplying Pre-Emption Rights most recently published by the Pre-Emption Group prior to the date of this Notice. The Directors do not have any present intention of exercising the authorities conferred by these resolutions, but they consider it desirable that Directors’ have the authority to issue shares for cash in the above-mentioned circumstances so that they can more readily take advantage of possible opportunities. Unless revoked, varied or extended, these authorities will expire at the conclusion of the next AGM of the Company or 18 months after the passing of these resolutions, whichever is the earlier. Resolution 17 – Authority to purchase shares (market purchase) This resolution authorises the board to make market purchases of up to 11,668,664 ordinary shares (representing approximately 10% of the Company’s issued ordinary shares as at 24 April 2024 being the latest practicable date before publication of this notice). Shares so purchased may be cancelled or held as treasury shares. The authority will expire at the end of the next AGM of the Company or 18 months from the passing of the resolution, whichever is the earlier. The Directors intend to seek renewal of this authority at subsequent AGMs. The minimum price that can be paid for an ordinary share is 0.25p being the nominal value of an ordinary share. The maximum price that can be paid is the higher of (i) 5% over the average of the middle market prices for an ordinary share, derived from the Daily Official List of the London Stock Exchange, for the five business days immediately before the day on which the share is contracted to be purchased and (ii) the higher of the price of the last independent trade, and the highest current independent bid on the trading venue where the purchase is carried out. The Directors intend to exercise this right only when, in light of the market conditions prevailing at the time and taking into account all relevant factors (for example, the effect on earnings per share), they believe that such purchases are in the best interests of the Company and shareholders generally. The overall position of the Company will be taken into account before deciding upon this course of action. The decision as to whether any such shares bought back will be cancelled or held in treasury will be made by the Directors on the same basis at the time of the purchase. The Directors do not have any present intention of exercising the authorities conferred by this resolution but they consider it desirable that the authorities are in place so that they can more readily take advantage of possible opportunities. NOTICE OF ANNUAL GENERAL MEETING CONTINUED FEVER-TREE DRINKS PLC | Annual Report & Financial Statements 2023 156 Resolution 18 – ratification of Relevant Distribution and approval of entry into Shareholders’ Deed of Release and Directors’ Deed of Release The Relevant Distribution, an interim dividend, was announced by the Company on 12 September 2023 and paid to its shareholders on 20 October 2023. The Company’s prior audited annual accounts did not show sufficient distributable reserves to permit the Relevant Distribution. Whilst the group as a whole had generated sufficient profits to justify the payment of the Relevant Distribution, for various technical reasons the company did not satisfy the legal requirements under the Act to permit the payment of the Relevant Distribution. In order to remedy the potential consequences of the Relevant Distribution having been made otherwise than in accordance with the Act, and to put all potentially affected parties so far as possible in the position in which they were always intended to be had the Relevant Distribution been made in accordance with the requirements of the Act, the Company is proposing resolution 18. If passed, the effect of the resolution 18 will be to: • ratify the Relevant Distribution and confirm the appropriation of the profits of the Company in the relevant financial year for the purposes of the Relevant Distribution; • waive any and all claims which the Company has or may have in respect of the payment of the Relevant Distribution against its recipient shareholders (or the personal representatives and their successors in title of the estate of any deceased recipient shareholders), such waiver to be effected by way of the entry by the Company into the Shareholders’ Deed of Release; and • waive any and all claims which the Company may have against its Directors (save for David Lapp, who joined the Board after the payment of the Relevant Distribution) and Former Directors, such waiver to be effected by way of the entry by the Company into the Directors’ Deed of Release. The approach that the Company is proposing by way of the resolution is consistent with the approach taken by other UK incorporated companies whose shares are admitted to a market of the London Stock Exchange and that have, similarly, made corporate distributions otherwise than in accordance with the Act. It should be noted that the entry into the Directors’ Deed of Release constitutes a related party transaction for the purposes of the AIM Rules for Companies. In addition, the entry into the Shareholders’ Deed of Release constitutes a related party transaction in relation to any significant shareholders of the Company (as defined in the AIM Rules). In accordance with the AIM Rules for Companies, David Lapp (being the only current director of the Company who was not on the board at the time of payment of the Relevant Distribution) considers, having consulted with the Company’s nominated adviser, Investec Bank plc, that the entry into the Directors’ Deed of Release is fair and reasonable insofar as the Company’s shareholders are concerned. In accordance with the AIM Rules for Companies, David Lapp and Clare Swindell (being the current directors of the Company who are not shareholders) consider, having consulted with the Company’s nominated adviser, Investec Bank plc, that the entry into the Shareholders’ Deed of Release is fair and reasonable insofar as the Company’s shareholders are concerned. Overview Strategic Report Governance Financial Statements 157 Registered and Head Office 186–188 Shepherds Bush Road London, W6 7NL Company Website www.fever-tree.com