Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Campari Group Full Year 2020 Results Presentation conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing Star and Zero on their telephone. At this time, I would like to turn the conference over to Mr. Bob Kunze-Concewitz, CEO of the Campari Group. Please go ahead, sir. Thank you very much. Good afternoon to all, and welcome to our call. Thanks for joining us. I hope you've all been well in these past few months. Clearly, this has been an interesting year. I think it's probably been the most intense and challenging for this generation of managers. Before jumping into the numbers, I'd like to focus at the beginning on more qualitative measures. All of those, I think, if we were to sum up the year, is that despite the very challenging year, we've continued with the consistent execution of our long-term growth strategy. We've continued strongly focused on brand building. We've increased the focus significantly and had a huge step up in digital marketing, as well as off-premise brand building, and have driven home consumption occasions to really the next level, helping fuel double-digit off-premise sell-out growth indicators across all of our key brand market combinations. We've also been able to proceed with selected innovation rollouts. We've elevated Appleton Estate image via super premium packaging and also a price repositioning. We've had new releases of Wild Turkey Premium series, as well as rolled out the new look and feel, as well as packaging of Crodino across international markets. We strengthened business infrastructure and commercial capabilities. Particularly, we've really developed the digital capabilities across the organization via accelerated programs in digital transformation throughout the company, as well as made a big step forward in e-commerce, and we'll go through those details later on. We've established a direct commercial presence in the strategic French market, which is very clearly one of our top five markets with a lot of potential. We've enhanced focus on Asia, which to a certain extent has been our Achilles' heel. We've relocated the APAC regional headquarters to Singapore. We set up a joint venture in Japan, as well as endeavored in other route-to-market initiatives, which kicked in at the beginning of this year. Last but not least, we went ahead with the restructuring of the sugar business in Jamaica, which was quite the bleeder in previous years. We've confirmed M&A as a business priority. We've acquired Rothschild France Distribution, Champagne Lallier, as well as a minority stake in Tannico, which is the leading e-commerce platform for premium wines and spirits in Italy. Last but not least, we've completed the company's redom to the Netherlands, enabling a capital structure which is much more supportive of our external growth strategy in the long run, as well as capable of rewarding long-term oriented shareholders. We've maintained and built on our solid financial profile. We successfully issued a seven-year EUR bond for EUR 550 million at very attractive coupon. That enabled us to extend quite a bit the overall debt maturity profile. Last but not least, we continued despite the financial difficulties, with our focus on people and community. The safety and wellbeing of Campari's worldwide has been a top priority for us, and we're happy to say that we've operated at probably more than 100% capability throughout the pandemic. We've really kept the cases to a minimum and had not any losses. We've had also significant initiatives supporting our local communities and business partners, and that has been very consistent with our sustainability agenda. Now, moving on to the numbers on page number five and the review of our net sales. Clearly, what you see is that our core brand health remains very strong, and it is confirmed by the very strong and resilient home consumption trends. If we start with net sales, overall on an organic basis, they've had only a decline of 4.1%, which is probably best in class in the industry, with our Q4 unfortunately down 7%, largely due to the impact of the renewed lockdowns, as well as the severe restrictive measures affecting key on-premise markets, as well as global travel retail. On a full year basis, continued sustained growth in the off-premise food markets, and really sustained growth in the U.S., Canada, Australia, and Northern Europe helped mitigate weakness in on-premise led markets, mainly Italy, as we'll see throughout the presentation. On a geographic basis, resilient growth in core off-premise markets. As I said earlier, the U.S. was up 3.4% despite the destocking effect. Actually, if we look at our depletion numbers, they were up by 9.1%, so that's the underlying trend of our U.S. business. That would have led to an overall group net sales performance of -2.5%. Germany was up a strong 8.6%. Canada, double digit, 12.5%. Australia as well, 20.2%. These were unfortunately more than offset by the weakness in on-premise markets like Italy, which is our second largest market, and which was down 17.4%. South America as well as GTR contributed to the decline. Q4 was weak. That was mainly driven by Southern Europe, Middle East, and Africa, driven by Italy as well as North, Central, Eastern Europe, which were impacted by the restrictions reintroduced in the on-premise, as well as the less pronounced staycation effect compared to the summer, given that our aperitifs have a lower seasonality in Q4, obviously, the lack of winter tourism as well as the pipeline loading effects, which we normally have. With that not happening, it's also impacted quite a few markets. Looking at it by brand, our global priorities declined by 3.8%. This despite quite the positive performance from Wild Turkey as well as our Jamaican rum portfolio. It was driven by the on-premise skewed brands, mostly our aperitifs, and impacted by the restrictions throughout the year across markets, which were amplified by opening and closing the renewed lockdowns, which created quite a bit of uncertainty for our customers. Obviously, the USD stocking had quite an impact, mostly on SKYY Vodka as well as European imports. Aperol was flattish. It would have grown 11% if we exclude Italy and GTR, and much more if we exclude Spain as well. Regional priorities were flattish overall, but here clearly there's one very strongly growing brand, Espolòn, up 29.9%, which helped to compensate weakness across the rest of the portfolio. Local priorities were down 4.4%, largely due to the Italian on-premise skewed single serve aperitifs, Campari Soda, and Crodino. Meanwhile, sellout trends in the off-premise continued to outperform shipments across all of our key brand market combinations. On a reported basis, our net sales came in at -3.8%. This reflects a positive perimeter effect of 3%, as well as a negative ForEx effect of 2.7%. Moving on to EBIT. On an adjusted basis, organic EBIT declined by 20.4%, which amounts to 380 basis points margin dilution, driven by the negative sales mix by brand and market, sustained A&P investments, as well as the lower absorption of fixed costs given the top line decline. On a reported basis, EBIT declined by 40%. This reflects negative operating adjustments of EUR 90.1 million, which are mostly brand impairment losses, restructuring costs, as well as transaction fees. Net profit on an adjusted basis came in at EUR 200.2 million, down 24.4%. Group net profit reported came in at EUR 187.9 million, down 39.1%, after total adjustments of EUR -14.2 million. Clearly, there are items compensating the EUR 90.1 million negative operating adjustments. Free cash flow was pretty good. It came in at EUR 168.6 million. Recurrent free cash flow was a strong EUR 261.7 million or 65.4% of adjusted EBITDA, up from 55.7% in 2019. It must be said, though, that this was also helped by a temporary working capital reduction at year-end due to the phasing effects generated by the renewed restrictions impacting business performance. Net financial debt came in at EUR 1,103.8 million, so up by EUR 326.4 million versus year ago, as the very good cash flow generation was absorbed by the M&A activities as well as financial commitments, particularly the share buyback and the dividend payment, which amounted to an overall amount of EUR 519.2 million. This leads us to a net debt to EBITDA adjusted ratio of 2.8 x at the end of 2020. Having said all of this, we feel the company is in very solid state. Our brands are very healthy, and we are proposing to maintain the full year dividend unchanged at EUR 0.055 per share. Moving on to page number seven. I am not going to spend much time there. What you see on the left-hand side is that practically, with the exception of Southern Europe, Middle East, and Africa, all of our regions had a pretty decent year given the circumstances. Whereas Southern Europe, Middle East, and Africa, which was mostly prevalently on-premise markets, particularly Italy, obviously was impacted. You can see the impact of Italy on the different brand clusters given that Campari and Aperol in Italy impacted global priorities, Averna, the regionals, and Campari Soda, as well as Crodino, the local priorities. More important than that, I think it is key to focus on the underlying trend and on the brand health across our portfolio. On chart number eight, what you see, the really very strong off-premise sellout trends in our key brand market combinations. Actually, we took market share. We grew faster than our reference markets across all of our subsidiaries and took market share. Top left, you see in the U.S., we grew significantly faster than the market, and there's been also quite a divergent view between the growth of our off-premise sellout data, which is in dark blue versus our shipments, which are in yellow. You see pretty much the same pattern in Germany, in Italy, in the U.K., and we could have added many more pages, but it's quite quickly the same. Our brands are taking share, are doing very well, and clearly there's also been de-stocking at the retail level as retailers have used the opportunity to drive down stocks. The other element which I would like to stress is really the big step forward we've done in e-commerce. We built in all of our key markets, dedicated teams already in the month of March, and put dedicated resources against that. We've had significant growth. Campari U.S. grew its e-commerce by fivefold. We had the CEO of Drizly at our convention, U.S. convention last week, and he was mentioning that on a full year basis, Drizly grew by 325%, whereas Campari grew by 500%. Actually, we were the second fastest growing company in e-commerce in the spirits industry in the U.S. last year. In terms of ranking, we definitely played way above our weight, coming in as a fifth player on a value basis and sixth on a volume basis. Interestingly enough, if you look at the top 30 brands in e-commerce in the U.S., we are able to field four brands. We're the second supplier after the industry leader. In the U.K. as well, in the U.K. currently, e-commerce accounts for 10% of our sales, so that's quite significant. We've seen triple digit growth rates across our brands and across our e-commerce customers. Again, clearly we've been one of the winners. Moving on to page number 16. The only two things I'd like to attract your attention to is clearly the impact the pandemic has had on GTR, which has gone from 2% of our sales to 0.5%, as well as on Italy, which has gone from 19.9% to 17.1%. Moving on to the following chart. I'm not going to go into the details, but it can be summarized by the fact that thanks to our very rapid pivot towards the off-premise, on a group level, our estimated share of the split between on-premise versus off-premise has moved from 40/60 to 30/70. We've really made the most out of the opportunity. Moving on to page number 12 in the Americas. We'll focus first on the U.S. You'll recall from previous charts that the overall positive shipment performance of 3.4%, and this despite the on-premise, being mostly shut. You know, for us, it represented a 30%, so a bit more than the market average. We've also had restrictions impacting, in particular, our European imports, Grand Marnier, Campari, Aperol, and the Italian Bitters, as well as an important de-stocking across the whole portfolio, which has now been fully completed. Our Italian portfolio of Aperitifs and Bitters were obviously also penalized by the import tariffs, which led to us increasing prices to partially compensate the tariffs. Importantly, excluding the de-stocking effect, the U.S.'s organic growth would have been 9.1% last year, which is best in class performance and one of the strongest we've had in many, many years. The good news is that the momentum is continuing. We've had a pretty good recovery in Q4, up by 13%, as due to the low stock levels, shipments and depletions and consumption had to start converging. We've had that circuit cloud, that realignment. Our Aperitifs also grew in Q4, thanks to that gradual catch-up. Continued very strong performance of Espolòn. Espolòn sell out in the off-premise was 88%, so really impactful. Happy to say that repositioning our Jamaican rums has been a success, as well as a continued premiumization of the Wild Turkey franchise. The higher margin Longbranch and Russell's Reserve grew much faster than the remainder of the franchise. SKYY continued to be affected by the de-stocking at the wholesaler level, but clearly that was also pushed by us, because, as we will present in a few charts, we are in the process of completely relaunching the whole franchise behind significantly improved positioning, packaging, as well as liquid and claims. Brand momentum, as I said, in the off-premise, continues to be very strong across our hotel portfolio. Our sell-out on an instant basis grew in value by 32.3% over the full year. This is actually one and a half times faster than the overall market. If we look at our own reference of 10 competitors, we were the fastest growing one. We've had sell-off in the off-premise, actually double-digit across core brands, as well as the newly acquired Mexican jewels, Ancho Reyes, and Montelobos. A little bit earlier on, I referred to our very strong growth encompassing our e-commerce business, which now accounts for 3% of net sales. Moving on to the rest of the Americas on page number 13. You see that Canada had a very strong year, up 12.5%. Resilient growth in a largely off-premise market driven by Forty Creek, which we've also been premiumizing, as well as the Jamaican rums and Grand Marnier, Aperol, Campari, and Espolòn. Actually, we could have grown faster on the aperitifs had it not been for out of stocks in Ontario, where the forecast done by our key customer there, as you know, it's a monopoly, weren't actually in line with consumer demand. Jamaica, unfortunately, was down by 8.2%. We've had this overall decline notwithstanding really good momentum behind Wray & Nephew White Overproof, as on-premise restrictions and a sharp reduction in touristic flows impacted the rest of the portfolio. Clearly, the tough comparison base, we were up close to 18% in the previous year, didn't help either. The rest of the region was down close to 19%, 18.7%. With the exception of Argentina, which on a real basis, so excluding inflationary effect, was up 4%, which is pretty amazing given the economic circumstances of the country. Moving on to Southern Europe, Middle East and Africa on page 14. As you can see, this is clearly where we have our largest pain point. The region was down 18.6%. Italy was down 17.4%. It has been a very volatile year. The market has quite an on-premise skew. Pre-COVID, 70% of consumption happened outside of home. Clearly, this opening and closing, not only had an impact on consumers, but also on the trade and their insecurity, especially at the wholesale level, from stocking up. When the market reopened in Q3, we had a very strong quarter. Clearly, there is a very strong demand by consumers for conviviality, a desire to go out and enjoy our brands again. Unfortunately, we had the opposite effect in Q4 as new restrictions came out, and we were down 32.6%. The entire portfolio declined, obviously, in these circumstances over the year, particularly Aperol, Campari, and our single serve aperitifs, Campari Soda and Crodino. The only brand which grew at a very strong, sustainable level, is actually a line extension, Aperol Spritz, which was up 36% or 38%, thanks to very strong performance in the off-premise. Talking about the off-premise, sell-out throughout our portfolio was quite strong in that channel. Both Aperol and Campari tracked above 25%. Soda and Aperol Spritz, as I said, were in strong double digits, even stronger. Excuse me one second. The rest of the geography of the business unit was down 22%, despite the fact that France grew double digit overall and had a strong Q4, up 9.6%. The strength is across the heroes in our portfolio there. We're very happy to have the highly performing French team on board. As I said at the beginning, this is going to be quite important for us in the years to come. GTR, unfortunately, was down almost 70%, 68.9%, and we expect this to remain highly challenged, clearly at least in the first half of this year. Spain as well was strongly hit, down 47.7% due to its on-premise skew. Within Africa, both Nigeria and South Africa declined. Obviously, South Africa more than Nigeria, as the restrictions were more severe there. Moving on to positive territory, North, Central, Eastern Europe on page number 15. Very healthy, very strong overall growth of 6.8%. Germany did very well. It was up 8.6%. Clearly very solid growth in a resilient off-premise market. We've had a slower growth path in Q4, obviously, as there was less of a staycation effort. Climatically, our portfolio is not the best here in that season. However, overall, Aperol, Ouzo 12, Campari, Cinzano Vermouth, and Bulldog, were really able to offset declines in our specialty bitters and agency brands, which are on-premise skewed. If we look at the sell-out trends of our portfolio in the off-premise in Germany, we can see that we grew twice as fast as the market, so we continue taking significant share. As I mentioned earlier, Aperol grew by 30% and Campari by 15%. The U.K. had another strong year, up 7.4%, and this despite a weak Q4, where we're down by 20.4%. Now, this is largely due to a tough comp base. We were up by 68% in the same period last year, as well as significant promotional pressure from some leading players in that market. Key brands is Aperol, Campari, Wray & Nephew, Overproof, and Magnum Tonic grew by very strong double-digit rates. If you look at our sell-out trends, we were the second fastest growing company in the off-premise in the U.K. last year, growing by 38.4%, twice as fast as the local market. Also, we've been a top performer in the e-commerce channel, which has reached 10% of our sales by growing by 90% versus 2019. Russia also had a good year, double digit, 10.7% up. Overall positive performance across the portfolio with very good ones by Aperol, Mondoro, Cinzano Vermouth, Espolón, and Campari. Obviously, that helps the mix. The remainder of the region was only up 2.1%. We've had good growth in Switzerland and Belgium, as well as Eastern European markets, again, driven by the APATV. Clearly, Austria, which is very dependent on tourism influx, was impacted. Last region, Asia Pac, up 4.6%. Here it's a tale of two stories. On the one hand, Australia doing extremely well, growing 20.2%. Very positive performance in this off-premise skewed market. Importantly, the mix was also very good with Wild Turkey Ready to Drink, Wild Turkey Bourbon, American Honey, as well as our European imports doing extremely well. Sell-out trends in the off-premise remain strong. We were up 22.6%. We're continuing to see good momentum in that market. The rest of the region was actually impacted not only by the restrictions of the pandemic, but also by de-stocking ahead of route-to-market changes. This impacted Japan during the year, but towards the end of the year, China, where we'll be changing our distribution network on the 1st of March this year, as well as New Zealand. Moving on to page number 17, not much of a change. I think it's much more interesting to start focusing on the brands. Page 18, Aperol, our largest brand, flattish, 19% of our net sales. It was impacted by the weak results in our core on-premise skewed markets, which were impacted by the lockdown measures. Core Italian market, which accounts for 31% of the Aperol sales, Spain and GTR, had quite an impact. They offset very positive performances of France and Argentina. As I said earlier, if we exclude Italy and GTR, Aperol would have grown double digit. Also, what is very nice to see is that the brand is continuing to grow double digit in key off-premise markets, particularly Germany, up 31%, the U.S., 66.5%, and continued double digits in Russia, Switzerland, Russia, U.K. On the chart on the left, you can see really the big delta between sell-outs as well as the shipment value. What really encouraged us the most beyond the numbers is to see that there is unparalleled affection for our brand and its signature drink. Actually, Aperol Spritz is the most mentioned cocktail online worldwide in 2020. I think this is a great feat on which to build and continue growing the brand and recruit new consumers into the franchise going forward. Campari, 10% of group sales, down 4.5%, impacted similarly as Aperol. Clearly, Brazil and Jamaica also added to the mix. Again, though, very nice double-digit growth showing consumer love for the brand in the U.S., the U.K., France, and Australia, as well as Germany and Switzerland. Net in net, we feel very good about the momentum of Campari, as well as its signature drink, the Negroni. We'll continue with our edutainment efforts, which seem to be working very well, as well as our support of the arts, particularly film, which is doing quite a bit to build brand equity. Moving on to Wild Turkey, 8% of sales, up 4.9%. Actually, the underlying numbers are much better. Clearly, in the U.S., we've had a difference between consumption, depletions, and shipments. Last but not least, let's also not forget that Japan is the third largest market for this brand, so there was quite an impact from the de-stocking in that market. The premiumization of this brand is working. The Russell's Reserve and Longb ranch are growing at 50% clips in the off-premise, double as much as 101. We will continue with the premiumization of the brand, both via dedicated SKUs as well as the upgrading of the packaging of 101, which has tested extremely well and which will be launched in the second half of the year, and we will continue that. Moving on to SKYY. SKYY, our fourth largest brand, 7% of sales, down 16.2%. Heavily impacted by de-stocking in the U.S. As I mentioned earlier, we're going through right now a complete brand relaunch. You can see it summarized in the page. A big improvement and premiumization of the packaging, as well as fine-tuning of the liquid and a significant upgrading of the product claims, which we think will really help take the brand to the level it deserves. All of these elements have tested very well, and they've been very well received by our distribution network, and now step by step by the trade. We look forward to that. Grand Marnier down 15%, part of the European imports, which was obviously penalized. We have an overall negative shipment performance, which doesn't correspond to the depletions, which were positive, and consumption in the off-premise, which was quite positive. Grand Marnier grew by 38% on a full year basis in the off-premise in the U.S. As the brand was formerly very on-premise skewed, this practically means that we're doing quite a good job now recruiting new consumers into the franchise. Again, here, as in the case of Wild Turkey, we will continue with our premiumization journey. You can see below how the range is evolving. Last year, we launched the Cuvée Louis-Alexandre and Cuvée du Centenaire. This year, we will launch Grande Cuvée Révélation and Quintessence. The interesting thing is that prices go from Cordon Rouge at around EUR 40 to about EUR 1,200 on the Quintessence. They're not going to be huge volume, but they're going to be very high value and very profitable for us. The premiumization story continues with our Jamaican rums. Overall, very nice performance, up 5.2%. It was a big bet relaunching Appleton Estate behind the significantly improved range, as well as packaging behind a significant price increase across all markets. It's nice to see that actually the brand grew. The premiumization is also further strengthened by the limited edition we launched, that's this collection of single barrels, unfiltered from the years 1994, 1995, and 1999, selling at close to $500 range, and the whole collection actually was sold out in a few days' time. T o close off the focus on individual brands, we could only do it with Espolòn growing by close to 30%. Again, here, quite a difference between depletions as well as the consumption off-premise sell-out, and this brand skews more off-premise at this stage in the U.S., was up by 87.4%. It's also doing very well in many other markets. We expect this to become clearly one of our key drivers of growth for many years. Closing up with the rest of the regional brands, Bulldog was unfortunately impacted by core GTR in Spain. Despite very nice performances in Central Europe, the brand was down 11.6%. Glen Grant was impacted by GTR as well, mostly as we've premiumized the range and dedicated the SKUs to that channel. Forty Creek, on the other hand, responded very well to innovation and premiumization as well, growing double digits. Unfortunately, the bitters went the other way, as they're very much on-premise focused, both in Italy as well as mixology focused in the U.S. The Cinzano brand had a decent performance, a nice performance on the vermouth, which only declined by 4.8%, despite the fact that we've reformulated it and put a spirit-based formula, which required increasing pricing significantly. In that context, it's actually a very good result. The issue is more on the sparkling wines, which are mid-tier from a pricing perspective and suffering because of that. If you look at our higher price, Mondoro and Riccadonna, you'll see that we have a positive performance up by 5.3%. To close it up with the local priorities, as we said earlier, the Italian monodose aperitifs suffered. They're very much skewed to the on-premise. Despite international expansion, they were down double digits. On the other hand, our RTDs in Australia were up by a whopping 22.5%, double-digit growth as well on Żubrówka as on Cabo. For the first time, we're mentioning the brand X-Rated, which despite the closure of the high-energy outlets in Korea, worked extremely well, ended up in positive territory as consumers in China and the rest of Asia seem to be taking quite a strong liking to this brand. Let me continue on. Last but not least, some more examples of brand and global campaign rollouts, the much more premium Crodino packaging. With regards to the Appleton range, we removed the Appleton Special so that it's only Appleton Estate at the high end, and we've relaunched that line as Kingston 62. Very successful, looking at consumption data, the relaunch of Ayane in Italy and Central Europe behind the Open to City campaign. Very encouraging launch also of The Glen Grant Arboralis of Glen Grant, which over time will replace The Major's Reserve. Last but not least, we started rolling out Bisquit & Dubouché in international markets. This is it on the brand side. I pass it on to Paolo. Thank you, Bob. If you follow me to page 32, we have the analysis of the EBIT by region. Starting from the biggest region, the Americas. Net sales came in at EUR 733.9 million and EBIT at EUR 139.7 million. On a reported basis, including organic change, perimeter, and effects, the top line declined by 500% in value and the EBIT by 18.5%. Focusing on the organic performance, EBIT adjusted organically declined in value by 21.6% with 4.2% dilution. If we stripped out the effect of the U.S. stocking, the decline in EBIT adjusted in value would account for 10.5% and the margin dilution for 250 basis points. At gross profit level, we had a decline in value of 9.3%, which was stronger than top line, leading to 450 basis points margin dilution, primarily driven by negative brand and channel mix in the largest market of Americas, the U.S. market, driven by basically three factors. The first one was the outperformance of the Espolón brand, whose margin continued to be dampened by dilated average purchase price. The second effect was the severe destocking in high margin brands, particularly SKYY Vodka and the European imports, Campari, Averna, and Drambuie, as well as a third effect, the negative impact from the U.S. tariffs. Looking at the A&P, the A&P decreased in value by 8.3%, more than the top line, leading to 150 basis points margin accretion, driven by a combined effect of cost mitigation initiatives, some shifts of investment from offline to the less expensive online, as well as a different phasing for key global priorities, namely SKYY Vodka, ahead of the complete brand relaunch, which will occur in 2021. The SG&A had a slight increase in value by 3.5%, but given the top-line decline, drove a margin dilution of 100 basis points, and that was totally attributable to lower absorption of fee structure cost. If you move on to page 33, on the EMEA region, net sales came in at EUR 463.6 million, EBIT EUR 32.5 million. On a reported basis, the decline accounted for 7% in net sales and 63.2% in EBIT. Organically, EBIT adjusted show a strong organic decline, 58.8% in value. To the right-hand side, you can see 870 basis point margin dilution. It was clearly heavily impacted the region by COVID in the high margin aperitif business in the biggest market, Italy. Gross profit level, the decline in value organically accounted for 20.1%, stronger than top line, leading to 130 basis point margin dilution due, as said, to unfavorable sales mix driven by the on-premise closure, hitting in particular the high margin aperitif business in Italy, combined with a lower absorption of fixed production cost. In the region, the A&P in value was broadly stable, up 0.4%, driving further 420 basis point margin dilution and reflecting the sustained marketing investments behind key brands. Key initiatives were the Venice International Film Festival, which was sponsored by Aperol, and the Averna new campaign launch, which occurred at the back end of last year and drove an uplift in A&P spend in the second part of the year. SG&A decreased in value by 10.1%, but remained significantly dilutive, 330 basis points, as a consequence of lower absorption of fee structure cost given the strong top-line decline. That effect was partly mitigated by certain cost containment actions, which were basically aiming at reducing as much as recoup variable costing, particularly travel expenses, the company hiring freeze, and also these bonuses had a positive impact on the SG&A trend. With regards to page 34, Northern and Central Eastern Europe, on a reported basis, net sales came in at EUR 403.7 million, EBIT EUR 133.2 million. Reported change, an increase in top line of 2.5% and an increase in bottom line of 0.3%. Organically, EBIT adjusted grew by 3.2% in value, lower than sales, leading still to some margin dilution accounting for 110 basis points. The gross profit level in value increase accounted for 5.4%, generating 80 basis points dilution, which was driven by unfavorable geographic sales mix, particularly worthwhile calling out the outperformance of the Russian market, which is very dilutive to the regional and to the group margin. A&P increased by 10% in value, leading to 40 basis points dilution, with sustained marketing investments behind key brands. Those investments accelerated in the second half of the year as happened in the EMEA region. The SG&A increased 6.1% in value, slightly lower than net sales, generating 10 basis points accretion. Moving on to the fourth and last region, APAC, page 35, net sales came in at EUR 130.8 million, EBIT EUR 16.5 million. On a reported basis, top line increased by 1.8% and bottom line by 5.8%. Organically, EBIT adjusted grew by 9.1%— faster than the top line— generating 50 basis points accretion at EBIT level. Gross profit in value was up 5.1%, ahead of sales, driving 20 basis points accretion. That was driven by favorable sales mix with improved profitability on local priorities in Australia, namely Wild Turkey Ready- to- Drink. A&P was slightly up in value, up 1.5%, generating 40 basis point margin accretion. SG&A increase in value in APAC by 5.1%, driving a dilution of 10 basis point that is attributable to one end, the new route- to- market initiatives, and on the other end, to the transfer of the regional offices from Sydney to Singapore. If you move on to page 37, we have the analysis of the EBIT adjusted. Here we have a very interesting waterfall chart where we basically go to the root causes of the EBIT decline from 2019, EUR 408 million to the 2020 EBIT of EUR 321.9 million. The key driving factors, as you can see, of the decline were first and foremost, agave, which had a negative impact in value of EUR 6 million. Clearly the U.S. tariffs, which accounted for a negative EUR 19 million. That negative effect was partly offset by the price increase that we took in the U.S. market, which generated an EBIT uplift of EUR 12 million. The net effect of the tariff was EUR 7 million negative. The stocking, which in the U.S. accounted for EUR 13 million top line and EUR 19 million in bottom line that you see here. Then we have the proper gross profit decline, excluding those external factors which accounted for EUR 63.4 million, driving a net 130 basis point EBIT margin decline. We then had some tailwinds in A&P and SG&A for EUR 6.9 and EUR 5.4 million respectively, and then an aggregate negative effect of FX and perimeter accounting for EUR 3.1 million in value and 20 basis point in margins. If you move on to page 38, EBIT adjusted. Gross profit on a reported basis was down 8.5% in value, with 300 basis point dilution. Organically, the gross profit decline accounted for 8.5% in value, leading to 280 basis point margin dilution. We saw with the effect that we've already mentioned, first and foremost, the unfavorable sales mix driven by the over-performance of lower margin Espolòn, the underperformance of the high margin aperitif portfolio in core Italian market, the de-stocking in the U.S. market. Again, of course, the impact of tariffs as well as the effects of the lower absorption of fixed production cost. A&P on a reported basis was down 3.1% in value, 10 basis point dilution. Organically, the decline in A&P accounted for 2.2% in value with 30 basis point dilution. The SG&A on a reported basis were up basically 0.2% in value, or flat, with 90 basis point dilution. Organically, we had a decline in value of the SG&A line by 1.4%, with 60 basis point dilution as a consequence of lower absorption of fixed structural cost, and notwithstanding the cost containment measures that have been taken. EBIT adjusted on a reported basis was down 21.1% in value with 400 basis point dilution. Organically, EBIT adjusted was down 20.4% in value with 380 basis point margin dilution. Excluding the effect of the U.S. de-stocking, it clearly is not a recurring effect. The EBIT adjusted on an organic basis would have declined by 15.7% in value with 300 basis point margin dilution. If you move on to page 39, we have the analysis of operating adjustments previously called one-offs. They totaled EUR 90.1 million, of which EUR 35.4 million attributable to brand impairment losses non-cash, EUR 16 million on Bulldog, EUR 15.5 million on Glen Grant, and EUR 3.9 million on rhum agricole as a consequence of the negative impact of COVID-19 on those brands' performance. Clearly those brands are particularly skewed towards GTR and on trade channels, which were impacted the most. We had a EUR 15.9 million in transaction fees connected to the transfer of the registered office to the Netherlands, EUR 9.9 million, as well as transaction fees linked to the new route to market initiatives as well as M&A initiatives totaling EUR 6 million. We have EUR 21.4 million of restructuring costs. The biggest component is the restructuring of the Jamaican sugar business, which accounted for EUR 13.5 million. We had a multitude of other smaller reorganization activities, both at central level as well as in the market, accounting in total for EUR 7.9 million. In closing, we have EUR 17.4 million of other costs related to donations made by the group to fight pandemic, some special projects, a few legal disputes, and also costs connected to the IT restoring operations following the malware attack in November. The last of the IT restoring accounted for just EUR 2 million. Page 40, profit before tax. Net financial charges came in at EUR 38.9 million, EUR 5.9 million higher than in 2019 due to a negative variance from FX. We incurred in EUR 4.1 million losses this year, whilst we benefited from EUR 2.8 million gain in 2019. If we excluded the negative variance on FX, the net financial charges showed a saving of EUR 1 million, despite the higher average net debt in 2020 versus 2019. That was due to a lower average cost of net debt. The average cost of debt is coming down from 4.1% to 3.5%. The decrease was due to the reduced average coupon on existing gross debt, thanks to the liability management transactions which were implemented last year, as well as thanks to the bond issue, EUR 500 million bond issue that was completed in October last year, which led to a decrease in the average cost of nominal coupon on bonds and long-term loans from 2.15% to 1.4%. The reduction of earnout liabilities draw a positive effect of EUR 18.1 million. The biggest chunk of it is the write off of the earnout on Bulldog acquisition, accounting for EUR 19.4 million. We have some small losses on JVs, EUR 2.8 million in Japan, which was negatively impacted by the lower absorption of fixed costs in a context of low sales level. Bottom line, profit before tax was down by 40.9%, achieving EUR 209.6 million. The PBT adjusted came in at EUR 278.9 million, down 24.7%. Group net profit adjusted the taxation total EUR 22.7 million on a reported basis. If we stripped out the positive tax adjustments, which totaled EUR 55.1 million, the recurring income taxes were equal to EUR 77.9 million. Worthwhile noting that the positive tax adjustment that I've mentioned— the EUR 55.1 million— include one-off benefit of EUR 29.9 million relating to the remeasurement of deferred tax liabilities, as a result of the step- up of the fiscal values of certain brands and goodwill to their corresponding book values. This is a very interesting new law in Italy, which we're now exploiting, which will drive some significant positive cash effect. It is a positive EUR 120 million cash effect in 18 years, which would reduce the recurring cash tax rate from 23.2% that you see here, in 2020 to a 22.2% in coming years. With deferred taxes on goodwill and trademark that you see here reported at EUR 13 million, they will grow to the level of EUR 19 million in coming years. After the expiry of the patent box that drove about EUR 100 million of cash savings, we have this new law, which will drive EUR 120 million in the coming 18 years. Page 43, we have the cash flow, the free cash flow analysis, and as always, cash is king. Free cash flow came in at EUR 168.6 million, down EUR 89.8 million. If you look at what is important, the recurring free cash flow, it came in at EUR 261.7 million, very much in line with 2019 at EUR 267.3 million. Against the odds, the free cash flow generation on a recurring basis was quite strong and unchanged. I will comment the recurring more than anything else. The key drivers of the free cash flow, recurring free cash flow performance, we have a decrease in the EBITDA adjusted that accounted for, as you can see to the right hand side, EUR 79.9 million from 2019, EBITDA adjusted of EUR 479.8 million to 2020, EBITDA adjusted of EUR 399.9 million. Clearly, the total EBITDA was negatively impacted by the already mentioned EUR 90 million operating adjustment. With regards to taxes, on a recurring basis, taxes paid came in at EUR 84.8 million, so probably unchanged versus last year, EUR 81.1 million. With regards to change in working capital, here, we find the offset to the EBITDA reduction, where in 2019, we had an increase in operating working capital that is negative in the cash flow for EUR 29.6 million, and this year, we had an operating working capital compression of EUR 43.4 million. We have a positive variance on the change in working capital of EUR 73 million. That basically leaves the cash flow from operating activities in 2020 to EUR 351.5 million versus EUR 756.3 million of 2019. Even there, at the level of cash flow from operating activities, we have very stable results. With regards to financial expenses, EUR 25.3 recurring million in 2020 versus EUR 27.9 million, so a tiny reduction. With regards to CapEx, in recurring, you see the maintenance CapEx that have remained almost unchanged, EUR 64.4 versus EUR 61. This is why we achieved a free cash flow on a recurring basis of EUR 261.7 million. Recurrent free cash flow on EBITDA adjusted clearly jumps up from 55.7% in 2019 to 65.4% in 2020. If we move on to page 44, the analysis of working capital. Overall, as we saw before, operating working capital decreased in value by EUR 64.9 million. If you look at the organic performance, the decline accounted for EUR 43.4 million, as we saw before in the cash flow. The increase in inventory accounted for EUR 47.7 million, with age in liquid step up of EUR 20.1 million, mostly linked to Glen Grant and Bisquit cognac maturing inventory uplift. The other inventory increased as a consequence of the weaker demand in the last quarter of 2020. Flip side of the coin, the business slowdown in Q4 drove a decrease in receivable of EUR 42 million. An increase in payable of EUR 49 million that is due to phasing. Operating working capital as a percentage of net sales came in at 34.8%, clearly down from 2019 by 200 basis points. Going forward, we're expecting that the level of 2019 that was 37.7% operating working capital, will not be the level for 2021. We believe more a 1% reduction at 36.7% is what we are currently envisaging for next year on working capital as a percentage of sales. If you follow me to page 45, we have the analysis of CapEx. They totaled EUR 79.8 million in 2020, of which EUR 64.6 million maintenance CapEx, basically in line with the guidance that you see to the left-hand side. Twice, we had EUR 15.1 million extraordinary CapEx versus guidance of EUR 30 million due to shift of certain projects into 2021. The new guidance for 2021 on CapEx is an overall amount of EUR 100 million, with maintenance CapEx broadly unchanged at EUR 60 million and an uplift in extraordinary CapEx at EUR 14 million due on one end to the carry forward effect of CapEx from 2020. On top of that, we had new investments on extra projects, including brand houses and a few other projects. If you move on to page 46, we have the analysis of net debt. Net indebtedness came in at EUR 1,103.8 million, up EUR 326.4 million over 2019. Positive free cash flow EUR 261 on a recurring basis, EUR 168.6 on a reported basis. We call out substantial payment commitment for an overall amount of EUR 459.1 million, of which EUR 125 million attributable to acquisition. We have EUR 62.9 million of dividends and EUR 271.2 million of purchase of own shares. This is a portion of the overall share buyback program that you may remember accounts for EUR 350 million. We still have EUR 80 million to buy in 2021. Worthwhile highlighting the fact that the amount of EUR 271.2 million does include the investments on the share buyback of withdrawn shares in the context of the re-domiciliation that accounted for EUR 64.7 million. I would like to call out footnote number four, where we're saying that considering the spot price per share at the back end of this year is EUR 9.34, we have a theoretical gain on the share buyback program at year-end of EUR 45.3 million that we recognize in equity and not in the P&L as it should be. Page 47, the debt maturity profile is sound and strong. We have long-term eurobond and term loan that account for the whole amount of the debt, EUR 1,150 million, with a very compelling nominal coupon, 1.32%, and a very good interest rate hedging with fixed interest rates accounting for 78% of the overall gross debt. Being quite busy on numbers, I will hand back to you. Yeah. Thanks, Paolo. I know most of your listeners are dying to ask their questions, I'd like to take some time to re-emphasize some key corporate initiatives which we'll be continuing this year, and then close up with the outlook. As we said at the beginning of this presentation, digital transformation has really become fundamental for us. We've made a big step forward last year, and we're going to continue driving that at speed this year. It's not going to be impacting only marketing and sales, but the whole company throughout all of the functions. We're going to drive this forward, clearly, we're also going to strengthen our security as well in a significant manner. Moving on to business development. We're continuing to focus on Asia. A quick update on the Aperol Micro Battles. The Micro Battles unfortunately started half a year later due to the lockdown of China in the first half of last year. They've given us quite a bit of satisfaction. We've had very good consumer and trade feedback from Western-style restaurants and bars, which could really end up being a meaningful volume on itself. Currently, we're also in field with Micro Battles in Asian socials, karaoke bars, et cetera. We're learning a lot on how best to position the brand and the drink in that channel. On the basis of that, we're going to have a scale-up of those tests in the first half of this year and then really go out into the market in the second half of next year. Encouraged by these very nice results and Chinese consumer and trade appeal for the brand, we've also decided to make a big change in our route to market. We've had a fantastic relationship with our previous distributor who are a class-act company, but we felt we needed much more feet on the ground and expertise in the on-premise to satisfy our ambition on Aperol and the rest of the portfolio. As of March 1st, the distribution and the trade marketing of our brands will move on to a company called Selfridge, which has been very successful with a few Western brands in recent years in the on-premise. That gets us quite excited. With regards to South Korea, we've anticipated the controlling interest in the joint venture. The team is a great team that will remain with us, but we've expanded our controlling interest to 51%, as that geography starts becoming more important for us. Last but not least, we'll be also moving part of our portfolio to a new distribution setup in New Zealand. In terms of major initiatives, we're really formalizing and becoming much more communicative with regards to our sustainability roadmap. Historically, Campari has always done the right thing from a sustainability perspective, but probably we aren't very good at communicating what we do, and certainly not doing it in an organized fashion. We're starting to do that both internally and externally, and the blocks which we identified are quite clear. It starts with people, which are our most important assets. You'll see we run regular internal surveys with A Great Place to Work, and you can see how we've been really improving our trust index over the years, as well as the overall rating. We've been gaining A Great Place to Work accolades in many markets. This fuels, obviously, a virtuous cycle as we keep on improving things going forward. Our commitment, with a big focus on a rollout this year, is on our inclusion, equity, and diversity program, which will make quite a difference, not that much from an operational standpoint, but I think it will really clarify the true culture within the company from a performance standpoint. We're driving forward our learning project, the Learning Distillery. This will become almost an in-house university for all Campari staff. We're also rolling out an employee share ownership plan, which will impact all Campari staff irrespective of the level and where they work. Clearly beyond those which were already heavily exposed to our LTI programs, now everybody else will be aligned, and that will reinforce even more, I think, our performance and meritocracy-based culture. In terms of responsible practices, this is probably one area where we've communicated on a regular basis in the past. We will continue doing that and take it to the next level. With regards to the environment, we're formally committing to significant reductions in greenhouse gas, water, and waste management between now and 2025. We aim to reduce greenhouse gas emissions by 20%, water use by 25%, and move on to a zero waste to landfill position by the end of 2025. On community, this again, is something which has been in the DNA of the company since its founding in 1860. We'll continue our culture and education program, as well as our charitable activities, which are significant. This brings us to our outlook. I think it can be summed up very simply by saying that looking forward, we have a cautious confidence in the short term and are quite optimistic about the buoyant long-term business momentum, fueled by very healthy brands and strong consumer pull. 2020 performance showed, we believe, very strong business resilience and brand momentum in key off-premise brand market combinations, clearly underlining consumers' loves for our brands and our cocktails. These trends are really sustained and continuing into this year. Looking into this year and beyond on an organic basis, as I said earlier, our brands are quite healthy and have a strong consumer pull. We feel good about that. On commenting, Vito, it is normal that we remain cautious, at least for the first half of the year, due to the uncertainty related to the ongoing restrictions as well as the vaccine rollout, particularly in Europe, and how that will be affecting the on-premise channel across our geographies as well as global travel retail. We have no doubt that the home consumption will remain very sustained, and we will fuel this by continuous marketing investments as well as initiatives. Our edutainment efforts and digital activities are really paying off. With regards to destocking activities, we are happy to say that we have completed them in the U.S., so our shipments are expected to progressively align with consumption trends. We will continue to leverage, if not take to the next level, all digital and online investments, which are again, being very rewarding for us. We will strengthen our online channel approach to sales. Net in net, we're adapting very well and very quickly to the new normal, particularly e-commerce, and we'll bear the benefits of that in the years to come. Lastly, we remain quite confident about the long-term consumption trends and growth opportunities, as well as the strength and resilience of our brands, especially in an environment where we believe that conviviality will make a big return once the large majority of populations have been vaccinated. The one call-out, though, is that with regards to perimeter and ForEx, we expect to be negatively impacted this year. The group's EBIT adjusted in 2021 will be impacted by a EUR 9 million hit on perimeter, mostly due to termination of agency brands, particularly one large agency in Germany, which will also enable us to concentrate much more on our own portfolio and brands. Lastly, a EUR 13 million hit in ForEx, mostly deriving from the weak U.S. dollar as well as some emerging market currencies. This is it on our side. I see there are a lot of questions. Let's open the session to your questions. Thank you. The first question is from Simon Hales with Citi. Please go ahead. Thank you. Good afternoon, everybody. Thanks, Bob. Thanks, Paolo. I've got three questions, please. Bob, could I just start and just pick up on your very final comments there around the perimeter impacts in 2021? Are you able to share a little bit more detail there? What's the top line impact, perhaps, of those changes as well as the EUR 9 million EBIT impacts? Are there other agency brands that you perhaps would be looking to exit relationships with in future, perhaps beyond 2021? That's the first question. Secondly, you obviously talked about the strong growth you're seeing in the e-commerce sort of business. I wonder if you could just comment a little bit about the margin structure of your different businesses and different markets that you're seeing there, and how does it really compare to the margins you enjoy in the more traditional trade channels? Thirdly, maybe one for Paolo around just the moving parts of the margin in 2021. I know a lot of it will be dependent on the speed of recovery in the top line, but when we think about some of the things that you can control, obviously the absence of USD Stock this year, how do we think about the right level of A&P spend? Any comments perhaps around agave and raw material cost there. Lots of questions. Thank you, Simon. It is always good to have them. Let me start with the first two. The perimeter impact from the discontinuation of the agency brands is EUR 33 million at the top line, EUR 9 million from the bottom line. Most of it is due to a very large agency which we have had for the past five, six years in Germany. It has been a very good partnership, but both sides decided it would be better to part ways because we, on one hand, want to really focus on the great opportunities we have across our extended portfolio. I think the other party wanted more focus. Net in net, I think this is going to really improve both our relationship with customers as well as the dedication we give to our complete portfolio, not just the activities in Germany. With regards to e-commerce, it's become quite important for us, and we'll be driving it forward, nicely going forward. Frankly, on a marginality and trading terms standpoint, there isn't much of a difference versus our existing off-premise customers. The only difference, though, I would say, is that the mix is actually richer because we tend to sell more premium brands there. Because of that, it tends to be slightly more profitable than our regular off-premise. Yes. With regards to the margin trends in 2021, clearly, Simon, as you correctly pointed out, there is a lot of volatility and many moving parts around, so it is very difficult to give at this stage a clear guidance. If we go back for a second on slide 37, where we have the waterfall showing the big effect. The first one, agave. Agave was a negative EUR 6 million last year. For 2021, we're not expecting any impact from agave. We're at the moment on wait and see, but our base case for the time being is neutral agave impact. Which means that if there will be any increase in agave, we will offset it via price increase, and potentially there might be some opportunities, but it's still neutral at this stage. With regards to the second building block of the waterfall, the U.S. tariffs, that's a big opportunity. It's a EUR 19 million opportunity. If the U.S. administration decided to discontinue tariff, clearly the price increase that accounted for EUR 12 million is destined to stay. This is an opportunity of EUR 19 million if and when. Sorry, going back to agave, we're expecting to be neutral, but we always remind investors that the overall negative effect of agave at year-end, if you look at agave price or what it should be in a normal market condition, the overall opportunity is EUR 13 million. It's the second big bucket of opportunity. With regards to de-stocking, clearly, we said market has been fully de-stocked. We're not expecting any restock at all, no positive. If anything, marginally positive, for sure, no negative effects. With regards to gross margin, then organically, we believe there are very good chances of achieving gross margin expansion next year. We will start recovering the loss of gross margin that we saw last year. With regards to A&P and SG&A, we're not expecting any meaningful impact, broadly in line with top line. That's the current stance. We'll be clearly more precise as the time goes by. Presumably H1 we'll be in a position of once we have at least a Q2 under our belts to give a guidance for the full year. Well, that's really helpful. Can I just check, Paolo, that you're still expecting about a EUR 6 million benefit in terms of the restructuring of the Jamaican sugar business this year? Yes. Thank you for reminding me that. Yes, confirmed. Perfect. That's great, guys. Thank you. The next question is from Mitch Collett with Deutsche Bank. Please go ahead. Good afternoon. I guess the first question I’d like to ask is on A&P, where you held the ratio broadly flat despite the on-trade clearly being very challenged. I guess that means you pivoted your investment towards the off-trade pretty quickly. Lots of other alcohol players have ended up reducing A&P due to the on-trade weakness. I’d love it if you could comment on how you were able to pivot that quickly. Secondly, on the SKYY brand relaunch, I guess you show in the slide how you’ve changed the bottle. I’d love to know broadly, what are you doing differently? How will the relaunch affect your pricing strategy, if at all? What would you see as a successful outcome of the relaunch of that brand? Thank you. Thanks for your questions. Yes, effectively, we've been very agile last year. When the first lockdown occurred, we pivoted within two weeks across the globe, across all of our brands. We've put a big focus on the off-trade, on e-commerce, and moved from offline marketing to digital marketing. This was centrally driven, and we very quickly developed new assets for all of the markets, and we've really benefited from that. At 17.5%, we've moved a lot of money from offline to online into edutainment efforts, into storytelling efforts in the e-commerce, into really creating almost on-premise opportunities in the consumer's home. It goes through all sorts of activities as well as events. The additional benefit though is that whereas we've maintained spending overall, the ROI we've got on the spending has been far, far superior. The efficiency, the targeting, and you see that in the acceleration and the big beat, which we've had in off-premise growth and taking market share versus competition. Moving on to SKYY. SKYY is a complete relaunch. You have a fine-tuned liquid, you have a completely new positioning, packaging. We're not going to touch pricing. Pricing is not really the area to go in U.S. vodka. Potentially, we'll be able to reduce, I think, promotionality. We'll have to see how it goes. We would look at improving size mix as well and sell more of the smaller sizes, which are more profitable. Success for us means starting to take market share in U.S. vodka. The tests were very positive across all the blocks. Obviously, the proof will be in the pudding. Understood. Thank you, Bob. The next question is from Laurence Whyatt with Barclays. Please go ahead. Afternoon. Thanks very much. Two questions from me. Firstly, on the slides, you focused a lot about how you've gained share and improved your performance in the off-trade. Given Campari's traditionally been quite an on-trade business, how much of that would you expect to maintain as we start to return to the on-trade, hopefully with the benefit of the vaccine? Do you see Campari in the future being more skewed towards the off-trade than it was pre-pandemic? Secondly, it's great to see that you're going to be disclosing more of your environmental credentials. Can I just ask a small one about your water usage? A lot of your competitors have got targets around where they use and return water in water-stressed areas. I was wondering, as well as the targets you have around water use, do you have any internal targets around returning water in water-stressed areas? Thank you. Yeah. Let me take the second one first. We have really the benefit of not having any plants in any water-stressed area, so that's why we haven't put any targets against that. All of our plants and distilleries are in areas where there's plenty of water. Obviously also there, clearly, we're releasing clean waters back into the system. We feel very good about that. Now, with regards to the off versus on debate, we estimate that throughout 2020, we had a 10% shift on a group level of our sales from the on-premise to the off-premise. We would expect that at least in the next two to three years, consumers will continue to consume quite a bit of spirits at home. Having gone through overcoming, let's say, their hang-ups with regards to producing high-quality cocktails at home, we think that that trend is here to stay, at least for the short to midterm, and we would expect to continue taking market share and growing over proportionally there. As we said, the off-premise, which is a combination of bricks-and-mortar as well as e-commerce— has really revealed itself as a very interesting channel to do brand building, and it's been very rewarding for us, and we'll continue doing that. We would expect that momentum to continue, and we look forward to when we'll be able to continue to start again to spoil cocktail lovers in the on-premise, because we see that every time that the on-premise opens, irrespective of the country, we've got a very big return to conviviality, which is on top of what is happening in the off-premise. Net in net, I think it's a good position to be in. That's great. Thank you very much. The next question is from Edward Mundy with Jefferies. Please go ahead. Afternoon, Bob. Afternoon, Paolo. Three brand questions, please. The first is on Aperol. You talked about unparalleled affection with incredibly strong off-trade growth in certain markets, Germany, U.S., Russia, Switzerland, and U.K. You also talked about creating this on-premise opportunity in consumers' homes. Do you have any sense as to whether the growth is from increased frequency of existing consumers, or have you been able to recruit new consumers into the brand franchise? The second one is on Espolòn as a brand. It's now 5% of net sales, just below Grand Marnier. I think you talked about some better performance in Canada, Russia, Australia. At what stage are you ready to move this from a regional priority to a global priority? Put another way, do you think you can leverage your distribution platform to grow tequila meaningfully outside of the U.S. into the rest of the world? The third is on Grand Marnier. As you've seen, cognacs had incredibly strong growth in the U.S. in 2020. Appreciate that it's been quite tricky getting momentum, given the destock in the U.S., as well as the brand is more exposed to the on-trade. To what extent do you think you can get consumers into the brand as a sort of orange-flavored cognac? Thanks, Ed. With regards to Aperol, safe to say that we've been able to actually attract new consumers into the franchise. The data is showing that, because what we've done is both in the regular off-premise as well as in the on-premise, we've offered them ready kits. You would have your Aperol with the prosecco as well as glasses, and made it as easy as possible for them, and very entertaining via edutainment efforts. They have paid off. We've received many compliments, particularly in the e-commerce arena, from our customers on that. We've done the same, to be honest, also on the Campari franchise, obviously at another rate. Aperol is responding very well to our digital efforts and our efforts to recreate, as much as possible, an experience for consumers back at home. With regards to Espolòn, I think we're very close to upgrading the brand into another cluster. It's a great brand that's resonating across all consumer segments in whichever country we go into. At this moment in time, we're trying to reserve as much volume as possible for the U.S., which is our number one priority. That might slow down some international rollouts. There is no question that this is going to become quite a meaningful brand for us, and that we believe there's an opportunity for tequila outside of the U.S., which doesn't necessarily have to grow through the margarita route. What we're really pushing internationally is the Paloma, which is Espolòn Blanco with grapefruit juice, and that's resonating very strongly. With regards to Grand Marnier, actually, if you consider that Grand Marnier in the U.S. was overly skewed to the on-premise, the fact that we were able to grow by 38% in the off-premise shows that we've been attracting new consumers into the franchise. That is also validated by the data we get. New consumers stuck at home wanting to have margaritas, and we've done a big margarita push. Again, here, we were able to create virtual kits around our brand, and offering ready-made solutions to the consumers have really brought younger consumers into the franchise. We look very forward to that. At the same time, what's going to be very important is also the premiumization we're growing through. That is a different, if you like, type of consumption of the brand. It's much more closer to cognac consumption. That seems to be resonating also very nicely. Great. Thanks very much. Thank you. The next question is from Andrea Pistacchi with Bank of America. Please go ahead. Hi, Bob. Hi, Paolo. I have three questions, please. The first one on Italy to understand a bit the situation there. Q4 was clearly impacted by the lockdowns. What is the situation with wholesaler stock levels in Italy? You referred, I think, to the fact that this year there wasn't a normal pipeline fill there. I know it's very early days now, but the restrictions have been eased in Italy a few weeks ago. Have you seen a clear improvement there? What do you think about Italy this year? I appreciate visibility is low. More broadly, on the on-trade, if you sort of think of your main markets now, a lot of accounts have obviously been hit hard by the situation. What percentage of on-trade do you think won't reopen, unfortunately, in your main markets? My last question, please, is on China. If I could just get a little bit more detail on some of the things you are saying on your plans for China. Based on what you've learned with your tests and with the Micro Battles, do you think the positioning of Aperol there in terms of price, in terms of where you serve it, will it be different from other markets? Also, could you give a sense of the breadth and the distribution reach that you'll be able to achieve with Tailfoot in terms of cities or feet on the ground or something like that? Hi, Andrea. Thank you. With regards to Italy, the situation in Italy is pretty simple. It's a little bit of a stop-and-go situation. The moment the regions turn into yellow and the on-premise is allowed to open during daytime, there's a huge boom. We also own outlets. We see people queuing up to get in there. There's a very strong demand for conviviality and the ability to sit around a table and sip an Aperol Spritz or a Negroni or an Americano. The pent-up demand is there. Currently, we're in a positive phase. Frankly, we really don't have any visibility as to what's going to happen in the next six months. As you know, in continental Europe, we're behind the U.K. with regards to the rollout of the vaccines. We'll have to wait and see when the opening of the markets become permanent. If they do, we know that we're going to have a very nice boost. Let's keep our fingers crossed. With regards to wholesalers and as well as the on-premise outlets. With this stop-and-go situation, they've been very careful as to not build any stocks. It really is, at times, touch-and-go situations. We've come into very low stocks in the wholesale segment globally, but particularly also in Western Europe. If the markets open, let's see what happens. It certainly will have an impact on our supply chain, but we're ready for that. Now, I don't have any precise data on the percentage of on-trade which will not reopen or hasn't reopened, but I would estimate, depending on the market, it's going to be anywhere between 10%-25%. This is also what I'm hearing from our key distributors as well as the key wholesalers. In terms of learning in China, the good thing is that we found out that actually the global Aperol model works 80/20 in China. The drink doesn't have to be changed. It is the Aperol Spritz with our proportions. In Western-style restaurants and in bars, it is a signature serve in the wine glass, and with training, we see that the staff is able to deliver the right drink. The pricing is slightly more premium versus beer than what we would have in other markets. If you look at just that opportunity, somewhere in three to five years, we believe we can have a business as big as the ones we have in France, and this is only in that limited channel. The big difference is going to be cracking the Chinese on-premise outlets, particularly the informal restaurants, the so-called Asian socials, the karaoke places. There, it seems as if the ready-to-drink proposition is more meaningful, works a lot easier, and we can deliver a much better drink. We're still going through that, but it shows us a potential in that area. It takes a lot more explanation to do to the end consumer. Again, with our new partner, which has about, I would say, close to 10 times as many feet on the ground as our previous partner in the on-premise, and particularly very targeted into both the western part of the market as well as the modern Chinese, I think that will do us a lot of good. We've kicked off of the training already a month before. They're ready in the starting blocks as of the month of March. As I said, we'll use the first half of the year to scale up the tests we've done last year, and then roll out in key cities in a broader way in the second half of the year. Thank you. Thank you. The next question is from Trevor Stirling with Bernstein. Please go ahead. Hi, Bob and Paolo. I guess most of the questions have been answered. One question, Bob, coming back to the U.S. reopening. The spirits category has been a big beneficiary of COVID-19 in terms of the increased penetration at home. When you're seeing states like, let's say, Florida and Texas, which have started to reopen earlier than others, are you seeing people bringing those habits with them back to the on-trade? That's a very good question, Trevor. What we're seeing is that currently, this in-home consumption seems to be building momentum. Also in states which are opening, because I think to a large extent, climatically, in quite a few states, if you take Texas, it's probably not the best time to go outdoors. At the same time, consumers have grown confidence. They think that they get more out of their dollar in home consumption, and we're seeing that penetration grow. With the arrival of e-commerce, they're much more of an exploratory mode. It is much easier to explore the virtual aisle, which is also richer in terms of experience because there's a lot of storytelling and entertainment happening there, which then gives them the incentive to be a little bit more courageous and try new things. We would expect that trend to continue for a while. I guess a follow-up combined with something you said earlier, it sounds as if you're definitely re-examining your model about how to build Aperol for the off-trade to have a much bigger role in that. Yes, definitely. The Aperol model has been built on the on-premise. We've been very successful on that, now that we're seeing that we're also successful with the off-premise, clearly, this brings us to modify our approach in many markets. Great. Thank you very much, Bob. Thank you. The next question is from Quentin Ryan with J.P. Morgan. Please go ahead. Good afternoon, Bob. Good afternoon, Paolo. Just two questions from me, please, and then just one clarification. Firstly, could you give us some update on the impact of the IT systems due to the malware attack? Recall back in autumn, it seemed to be quite dramatic situation. Not to have quite a small charge in P&L from that, are you sort of rethinking your approach towards your sort of digital infrastructure now to investments, just allied with, are you talking about the gains in e-commerce? Secondly, just could you clarify the impact on the tax rates? Appreciate the new recognition of goodwill. You said it's going to have a lower impact in terms of the cash tax rates going forward, just in terms of the adjusted tax rate in the P&L, is that still going to be around the sort of 27%, 28%? Finally, I think just going back to the point of around the Paloma occasion for the Aperol brand, do you have any particular partners for that? Particularly thinking of some U.K.-listed mixers company who made a big push on that grapefruit soda with Paloma occasions. Do you think you can push that yourself, or would you be looking to partner with other sort of soft drink brands to help that expansion? Thank you. I'll take that last question. With regards to the Paloma, we work with different partners in different markets, including that U.K.-listed company, so we're pretty agnostic there. We believe that the focus needs to be more on the tequila than on the type of soft drink you're using. Okay. With regards to your first question, the impact on IT from the malware attack, all systems have been fully restored. We're back to normality since the beginning of January, basically we had to suffer a little bit for a couple of months. Yeah, costs are, I would say, contained, couple of million EUR, not more than that. With regards to envisaged future costs, we have a plan of further lifting our cybersecurity measures and the cost of that plan is, as well as the investments that will be made to support the digital transformation, are fully reflected in our CapEx guidance, as well as clearly in the OpEx, where we do not have a guidance, but still, there is nothing that will be seen as a bad surprise going forward from a CapEx and OpEx perspective. I think it was quite a tough period of time for us, but I think we're definitely touching wood out of it. With regards to the second question that is the tax rate impact, basically, just to give you a little bit of color. Basically, in Italy, the government allowed Italian corporates to realign to their book value, the fiscal values of intangibles, both trademarks and goodwill. Basically, being a key tax contributor in Italy, we have strong interest in exploiting that opportunity. Basically what happens, we will pay a 3% tax to uplift the fiscal value of the intangibles. The cost of that tax is about EUR 15 million. In doing so, we would achieve tax savings over the 18-year horizon of EUR 135 million. Which means that we have a net positive effect of about EUR 120 million. How does that reflect into our P&L and cash flows? You have a cash flow compression of about EUR 6 million from 2021 onwards. Sorry, cash flow compression. I said cash flow increase of EUR 6 million per annum from 2021 onwards, corresponding to the total amount of EUR 120 million. This is to say that, in the P&L, on the contrary, that the tax saving is then offset by the accrual of deferred taxes on goodwill and trademark amortization, the other EUR 6 million that I'm mentioning. In that sense, the recurring effective tax rate will stay unchanged at the current level of 27.9%, whilst what really matters is the recurring cash tax rate will drop from 23.2% to 22.2%, 1% below the current level, with positive effect on cash flow of EUR 6 million. Perfect. Thanks for the extra explanation. You're welcome. The next question is from Robert Samson with UBS. Please go ahead. Thank you very much for taking my questions. My first question is on the U.S. Could you tell us what your depletions were in Q4? I'm trying to understand how much of that 13% was related to inventories. I'll ask my next questions after. Yeah. Basically, our depletions in Q4 more or less reflected the shipments. They were, depending on the brand, either slightly above or slightly below, but no big change. Super. Thank you very much. On China, just a couple of points of clarification. You mentioned you'll go national in the market in the second half of next year. Do you mean 2H 2022? When you say the size of France, do you mean Aperol in France or the whole of France? No, I meant, first of all, the Aperol brand in France. I talk about three to five years' time. The second factor is when we're going national. National means going to a half a dozen large cities. China is absolutely huge. We want to focus on tier one cities first. That will start happening in the second half of 2021. Great. Thank you. Sorry, final question from me. Just on the inventory destocking shifting flag in Western Europe, and I presume mostly Southern Europe. Can you give us anything to help us get a sense of the scale? I don't know how many inventory days these wholesalers normally run at, but if you can give us a sense of what they're currently running at, just to help quantify that would be great. Thank you. Unfortunately, Southern Europe is not as data-driven as the U.S., we don't have that punctual data. Clearly we see it from the moment the markets reopen, and we go into a yellow zone, for instance, there are big orders coming in. That means that they're not sitting on any stock. At the same time, we're seeing also a very divergent, let's say, performance between sellout in the off-premise and sell-in in the off-premise. Again, their key customers are lagging behind the true trend of our brands, and this throughout continental Europe. Great. Thank you very much. Thank you. The next question is from Alessandro Tortora with Mediobanca. Please go ahead. Yes, hi. Good morning to everybody. I have two, let's say, quick follow-up. The first one is on the A&P of G&A on sales trend you expect for this year. What I would like to understand is if there is any specific assumption behind, because considering, let's say, the increasing exposure to online versus offline, I would have, let's say, thought some improvement on margin, considering the A&P on sales. Also on the G&A side, if there is, considering let's say the step up from the introduction you made last year, if there is again some specific investments at P&L level you are doing keeping the same level of fees. Yeah, I'll take the A&P question. Yes, clearly it is much more efficient and efficacious to go the digital route versus online versus offline. Looking forward, we would see our A&P unchanged as a percentage of sales at around 17.5%, which means that all the efficiency is reinvested to accelerate the momentum of our brands. Yeah. With regards to the G&A as a percentage of sales, again, at this stage, we believe that G&A of sales will remain broadly flat in 2021. With regards to new go-to-market initiatives, we do not envisage any meaningful difference in G&A as a percentage of sales. Clearly, what can make a difference is a potential M&A deal, but that would be in any case recognized as a separate component in the perimeter. In the organic performance of G&A, its growth trajectory would stay in line with top line. Okay. Sorry, I forgot, let's say, the question on, let's say, the mix and the shift on brands you're seeing here. Is it possible to have an idea of the impact at gross margin level of this, let's say, 10% shift at group level you experienced in terms of gross margin reduction? We would expect it to be roughly neutral. Okay. Thanks. The next question is from Paola Carboni with EQUITA SIM. Please go ahead. Yes. Hi. Good afternoon, everybody. Paola. Hi. A follow-up from just the previous question, which were a bit similar, but I wanted to have a bit more of colors on the go-to-market initiatives that you have mentioned are going to kick in at the beginning of 2021. Regarding the channel mix, I was wondering if you can elaborate on the channel mix which would probably be needed to reabsorb the 130 basis points drift in gross margin we had in 2020, to the extent that it is possible to have this kind of connection, let's say. A very last question is about non-recurring items, if you have already any projection for 2021 of any one-off element which could be reported below the EBIT line. Thank you, Paola. I'll take the first question. Go-to-market changes, obviously with our entry from Asia, quite a bit is changing there. Last year, you know that we kicked off our joint venture, which really started trading in September. We stocked the previous distributor and are gradually resuming normal trading there. There was an impact of that destocking. In anticipation of the move in China, we also did the same thing there. We will start trading with the new distributor. When I'm saying trading, they will start trading because obviously we've been shipping inventory to them, and they'll start trading on our behalf on March 1st. Okay. With regards to your sec- Not so much for. Sorry, we can't hear you, Paola. Hello? Yeah. Sorry. Have you heard my question by chance? I am sorry. I had a problem with my headphone. I was wondering, when you talk about new go-to-market initiatives, you were referring about these external distributors here and there? One part of our portfolio will be changing distribution in New Zealand, but it's not going to be material on the Group. Okay. Nothing regarding your direct distribution? No. Okay. Thanks. With regards, Paola, to your second question that is around the gross margin trend and the mix, you said channel mix. For us, we are more exposed to sales mix in brands and geographies than channel, as we said before. As you know, the on-off trade% is not moving the needle. The key driving factors, if we excluded all the other one-offs of agave, tariff, and whatever, just driving factors of margin dilution last year were the outperformance of Espolòn that is diluted due to the current level of the agave price. This is destined to stay next year because we are very positive with the brand. It has very strong momentum. Also, the category is growing. We think, this is a trend that is destined to stay in 2021. Potentially there is an opportunity, as said before, going forward, the EUR 30 million recovery in profitability on the Espolòn brand as the agave price will decline. We have two factors that are potentially a positive in terms of mix. That is, if at last year we had very strong underperformance of the aperitif business, particularly in Italy, where we had huge on-trade consumption. This is potentially a positive for next year. We all know that our aperitif portfolio is driving gross margin accretion. The second factor is the de-stocking in the U.S. that accounted for EUR 19 million. As said, next year, we're not expecting that to repeat again. We have tariffs is a question mark and lower absorption on fixed costs. I believe, next year, we will see some positive operational leverage in fixed costs versus 2020 because volumes will grow definitely versus last year, and this is a positive. In essence, the three drivers of mix improvement next year is the non-recurring effect of de-stocking, a better performance on aperitif, and positive operational leverage in fixed production costs. Okay, thanks. With regards to your third question on recurring expenses, not that we know at the moment. These are one-off, and for the time being, we do not see anything meaningful. Okay, perfect. Thank you very much. There is a follow-up question from Robert Samson with UBS. Please go ahead. Hello, I'm really sorry. Some follow-ups. Two ones from me. Obviously, most of your peers have cut marketing while you've increased it over the last second half of the year. Any views on what happens when they come back to the market? Secondly, as you mentioned, cost containment. How much of that should we think comes back in 2021? How much is temporary now to structure, I guess? Yeah. Thank you. I'm not sure I got your first question. I think, it's fair to say that in Q4, when we actually maintained or actually increased the A&P across brands and markets, most of our peers focused much more on promotions in the off-premise and focusing really on short-term tactical commercial means. We'll have to wait and see what they're up to this year. Having said that, we always manage this business for the mid to long term, and we're not going to be impacted by what our peers do in the short term. With regards to your second question with cost containment measures, some of them will still be in place in 2021, at least in the first part of the year. If we think at T&E, for example, if you think at hiring discipline is destined to stay probably, not hiring freeze, but very prudent approach to new hiring, and selectively on certain strategic direction like digital marketing transformation or Asia. This is where we may want to invest a little bit more. There are other positive one-off factors in costs that are not recurring in 2021. If you think at, for example, bonus compressions, that we all hope will be in a position of paying higher bonuses, which means that the business is improving. It will not be as big as last year, the saving. As the business gets to its normality, we will start managing the business more in a normal manner. Great. Thank you very much. Really appreciate it. Once again, if you wish to ask a question, please press Star and One on your telephone. It's like in church, if you don't raise your hand, the deed is done. I confirm there are no more questions at this time. We're married. Thank you very much for joining us. Appreciate it, and stay well. Bye-bye. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.