TIDMCCH
RNS Number : 3491C
Coca-Cola HBC AG
22 February 2022
STRONG EXECUTION DRIVES GROWTH MOMENTUM
Coca-Cola HBC AG, a growth-focused Consumer Packaged Goods
business and strategic bottling partner of The Coca-Cola Company,
reports its financial results for the full year ended December
2021.
Full-year highlights
-- Effective execution in a volatile environment drove strong recovery
o FX-neutral revenue growth +20.6% like-for-like(1) . Reported
revenues +16.9%
o Business gained momentum in Q4, with FX-neutral revenue
closing 10% above 20192 levels for the year like-for-like
o Value share gains continued to increase, +80bps in NARTD
-- Volume growth of 14.0% like-for-like, or 13% on a reported
basis, led by the Emerging and Established segments as well as the
strategic priorities in our portfolio
o Sparkling volume +13.8%, Low/no sugar +47.3%; Adult sparkling
+31.8%
o Energy volume + 45.3%, driven by the performance of Monster,
Burn and Predator
-- Strength of brand portfolio demonstrated as pricing and other
revenue growth management actions drove FX-neutral revenue per case
+5.8%, or +3.9% excluding Poland
-- Consistent investment behind strategic priorities building growth momentum
o Costa Coffee now available in 17 markets; Caffè Vergnano
launched in Q4, now live in 5 markets
o Geographical expansion into Egypt adds exciting growth
opportunity, integration on track
o Net Zero commitment backed by EUR250 million investment by
2025
-- Expanded EBIT margin while increasing marketing investment
o Comparable EBIT grew by 23.6% with margins +60bps to 11.6%,
including c. 30bps benefit from Cyprus property sale. Reported EBIT
grew by 21.0%
o Opex as a percent of revenue improved by 2.2pp, driven by
operating leverage, cost savings higher than plan; 30 bps benefit
from Cyprus property sale
o Marketing expenditure +63%, full year spend almost back to
pre-pandemic levels
-- Strong earnings growth, record high free cash flow and
increased dividend pay-out target range
o Comparable EPS up 33.7% to EUR 1. 58 on lower tax rate; free
cash flow increased by EUR104.3 million to EUR 601.3 million
o Increased dividend pay-out ratio target to 40-50%, previously
35-45%
o Board of Directors to propose ordinary dividend of EUR0.71 per
share, up +10.9% year-on-year
Segment highlights
Emerging segment strong momentum and ongoing Established and
Developing segments recovery
-- Established: FX-neutral revenue increased by 13.9% with
volumes up 9.9% as in-market execution capitalised on reopening.
Comparable EBIT expanded 43.9%, or 33% excluding the Cyprus
property sale.
-- Developing: FX-neutral revenue up 18.0%, with volumes up 0.8%
and comparable EBIT up 4.3%, despite impact from Polish sugar
tax.
-- Emerging: FX-neutral revenue up 27.1% like-for-like driven by
strong momentum in Nigeria, Russia, and Ukraine and recovery
through the rest of the segment. Comparable EBIT grew by 17.3%.
Zoran Bogdanovic, Chief Executive Officer of Coca-Cola HBC AG,
commented:
"The business has delivered a very strong recovery in 2021, with
all key metrics above pre-pandemic levels, the result of consistent
and disciplined focus on our strategic priorities over the last few
years. We finished the year with strong revenue growth, our highest
ever EBIT margin and free cash flow while continuing to gain share.
This performance demonstrates the strength of our 24/7 brand
portfolio, revenue growth management capabilities and execution
excellence in our markets. It is driven by the strong drive and
passion of our people, who continue to show great creativity and
adaptability in navigating the volatile operating environment while
nurturing our culture which embraces change, challenge and care.
Our results and strong future plans are also a reflection of our
stronger than ever partnership with The Coca-Cola Company.
2021 also marked 70 years since our early beginnings in Nigeria
and I am more excited than ever by the growth potential of our
business, further strengthened with the addition of Egypt to our
country portfolio.
Revenue growth management actions focused behind both premium
and affordable offers, as well as pricing and ongoing productivity
improvements have enabled us to continue investing behind our
strategic priorities, including in capabilities development, whilst
achieving EBIT margin expansion.
We are encouraged by the momentum we see in the business. We
expect 2022 to be a year of strong sales supported by ongoing
volume momentum, pricing actions and beneficial category mix. While
mindful of inflationary headwinds and other risks, our track record
and continuous focus on efficiencies give me confidence in
delivering another year of EBIT growth. Given the positive
long-term outlook for the business we are increasing our targeted
dividend pay-out range to 40-50%."
Full Year %
2021(1) 2020 Change
Volume (m unit cases) 2,412.7 2,135.6 13.0%
Net sales revenue (EUR m) 7,168.4 6,131.8 16.9%
Net sales revenue per unit case (EUR) 2.97 2.87 3.5%
FX-neutral net sales revenue(3) (EUR
m) 7,168.4 5,994.9 19.6%
FX-neutral net sales revenue per unit
case(3) (EUR) 2.97 2.81 5.8%
Operating expenses/ Net sales revenue
(%) 25.6 27.4 -190bps
Comparable operating expenses / Net
sales revenue (%) 25.1 27.3 -220bps
Operating profit (EBIT)(4) (EUR m) 799.3 660.7 21.0%
Comparable EBIT(3) (EUR m) 831.0 672.3 23.6%
EBIT margin (%) 11.2 10.8 40bps
Comparable EBIT margin(3) (%) 11.6 11.0 60bps
Net profit(5) (EUR m) 547.2 414.9 31.9%
Comparable net profit(3,5) (EUR m) 578.1 431.4 34.0%
Basic earnings per share (EPS) (EUR) 1.499 1.140 31.5%
Comparable EPS(3) (EUR) 1.584 1.185 33.7%
Free cash flow(3) (EUR m) 601.3 497.0 21.0%
--------------------------------------- ------------------ ------------------ --------
(1) Performance, unless stated otherwise, is negatively impacted
by the change in classification of our Russian Juice business,
Multon, from a joint operation to a joint venture, following its
re-organisation in May 2020. Performance is also positively
impacted by the acquisition of Bambi in June 2019, when compared to
2019. Unless stated otherwise, performance compared to 2019 is
presented on a like-for-like basis. For the Group's growth
including the respective performance of Multon as a joint operation
in the current year, refer to the relevant table in the 'Supporting
information' section.
(2) Comparison to 2019 is made to present growth versus
pre-pandemic levels of performance.
(3) For details on APMs refer to 'Alternative Performance
Measures' and 'Definitions and reconciliations of APMs'
sections.
(4) Refer to the condensed consolidated income statement.
(5) Net Profit and comparable net profit refer to net profit and
comparable net profit respectively after tax attributable to owners
of the parent.
Coca-Cola HBC Group
Coca-Cola HBC is a growth-focused consumer packaged goods
business and strategic bottling partner of The Coca-Cola Company.
We create value for all our stakeholders by supporting the
socio-economic development of the communities in which we operate,
and we believe building a more positive environmental impact is
integral to our future growth. Together, we and our customers serve
715 million consumers across a broad geographic footprint of 29
countries on three continents. Our portfolio is one of the
strongest, broadest and most flexible in the beverage industry,
offering consumer-leading beverage brands in the sparkling, juice,
water, sport, energy, plant-based, ready-to-drink tea, coffee,
adult sparkling and premium spirits categories. These beverages
include Coca-Cola, Coca-Cola Zero, Schweppes, Kinley, Costa Coffee,
Valser, Römerquelle, Fanta, Sprite, Powerade, FuzeTea, Dobry,
Cappy, Monster and Adez. We foster an open and inclusive work
environment amongst our 36,000 employees and we are ranked among
the top sustainability performers in ESG benchmarks such as the Dow
Jones Sustainability Indices, CDP, MSCI ESG and FTSE4Good.
Coca-Cola HBC has a premium listing on the London Stock Exchange
(LSE: CCH) and is listed on the Athens Exchange (ATHEX: EEE). For
more information, please visit https://www.coca-colahellenic.com
.
Financial information in this announcement is presented on the
basis of
International Financial Reporting Standards ('IFRS').
Conference call
Coca-Cola HBC will host a conference call for financial analysts
and investors to discuss the 2021 full year results update on
Tuesday, 22 February 2022 at 9:00 am GMT. Interested parties can
access the live, audio webcast of the call through Coca-Cola HBC's
website
https://www.coca-colahellenic.com/en/investor-relations/results-reports-presentations
.
Next event
12 May 2022 2022 First quarter trading update
Enquiries
Coca--Cola HBC Group
Investors and Analysts:
Joanna Kennedy Tel: +44 7802 427505
Investor Relations Director joanna.kennedy@cchellenic.com
Jemima Benstead Tel: + 44 7740 535130
Investor Relations Manager jemima.benstead@cchellenic.com
Marios Matar Tel: +30 697 444 3335
Investor Relations Manager marios.matar@cchellenic.com
Media:
David Hart Tel: +41 41 726 0143
Group Communication Director david.hart@cchellenic.com
Greek media contact:
V+O Communications Tel: +30 6936750476
Chara Yioti cy@vando.gr
Special Note Regarding the Information set out herein
Unless otherwise indicated, the condensed consolidated financial
statements and the financial and operating data or other
information included herein relate to Coca-Cola HBC AG and its
subsidiaries ("Coca-Cola HBC" or the "Company" or "we" or the
"Group").
Forward-Looking Statements
This document contains forward-looking statements that involve
risks and uncertainties. These statements may generally, but not
always, be identified by the use of words such as "believe",
"outlook", "guidance", "intend", "expect", "anticipate", "plan",
"target" and similar expressions to identify forward-looking
statements. All statements other than statements of historical
facts, including, among others, statements regarding our future
financial position and results, our outlook for 2022 and future
years, business strategy and the effects of the global economic
slowdown, the impact of the sovereign debt crisis, currency
volatility, our recent acquisitions, and restructuring initiatives
on our business and financial condition, our future dealings with
The Coca-Cola Company, budgets, projected levels of consumption and
production, projected raw material and other costs, estimates of
capital expenditure, free cash flow, effective tax rates and plans
and objectives of management for future operations, are
forward-looking statements. By their nature, forward-looking
statements involve risk and uncertainty because they reflect our
current expectations and assumptions as to future events and
circumstances that may not prove accurate. Our actual results and
events could differ materially from those anticipated in the
forward-looking statements for many reasons, including the risks
described in the 2020 Integrated Annual Report for Coca-Cola HBC AG
and its subsidiaries .
Although we believe that, as of the date of this document, the
expectations reflected in the forward-looking statements are
reasonable, we cannot assure you that our future results, level of
activity, performance or achievements will meet these expectations.
Moreover, neither we, nor our directors, employees, advisors nor
any other person assumes responsibility for the accuracy and
completeness of the forward-looking statements. After the date of
the condensed consolidated financial statements included in this
document, unless we are required by law or the rules of the UK
Financial Conduct Authority to update these forward-looking
statements, we will not necessarily update any of these
forward-looking statements to conform them either to actual results
or to changes in our expectations .
Alternative Performance Measures
The Group uses certain Alternative Performance Measures ("APMs")
in making financial, operating and planning decisions as well as in
evaluating and reporting its performance. These APMs provide
additional insights and understanding to the Group's underlying
operating and financial performance, financial condition and cash
flow. The APMs should be read in conjunction with and do not
replace by any means the directly reconcilable IFRS line items. For
more details on APMs please refer to 'Definitions and
reconciliations of APMs' section.
Group Operational Review
Winning in the marketplace
We continued to make progress on the pillars of our Growth Story
2025 strategy. We prioritised activities behind the highest return
opportunities in our portfolio, geographies and route-to-market.
These actions, combined with the use of revenue growth management,
are building growth momentum in the business.
Category growth and ongoing market share gains drove full year
volume up 14.0% on a like-for-like basis, while reported volume was
up 13.0% - still impacted by the reorganisation in the structure of
our Russian Juice business (Multon). Q4 volume growth of 11.4% year
on year, despite 4 fewer selling days (we estimate this had a c.
5pp negative impact on volume growth in the quarter) implies
business acceleration in volume in Q4 versus Q3.
The rapid recovery in volumes is notable, with Group volumes 9%
ahead of 2019 levels(1) . Emerging volumes finished 2021 21% ahead
of 2019 levels, while the Established and Developing segments
recovered volumes in the second half, but full year volumes remain
below 2019 levels by 5.5% and 3.6% respectively given higher
exposure to the out-of-home channel in the Established segment and
the Polish sugar tax coming into effect in 2021 in the Developing
segment.
We continue to seize the growth potential of new occasions and
premiumisation in the at-home channel, while our customer
relationships and execution in the out-of-home ensured we captured
the opportunity as the channel reopened. Volume recovery in the
out-of-home channel drove growth of 24%, 1% above 2019, while the
at-home channel continued to grow, with volumes up 10% year on
year, 14% above 2019.
We are investing in strengthening our route to market with
data-driven insights and digital tools which are deepening the
connection to our customers, ensuring better insights and even more
targeted actions.
We capitalised on the rapid growth of the digital commerce
channel in 2021, investing behind our B2B platforms which now
account for 8% of total orders, up from 2% in 2020. Greater use of
B2B platforms also allows us to reach new outlets which may
previously have been uneconomical. We launched Wabi2B in two of our
largest markets, Russia and Nigeria, seeing good expansion in both
customer and wholesaler take-up. Strong double digit growth in
e-retail continues, generating an attractive revenue per case given
high incidence of single serve formats.
Leveraging our unique 24/7 portfolio
Prioritisation of the growth opportunities across our 24/7
portfolio continues to drive performance and has created a stronger
and more resilient mix of categories. We accelerated market share
gains in non-alcoholic ready-to-drink beverages (NARTD) gaining
80bps in value share in 2021, while also gaining or maintaining
share in the majority of markets in Sparkling.
Sparkling volumes grew by 13.8%, propelled by strategic focus
areas, with low- and no-sugar variants up 47.3% and adult sparkling
brands up 31.8%. We are benefiting from broad-based growth across
the brands with Trademark Coca-Cola volumes up 12.3%, Fanta volumes
up 14.4% and Sprite volumes up 18.8%.
Energy volumes grew by 45.3% with consistently high growth in
all three segments and across the three main brands of Monster,
Burn and Predator, benefiting from innovation which is also
broadening the appeal of the category across a wider range of
consumer profiles.
The coffee category is a significant growth opportunity that we
are now addressing with two brands, Costa Coffee in the mass
premium segment and Caffè Vergnano in the premium segment. We have
been investing in teams and building capability creating the
conditions for near- and long-term success. Costa Coffee is now
live in 17 markets and Caffe Vergnano in 5, with additional roll
out plans for the rest of the year. Revenue momentum built through
2021.
Water volumes grew by 11.3%, a solid recovery after the prior
year was heavily impacted by lockdowns. We sell proportionally more
Water in the out-of-home channel compared to Sparkling drinks and
channel reopening is leading to volume recovery.
Juice volumes grew by 11.7% on a like-for-like basis with growth
across all segments.
Ready-to-drink tea ("RTD tea") volume grew by 12.8% with growth
from Q2 onwards, aided by category recovery.
Premium Spirits volumes increased by 41.9%, as the recovery in
the out-of-home channel and continued opportunities in at-home
occasions drove growth.
Revenue growth management driving improving price/mix
FX-neutral revenue per case expanded by 5.8%, or 3.9% excluding
pricing taken to pass on the Polish sugar tax. The power of our
brand portfolio was visible, with price taken in 95% of our
markets, while market share expanded and volumes were not
negatively impacted, outside of Poland. Pricing was taken
throughout the year with actions in every quarter, including an
additional wave in Q4 in response to increased COGS pressure.
Our revenue growth management capabilities, enhanced through the
use of data, allow us to understand opportunities to drive value in
our categories, for us and our customers. This has ensured that our
pricing actions are well designed and sustainable. We are proud
that in 2021 our portfolio became the number one contributor of
incremental value in the FMCG industry for our customers.
Category mix improved as we drove higher Sparkling and Energy
penetration. Package mix improved driven by higher single-serve
incidence in the at-home channel, as well as the reopening of the
out-of-home channel. The rapid Emerging segment volume growth
resulted in negative country mix despite the positive performance
of price/mix in all geographies.
2021 FX-neutral revenue increased by 20.6% on a like-for-like
basis. Reported net sales revenue increased by 16.9%, negatively
impacted by the weakening of the Russian Rouble and the Nigerian
Naira .
Cost control, operating profit and margins
Comparable gross profit grew by 11.7% while gross profit margins
declined by 170 basis points to 36.2%. We saw headwinds from input
cost inflation across all our key commodities of sugar, aluminium
and PET resin in the second half of the year in particular. FX-
neutral raw material cost per case increased by 8.0%, while
comparable COGS per case increased by 6.3% in the year.
Depreciation charges were lower by EUR42.2 million, of which c.
EUR33m was due to the change in the useful economic lives'
calculation for specific production equipment categories to reflect
the length of use of these assets more accurately, which benefited
the Gross Profit margin by c. 40bps. The Polish Sugar Tax had a
negative impact on margins caused by inflation in the revenue line
as pricing is taken to pass on the tax; this impact was c. -70bps
on Gross Profit margin.
The adverse impact from foreign currency movements amounted to
EUR73 million in the period, driven predominantly by the Nigerian
Naira and Russian Rouble.
Comparable operating costs increased by only 7.5% or EUR125.4
million as we retained careful cost discipline throughout the year.
As growth opportunities returned, we invested behind those with
marketing spend, which expanded by 63% in the year. The balance of
investment on revenue generating activities with careful cost
savings elsewhere drove strong operational leverage and a 2.2
percentage point decline in comparable operating costs as a percent
of revenue, which reached 25.1%.
Comparable EBIT increased by 23.6% to EUR831.0 million, taking
comparable EBIT margins up 60 basis points year on year, to 11.6%.
This includes a 30-basis point benefit from the sale of a property
in Cyprus in December. The divestment is part of our normal course
of business of efficiently managing our fixed asset base.
Nevertheless, we do not expect a disposal of this magnitude to
repeat.
Net profit and free cash flow
Comparable net profit of EUR578.1 million and comparable basic
earnings per share of EUR1.584 were 34.0% and 33.7% higher than in
the prior year, respectively. Reported net profit and reported
basic earnings per share in the year were EUR547.2 million and
EUR1.499 respectively.
Comparable taxes amounted to EUR 188.2 million, representing a
comparable tax rate of 24.5%, 420bps lower than the rate in the
prior year as we lapped one-off tax charges in 2020.
Financing costs were EUR67.6 million in the year, EUR2.5 million
lower compared to the prior-year period, in line with
expectations.
Capital expenditure reached EUR540.9 million, 7.5% of net sales
revenue, at the upper end of our targeted 6.5-7.5% range. In 2021,
we allocated capital to capacity expansions in targeted categories
and markets, additional coolers, our digital agenda and our
sustainability commitments.
Free cash flow was EUR601.3 million, an increase of EUR104.3
million compared to the prior year, driven by higher profitability
and a significant improvement in working capital as growth returned
to the business.
Balance sheet
We retain a strong balance sheet ensuring our ability to sustain
investment in the business. At the balance sheet date, the Group
had net debt/comparable EBITDA of 1.1 times.
Earning our license to operate
In 2021 we made progress across all pillars of our Mission 2025
Sustainability Commitment.
Packaging is a critical area for the industry, and we have made
progress with investments in recycled PET production and expanded
the number of our brands available in recycled PET. To deliver on
our target to collect 100% of primary packaging for recycling or
reuse by 2030, significant change in national collection system
infrastructure is required in most of our territories. We are
working hard in support of well-designed, industry-led Deposit
Return Schemes, and in Q4 were pleased to see a DRS launched in
Slovakia and Latvia. We are actively supporting further
implementation in our markets as the best way of ensuring high
collection rates and better availability of recycled PET
feedstock.
In 2021 we made our largest commitment to date on sustainability
by targeting net-zero emissions by 2040, and linking progress on
this metric to management incentives. This target built on an
existing, approved science-based target for a 25% reduction in
emissions across our value chain by 2030, with a further 50%
reduction in the following decade.
Operational Review by Reporting Segment
Established markets
Full Year %
2021 2020 Change
Volume (m unit cases) 589.9 536.9 9.9%
Net sales revenue (EUR m) 2,479.0 2,174.6 14.0%
Net sales revenue per unit case (EUR) 4.20 4.05 3.8%
FX-neutral net sales revenue (EUR
m) 2,479.0 2,175.6 13.9%
FX-neutral net sales revenue per
unit case (EUR) 4.20 4.05 3.7%
Operating profit (EBIT) (EUR m) 285.6 203.3 40.5%
Comparable EBIT (EUR m) 300.8 209.0 43.9%
EBIT margin (%) 11.5 9.3 220bps
Comparable EBIT margin (%) 12.1 9.6 250bps
----------------------------------------- ------------------- ------------------ -------
Established markets' volume increased by 9.9% in the full year,
cycling -14.0%. Due to greater exposure to the out-of-home channel
compared to other segments, the ongoing reopening of outlets
provided strong support to volumes. At the same time, we continued
to see growth in the at-home channel, which positively contributed
to the segment's overall performance.
All categories were in growth for the year. Energy was the best
performer, with growth of more than 40%, followed by high
single-digit growth in Sparkling. Still volumes recovered from the
declines of the prior--year, growing low double-digits, driven
mainly by Water.
FX-neutral net sales revenue per unit case grew by 3.7% in the
full year, helped by positive category and package mix, as well as
pricing taken in all but one market. FX-neutral net sales rev enue
grew by 13.9%, driven by the higher volumes and positive price mix.
Reported net sales revenue increased by 14.0%.
-- Volume in Italy grew by 13.3%, with good growth across
channels. Performance was mainly driven by volume recovering in the
out-of-home channel, with the at-home channel in strong growth.
Adult Sparkling delivered the strongest growth, followed by Energy
and low- and no-sugar sparkling variants. Italy also saw a good
performance from Water and RTD Tea.
-- Volume in Greece grew by 15.6% in the full year. The country
benefited from the reopening of HoReCa from early May, combined
with strong summer activation in the market. Volume grew in all
categories, with good performance in low- and no-sugar variants of
Trademark Coke, Adult Sparkling and Energy, while Costa Coffee
contributed to top-line performance. Stills continued to see a
strong recovery, with high double-digit growth.
-- In Ireland, volume increased by 11.0%. Volume growth
benefited from the reopening of the out-of-home channel, combined
with strong performance in the at-home. Sparkling growth was led by
low- and no-sugar Trademark Coke variants. Energy saw strong
double-digit growth, while Stills grew in the mid-teens. We saw a
positive impact from the launches of Costa Coffee and Topo
Chico.
-- Switzerland saw volumes decline by 4.3%, negatively impacted
by a weak tourist season and limited international arrivals which
limited out-of-home performance. Energy continues to see strong
performance.
Comparable EBIT in the Established segment increased by 43.9%
compared to the prior year, to EUR300.8 million. Comparable EBIT
margin increased by 250 basis points to 12.1% or by 160 basis
points excluding the benefit of the property sale in Cyprus. On a
reported basis, operating profit was EUR285.6 million, 40.5% higher
than the prior year.
Developing markets
Full Year %
2021 2020 Change
Volume (m unit cases) 415.5 412.1 0.8%
Net sales revenue (EUR m) 1,365.6 1,170.9 16.6%
Net sales revenue per unit case (EUR) 3.29 2.84 15.7%
FX-neutral net sales revenue (EUR m) 1,365.6 1,157.4 18.0%
FX-neutral net sales revenue per unit case
(EUR) 3.29 2.81 17.0%
Operating profit (EBIT) (EUR m) 104.7 97.0 7.9%
Comparable EBIT (EUR m) 106.5 102.1 4.3%
EBIT margin (%) 7.7 8.3 -60bps
Comparable EBIT margin (%) 7.8 8.7 -90bps
-------------------------------------------- --------- -------- -------
Developing markets' volume was broadly stable, up 0.8% in the
full year despite the impact of Poland, where pricing taken to pass
on the new sugar tax led to anticipated volume declines. Excluding
Poland, the segment's volume growth was 4.4%. The segment's
performance returned to growth in Q4, cycling strict restrictions
in the same period last year.
Energy volumes grew by high-double digits, while Sparkling was
down low-single digits, impacted negatively by the Polish sugar
tax. Stills returned to growth in the full year, with a mid-single
digit increase in Juice while Water saw low-single digit
growth.
FX-neutral net sales revenue per unit case increased by 17.0%.
Excluding the impact of the Polish sugar tax, the segment's
price/mix growth was 5.8% as pricing, package and category mix
improved. FX-neutral net sales revenue increased by 18.0% in the
full year, while net sales revenue grew by 16.6%, impacted by
weakness in the Polish Zloty and Hungarian Forint.
-- Volume in Poland declined 7.7% in the year, impacted by
pricing taken to pass on the sugar tax effective 1 January 2021. We
are pleased by the market share results and the continued good
performance of low- and no-sugar variants, with Coke Zero volumes
up double-digits. Strong performance in single-serve mix and market
share gains shows the actions taken to mitigate the sugar tax have
worked well. Energy volumes also continued to be strong, up
double-digits, while Costa Coffee is also contributing positively
to growth.
-- Volume in Hungary grew 12.0%, supported by the reopening of
the out--of--home channel as well as strong performance in the
at-home channel. We saw double-digit growth in Sparkling with
strong performance from Trademark Coke and Kinley, our Adult
sparkling proposition in the country. Water returned to growth this
year, while Juice and Tea saw double-digit increases.
-- In the Czech Republic, volume increased by 0.5%. Volumes recovered during the year as
out-of-home restrictions were lifted, offset by weaker
performance in the at-home channel, mainly due to commercial and
operational challenges we faced in Q3. Energy and Adult sparkling
delivered a strong performance during the year, with volumes up
double digits, while Coke Zero grew mid-single digits.
The Developing markets segment delivered comparable operating
profit of EUR106.5 million, a 4.3% increase compared to the prior
year. Higher input costs and higher operating expenses more than
offset improved price and category mix, such that comparable
operating profit margin decreased by 90 basis points to 7.8%. On a
reported basis, operating profit was EUR104.7 million, an increase
of 7.9% compared to the prior year.
Emerging markets
Full Year %
2021 2020 Change
Volume (m unit cases) 1,407.3 1,186.6 18.6%
Net sales revenue (EUR m) 3,323.8 2,786.3 19.3%
Net sales revenue per unit case (EUR) 2.36 2.35 0.6%
FX-neutral net sales revenue (EUR m) 3,323.8 2,661.9 24.9%
FX-neutral net sales revenue per unit case
(EUR) 2.36 2.24 5.3%
Operating profit (EBIT) (EUR m) 409.0 360.4 13.5%
Comparable EBIT (EUR m) 423.7 361.2 17.3%
EBIT margin (%) 12.3 12.9 -60bps
Comparable EBIT margin (%) 12.7 13.0 -20bps
-------------------------------------------- -------- -------- -------
Emerging markets volumes grew by 18.6% in the full year, or
20.4% on a like-for-like basis. The segment's impressive
performance was driven by Nigeria, Russia and Ukraine, where we saw
very strong growth momentum and execution.
All categories expanded double-digits, with Energy the strongest
performing. Sparkling volumes grew above 20%, driven by low- and
no-sugar variants, while Juice and Water were up high-teens and
low-teens respectively.
FX-neutral net sales revenue per unit case grew by 5.3%, or 5.6%
on a like-for-like basis, benefiting from pricing taken in all
countries through the year, as well as positive category and
package mix. Country mix continued to be negative due to good
volume growth in lower revenue per case markets such as Nigeria and
Ukraine. FX-neutral revenues grew by 24.9% in the full year, or
27.1% on a like-for-like basis. Net sales revenue grew by 19.3%,
negatively impacted by the Russian Rouble and Nigerian Naira.
-- Volume in Russia grew by 18.3%, or 25.0% on a like-for-like
basis, adjusting for the change in the accounting treatment of our
Juice business in the country. The at home channel continued to
demonstrate strong momentum, while we continue to see a recovery in
the out-of-home channel even though Russia has a relatively low
proportion of revenue from it. By category, Energy, Adult Sparkling
and low- and no-sugar sparkling variants performed very
strongly.
-- In Nigeria, volumes grew 29.5% in the period, with good
momentum in the last quarter of the year and strong price/mix
delivery. We are seeing strong growth across all categories,
particularly Energy and Sparkling. Our competitive position
benefited from our relevant price points, our digitally enabled
route-to-market, and increasingly sophisticated localised customer
segmentation.
-- Volume in Romania grew 9.2% in the year with Energy as the
most dynamic category. Stills saw a recovery and Sparkling grew
high-single-digits with particularly good performance from Adult
Sparkling, up by mid twenties.
-- In Ukraine, volumes grew 17.3%. Sparkling was the main
driver, particularly Trademark Coke and Adult Sparkling, while
Energy continued to grow off a lower base. Volumes of Stills were
up slightly, impacted by a weaker performance from Water.
-- In Serbia, volumes grew 12.0%. Energy and Adult Sparkling
performed strongly, as did Flavours and Coke Zero. Bambi's
performance was resilient, while Water grew above 20%.
The Emerging segment had comparable EBIT of EUR423.7 million, an
increase of 17.3% compared to the prior year. Strong volume growth
and positive price mix partially offset higher input costs,
negative foreign exchange, and higher operating expenses, leading
to a 20 basis points decline in comparable EBIT margin to 12.7%. On
a reported basis, operating profit was EUR409.0 million, 13.5%
higher compared to the prior year.
Business Outlook
While conscious of risks in 2022, we are encouraged by the
strong performance in 2021 and a good start to the year.
We expect volume growth to continue in 2022 with progress in all
three segments, led by ongoing good momentum in the Emerging
segment. We expect pricing and other revenue growth management
actions to drive another year of FX-neutral revenue per case
expansion. Overall, in 2022, we expect to see FX-neutral revenue
growth excluding Egypt above the 5-6% average target range.
We continue to expect commodity cost inflation in 2022 and
reaffirm our previous guidance of high-single digit COGS/case
increase, for the full year. We now believe that we will be towards
the upper end of that range. We anticipate this will be a more
significant headwind in H1 than in H2.
We expect pricing actions, beneficial category mix as well as
ongoing productivity and cost saving initiatives to allow the
business to continue to invest in our strategic priorities and top
line growth while generating comparable EBIT growth in the low to
mid-single digits, excluding Egypt.
As noted above, 2021 comparable EBIT benefited from a c. EUR23
million one-off gain from a property disposal in Cyprus. Excluding
this impact from the base we expect growth of mid to high-single
digits for FY 2022, excluding Egypt.
We expect the negative impact of foreign currency to be lower in
2022 than 2021 and with minimal translational impact on comparable
EBIT.
Given strong free cash flow generation and the positive
long-term prospects for the business, we are increasing the
targeted dividend pay-out ratio target to 40-50% of comparable net
profit, previously 35-45%.
Technical guidance
Restructuring We remain focused on continuously improving our
business and seeking productivity opportunities. For 2022, we have
identified restructuring initiatives of approximately EUR11
million. We expect these initiatives to yield EUR5 million in
annualised benefits from 2022 onwards, while the initiatives
already taken in 2021 and those that will be taken in 2022 are
expected to yield EUR16 million of total benefits in 2022.
Tax Considering the dynamics of the evolving mix of
profitability in our country portfolio, we continue to expect our
comparable effective tax rate to be in the range between 25% and
27%.
Finance costs We expect net finance costs for 2022 to be
approximately EUR15 to EUR20 million higher than 2021, mainly due
to the consolidation of Egypt.
Move to organic reporting We expect to start reporting using
organic growth metrics in 2022. We do not expect this change to
have any impact on our guidance ranges. For example, after this
change, guidance on FX- neutral revenue growth, excluding Egypt
would be replaced with organic revenue growth guidance, while
guidance on comparable EBIT growth, excluding Egypt would be
replaced with organic EBIT growth guidance.
Group Financial Review
Income statement Full Year
2021 2020 %
EUR million EUR million Change
--------------- ---------------
Volume (m unit cases) 2,412.7 2,135.6 13.0%
Net sales revenue 7,168.4 6,131.8 16.9%
Net sales revenue per unit case (EUR) 2.97 2.87 3.5%
FX-neutral net sales revenue(1) 7,168.4 5,994.9 19.6%
FX-neutral net sales revenue per unit
case (EUR)(1) 2.97 2.81 5.8%
Cost of goods sold (4,570.2) (3,810.3) 19.9%
Comparable cost of goods sold(1) (4,574.0) (3,808.7) 20.1%
Gross profit 2,598.2 2,321.5 11.9%
Comparable gross profit(1) 2,594.4 2,323.1 11.7%
Operating expenses (1,833.3) (1,682.2) 9.0%
Comparable operating expenses(1) (1,797.8) (1,672.4) 7.5%
Share of results of integral equity
method investments(2) 34.4 21.4 60.7%
Operating profit (EBIT)(2) 799.3 660.7 21.0%
Comparable operating profit (EBIT)(1) 831.0 672.3 23.6%
Adjusted EBITDA(1) 1,151.5 1,059.2 8.7%
Comparable adjusted EBITDA(1) 1,183.0 1,070.8 10.5%
Finance costs, net (67.6) (70.1) -3.6%
Share of results of non-integral equity
method investments(2) 3.2 3.3 -3.0%
Tax (187.4) (178.9) 4.8%
Comparable tax(1) (188.2) (174.0) 8.2%
Net profit(3) 547.2 414.9 31.9%
Comparable net profit(1,3) 578.1 431.4 34.0%
Basic earnings per share (EUR) 1.499 1.140 31.5%
Comparable basic earnings per share
(EUR)(1) 1.584 1.185 33.7%
--------------- --------------- ----------
(1) Refer to the ' Definitions and reconciliations of APMs'
section.
(2) Refer to the condensed consolidated income statement.
(3) Net Profit and comparable net profit refer to net profit and
comparable net profit respectively after tax attributable to owners
of the parent.
Net sales revenue grew by 16.9% in 2021 compared to the prior
year, driven by higher volume, pricing and favourable category and
package mix, which more than offset unfavourable foreign currency
movements. On a currency-neutral basis, net sales revenue grew by
19.6% during 2021, compared to the prior year.
Comparable and reported cost of goods sold increased by 20.1%
and 19.9% respectively in 2021 compared to the prior year, mainly
driven by the volume increase as well as higher input costs related
to our key commodities.
Comparable operating expenses increased by 7.5% in 2021 compared
to the prior year driven by higher distribution and marketing
expenses, partially offset by the benefits from our continuous
efforts on cost control, while operating expenses increased by 9.0%
in 2021 compared to the prior year further impacted by the
increased restructuring, acquisition and integration costs.
Comparable operating profit grew by 23.6% in 2021 compared to
the prior year, reflecting the benefits from volume and net sales
revenue growth, which were only partially offset by higher input
costs and unfavourable foreign currency movements. Operating profit
grew by 21.0% in 2021 compared to the prior year, reflecting the
benefits from volume and net sales revenue growth, which were only
partially offset by higher input costs, increased restructuring,
acquisition and integration costs as well as unfavourable foreign
currency movements.
Net finance costs reduced by EUR2.5 million in 2021, compared to
the prior year, mainly driven by lower interest expense due to the
bond repayment in June 2020, partially offset by the increased
hedging cost of borrowings in Nigeria.
On a comparable basis, the effective tax rate was 24.5% for 2021
and 28.7% for 2020. On a reported basis, the effective tax rate was
25.5% for 2021 and 30.1% for 2020. The Group's effective tax rate
varies depending on the mix of taxable profits by territory, the
non-deductibility of certain expenses, non-taxable income and other
one-off tax items across its territories.
In August 2020, Nigerian Bottling Company Ltd ("NBC"), the
Group's subsidiary in Nigeria, settled the additional tax assessed
by the Nigerian tax authorities ("FIRS") following the completion
of their income tax audit for the years 2005-2019 and transfer
pricing ("TP") audit for the years 2011-2019. The net impact in
2020 to the Tax line item in the income statement, following the
utilisation of provisions for uncertain tax positions, was EUR16.5
million, out of which EUR7.2 million is attributable to the results
of the TP audit. This additional tax charge of EUR16.5 million
resulted in a 2.8pp increase of the Group's effective tax rate on a
reported basis, for 2020.
Comparable net profit and net profit increased by 34.0% and
31.9% respectively in 2021 compared to the prior year, mainly
driven by improved operating profitability.
Balance Sheet
As at 31 December
2021 2020 Change
Assets EUR million EUR million EUR million
------------ ------------ ------------
Total non-current assets 5,357.4 5,046.0 311.4
Total current assets 3,156.9 2,527.1 629.8
Total assets 8,514.3 7,573.1 941.2
Liabilities
Total current liabilities 2,516.4 2,026.2 490.2
Total non-current liabilities 2,880.8 2,913.6 (32.8)
Total liabilities 5,397.2 4,939.8 457.4
Equity
Owners to the parent 3,114.5 2,630.7 483.8
Non-controlling interests 2.6 2.6 -
Total equity 3,117.1 2,633.3 483.8
Total equity and liabilities 8,514.3 7,573.1 941.2
Net current assets 640.5 500.9 139.6
------------ ------------ ------------
Total non-current assets increased by EUR311.4 million in 2021,
mainly driven by additions of property, plant and equipment,
currency translation and the acquisition of a minority equity
shareholding in Caffè Vergnano . Net current assets increased by
EUR139.6 million in 2021 mainly as a result of higher investments
in financial assets as well as increased trade receivables and
inventory, which were only partially offset by lower cash and cash
equivalents and higher trade payables, driven by COVID-19 recovery.
Total non-current liabilities decreased by EUR32.8 million in 2021,
mainly due to the reclassification of the current portion of loans
payable to joint ventures from non-current to current liabilities
.
Cash flow
Full Year
2021 2020 %
EUR million EUR million Change
------------- -------------
Net cash from operating activities(1) 1,142.2 961.5 18.8%
Capital expenditure(1) (540.9) (464.5) 16.4%
Free cash flow(1) 601.3 497.0 21.0%
------------- ------------- --------
(1) Refer to the 'Definitions and reconciliations of APMs'
section.
Net cash from operating activities increased by 18.8% or
EUR180.7 million in 2021, compared to the prior-year, mainly due to
increased operating profitability and cash generated from working
capital movements.
Capital expenditure increased by 16.4% in 2021, compared to the
prior year. In 2021, capital expenditure amounted to EUR540.9
million of which 56% was related to investment in production
equipment and facilities and 20% to the acquisition of marketing
equipment. In 2020, capital expenditure amounted to EUR464.5
million of which 56% was related to investment in production
equipment and facilities and 18% to the acquisition of marketing
equipment.
In 2021, free cash flow increased by 21.0% or EUR104.3 million,
compared to the prior year, driven by the increased cash from
operating activities, partially offset by increased capital
expenditure.
Supplementary Information
Effective May 2020, following a re-organisation of Multon's
structure, the joint arrangement was reclassified from a joint
operation to a joint venture. The table below depicts the Group's
growth compared to the prior year including the respective
performance of Multon as a joint operation in the current year
("like-for-like"):
Net sales revenue per unit case
2021 vs 2020 Volume FX-neutral Reported
Total CCH Total CCH Total CCH
Growth (%) Total CCH like-for-like Total CCH like-for-like Total CCH like-for-like
Established 9.9 9.9 3.7 3.7 3.8 3.8
Developing 0.8 0.8 17.0 17.0 15.7 15.7
Emerging 18.6 20.4 5.3 5.6 0.6 0.9
Total Group 13.0 14.0 5.8 5.8 3.5 3.4
---------- --------------- ---------- --------------- ---------- ---------------
Net sales revenue
2021 vs 2020 FX-neutral Reported
Total CCH Total CCH
Growth (%) Total CCH like-for-like Total CCH like-for-like
Established 13.9 13.9 14.0 14.0
Developing 18.0 18.0 16.6 16.6
Emerging 24.9 27.1 19.3 21.5
Total Group 19.6 20.6 16.9 17.9
---------- --------------- ---------- ---------------
The volume, net sales revenue and net sales revenue per unit
case on a reported and currency-neutral basis, are provided for
NARTD and Premium Spirits, as set out below:
Full Year %
NARTD 2021 2020 Change
Volume (m unit cases)(1) 2,409.3 2,133.2 12.9%
Net sales revenue (EUR m) 6,944.5 5,974.4 16.2%
Net sales revenue per unit case (EUR) 2.88 2.80 2.9%
FX-neutral net sales revenue (EUR m) 6,944.5 5,838.6 18.9%
FX-neutral net sales revenue per unit
case (EUR) 2.88 2.74 5.3%
Full Year %
Premium Spirits 2021 2020 Change
Volume (m unit cases)(1) 3.436 2.421 41.9%
Net sales revenue (EUR m) 223.9 157.4 42.2%
Net sales revenue per unit case (EUR) 65.16 65.01 0.2%
FX-neutral net sales revenue (EUR m) 223.9 156.3 43.3%
FX-neutral net sales revenue per unit
case (EUR) 65.16 64.56 0.9%
Full Year %
Total 2021 2020 Change
Volume (m unit cases)(1) 2,412.7 2,135.6 13.0%
Net sales revenue (EUR m) 7,168.4 6,131.8 16.9%
Net sales revenue per unit case (EUR) 2.97 2.87 3.5%
FX-neutral net sales revenue (EUR m) 7,168.4 5,994.9 19.6%
FX-neutral net sales revenue per unit
case (EUR) 2.97 2.81 5.8%
(1) For NARTD volume, one unit case corresponds to approximately
5.678 litres or 24 servings, being a typically used measure of
volume. For Premium Spirits volume, one unit case also corresponds
to 5.678 litres. For biscuits volume, one unit case corresponds to
1 kilogram.
Definitions and reconciliations of Alternative Performance
Measures (" APMs")
1. Comparable APMs(1)
In discussing the performance of the Group, "comparable"
measures are used, which are calculated by deducting from the
directly reconcilable IFRS measures the impact of the Group's
restructuring costs, the mark-to-market valuation of the commodity
hedging activity, acquisition and integration costs and certain
other tax items, which are collectively considered as items
impacting comparability, due to their nature. More specifically the
following items are considered as items that impact
comparability:
1) Restructuring costs
Restructuring costs comprise costs arising from significant
changes in the way the Group conducts business, such as significant
supply chain infrastructure changes, outsourcing of activities and
centralisation of processes. These costs are included within the
income statement line "Operating expenses". However, they are
excluded from the comparable results so that the users can obtain a
better understanding of the Group's operating and financial
performance achieved from underlying activity.
2) Commodity hedging
The Group has entered into certain commodity derivative
transactions in order to hedge its exposure to commodity price
risk. Although these transactions are economic hedging activities
that aim to manage our exposure to sugar, aluminium, gas oil and
plastics price volatility, hedge accounting has not been applied in
all cases. In addition, the Group recognises certain derivatives
embedded within commodity purchase contracts that have been
accounted for as stand-alone derivatives and do not qualify for
hedge accounting. The fair value gains and losses on the
derivatives and embedded derivatives are immediately recognised in
the income statement in the cost of goods sold and operating
expenses line items. The Group's comparable results exclude the
gains or losses resulting from the mark-to-market valuation of
these derivatives to which hedge accounting has not been applied
(primarily plastics) and embedded derivatives. These gains or
losses are reflected in the comparable results in the period when
the underlying transactions occur, to match the profit or loss to
that of the corresponding underlying transactions. We believe this
adjustment provides useful information related to the impact of our
economic risk management activities.
3) Acquisition and integration costs
Acquisition costs comprise costs incurred to effect a business
combination such as finder's fees, advisory, legal, accounting,
valuation and other professional or consulting fees as well as
changes in the fair value of contingent consideration recorded in
the income statement. Integration costs comprise direct incremental
costs necessary for the acquiree to operate within the Group. These
costs are included within the income statement line "Operating
expenses". However, to the extent that they relate to business
combinations that have completed or are expected to be completed,
they are excluded from the comparable results so that the users can
obtain a better understanding of the Group's operating and
financial performance achieved from underlying activity.
4) Other tax items
Other tax items represent the tax impact of (a) changes in
income tax rates affecting the opening balance of deferred tax
arising during the year and (b) certain tax related matters
selected based on their nature. Both (a) and (b) are excluded from
comparable after-tax results so that the users can obtain a better
understanding of the Group's underlying financial performance.
The Group discloses comparable performance measures to enable
users to focus on the underlying performance of the business on a
basis which is common to both periods for which these measures are
presented.
(1) Comparable APMs refer to comparable COGS, comparable Gross
Profit, comparable Operating expenses, comparable EBIT, comparable
EBIT margin, comparable Adjusted EBITDA, comparable tax, comparable
net profit and comparable EPS.
The reconciliation of comparable measures to the directly
related measures calculated in accordance with IFRS is as
follows:
Reconciliation of comparable financial indicators (numbers in
EUR million except per share data)
Full Year 2021
--------------------------------------------------------------------------------------
Gross Operating Adjusted Net EPS
COGS Profit expenses EBIT EBITDA Tax Profit(1) (EUR)
As reported (4,570.2) 2,598.2 (1,833.3) 799.3 1,151.5 (187.4) 547.2 1.499
Restructuring
costs - - 21.2 21.2 21.0 (4.6) 16.6 0.045
Commodity hedging (3.8) (3.8) - (3.8) (3.8) 0.7 (3.1) (0.008)
Acquisition and
integration costs - - 14.3 14.3 14.3 - 14.3 0.039
Other tax items - - - - - 3.1 3.1 0.009
--------
Comparable (4,574.0) 2,594.4 (1,797.8) 831.0 1,183.0 (188.2) 578.1 1.584
---------- -------- ---------- -------- --------- -------- ----------- --------
Full Year 2020
--------------------------------------------------------------------------------------
Gross Operating Adjusted Net EPS
COGS Profit expenses EBIT(2) EBITDA Tax Profit(1) (EUR)
As reported (3,810.3) 2,321.5 (1,682.2) 660.7 1,059.2 (178.9) 414.9 1.140
Restructuring
costs - - 9.8 10.0 10.0 (1.6) 8.4 0.022
Commodity hedging 1.6 1.6 - 1.6 1.6 (0.3) 1.3 0.004
Other tax items(3) - - - - - 6.8 6.8 0.019
Comparable (3,808.7) 2,323.1 (1,672.4) 672.3 1,070.8 (174.0) 431.4 1.185
---------- -------- ---------- -------- --------- -------- ----------- --------
(1) Net Profit and comparable net profit refer to net profit and
comparable net profit respectively after tax attributable to owners
of the parent.
(2) EBIT for 2020 includes EUR0.2 million from restructuring
within share of results of integral equity method investments.
(3) Other tax items for 2020 include EUR7.2 million regarding
net impact from the settlement of transfer pricing audit for years
2011-2019 in Nigeria (refer to Group Financial review section for
relevant details).
Reconciliation of comparable EBIT per reportable segment (numbers
in EUR million)
Full Year 2021
---------------------------------------------------
Established Developing Emerging Consolidated
EBIT 285.6 104.7 409.0 799.3
Restructuring costs 14.7 3.4 3.1 21.2
Commodity hedging (3.0) (4.3) 3.5 (3.8)
Acquisition and integration
costs 3.5 2.7 8.1 14.3
------------ ----------- --------- -------------
Comparable EBIT 300.8 106.5 423.7 831.0
------------ ----------- --------- -------------
Full Year 2020
---------------------------------------------------
Established Developing Emerging Consolidated
EBIT(1) 203.3 97.0 360.4 660.7
Restructuring costs 5.5 4.0 0.5 10.0
Commodity hedging 0.2 1.1 0.3 1.6
Comparable EBIT 209.0 102.1 361.2 672.3
------------ ----------- --------- -------------
(1) EBIT for 2020 includes EUR0.2 million from restructuring
within share of results of integral equity method investments.
2. FX- neutral APMs
The Group also evaluates its operating and financial performance
on an FX-neutral basis (i.e. without giving effect to the impact of
variation of foreign currency exchange rates from year to year).
FX-neutral APMs are calculated by adjusting prior period amounts
for the impact of exchange rates applicable to the current year.
FX-neutral measures enable users to focus on the performance of the
business on a basis which is not affected by changes in foreign
currency exchange rates applicable to the Group's operating
activities from year to year. The most common FX-neutral measures
used by the Group are:
1) FX-neutral net sales revenue and FX-neutral net sales revenue per unit case
FX-neutral net sales revenue and FX-neutral net sales revenue
per unit case are calculated by adjusting prior year net sales
revenue for the impact of changes in exchange rates applicable in
the current year.
2) FX-neutral comparable input costs per unit case
FX-neutral comparable input costs per unit case is calculated by
adjusting prior year commodity costs and more specifically, sugar,
resin, aluminium and fuel commodity costs, excluding commodity
hedging as described above; and other raw materials costs for the
impact of changes in exchange rates applicable in the current
year.
The calculations of the FX-neutral APMs and the reconciliation
to the most directly related measures calculated in accordance with
IFRS is as follows:
Reconciliation of FX-neutral net sales revenue per unit case
(numbers in EUR million otherwise stated)
Full Year 2021
---------------------------------------------------
Established Developing Emerging Consolidated
Net sales revenue 2,479.0 1,365.6 3,323.8 7,168.4
Currency impact - - - -
------------ ----------- --------- -------------
FX-neutral net sales revenue 2,479.0 1,365.6 3,323.8 7,168.4
Volume (m unit cases) 589.9 415.5 1,407.3 2,412.7
------------ ----------- --------- -------------
FX-neutral net sales revenue
per unit case (EUR) 4.20 3.29 2.36 2.97
------------ ----------- --------- -------------
Full Year 2020
---------------------------------------------------
Established Developing Emerging Consolidated
Net sales revenue 2,174.6 1,170.9 2,786.3 6,131.8
Currency impact 1.0 (13.5) (124.4) (136.9)
------------ ----------- --------- -------------
FX-neutral net sales revenue 2,175.6 1,157.4 2,661.9 5,994.9
Volume (m unit cases) 536.9 412.1 1,186.6 2,135.6
------------ ----------- --------- -------------
FX-neutral net sales revenue
per unit case (EUR) 4.05 2.81 2.24 2.81
------------ ----------- --------- -------------
Reconciliation of FX-neutral input costs per unit case (numbers
in EUR million unless otherwise stated)
Full Year Full Year
2021 2020
---------- ----------
Input costs 1,954.8 1,554.2
Commodity hedging 3.8 (1.6)
---------- ----------
Comparable input costs 1,958.6 1,552.6
Currency impact - 9.6
---------- ----------
FX-neutral comparable input costs 1,958.6 1,562.2
Volume (m unit cases) 2,412.7 2,135.6
---------- ----------
FX-neutral comparable input costs per unit case
(EUR) 0.81 0.73
---------- ----------
3. Other APMs
Adjusted EBITDA
Adjusted EBITDA is calculated by adding back to operating profit
the depreciation and impairment of property, plant and equipment,
the amortisation and impairment of intangible assets, the employee
share option and performance share costs and items, if any,
reported in line "Other non-cash items" of the consolidated cash
flow statement. Adjusted EBITDA is intended to provide useful
information to analyse the Group's operating performance excluding
the impact of operating non-cash items as defined above. The Group
also uses comparable Adjusted EBITDA, which is calculated by
deducting from Adjusted EBITDA the impact of the Group's
restructuring costs, acquisition and integration costs and the
mark-to-market valuation of the commodity hedging activity.
Comparable Adjusted EBITDA is intended to measure the level of
financial leverage of the Group by comparing comparable Adjusted
EBITDA to Net debt.
Adjusted EBITDA and comparable Adjusted EBITDA are not measures
of profitability and liquidity under IFRS and have limitations,
some of which are as follows: Adjusted EBITDA and comparable
Adjusted EBITDA do not reflect our cash expenditures, or future
requirements, for capital expenditures or contractual commitments;
Adjusted EBITDA and comparable Adjusted EBITDA do not reflect
changes in, or cash requirements for, our working capital needs;
although depreciation and amortisation are non-cash charges, the
assets being depreciated and amortised will often have to be
replaced in the future, and Adjusted EBITDA and comparable Adjusted
EBITDA do not reflect any cash requirements for such replacements.
Because of these limitations, Adjusted EBITDA and comparable
Adjusted EBITDA should not be considered as measures of
discretionary cash available to us and should be used only as
supplementary APMs.
Free cash flow
Free cash flow is an APM used by the Group and defined as cash
generated by operating activities after payments for purchases of
property, plant and equipment net of proceeds from sales of
property, plant and equipment and including principal repayments of
lease obligations. Free cash flow is intended to measure the cash
generation from the Group's business, based on operating
activities, including the efficient use of working capital and
taking into account its net payments for purchases of property,
plant and equipment. The Group considers the purchase and disposal
of property, plant and equipment as ultimately non--discretionary
since ongoing investment in plant, machinery, technology and
marketing equipment, including coolers, is required to support the
day--to--day operations and the Group's growth prospects. The Group
presents free cash flow because it believes the measure assists
users of the financial statements in understanding the Group's cash
generating performance as well as availability for interest
payment, dividend distribution and own retention. The free cash
flow measure is used by management for its own planning and
reporting purposes since it provides information on operating cash
flows, working capital changes and net capital expenditure that
local managers are most directly able to influence.
Free cash flow is not a measure of cash generation under IFRS
and has limitations, some of which are as follows: Free cash flow
does not represent the Group's residual cash flow available for
discretionary expenditures since the Group has debt payment
obligations that are not deducted from the measure; free cash flow
does not deduct cash flows used by the Group in other investing and
financing activities and free cash flow does not deduct certain
items settled in cash. Other companies in the industry in which the
Group operates may calculate free cash flow differently, limiting
its usefulness as a comparative measure.
Capital expenditure
The Group uses capital expenditure as an APM to ensure that the
cash spending is in line with its overall strategy for the use of
cash. Capital expenditure is defined as payments for purchases of
property, plant and equipment plus principal repayments of lease
obligations less proceeds from sale of property, plant and
equipment.
The following table illustrates how Adjusted EBITDA, Free Cash
Flow and Capital Expenditure are calculated:
Full Year
2021 2020
EUR million EUR million
------------ ------------
Operating profit (EBIT) 799.3 660.7
Depreciation and impairment of property, plant
and equipment,
including right of use assets 336.3 388.1
Amortisation of intangible assets 1.0 0.9
Employee performance shares 14.9 9.5
------------ ------------
Adjusted EBITDA 1,151.5 1,059.2
Share of results of integral equity method investments (34.4) (21.4)
Gain on disposals of non-current assets (28.4) (1.4)
Cash generated from working capital movements 195.8 108.3
Tax paid (142.3) (183.2)
------------ ------------
Net cash from operating activities 1,142.2 961.5
------------ ------------
Payments for purchases of property, plant and
equipment(1) (513.6) (419.2)
Principal repayments of lease obligations (63.1) (58.7)
Proceeds from sales of property, plant and equipment 35.8 13.4
Capital expenditure (540.9) (464.5)
------------ ------------
Free cash flow 601.3 497.0
------------ ------------
(1) Payments for purchases of property, plant and equipment for
2021 include EUR7.1 million (2020: EURnil) relating to repayment of
borrowings undertaken to finance the purchase of production
equipment by the Group's subsidiary in Nigeria, classified as
'Repayments of borrowings' in the condensed consolidated cash flow
statement.
Net debt
Net debt is an APM used by management to evaluate the Group's
capital structure and leverage. Net debt is defined as current
borrowings plus non-current borrowings less cash and cash
equivalents and financial assets (time deposits, treasury bills and
money market funds), as illustrated below:
As at 31 December
2021 2020
EUR million EUR million
------------ ------------
Current borrowings 381.7 315.2
Non-current borrowings 2,555.7 2,610.3
Other financial assets (834.9) (92.9)
Cash and cash equivalents (782.8) (1,215.8)
------------ ------------
Net debt 1,319.7 1,616.8
------------ ------------
Condensed consolidated financial statements for the six months
and the year ended 31 December 2021
Condensed consolidated income statement (unaudited)
Six months ended
31 December
2021 2020
-------------------------------------- -----
Note EUR million EUR million
-------------------------------------- ----- ------------------ -----------------
Net sales revenue 3 3,920.5 3,300.6
Cost of goods sold (2,521.8) (2,028.2)
-------------------------------------- ----- ------------------ -----------------
Gross profit 1,398.7 1,272.4
Operating expenses 4 (969.8) (831.4)
Share of results of integral equity
method
investments 1 20.3 16.8
-------------------------------------- ----- ------------------ -----------------
Operating profit 3 449.2 457.8
Finance costs, net 5 (32.9) (33.9)
Share of results of non-integral
equity method
investments 1 1.4 2.8
-------------------------------------- ----- ------------------ -----------------
Profit before tax 417.7 426.7
Tax 6 (103.6) (135.8)
-------------------------------------- ----- ------------------ -----------------
Profit after tax 314.1 290.9
-------------------------------------- ----- ------------------ -----------------
Attributable to:
Owners of the parent 314.1 290.9
-------------------------------------- ----- ------------------ -----------------
Basic and diluted earnings per share
(EUR) 7 0.86 0.80
Condensed consolidated statement of comprehensive income
(unaudited)
Six months ended 31
December
2021 2020
---------------------------------------------------------
EUR million EUR million
--------------------------------------------------------- ------------------ -----------------
Profit after tax 314.1 290.9
Other comprehensive income:
Items that may be subsequently reclassified to
income
statement:
Cost of hedging (1.7) -
Net gain of cash flow hedges 27.4 18.3
Foreign currency translation gains / (losses) 53.6 (116.2)
Share of other comprehensive income / (loss)
of equity method
investments 7.4 (31.3)
Income tax relating to items that may be subsequently
reclassified
to income statement (3.3) (2.7)
--------------------------------------------------------- ------------------ -----------------
83.4 (131.9)
Items that will not be subsequently reclassified
to income
statement:
Valuation gain on equity investments at fair
value through other
comprehensive income - 0.1
Actuarial gains 1.6 10.8
Income tax relating to items that will not be
subsequently
reclassified to income statement (6.4) (2.3)
(4.8) 8.6
--------------------------------------------------------- ------------------ -----------------
Other comprehensive income / (loss) for the period,
net of tax 78.6 (123.3)
--------------------------------------------------------- ------------------ -----------------
Total comprehensive income for the period 392.7 167.6
--------------------------------------------------------- ------------------ -----------------
Total comprehensive income attributable to:
Owners of the parent 392.7 167.6
--------------------------------------------------------- ------------------ -----------------
Condensed consolidated income statement (unaudited)
Year ended 31 December
2021 2020
----------------------------------------- -----
Note EUR million EUR million
----------------------------------------- ----- ------------------ -----------------
Net sales revenue 3 7,168.4 6,131.8
Cost of goods sold (4,570.2) (3,810.3)
----------------------------------------- ----- ------------------ -----------------
Gross profit 2,598.2 2,321.5
Operating expenses 4 (1,833.3) (1,682.2)
Share of results of integral equity
method
investments 1 34.4 21.4
----------------------------------------- ----- ------------------ -----------------
Operating profit 3 799.3 660.7
Finance costs, net 5 (67.6) (70.1)
Share of results of non-integral equity
method investments 1 3.2 3.3
----------------------------------------- ----- ------------------ -----------------
Profit before tax 734.9 593.9
Tax 6 (187.4) (178.9)
----------------------------------------- ----- ------------------ -----------------
Profit after tax 547.5 415.0
----------------------------------------- ----- ------------------ -----------------
Attributable to:
Owners of the parent 547.2 414.9
Non-controlling interests 0.3 0.1
----------------------------------------- ----- ------------------ -----------------
547.5 415.0
----------------------------------------- ----- ------------------ -----------------
Basic earnings per share (EUR) 7 1.50 1.14
Diluted earnings per share (EUR) 7 1.49 1.14
Condensed consolidated statement of comprehensive income
(unaudited)
Year ended 31 December
2021 2020
---------------------------------------------------------
EUR million EUR million
--------------------------------------------------------- --------------- --------------
Profit after tax 547.5 415.0
Other comprehensive income:
Items that may be subsequently reclassified to
income
statement:
Cost of hedging (2.7) (2.2)
Net gain of cash flow hedges 69.5 22.7
Foreign currency translation gains / (losses) 73.6 (254.9)
Share of other comprehensive income / (loss)
of equity method
investments 14.6 (25.4)
Income tax relating to items that may be subsequently
reclassified
to income statement (9.5) (2.4)
--------------------------------------------------------- --------------- --------------
145.5 (262.2)
Items that will not be subsequently reclassified
to income
statement:
Valuation loss on equity investments at fair
value through other
comprehensive income - (0.2)
Actuarial gains / (losses) 16.1 (12.5)
Income tax relating to items that will not be
subsequently
reclassified to income statement (6.1) 2.0
10.0 (10.7)
--------------------------------------------------------- --------------- --------------
Other comprehensive income / (loss) for the year,
net of tax 155.5 (272.9)
--------------------------------------------------------- --------------- --------------
Total comprehensive income for the year 703.0 142.1
--------------------------------------------------------- --------------- --------------
Total comprehensive income attributable to:
Owners of the parent 702.7 142.0
Non-controlling interests 0.3 0.1
703.0 142.1
--------------------------------------------------------- --------------- --------------
Condensed consolidated balance sheet (unaudited)
As at 31 December
2021 2020
-------------------------------------
Note EUR million EUR million
------------------------------------- ----- ------------------ -----------------
Assets
Intangible assets 8 2,043.3 1,986.1
Property, plant and equipment 8 2,830.9 2,616.6
Other non-current assets 483.2 443.3
------------------------------------- ----- ------------------ -----------------
Total non-current assets 5,357.4 5,046.0
------------------------------------- ----- ------------------ -----------------
Inventories 519.8 417.6
Trade, other receivables and assets 975.3 787.1
Other financial assets 10 878.9 106.6
Cash and cash equivalents 10 782.8 1,215.8
------------------------------------- ----- ------------------ -----------------
3,156.8 2,527.1
Assets classified as held for sale 8 0.1 -
------------------------------------- ----- ------------------ -----------------
Total current assets 3,156.9 2,527.1
------------------------------------- ----- ------------------ -----------------
Total assets 8,514.3 7,573.1
------------------------------------- ----- ------------------ -----------------
Liabilities
Borrowings 10 381.7 315.2
Other current liabilities 2,134.7 1,711.0
------------------------------------- ----- ------------------ -----------------
Total current liabilities 2,516.4 2,026.2
------------------------------------- ----- ------------------ -----------------
Borrowings 10 2,555.7 2,610.3
Other non-current liabilities 325.1 303.3
------------------------------------- ----- ------------------ -----------------
Total non-current liabilities 2,880.8 2,913.6
------------------------------------- ----- ------------------ -----------------
Total liabilities 5,397.2 4,939.8
------------------------------------- ----- ------------------ -----------------
Equity
Owners of the parent 3,114.5 2,630.7
Non-controlling interests 2.6 2.6
------------------------------------- ----- ------------------ -----------------
Total equity 3,117.1 2,633.3
------------------------------------- ----- ------------------ -----------------
Total equity and liabilities 8,514.3 7,573.1
------------------------------------- ----- ------------------ -----------------
Condensed consolidated statement of changes in equity
(unaudited)
Attributable to owners of the parent
Share Share Group Treasury Exchange Other Retained Total
capital premium reorganisation shares equalisation reserves earnings Total Non-controlling equity
EUR EUR reserve EUR reserve EUR EUR EUR interests EUR
million million EUR million million EUR million million million million EUR million million
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Balance as at 1
January
2020 2,010.8 3,545.3 (6,472.1) (169.8) (964.7) 256.3 4,491.7 2,697.5 2.7 2,700.2
Shares issued to
employees
exercising
stock
options (note
11) 3.6 4.0 - - - - - 7.6 - 7.6
Share-based
compensation: -
Performance
shares - - - - - 9.5 - 9.5 - 9.5
Appropriation of
reserves
(note 11) - - - 14.3 - (13.9) (0.4) - - -
Dividends (note
13) - (227.9) - - - - 2.2 (225.7) (0.2) (225.9)
Transfer of cash
flow
hedge reserve,
including cost
of
hedging
to
inventories,
net
of tax (1) - - - - - (0.2) - (0.2) - (0.2)
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
2,014.4 3,321.4 (6,472.1) (155.5) (964.7) 251.7 4,493.5 2,488.7 2.5 2,491.2
Profit for the
year,
net of tax - - - - - - 414.9 414.9 0.1 415.0
Other
comprehensive
loss
for the year,
net
of tax - - - - (277.4) 15.0 (10.5) (272.9) - (272.9)
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Total
comprehensive
income
for the year,
net
of tax(2) - - - - (277.4) 15.0 404.4 142.0 0.1 142.1
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Balance as at 31
December
2020 2,014.4 3,321.4 (6,472.1) (155.5) (1,242.1) 266.7 4,897.9 2,630.7 2.6 2,633.3
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
(1) The amount included in other reserves of EUR0.2 million gain
for 2020 represents the cash flow hedge reserve, including cost of
hedging, transferred to inventory of EUR0.1 million loss, and the
deferred tax income thereof amounting to EUR0.3 million.
(2) The amount included in the exchange equalisation reserve of
EUR277.4 million loss for 2020 represents the exchange loss
attributed to the owners of the parent, primarily related to the
Nigerian Naira and the Russian Rouble, including EUR22.5 million
loss relating to the share of other comprehensive income of equity
methods investments.
The amount of other comprehensive income net of tax included in
other reserves of EUR15.0 million gain for 2020 consists of loss on
valuation of equity investments at fair value through other
comprehensive income of EUR0.2 million, cash flow hedges gain of
EUR20.5 million, share of other comprehensive income of equity
method investments of EUR2.9 million loss and the deferred tax
expense thereof amounting to EUR2.4 million.
The amount of EUR404.4 million gain attributable to owners of
the parent comprises profit for the period of EUR414.9 million,
actuarial losses of EUR12.5 million and deferred tax income of
EUR2.0 million.
The amount of EUR0.1 million gain included in non-controlling
interests for 2020 represents the share of non-controlling
interests in profit for the year.
Condensed consolidated statement of changes in equity
(unaudited)
Attributable to owners of the parent
Share Share Group Treasury Exchange Other Retained Total
capital premium reorganisation shares equalisation reserves earnings Total Non-controlling equity
EUR EUR reserve EUR reserve EUR EUR EUR interests EUR
million million EUR million million EUR million million million million EUR million million
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Balance as at 1
January
2021 2,014.4 3,321.4 (6,472.1) (155.5) (1,242.1) 266.7 4,897.9 2,630.7 2.6 2,633.3
Shares issued to
employees
exercising
stock
options (note
11) 7.9 11.7 - - - - - 19.6 - 19.6
Share-based
compensation:
Performance
shares - - - - - 15.1 - 15.1 - 15.1
Movement in
shares
held for
equity
compensation
plan - - - - - (0.1) - (0.1) - (0.1)
Appropriation of
reserves
(note 11) - - - 8.9 - (9.0) 0.1 - - -
Dividends (note
13) - (235.8) - - - - 2.2 (233.6) (0.3) (233.9)
Transfer of cash
flow
hedge reserve,
including cost
of
hedging to
inventories,
net
of tax(3) - - - - - (19.9) - (19.9) - (19.9)
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
2,022.3 3,097.3 (6,472.1) (146.6) (1,242.1) 252.8 4,900.2 2,411.8 2.3 2,414.1
Profit for the
year
net of tax - - - - - - 547.2 547.2 0.3 547.5
Other
comprehensive
income
for the year,
net
of tax - - - - 88.1 57.4 10.0 155.5 - 155.5
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Total
comprehensive
income
for the year,
net
of tax(4) - - - - 88.1 57.4 557.2 702.7 0.3 703.0
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Balance as at 31
December
2021 2,022.3 3,097.3 (6,472.1) (146.6) (1,154.0) 310.2 5,457.4 3,114.5 2.6 3,117.1
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
(3) The amount included in other reserves of EUR19.9 million
gain for 2021 represents the cash flow hedge reserve, including
cost of hedging, transferred to inventory of EUR24.0 million gain,
and the deferred tax expense thereof amounting to EUR4.1
million.
(4) The amount included in the exchange equalisation reserve of
EUR88.1 million gain for 2021 represents the exchange gain
attributed to the owners of the parent, primarily related to the
Swiss Franc and the Russian Rouble, including EUR14.5 million gain
relating to the share of other comprehensive income of equity
methods investments.
The amount of other comprehensive income net of tax included in
other reserves of EUR57.4 million gain for 2021 consists of cash
flow hedges gain of EUR66.8 million, share of other comprehensive
income of equity method investments of EUR0.1 million gain and the
deferred tax expense thereof amounting to EUR9.5 million.
The amount of EUR557.2 million gain attributable to owners of
the parent comprises profit for the period of EUR547.2 million,
actuarial gains of EUR16.1 million and deferred tax expense of
EUR6.1 million.
The amount of EUR0.3 million gain included in non-controlling
interests for 2021 represents the share of non-controlling
interests in profit for the year.
Condensed consolidated cash flow statement (unaudited)
Year ended 31 December
Note 2021 2020
------------------------------------------------ -----
EUR million EUR million
------------------------------------------------ ----- ----------------- ----------------
Operating activities
Profit after tax for the period 547.5 415.0
Finance costs, net 5 67.6 70.1
Share of results of non-integral equity
method investments (3.2) (3.3)
Tax charged to the income statement 187.4 178.9
Depreciation and impairment of property,
plant and equipment 336.3 388.1
Employee performance shares 14.9 9.5
Amortisation of intangible assets 8 1.0 0.9
------------------------------------------------ ----- ----------------- ----------------
1,151.5 1,059.2
Share of results of integral equity method
investments (34.4) (21.4)
Gain on disposals of non-current assets (28.4) (1.4)
(Increase) / Decrease in inventories (114.5) 9.4
(Increase) / Decrease in trade and other
receivables (109.0) 178.5
Increase / (Decrease) in trade and other
payables 419.3 (79.6)
Tax paid (142.3) (183.2)
Net cash inflow from operating activities 1,142.2 961.5
------------------------------------------------ ----- ----------------- ----------------
Investing activities
Payments for purchases of property, plant
and equipment (506.5) (419.2)
Proceeds from sales of property, plant and
equipment 35.8 13.4
Payments for business combinations 14 (5.6) -
Payment for acquisition of joint operation (0.9) -
Net payment for acquisition of integral
equity method investment 15 - (0.5)
Payments for acquisition of non-integral
equity method investments 15 (87.0) (2.4)
Net receipts from integral equity method
investments 16 47.8 27.1
Net receipts from non-integral equity method
investments 16 1.9 1.3
Joint arrangement reclassification 15 - (13.1)
Net (payments for) / proceeds from investments
in financial assets
at amortised cost (102.8) 264.4
Net (payments for) / proceeds from investments
in financial assets
at fair value through profit or loss (640.6) 370.4
Loans to related parties (0.9) (2.5)
Interest (paid) / received (0.3) 0.2
Net cash (outflow) / inflow from investing
activities (1,259.1) 239.1
------------------------------------------------ ----- ----------------- ----------------
Financing activities
Proceeds from shares issued to employees,
exercising stock options 11 19.6 7.6
Proceeds from borrowings 129.3 211.8
Repayments of borrowings (133.8) (655.8)
Principal repayments of lease obligations (63.1) (58.7)
Dividends paid to owners of the parent (233.6) (225.7)
Dividends paid to non-controlling interests (0.2) (0.2)
Proceeds from / (payments for) settlement
of derivatives regarding
financing activities 4.9 (1.1)
Interest paid (45.5) (64.7)
Net cash outflow from financing activities (322.4) (786.8)
------------------------------------------------ ----- ----------------- ----------------
Net (decrease) / increase in cash and cash
equivalents (439.3) 413.8
------------------------------------------------ ----- ----------------- ----------------
Movement in cash and cash equivalents
Cash and cash equivalents at 1 January 1,215.8 823.0
Net (decrease) / increase in cash and cash
equivalents (2020: Net increase in cash
and cash equivalents, excl. joint arrangement
reclassification) (439.3) 426.9
Joint arrangement reclassification - (13.1)
Effect of changes in exchange rates 6.3 (21.0)
------------------------------------------------ ----- ----------------- ----------------
Cash and cash equivalents at the end of
the year 782.8 1,215.8
------------------------------------------------ ----- ----------------- ----------------
The accompanying notes form an integral part of these condensed
consolidated financial statements
Selected explanatory notes to the condensed consolidated
financial statements (unaudited)
1. Basis of preparation, accounting policies and change in accounting estimate
Basis of preparation
These condensed consolidated financial statements are prepared
in accordance with International Accounting Standard ('IAS') 34,
'Interim Financial Reporting', as adopted by the European Union
('EU'), and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
These condensed consolidated financial statements do not include
all the information and disclosures required in the annual
financial statements and should be read in conjunction with the
Group's annual consolidated financial statements as at 31 December
2020. The Group's annual consolidated financial statements for the
year ended 31 December 2020 were prepared in accordance with
International Financial Reporting Standards ('IFRS') as issued by
the International Accounting Standards Board ('IASB'). IFRS as
adopted by the EU differ in certain respects from IFRS as issued by
the IASB. These differences have no impact on the Group's condensed
consolidated financial statements for the periods presented.
Going concern
In 2021 the Group experienced the gradual recovery from COVID-19
pandemic as evidenced by the re-opening of its markets and return
to pre-pandemic levels of performance. However, COVID-19 continues
to be a source of uncertainty for the near-term and could
potentially lead to further economic disruption. Management has
reviewed a range of scenarios and forecasts as part of its
continuous focus on risk management, including the potential
financial impact of a slower COVID-19 pandemic recovery along with
the Group's proposed responses. The relevant assumptions have been
modelled on the estimated potential impact of severe but plausible
downside scenarios, linked to the Group's principal risks. The
Group's strong balance sheet and liquidity position (refer to note
9), its leading market shares and largely variable cost base,
together with its unique portfolio of brands and resilient and
talented people will, management believe, allow the Group to fully
overcome the challenges posed by the ongoing COVID-19 pandemic.
Having considered the outcome of these assessments, based on a
quantitative viability exercise, the Group has a reasonable
expectation that there are adequate resources to continue in
operational existence for at least 12 months from the date of
approval of the condensed consolidated financial statements and
considers appropriate to adopt the going concern basis of
accounting in preparing these condensed consolidated financial
statements.
Accounting policies
The accounting policies used in the preparation of the condensed
consolidated financial statements of Coca-Cola HBC AG ('Coca-Cola
HBC', the 'Company' or the 'Group') are consistent with those used
in the 2020 annual financial statements , except for the adoption
of applicable amendments to accounting standards effective as of 1
January 2021. The Group has not early adopted any standard,
interpretation or amendment that has been issued but is not yet
effective.
Amended standards adopted by the Group
The below amendments to the standards became applicable as of 1
January 2021 and were adopted by the Group. The adoption of these
amendments did not have a significant impact on the Group's
condensed consolidated financial statements.
Amendments to IFRS 9, IAS 39, IFRS 7 and IFRS 16 - Interest Rate
Benchmark Reform - Phase 2: With publication of the Phase 2
amendments, the IASB has completed its work in response to
Interbank Offered Rate (IBOR) reform. The amendments provide
temporary reliefs which address the financial reporting effects
when an IBOR is replaced with an alternative benchmark rate. More
specifically, the amendments include practical expedients in
relation to how a company will account for changes in the
contractual cash flows of financial instruments, how it will
account for the change in its hedging relationships and the
information it should disclose.
Amendments to IFRS 16 Leases - COVID-19 related rent
concessions: The amendment provides lessees (but not lessors) with
relief in the form of an optional exemption from assessing whether
a rent concession related to COVID-19 is a lease modification.
Lessees can elect to account for rent concessions in the same way
as they would for changes which are not considered lease
modifications. In such cases, this will result in accounting for
the concessions as variable lease payments in the period in which
they are granted.
Change in accounting estimate
In 2021, the Group re-assessed the estimated useful life for
specific categories of production equipment, following changes in
estimates over their expected period of usage. As a result,
effective 1 January 2021, the expected useful life of the specific
categories of production equipment was extended by five years.
Therefore, the depreciation expense for 2021 is approximately EUR33
million less compared to the depreciation expense calculated using
the previously applied useful lives. This is primarily reflected in
the 'Cost of goods sold' line of the consolidated income
statement.
2. Foreign currency and translation
The Group's reporting currency is the Euro (EUR). Coca-Cola HBC
translates the income statements of foreign operations to the Euro
at average exchange rates and the balance sheets at the closing
exchange rates on 31 December. The principal exchange rates used
for translation purposes in respect of one Euro are:
Average rate for the year
ended Closing rate as at
31 December 31 December
2021 2020 31 December 2021 31 December 2020
------------------- ------------- ------------- ----------------- -----------------
US Dollar 1.18 1.14 1.13 1.22
UK Sterling 0.86 0.89 0.84 0.91
Polish Zloty 4.56 4.44 4.60 4.54
Nigerian Naira 484.31 435.06 481.32 480.68
Hungarian Forint 358.49 350.65 370.08 364.83
Swiss Franc 1.08 1.07 1.04 1.08
Russian Rouble 87.23 82.23 83.87 90.55
Romanian Leu 4.92 4.84 4.95 4.88
Ukrainian Hryvnia 32.30 30.66 30.78 34.64
Czech Koruna 25.64 26.45 24.95 26.21
Serbian Dinar 117.57 117.58 117.56 117.57
------------------- ------------- ------------- ----------------- -----------------
3. Segmental analysis
The Group has essentially one business, being the production,
sale and distribution of ready-to-drink, primarily non-alcoholic,
beverages. The Group operates in 28 countries which are aggregated
in reportable segments as follows:
Established markets: Austria, Cyprus, Greece, Italy, Northern Ireland, the Republic of Ireland and Switzerland.
Developing markets: Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia.
Emerging markets: Armenia, Belarus, Bosnia and Herzegovina, Bulgaria, Moldova, Montenegro, Nigeria, North
Macedonia,
Romania, the Russian Federation, Serbia (including the Republic of Kosovo) and Ukraine.
a) Volume and net sales revenue
The Group sales volume in million unit cases (1) was as
follows:
Six months ended Year ended
31 December 31 December
2021 2020 2021 2020
-------------- ------------------------ ------------------------ ---------------- ---------------
Established 315.6 291.6 589.9 536.9
Developing 224.6 222.4 415.5 412.1
Emerging 745.8 631.1 1,407.3 1,186.6
Total volume 1,286.0 1,145.1 2,412.7 2,135.6
-------------- ------------------------ ------------------------ ---------------- ---------------
(1) One unit case corresponds to approximately 5.678 litres or
24 servings, being a typically used measure of volume. For biscuits
volume, one unit case corresponds to 1 kilogram. Volume data is
derived from unaudited operational data.
Net sales revenue per reportable segment for the six months and
the years ended 31 December is presented below:
Six months ended Year ended
31 December 31 December
2021 2020 2021 2020
EUR million EUR million EUR million EUR million
------------------------- ------------------------ ------------------------ --------------- ---------------
Established 1,329.2 1,188.7 2,479.0 2,174.6
Developing 764.0 650.7 1,365.6 1,170.9
Emerging 1,827.3 1,461.2 3,323.8 2,786.3
Total net sales revenue 3,920.5 3,300.6 7,168.4 6,131.8
------------------------- ------------------------ ------------------------ --------------- ---------------
In addition to non-alcoholic ready-to-drink beverages ("NARTD"),
the Group sells and distributes Premium Spirits. An analysis of
volume and net sales revenue per product type for the six months
and the years ended 31 December is presented below :
Six months ended Year ended
31 December 31 December
2021 2020 2021 2020
EUR million EUR million EUR million EUR million
------------------------- ------------------------ ------------------------ --------------- ---------------
Volume in million unit
cases(1)
NARTD(2) 1,284.0 1,143.6 2,409.3 2,133.2
Premium spirits 2.0 1.5 3.4 2.4
Total volume 1,286.0 1,145.1 2,412.7 2,135.6
------------------------- ------------------------ ------------------------ --------------- ---------------
Net sales revenue (EUR
million)
NARTD 3,784.2 3,202.4 6,944.5 5,974.4
Premium spirits 136.3 98.2 223.9 157.4
Total net sales revenue 3,920.5 3,300.6 7,168.4 6,131.8
------------------------- ------------------------ ------------------------ --------------- ---------------
(1) One unit case corresponds to approximately 5.678 litres or
24 servings, being a typically used measure of volume. For Premium
Spirits volume, one unit case also corresponds to 5.678 litres. For
biscuits volume, one unit case corresponds to 1 kilogram. Volume
data is derived from unaudited operational data.
(2) NARTD: non-alcoholic, ready-to-drink beverages .
b) Other income statement items
Six months ended Year ended
31 December 31 December
2021 2020 2021 2020
EUR million EUR million EUR million EUR million
---------------------------------- ------------- ------------ --------------- ---------------
Operating profit
Established 175.0 156.7 285.6 203.3
Developing 69.0 80.9 104.7 97.0
Emerging 205.2 220.2 409.0 360.4
Total operating profit 449.2 457.8 799.3 660.7
---------------------------------- ------------- ------------ --------------- ---------------
Reconciling items
Finance costs, net (32.9) (33.9) (67.6) (70.1)
Tax (103.6) (135.8) (187.4) (178.9)
Share of results of non-integral
equity method
investments 1.4 2.8 3.2 3.3
Non-controlling interests - - (0.3) (0.1)
----------------------------------
Profit after tax attributable to
owners of the parent 314.1 290.9 547.2 414.9
---------------------------------- ------------- ------------ --------------- ---------------
c) Other items
The Group continues to monitor the situation in Nigeria in order
to ensure that timely actions and initiatives are undertaken to
minimise potential adverse impact on its performance, particularly
in relation to potential currency volatility. During 2021, revenue
from our operations in Nigeria amounted to 10% of consolidated net
sales revenue; as at 31 December 2021 non-current assets of our
operations in Nigeria amounted to 12% of the consolidated
non-current assets.
4. Restructuring expenses
As part of the effort to optimise its cost base and sustain
competitiveness in the marketplace, the Company undertakes
restructuring initiatives. Restructuring mainly concerns employee
costs, which are included within operating expenses. Restructuring
expenses per reportable segment for the six months and years ended
31 December are presented below:
Six months ended Year ended
31 December 31 December
2021 2020 2021 2020
EUR million EUR million EUR million EUR million
--------------------- ------------------------- ------------------------- --------------- ---------------
Established 15.1 4.7 14.7 5.5
Developing 2.5 4.0 3.4 4.0
Emerging 3.1 0.3 3.1 0.3
Total restructuring
costs 20.7 9.0 21.2 9.8
--------------------- ------------------------- ------------------------- --------------- ---------------
5. Finance costs, net
Six months ended Year ended
31 December 31 December
2021 2020 2021 2020
EUR million EUR million EUR million EUR million
---------------------- ------------------------- ------------------------- --------------- ---------------
Interest income (3.0) (1.7) (5.3) (3.8)
Finance costs 35.3 35.0 68.8 73.6
Net foreign exchange
losses 0.6 0.6 4.1 0.3
Finance costs, net 32.9 33.9 67.6 70.1
---------------------- ------------------------- ------------------------- --------------- ---------------
6. Tax
Six months ended Year ended
31 December 31 December
2021 2020 2021 2020
EUR million EUR million EUR million EUR million
-------------------- ------------------------- ------------------------ --------------- ---------------
Profit before tax 417.7 426.7 734.9 593.9
Tax (103.6) (135.8) (187.4) (178.9)
Effective tax rate 24.8% 31.8% 25.5% 30.1%
-------------------- ------------------------- ------------------------ --------------- ---------------
The Group's effective tax rate for 2021 may differ from the
theoretical amount that would arise using the weighted average tax
rate applicable to profits of the consolidated entities. This
difference can be a consequence of a number of factors, the most
significant of which are the application of statutory tax rates of
the countries in which the Group operates, the non-deductibility of
certain expenses, the non-taxable income and one-off tax items.
In August 2020, Nigerian Bottling Company Ltd, the Group's
subsidiary in Nigeria, settled the additional tax assessed by the
Nigerian tax authorities following the completion of their income
tax audit, for the years 2005-2019, and their transfer pricing
audit, for the years 2011-2019. The net impact to the Tax line item
of the income statement, following the utilisation of provisions
for uncertain tax positions, was EUR16.5 million. These additional
tax charges resulted in a 3.8pp and 2.8pp increase of the Group's
effective tax rate for the six months ended 31 December 2020 and
full year of 2020, respectively.
7. Earnings per share
Basic earnings per share is calculated by dividing the net
profit attributable to the owners of the parent by the weighted
average number of shares outstanding during the period (full year
of 2021: 365,011,304, full year of 2020: 363,991,866, six months
ended 31 December 2021: 365,500,180, six months ended 31 December
2020: 364,205,261). Diluted earnings per share is calculated by
adjusting the weighted average number of ordinary shares
outstanding to assume conversion of all dilutive ordinary shares
arising from exercising employee stock options.
8. Intangible assets and property, plant and equipment
Property,
Intangible plant
assets and equipment
EUR million EUR million
------------------------------------------------------- ------------ --------------
Net book value as at 1 January 2021 excluding
right-of-use assets 1,986.1 2,434.5
Additions (note 15) 16.4 482.6
Arising from business combinations (note 14) 4.1 1.3
Reclassified to assets held for sale - (0.1)
Disposals - (11.2)
Depreciation, impairment, and amortisation (1.0) (283.0)
Foreign currency translation 37.7 44.2
Net book value as at 31 December 2021 excluding
right-of-use assets 2,043.3 2,668.3
------------------------------------------------------- ------------ --------------
Net book value as at 1 January 2021 of right-of-use
assets 182.1
Net book value as at 31 December 2021 of right-of-use
assets 162.6
------------------------------------------------------- ------------ --------------
Net book value as at 31 December 2021 2,830.9
------------------------------------------------------- ------------ --------------
Impairment testing for goodwill and other indefinite-lived
intangible assets
The Group performs its impairment test annually. The recoverable
amount of the cash-generating units is determined through a
value-in-use calculation, which uses cash flow projections based on
operation and market-specific high-level assumptions including
growth rates, discount rates, forecast selling prices and direct
costs. Management has considered the key impacts from COVID-19 when
determining the relevant assumptions and has found them to be
limited considering the strong performance throughout the
development of the pandemic across our territories and the
re-opening of global economies along with vaccinations' progress.
No impairment of goodwill and other indefinite-lived intangible
assets was identified as at 31 December 2021.
9. Financial risk management and financial instruments
The Group's activities expose it to a variety of financial
risks: market risk (including currency risk, interest rate risk and
commodity price risk), credit risk, liquidity risk and capital
risk. There have been no material changes in the risk management
policies since the previous year end.
As described in the 2020 Integrated Annual Report, the Group
actively manages its liquidity risk, which has been an area of
focus during the pandemic. The Group maintains its healthy
liquidity position and is able to meet its liabilities as they fall
due. As at 31 December 2021, the Group has net debt of EUR1.3
billion (refer to note 10). In addition, as at 31 December 2021,
the Group has cash and cash equivalents and other financial assets
of EUR1.6 billion, an undrawn Revolving Credit Facility of EUR0.8
billion, as well as EUR0.8 billion available out of the EUR1.0
billion Commercial Paper Programme. None of our debt facilities are
subject to any financial covenants that would impact the Group's
liquidity or access to capital. The Group credit ratings as
disclosed in the 2020 Integrated Annual Report were reaffirmed
within 2021.
The Group's financial instruments recorded at fair value are
included in Level 1, Level 2 and Level 3 within the fair value
hierarchy as described in the 2020 Integrated Annual Report. The
money market funds recorded at fair value are included in Level 1
within the fair value hierarchy. As at 31 December 2021, the fair
value of the money market funds amounted to EUR638.8 million (31
December 2020: EURnil). As at 31 December 2021, the total
derivatives included in Level 2 were financial assets of EUR42.2
million and financial liabilities of EUR3.8 million.
The Group uses derivatives to mitigate the commodity price risk
related to plastics. As the valuation of these derivatives uses
prices that are not observable in the market, it is classified
within Level 3. The fair value of the derivatives related to
plastics as at 31 December 2021 amounted to a financial asset of
EUR6.0 million and financial liability of EUR6.9 million.
The Group uses foreign currency derivatives to mitigate the
currency risk related to Nigerian Naira. As the valuation technique
of these derivatives incorporates greater use of unobservable
inputs, their fair value is classified within Level 3. The fair
value of these derivatives as at 31 December 2021 amounted to a
financial liability of EUR3.9 million.
The fair value of bonds and notes payable applying the clean
market price, as at 31 December 2021, was EUR2,486.5 million
compared to their book value of EUR2,385.7 million, as at the same
date.
10. Net debt
As at 31 December
2021 2020
EUR million EUR million
----------------------------------------------------- ------------------- ------------------
Current borrowings 381.7 315.2
Non-current borrowings 2,555.7 2,610.3
Less: Cash and cash equivalents (782.8) (1,215.8)
- Financial assets at amortised cost (196.1) (92.9)
- Financial assets at fair value through
profit or loss (638.8) -
------------------- ------------------
Less: Other financial assets (834.9) (92.9)
Net debt 1,319.7 1,616.8
----------------------------------------------------- ------------------- ------------------
The outstanding EUR563.4 million of the 2.375%, EUR800 million
7-year fixed rate bond was repaid upon its maturity in June
2020.
In December 2019 the Group established a loan facility of US
Dollar 85.0 million to finance the purchase of production equipment
by the Group's subsidiary in Nigeria. The facility was being drawn
down by Nigerian Bottling Company Ltd ('NBC') over the course of
2020 and 2021 maturing in 2027. The obligations under this facility
are guaranteed by Coca-Cola HBC AG. As at 31 December 2021, the
outstanding liability amounted to EUR63.2 million (EUR48.2 million
as at 31 December 2020).
Cash and cash equivalents include an amount of EUR161.4 million
equivalent in Nigerian Naira. This includes an amount of EUR8.9
million equivalent in Nigerian Naira, which relates to the
outstanding balance held for the repayment of NBC's former minority
shareholders, following the 2011 acquisition of non-controlling
interests.
The financial assets at amortised cost comprise of time deposits
amounting to EUR189.9 million (31 December 2020: EUR92.9 million)
and also include an amount of EUR6.2 million (31 December 2020:
EURnil) equivalent in Nigerian Naira invested in Treasury Bills
related to the outstanding balance of the bank account held for the
repayment of NBC's former minority shareholders as described above.
The financial assets at fair value through profit or loss are
related to money market funds. Included in 'Other financial assets'
of the condensed consolidated balance sheet are derivative
financial instruments of EUR39.2 million (31 December 2020: EUR13.5
million) and related party loans receivable of EUR4.8 million (31
December 2020: EUR0.2 million).
11. Share capital, share premium and treasury shares
Number of shares Share Share
(authorised capital premium
and issued) EUR million EUR million
--------------------------------------- ----------------- ------------ ------------
Balance as at 1 January 2020 369,930,157 2,010.8 3,545.3
Shares issued to employees exercising
stock options 582,440 3.6 4.0
Dividends (note 13) - - (227.9)
Balance as at 31 December 2020 370,512,597 2,014.4 3,321.4
--------------------------------------- ----------------- ------------ ------------
Shares issued to employees exercising
stock options 1,282,821 7.9 11.7
Dividends (note 13) - - (235.8)
Balance as at 31 December 2021 371,795,418 2,022.3 3,097.3
--------------------------------------- ----------------- ------------ ------------
In 2021, the share capital of Coca-Cola HBC increased by the
issuance of 1,282,821 (2020: 582,440) new ordinary shares following
the exercise of stock options pursuant to the Coca-Cola HBC AG's
employees' stock option plan. Total proceeds from the issuance of
the shares under the stock option plan amounted to EUR19.6 million
(2020: EUR7.6 million).
An amount of EUR8.9 million in 2021 (2020: EUR14.3 million)
relates to treasury shares provided to employees in connection with
vested performance share awards under the Company's employee
incentive scheme, which was reflected as an appropriation of
reserves between 'Treasury shares' and 'Other reserves' in the
condensed consolidated statement of changes in equity.
Following the above changes, on 31 December 2021 the share
capital of the Group amounted to EUR2,022.3 million and comprised
371,795,418 shares with a nominal value of CHF 6.70 each.
12. Leases
The leases which are recorded on the consolidated balance sheet
are principally in respect of vehicles and buildings. T he Group's
right-of-use assets and lease liability are presented below:
2021 2020
EUR million EUR million
Land and buildings 63.2 71.9
Plant and equipment 99.4 110.2
Total right-of-use assets 162.6 182.1
------------------------------- ------------ ------------
Current lease liabilities 50.9 54.8
Non-current lease liabilities 109.4 129.4
Total lease liability 160.3 184.2
------------------------------- ------------ ------------
13. Dividends
On 16 June 2020, the shareholders of Coca-Cola HBC AG at the
Annual General Meeting approved a dividend distribution of 0.62
euro per share. The total dividend amounted to EUR227.9 million and
was paid on 28 July 2020. Of this an amount of EUR2.2 million
related to shares held by the Group.
The shareholders of Coca-Cola HBC AG approved a dividend
distribution of 0.64 euro per share at the Annual General Meeting
held on 22 June 2021. The total dividend amounted to EUR235.8
million and was paid on 3 August 2021. Of this an amount of EUR2.2
million related to shares held by the Group.
The Board of Directors of Coca-Cola HBC AG has proposed a 0.71
euro dividend per share in respect of 2021. If approved by the
shareholders of Coca-Cola HBC AG, this dividend will be paid in
2022.
14. Business combinations
On 31 October 2021, the Group acquired a self-serve coffee
vending business in Poland (the 'Costa Express Business'). The
acquisition was of a group of assets that constituted a business,
and which have been integrated into the Group's operations in
Poland. Consideration paid for the acquisition amounted to EUR5.6
million and is included in line 'Payment for business combination'
of the condensed consolidated cash flow statement. As a result of
the above acquisition, other intangible assets of EUR3.1 million,
goodwill of EUR1.0 million and property, plant and equipment of
EUR1.3 million were recorded in the Group's Developing segment
(refer to note 8). Acquisition-related costs of EUR0.4 million were
included in 2021 'Operating expenses' line of the condensed
consolidated income statement, as a result of the above
acquisition.
In addition, acquisition and integration costs of EUR13.9
million incurred in 2021 regarding acquisitions completed in 2022
(refer to note 20) were included in 'Operating expenses' line of
the condensed consolidated income statement.
15. Interests in other entities
The Group has a 50% interest in the Multon Z.A.O. Group of
companies ('Multon'), which is engaged in the production and
distribution of juices in Russia and is jointly controlled by the
Group and The Coca-Cola Company. The joint arrangement was
initially classified as a joint operation, as it provided to the
Group and The Coca-Cola Company rights to the assets and
obligations for the liabilities of the joint arrangement. Effective
May 6, 2020 following the completion of Multon's reorganisation,
the joint arrangement was reclassified from a joint operation to an
integral joint venture, as the new structure provided to the Group
and The Coca-Cola Company rights to the joint arrangement's net
assets. As a result, the Group derecognised its share of the joint
arrangement's assets and liabilities with a corresponding increase
in equity method investments included in line 'Other non-current
assets' of the condensed consolidated balance sheet. The decrease
of cash and cash equivalents in 2020, resulting from the
reorganisation of Multon, amounting to EUR13.1 million, was
reported in line 'Joint arrangement reclassification' within
investing activities in the condensed consolidated cash flow
statement. No gain or loss was recognised as a result of the above
reorganisation. Following Multon's reorganisation, transactions
between the Group entities and the joint arrangement are reported
as related party transactions under the joint venture category
(refer to note 16).
In January 2021, a demerger of Acque Minerali S.r.l., our
mineral water and adult sparkling beverages integral joint venture
with The Coca-Cola Company in Italy, was completed. As part of the
demerger, certain operating activities were transferred to the
Group, resulting in the recognition of EUR15.6 million of goodwill
as part of the Group's Established segment (refer to note 8). There
was no significant impact to the Group's net assets or income
statement from the demerger. During 2020, the Group paid
outstanding consideration and acquisition costs of EUR1.8 million
and EUR0.2 million respectively as well as further EUR0.2 million
consideration in connection with the acquisition of Acque Minerali
S.r.l., while it received an amount of EUR1.7 million as adjustment
to the purchase price.
In April 2021, the Group acquired a 50% interest in Stockday
S.R.L., an online business-to-business platform and distributor in
Romania, which was up until that point wholly owned by HEINEKEN
Romania S.A. The transaction resulted in the two shareholders
jointly controlling Stockday S.R.L. The joint arrangement was
classified as a joint operation in accordance with the requirements
of IFRS 11 ' Joint arrangements', as it provides to the
shareholders rights to the assets and obligations for the
liabilities of the joint arrangement. As a result of the above
transaction, goodwill of EUR0.8 million was recorded as part of the
Group's Emerging segment (refer to note 8).
On 7 October 2021, the Group acquired a 30% equity shareholding
in Casa Del Caffè Vergnano S.p.A. ('Caffè Vergnano'), a premium
Italian coffee company. The Group also entered into an exclusive
distribution agreement for Caffè Vergnano's products in all its
territories outside of Italy. The corresponding investment was
classified as an associate in accordance with the requirements of
IAS 28 'Investments in Associates and Joint Ventures' since the
terms of the transaction provide to the Group significant influence
over the investee. The investment is accounted for using the equity
method and was further classified as a non-integral equity-method
investment in the condensed consolidated financial statements of
the Group, considering that the distribution agreement is separate
to the shareholding. The total consideration and acquisition costs
paid amounted to EUR87.0 million, reflected in line 'Payments for
acquisition of non-integral equity method investments' of the
condensed consolidated cash flow statement.
16. Related party transactions
a) The Coca-Cola Company
As at 31 December 2021, The Coca-Cola Company and its
subsidiaries (collectively, "TCCC") indirectly owned 2 1 .0% (31
December 2020: 23.0%) of the issued share capital of Coca-Cola HBC.
The below table summarises transactions with The Coca-Cola Company
and its subsidiaries:
Six months ended Year ended
31 December 31 December
2021 2020 2021 2020
EUR million EUR million EUR million EUR million
------------------------------ --------------- --------------- ------------- -------------
Purchases of concentrate,
finished products
and other items 821.1 688.4 1, 598 .8 1, 374.6
Net contributions received
for marketing
and promotional incentives 51.5 58.2 83.1 90.7
Sales of finished goods and
raw materials 2. 6 2.3 4 .5 3.5
Other income 1.5 4.3 2.8 6 .3
Other expenses 2.1 3.0 4.2 5.6
As at 31 December 2021, the Group was owed EUR 52.8 million
(EUR40.9 million as at 31 December 2020) by TCCC and owed EUR 223.1
million (EUR196.4 million as at 31 December 2020) to TCCC. In the
second half of 2021, the Group paid a total consideration of EUR5.6
million for the acquisition of Costa Express Business (refer to
note 14).
b) Frigoglass S.A. ("Frigoglass"), Kar-Tess Holding and AG Leventis (Nigeria) Plc
Frigoglass, a company listed on the Athens Exchange, is a
manufacturer of coolers, cooler parts, glass bottles, crowns and
plastics. Truad Verwaltungs AG currently indirectly owns 48.6% of
Frigoglass and 99.3% of AG Leventis (Nigeria) Plc and also
indirectly controls Kar Tess Holding, which holds approximately
23.0% (31 December 2020: 23.0%) of Coca-Cola HBC's total issued
capital. Frigoglass has a controlling interest in Frigoglass
Industries (Nigeria) Limited, in which Coca-Cola HBC has a 23.9%
effective interest, through its investment in Nigerian Bottling
Company Ltd.
The table below summarises transactions with Frigoglass,
Kar-Tess Holding and AG Leventis (Nigeria) Plc:
Six months ended Year ended
31 December 31 December
2021 2020 2021 2020
EUR million EUR million EUR million EUR million
-------------------------------- --------------- --------------- ------------- -------------
Purchases of coolers and other
equipment, raw
and other materials 56.8 31.8 126.9 97.8
Maintenance and other expenses 16.4 10.5 28.7 21.8
As at 31 December 2021, Coca-Cola HBC owed EUR 14.9 million
(EUR11.8 million as at 31 December 2020) to and was owed EUR 0.8
million (EUR0.8 million as at 31 December 2020) from Frigoglass and
its subsidiaries. As at 31 December 2021, Coca-Cola HBC owed EUR
0.9 million (EUR1.8 million as at 31 December 2020) and had a lease
liability of EUR 6.0 million (EURnil as at 31 December 2020) to AG
Leventis (Nigeria) Plc. Capital commitments to Frigoglass and its
subsidiaries as at 31 December 2021, amounted to EUR 33.5 million
(EUR14.1 million as at 31 December 2020) including the Group's
share of its joint ventures' capital commitments to Frigoglass.
Frigoglass Industries (Nigeria) Limited, an associate in which
the Group holds an effective interest of 23.9% through its
subsidiary Nigerian Bottling Company Ltd, is guarantor under the
amended banking facilities and notes issued by the Frigoglass
Group, as part of the debt restructuring of the latter. The Group
has no direct exposure arising from this guarantee arrangement, but
the Group's investment in this associate, which stood at EUR25.2
million as at 31 December 2021 (31 December 2020: EUR23.9 million),
would be at potential risk if there was a default under the terms
of the amended banking facilities or the notes and the Frigoglass
Group (including the guarantor) were unable to meet their
obligations thereunder. During the six months and the full year
ended 31 December 2021, the Group received dividends of EUR1.4
million (EURnil in the respective prior year periods) from
Frigoglass Industries (Nigeria) Limited, which are included in line
`Net receipts from non-integral equity method investments' of the
condensed consolidated cash flow statement.
c) Other related parties
Other
During the six months and the full year ended 31 December 2021,
the Group incurred other expenses of EUR 7.8 million and EUR 15.1
million (EUR7.4 million and EUR16.4 million in the respective
prior-year periods) mainly related to maintenance services for cold
drink equipment and installations of coolers, fountains, vending
and merchandising equipment as well as subsequent expenditure for
fixed assets of EUR 0.7 million and EUR 1.5 million (EUR0.9 million
and EUR1.8 million in the respective prior-year periods) from other
related parties. As at 31 December 2021, the Group owed EUR 0.6
million (EUR1.9 million as at 31 December 2020) to and was owed
loans receivable of EUR 0.9 million (EURnil as at 31 December 2020)
from other related parties .
During the six months and the full year ended 31 December 2021,
the Group received dividends of EURnil and EUR0.5 million,
respectively, from BevService S.r.l. (EURnil and EUR1.3m in the
respective prior year periods), which are included in line `Net
receipts from non-integral equity method investments' of the
condensed consolidated cash flow statement.
d) Joint ventures
The below table summarises transactions with joint ventures:
Six months ended Year ended
31 December 31 December
2021 2020 2021 2020
EUR million EUR million EUR million EUR million
----------------------------- --------------- --------------- ------------- -------------
Purchases of inventory 2.5 4.7 5.2 10.9
Sales of finished goods and
raw materials 2.7 1.7 4.8 2.8
Other income 9.0 7.5 16.2 10.2
Other expenses 7.4 8.9 13.4 11.5
As at 31 December 2021, the Group owed EUR 149.8 million
including loans payable of EUR 63.2 million (EUR159.6 million as at
31 December 2020 including loans payable of EUR86.3 million) to,
and was owed EUR 13.9 million including loans receivable of EUR 7.1
million (EUR13.1 million as at 31 December 2020 including loans
receivable of EUR7.0 million) from joint ventures. During the six
months and the full year ended 31 December 2021, the Group received
dividends of EUR41.3 million and EUR47.8 million from integral
joint ventures (dividends from integral joint ventures of EURnil
million and EUR27.1 million in the respective prior-year periods),
which are included in line `Net receipts from integral equity
method investments' of the condensed consolidated cash flow
statement.
e) Directors
Bruno Pietracci and Henrique Braun have been elected to the
Board of Coca-Cola HBC following a proposal made by TCCC. There
have been no transactions between Coca-Cola HBC and the Directors
and senior management except for remuneration for both the six
months and years ended 31 December 2021 and 2020.
There were no other significant transactions with other related
parties for the year ended 31 December 2021.
17. Contingencies
In relation to the Greek Competition Authority's decision of 25
January 2002, one of Coca-Cola Hellenic Bottling Company S.A.'s
competitors had filed a lawsuit against Coca-Cola Hellenic Bottling
Company S.A. claiming damages in an amount of EUR7.7 million. The
court of first instance heard the case on 21 January 2009 and
subsequently rejected the lawsuit. The plaintiff appealed the
judgement and on 9 December 2013 the Athens Court of Appeals
rejected the plaintiff's appeal. On 19 April 2014, the same
plaintiff filed a new lawsuit against Coca-Cola Hellenic Bottling
Company S.A. (following the spin-off, Coca-Cola HBC Greece
S.A.I.C.) claiming payment of EUR7.5 million as compensation for
losses and moral damages for alleged anti-competitive commercial
practices of Coca-Cola Hellenic Bottling Company S.A. between 1994
and 2013. On 21 December 2018, the plaintiff served their
withdrawal from the lawsuit. However, on 20 June 2019, the same
plaintiff filed a new lawsuit against Coca-Cola HBC Greece S.A.I.C.
claiming payment of EUR10.1 million as compensation for losses and
moral damages again for alleged anti-competitive commercial
practices of Coca-Cola Hellenic Bottling Company S.A. for the same
period between 1994 and 2013. On July 16, 2021 the Athens
Multimember Court of First Instance issued its judgment number
1929/2021 (hereinafter the "Judgment"), which adjudicates that
Coca-Cola HBC Greece S.A.I.C. is obliged to pay to the plaintiff an
amount of circa EUR0.9 million plus interest as of 31.12.2003. Both
Coca-Cola HBC Greece S.A.I.C and the plaintiff have appealed
against this decision to the court of appeals. Both appeals have
been scheduled to be heard on 19 January 2023. Management believes
that any liability to the Group that may arise as a result of these
pending legal proceedings will not have a material adverse effect
on the results of operations, cash flows, or the financial position
of the Group taken as a whole.
With respect to the ongoing investigation of the Greek
Competition Commission initiated on 6 September 2016, regarding
Coca-Cola HBC Greece S.A.I.C.'s operations in certain commercial
practices in the non-alcoholic beverages market, the Rapporteur of
the Greek Competition Commission appointed for this case issued her
Statement of Objections on 5 July 2021. According to this Statement
of Objections, Coca-Cola HBC Greece S.A.I.C. has allegedly breached
Article 2 of Law 3959/2011 and Article 102 of 'Treaty on the
Functioning of the European Union' ('TFEU') in the Greek on premise
market for the sale of cola and non-cola beverages. In particular,
according to this Statement of Objections, during the period
2015-2020 Coca-Cola HBC Greece S.A.I.C. allegedly undertook a
series of anti-competitive practices, in the relevant market,
thereby excluding competitors and limiting their growth
possibilities. The Statement of Objections recommends that the
Greek Competition Commission should impose a fine upon Coca-Cola
HBC Greece S.A.I.C., and that the latter is required to omit the
allegedly anti-competitive practices in the future. The Statement
of Objections is not binding on the Greek Competition Commission,
which will decide on the case after it has taken into consideration
all evidence, as well as the arguments put forward by all the
parties involved. Coca-Cola HBC Greece S.A.I.C. has vigorously
defended its commercial practices, in rebuttal of the allegations
set out in the Statement of Objections. The hearing of the case,
before the plenary session of the Greek Competition Commission, was
concluded on 29 November 2021 and the supplementary briefs of the
parties were submitted on 16 December 2021. At this stage, it is
difficult to predict with certainty the outcome of the hearing and
the timing of the decision by the Greek Competition Commission.
In 1992, our subsidiary Nigerian Bottling Company ('NBC')
acquired a manufacturing facility in Nigeria from Vacunak, a
Nigerian company. In 1994, Vacunak filed a lawsuit against NBC,
alleging that a representative of NBC had orally agreed to rescind
the sale agreement and instead enter into a lease agreement with
Vacunak. As part of its lawsuit, Vacunak sought compensation for
rent and loss of business opportunities. NBC discontinued all use
of the facility in 1995. On 19 August 2013, NBC received the
written judgment of the Nigerian court of first instance issued on
28 June 2012 providing for damages of approximately EUR17.2
million. NBC has filed an appeal against the judgment. Based on
advice from NBC's outside legal counsel, we believe that it is
unlikely that NBC will suffer material financial losses from this
case. We have consequently not provided for any losses in relation
to this case.
In May 2021, the European Commission sent CCH a questionnaire as
part of a preliminary investigation into a possible infringement by
a CCH subsidiary, Coca-Cola European Partners and The Coca-Cola
Company of EU competition rules through the granting of conditional
rebates to "off-trade" customers capable of foreclosing competition
from other suppliers. CCH's subsidiary will vigorously defend its
commercial practices and is actively cooperating with the European
Commission. The fact that the European Commission is carrying out a
preliminary investigation does not mean that it will open formal
proceedings. It is not possible to predict how long the
investigation will take and its ultimate outcome.
The tax filings of the Group and its subsidiaries are routinely
subjected to audit by tax authorities in most of the jurisdictions
in which the Group conducts business. These audits may result in
assessments of additional taxes. The Group provides for additional
tax in relation to the outcome of such tax assessments, to the
extent that a liability is probable and estimable.
The Group is also involved in various other legal proceedings.
Management believes that any liability to the Group that may arise
as a result of these pending legal proceedings will not have a
material adverse effect on the results of operations, cash flows,
or the financial position of the Group taken as a whole.
Other than the above, there have been no significant adverse
changes in contingencies since 31 December 2020 (as described in
our 2020 Integrated Annual Report available on the Coca-Cola HBC's
web site: www.coca-colahellenic.com ).
18. Commitments
As at 31 December 2021 the Group had capital commitments
including commitments for leases and the share of its joint
ventures' capital commitments of EUR166.1 million (31 December
2020: EUR115.4 million), which mainly relate to plant and machinery
equipment.
19. Number of employees
The average number of full-time equivalent employees in 2021 was
26,787 (2020: 27,722).
20. Subsequent events
a) Acquisition of Coca-Cola Bottling Company of Egypt S.A.E.
On 12 August 2021, the Group entered into sale and purchase
agreement to acquire approximately 52.7% of Coca-Cola Bottling
Company of Egypt S.A.E. ('CCBCE'), the bottling partner of The
Coca-Cola Company ('TCCC') in Egypt, from MAC Beverages Limited and
certain of its affiliated entities ('MBL acquisition'). The MBL
acquisition was completed on 13 January 2022 and resulted in the
Group obtaining control over CCBCE.
The acquisition of CCBCE expands the Group's existing footprint
on the African continent and further increases its exposure to
high-growth markets, as it provides access to one of the largest
non-alcoholic ready-to-drink markets by volume in Africa. In
addition, sharing of the Group's proven capabilities, experience
and best practices with CCBCE, is expected to unlock growth
opportunities, creating value for all stakeholders.
The operating results and assets and liabilities of CCBCE will
be consolidated from 14 January 2022.
The fair value of the consideration for the MBL acquisition
consists of EUR264.9 million, which has already been transferred,
and an additional payment that is to be determined, following
discussions and conditions agreed between the Group and MBL, based
on CCBE's past performance, net financial position and working
capital movement.
As part of the MBL acquisition completion, a convertible loan
which had been granted to CCBCE from a wholly-owned affiliate of
TCCC, one of its major shareholders, was also transferred to the
Group for a consideration of EUR19.1 million. The consideration was
equal to the outstanding principle amount of the convertible loan
and any unpaid interest at the time of its transfer. The loan is
convertible at its maturity in March 2022 into new CCBCE shares at
fair market value and was eliminated upon consolidation of
CCBCE.
Details of the MBL acquisition with regards to provisionally
determined fair values of the net assets acquired, non-controlling
interests and goodwill are as follows:
Fair Value
---------------------------------------
EUR million
--------------------------------------- ------------
Franchise agreements 367.7
Property, plant and equipment 315.3
Inventories 59.2
Trade, other receivables and assets 65.2
Cash and cash equivalents 15.9
Borrowings (217.0)
Trade and other payables (127.4)
Net deferred tax liabilities (121.9)
----------------------------------------- ------------
Net identifiable assets acquired 357.0
Less: Non-controlling interests (169.0)
Add: Goodwill arising on acquisitions 76.9
----------------------------------------- ------------
Net assets acquired 264.9
----------------------------------------- ------------
The table above excludes the additional payment that may adjust
the provisionally determined fair values of the net assets
acquired, non-controlling interests and goodwill.
Fair values on acquisition are provisional due to the timing of
the transaction and will be finalised within 12 months of the
acquisition date. The goodwill is attributable to CCBCE's strong
market position and growth potential. Line 'Borrowings' in the
above table includes the convertible loan as well as third party
loans of EUR122.7 million, which have been repaid and replaced with
intragroup borrowings. The Group has chosen to recognise the
non-controlling interests at their proportionate share of the fair
value of CCBCE's net identifiable assets acquired.
On 12 August 2021, the Group entered into an additional sale and
purchase agreement to acquire approximately 42% of Coca-Cola
Bottling Company of Egypt S.A.E. ('CCBCE'), from a wholly-owned
affiliate of TCCC ('TCCC acquisition'). The TCCC acquisition was
completed on 25 January 2022.
The fair value of the consideration paid for the TCCC
acquisition amounted to EUR108.9 million. The transaction was
treated as separate to the MBL acquisition, considering that whilst
the transactions above were entered into at the same time and in
contemplation of each other, they are separate from a commercial
and contractual perspective and as such they are treated as two
separate transactions. The TCCC acquisition was accordingly
accounted for as an equity transaction.
Following the completion of both the transactions, the Group
holds a 94.7% interest in CCBCE.
b) Other subsequent events
There were no other subsequent events following 31 December
2021.
Volume by country for 2021 and 2020
% Change
Unit cases (million)(1) 2021 2020 2021 vs 2020
------------------------------------------- -------- -------- -------------
Established Markets
Austria 79.4 75.5 5%
Cyprus 14.3 13.7 4%
Greece 103.4 89.4 16%
Italy 254.5 224.7 13%
Republic of Ireland and Northern Ireland 75.4 67.9 11%
Switzerland 62.9 65.7 -4%
Total 589.9 536.9 10%
------------------------------------------- -------- -------- -------------
Developing Markets
Baltics 33.1 33.0 -
Croatia 28.1 22.7 24%
Czech Republic 51.1 50.8 1%
Hungary 91.9 82.1 12%
Poland 180.0 195.2 -8%
Slovakia 23.2 21.5 8%
Slovenia 8.1 6.8 19%
Total 415.5 412.1 1%
------------------------------------------- -------- -------- -------------
Emerging Markets
Armenia 14.0 10.8 30%
Belarus 41.1 37.4 10%
Bosnia and Herzegovina 21.3 18.6 15%
Bulgaria 62.6 54.9 14%
Moldova 8.4 6.9 22%
Nigeria 400.4 309.2 29%
Romania 202.5 185.5 9%
Russian Federation 373.3 315.6 18%
Serbia (including the Republic of Kosovo)
and Montenegro 146.4 130.7 12%
Ukraine 137.3 117.0 17%
------------------------------------------- -------- -------- -------------
Total 1,407.3 1,186.6 19%
------------------------------------------- -------- -------- -------------
Total Coca-Cola HBC 2,412.7 2,135.6 13%
=========================================== ======== ======== =============
(1) One unit case corresponds to approximately 5.678 litres or
24 servings, being a typically used measure of volume. For Premium
Spirits volume, one unit case also corresponds to 5.678 litres. F
or biscuits volume, one unit case corresponds to 1 kilogram. Volume
data is derived from unaudited operational data.
- Our joint venture with Heineken in North Macedonia generated
volume of 25.2 million unit cases in 2021 (2020: 21.5 million unit
cases), increased by 17% compared to the prior year.
- Multon joint venture, our Russian juice business, generated
volume of 69.9 million unit cases in 2021 (2020: 40.2 million unit
cases, following its reorganisation in May 2020), which is not
included in the performance of the Russian Federation.
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END
FR FFLLLLLLBBBL
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