TIDMCCH
RNS Number : 6331V
Coca-Cola HBC AG
11 August 2022
Strong volumes, revenue, EBIT; investing in growth
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 six months ended 1 July
2022.
Half-year highlights
-- Execution of our strategy drove continued strong organic
growth(1) , well balanced between volume and price/mix
o Organic revenue +19.4%. Reported revenues +29.6%
o Excluding Russia and Ukraine organic revenue +25.2%, with
volume +12.1%
o Organic revenue per case of 14.0% benefited from pricing and
targeted actions to improve mix, further supported by out-of-home
channel recovery
o Broad based volume momentum continues outside of Russia and
Ukraine, with growth led by strategic priorities
o Integration of Egypt progressing well; 7 pp addition to
reported revenue growth
o Further value and volume share gains in NARTD and
Sparkling
-- Organic EBIT up 23.0%, with margins up 30bps on an organic
basis to 11%, benefiting from pricing, mix and cost discipline
o Quality of revenue growth driving underlying profit
expansion
o Opex as a percent of revenue improved, driven by operating
leverage and cost savings
o Marketing expenses excluding Russia and Ukraine increased by
9%
-- Continued investment behind strategic priorities to drive profitable growth
o Consistent investment behind adult sparkling proposition
driving continued strong performance, with volumes +18.7% excluding
Russia and Ukraine
o Acquisition of craft adult sparkling business, Three Cents,
expected to complete in Q3, strengthens premium brand offering
o Coffee volumes +56% with accelerating contribution from
out-of-home
o Rapid digitisation of the enterprise - our proprietary B2B,
Customer Portal now has more than 200,000 customers
o Deployment of our key revenue growth and route to market
capabilities in Egypt
-- Improved cash generation and continued strong balance sheet
o Comparable EPS +33.9%; free cash flow increased by EUR55.4
million to EUR332.9 million
o Strong balance sheet and liquidity remains after paying the
EUR0.71 dividend in August
Segment highlights
Established and Developing show strong momentum, Emerging
impacted by declines in Russia
-- Established: Organic revenue increased by 19.1% with
well-balanced volume and revenue-per-case expansion. Organic EBIT
expanded 26.5% with margins up 60bps
-- Developing: Organic revenue up 33.6%, led by strong share
gains. Organic EBIT up 63.8% with margins up 120bps
-- Emerging: Organic revenue up 14.2% driven by momentum in
markets excluding Russia and Ukraine. Organic EBIT up 15.5% with
organic margins up 20bps
Zoran Bogdanovic, Chief Executive Officer of Coca-Cola HBC AG,
commented:
" We delivered strong performance in the first half as we
continued to execute our growth strategy with focus and discipline,
including making progress on our sustainability commitments. I
would like to thank our people for their outstanding contribution
every day. I am also particularly grateful for our strong
partnership and collaboration with customers and suppliers during
these volatile times.
The quality of our 24/7 brand portfolio, revenue growth
management capabilities and execution excellence allowed us to take
full advantage of post-pandemic recovery across our markets and to
continue to gain significant share. I am pleased we achieved strong
organic growth, balanced between volume and revenue per case.
Pricing, mix and cost efficiencies helped to mitigate input cost
increases, underpinning successful conversion of revenue growth
into profits and cashflow.
Consistent investment in high-potential opportunities,
prioritised capabilities and capacity over years is delivering
growth today. And we stay the course, with targeted investments for
growth.
We have high confidence that our close customer partnerships,
strong portfolio and the capabilities of our people will allow us
to continue to create value even as we face a period of
macro-economic and geo-political uncertainty. We are reinstating
guidance for 2022 and expect to generate comparable EBIT in the
range of EUR740-820 million."
Half-Year
% Change % Change
2022 2021 Reported Organic(1)
Volume (m unit cases) 1,330.2 1,126.7 18.1% 4.7%
Net sales revenue (EUR
m) 4,209.9 3,247.9 29.6% 19.4%
Net sales revenue per
unit case (EUR) 3.16 2.88 9.8% 14.0%
Operating profit (EBIT)(2)
(EUR m) 275.7 350.1 -21.3%
Comparable EBIT(1) (EUR
m) 462.5 350.3 32.0% 23.0%
EBIT margin (%) 6.5 10.8 -420bps
Comparable EBIT margin(1)
(%) 11.0 10.8 20bps 30bps
Net profit(3) (EUR m) 152.9 233.1 -34.4%
Comparable net profit(1,3)
(EUR m) 316.9 235.6 34.5%
Basic earnings per share
(EPS) (EUR) 0.418 0.639 -34.6%
Comparable EPS(1) (EUR) 0.865 0.646 33.9%
Free cash flow(1) (EUR
m) 332.9 277.5 20.0%
---------------------------- ---------------- --------------- ---------- ------------
(1) For details on APMs refer to 'Alternative Performance
Measures' and 'Definitions and reconciliations of APMs'
sections.
(2) Refer to the condensed consolidated interim 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.
Business Outlook
While we remain attentive to macro-economic and geo-political
risks, we have high confidence in our portfolio, route to market
strength, customer-centric commercial strategy, the potential of
our diverse markets, and above all, the capability of our people.
We are actively prioritizing investments across geographies to
drive sustainable growth.
-- In 2022 we expect to generate positive organic revenue growth at a Group level.
-- Our markets outside of Russia and Ukraine continue to show
strong momentum. Excluding Russia and Ukraine we expect double
digit organic revenue growth.
-- We continue to face ongoing inflation and now assume
COGS/case increase by mid-teens in 2022.
-- We will remain disciplined on efficiency improvements. We
will also continue to invest behind growth opportunities in the
portfolio, our markets, our capabilities, people and sustainability
commitments. To support growth opportunities in our markets we
anticipate an increase in marketing in H2 2022 .
-- Going forward, our presence in Russia will be significantly
smaller than in prior years and focused on existing local brands.
Our expectation is for this local business to be immediately
financially self-sufficient.
-- As a result of these factors, we expect Group comparable EBIT
in the range of EUR740 to EUR820 million for 2022 , which includes
the full consolidation of Multon starting on 11 August .
Technical guidance
Restructuring We do not expect significant restructuring
initiatives to take place for the rest of the year.
Financial charges In H1 we incurred non-cash charges of EUR188
million and cash charges of EUR2 million, predominantly related to
our business in Russia. As a result of post balance sheet events,
we expect to incur further charges in H2, currently estimated at
EUR82 million. These charges do not affect our comparable
metrics.
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 continue to expect net finance costs for 2022
to be approximately EUR15 to EUR20 million higher than 2021, mainly
due to the consolidation of Egypt.
Group Operational Review
Update on Ukraine and Russia
We continue to prioritise the safety of our people and their
families who have been affected by the unspeakable tragedy in
Ukraine. On 24 February 2022 we temporarily closed our plant and
stopped production for safety reasons. Since May, we progressively
restarted manufacturing in Ukraine and are currently distributing
and selling beverages where it is safe to do so. In Q2, volumes in
Ukraine declined by 45%.
On 8 March we stopped placing orders for concentrate of The
Coca-Cola Company's branded products in Russia and we have worked
in close alignment with The Coca-Cola Company on the implementation
of its decision to suspend its business there. We have ceased
investment in Russia and will not deploy new capital into the
market. In Russia, volumes declined by 46% in Q2 and we expect some
further declines in H2. Going forward we expect to have
significantly smaller presence in Russia focused on local brands
which will be immediately operationally and financially
self-sufficient. We have incurred non-cash charges of EUR188
million and cash charges of EUR2 million. These charges will be
recognised as items affecting comparability and will impact EBIT
and EPS only on a reported basis. We will start full consolidation
of Multon from 11 August.
Leveraging our unique 24/7 portfolio
We delivered half year organic volume growth of 4.7%, which was
impacted by declines in Russia and Ukraine. Excluding these
markets, organic volume growth was up 12.1%, with broad-based
growth and increased momentum in Q2. All segments achieved H1
volumes above 2019 levels.
Our focus on the most profitable growth opportunities across our
24/7 portfolio is driving high quality revenue growth and EBIT
margin resilience.
-- Within Sparkling, Low/ no sugar variants were up 28.6% and
Adult Sparkling brands up 7.4%. Trademark Coca-Cola volumes grew by
4.0%, led by ongoing strong performance from Coke Zero. Overall,
Sparkling volumes grew by 3.6% (+11.2% excluding Russia and
Ukraine).
-- Energy volumes grew by 18.6%, with consistently high growth in all three segments.
-- Coffee performed well, up 55.8%, led by growth in Costa
Coffee. We continued out-of-home customer recruitment, strengthened
by our premium brand Caffè Vergnano.
-- Still volumes grew by 7.0%, with growth led by the
Established and Developing segment, while performance in the
Emerging segment was weaker, impacted by Russia and Ukraine.
-- Premium Spirits volumes increased by 4.9%, cycling growth of
nearly 50% in the prior year period.
Winning in the marketplace
Organic revenue per case expanded by 14.0%. We saw an
acceleration in our pricing and other revenue growth management
actions in Q2, as we took decisive actions to mitigate ongoing
inflationary pressures.
Organic revenue increased by 19.4% and reported net sales
revenue increased by 29.6%. Egypt added 7 percentage points to
reported net sales revenue growth and we also faced a positive
currency impact from the Russian Rouble and Nigerian Naira.
Pricing and mix
All price increases have been executed according to plan. We
continue to take advantage of all revenue growth management
capabilities, the strength and breadth of our portfolio, as well as
data, insights and analytics, to support affordability in a profit
accretive way, while also premiumising to enhance revenue per
case.
Strong growth in the out-of-home channel, and targeted
activation of single-serve package formats, improved package mix.
Similarly, multi-packs of single serves were a focus area in the
at-home channel. These combined actions improved single serve mix
by 3.7 percentage points, 2.1 percentage points above 2019 levels.
Outperformance of Adult Sparkling and Energy drove further
improvements in category mix.
Market share gains
Successful execution in the out-of-home channel ahead of the
summer season was crucial across our markets. We complemented this
with a continued focus on opportunities in the at-home channel,
leveraging the strength of our portfolio with strong marketing
campaigns and execution. We gained 160 basis points of value share
in NARTD and 210 basis points of value share in Sparkling over the
period, showing the enduring strength of our brands and
attractiveness of our offering for customers and consumers.
Cost control, operating profit and margins
Comparable gross profit grew by 20.8%, while gross profit
margins declined by 250 basis points to 34.1%. We saw headwinds
from inflation in input costs, energy and production overheads,
which drove comparable COGS per case higher by 14.1%. The
consolidation of Egypt eroded the gross profit margin by 70 basis
points.
Comparable operating costs increased by 17.1% on the back of
higher volume and Egypt, but operating costs as a percent of
revenue decreased by 250 basis points to 23.7%. We benefited from
good operational leverage by controlling costs as revenue growth
accelerated. To seize opportunities in markets outside of Russia
and Ukraine, we increased marketing spend, partially offset by cuts
in Russia from March onwards.
Comparable EBIT increased by 23.0% and 32.0% on an organic and
reported basis respectively, to EUR462.5 million. Egypt added 2
percentage points to reported growth and currency impact was
positive overall as the Russian Rouble and Nigerian Naira
appreciated. Comparable EBIT margin was 11.0%, up 30 basis points
on an organic basis, as the combination of pricing, operating
leverage and disciplined cost control more than offset higher costs
.
Net profit and free cash flow
Comparable net profit of EUR316.9 million and comparable basic
earnings per share of EUR0.865 were 34.5% and 33.9% higher than in
the prior year period, respectively. Reported net profit and
reported basic earnings per share during the period were EUR152.9
million and EUR0.418 respectively, mainly due to impairment charges
relating to our operations in Russia.
Comparable taxes amounted to EUR104.8 million, representing a
comparable tax rate of 24.9%, 80 basis points lower than the rate
in the prior year period.
Financing costs were EUR42.7 million in the year, EUR8.0 million
higher compared to the prior-year period, in line with
expectations.
Capital expenditure reached EUR199.7 million, EUR19 million
lower than the prior-year period. Capex as a percentage of revenue
was below our targeted range at 4.7%. We expect to return to our
guidance range of 6.5% to 7.5% by the end of the year.
Free cash flow was EUR332.9 million, an increase of EUR55.4
million compared to the prior year, mainly driven by higher
profitability.
Earning our license to operate
We are committed to enhancing biodiversity by reducing emissions
and water use, preserving and re-instating water priority areas,
and by sourcing agricultural ingredients sustainably. In June 2022,
we joined the Science Based Targets Network (SBTN) corporate
engagement programme and will work to implement the SBTN's
guidance. We have committed to achieving a net positive impact on
biodiversity in critical areas in our operations and supply chain
by 2040 and eliminate deforestation in our supply chain by
2030.
We continue to make progress on packaging. Switzerland was a
focus market for two packaging improvements in Q2. We launched
Valser water in label-free bottles in the market. In addition, as
part of pack/price architecture adjustment in Switzerland in June,
we launched our entire Swiss portfolio in rPET. We are planning
100% rPET launches in additional markets by the end of the year
while we continue to navigate very limited availability of rPET. We
are working actively to promote and support the launch of
well-designed, industry-led, deposit return or collection schemes
to improve collection rates and increase rPET supply.
Operational Review by Reporting Segment
Established markets
Half-Year
% Change % Change
2022 2021 Reported Organic
Volume (m unit cases) 305.7 274.3 11.4% 11.4%
Net sales revenue (EUR m) 1,384.2 1,149.8 20.4% 19.1%
Net sales revenue per unit
case (EUR) 4.53 4.19 8.0% 6.8%
Operating profit (EBIT) (EUR
m) 147.4 110.6 33.3%
Comparable EBIT (EUR m) 140.2 108.6 29.1% 26.5%
EBIT margin (%) 10.6 9.6 100bps
Comparable EBIT margin (%) 10.1 9.4 70bps 60bps
--------------------------------- ------------- -------------- ---------- ----------
Established markets volume grew 11.4%, supported by out-of-home
performance. Sparkling volumes grew low-double digits benefiting
from mid-thirties volume expansion from Adult Sparkling. Stills
grew by mid-teens, benefiting from strong execution and improvement
in the out-of-home channel. Energy volumes expanded in the
high-teens despite tough comparatives.
Organic growth in net sales revenue per case was 6.8%. We
benefited from price increases in all markets amplified by positive
package and channel mix. A focus on single serve activation, both
in at-home and out-of-home, saw a 6 percentage point positive swing
in single-serve mix driven by nearly 25% volume growth from
single-serve package formats.
Net sales revenue grew by 19.1% and 20.4% on an organic and
reported basis respectively, with the difference coming from the
stronger Swiss Franc.
-- In Italy, volumes grew by low-double digits. Volumes were
driven by strategic priorities in Sparkling: Coke Zero up mid-teens
and Adult Sparkling up strong double-digits. Energy and
Ready-to-drink tea grew in the twenties. The market benefited from
favourable comparatives in the out-of-home channel. In addition,
our early summer season activations and execution boosted share
gains in Sparkling.
-- Volumes in Greece were up by low-double digits. We saw
high-teens volume growth in Stills, driven by Water, which
performed well as the out-of-home channel recovered. Sparkling grew
by high-single digits driven by Coke Zero and Adult Sparkling,
while Energy continued to grow double digits.
-- In Ireland, volumes grew by low-double digits. Stills
delivered strong double-digit volume growth driven by successful
new premium launches in Hydration. Sparkling volumes grew by
low-double digits, driven by Trademark Coke and Adult
Sparkling.
-- In Switzerland, volumes grew by mid-single digits, benefiting
from out-of-home recovery and the success of pack price
architecture adjustments made during Q2. Stills volume was up
high-single digits, driven by Ready-to-drink tea. Sparkling volumes
grew mid-single digits and we gained share.
Comparable EBIT in the Established segment increased by 26.5%
and 29.1% on an organic and reported basis respectively, to
EUR140.2 million. Comparable EBIT margin was 10.1%, up 60 basis
points on an organic basis, despite higher input costs, due to good
operating leverage.
Developing markets
Half-Year
% Change % Change
2022 2021 Reported Organic
Volume (m unit cases) 230.4 190.9 20.7% 20.7%
Net sales revenue (EUR m) 791.6 601.6 31.6% 33.6%
Net sales revenue per unit case
(EUR) 3.44 3.15 9.0% 10.7%
Operating profit (EBIT) (EUR m) 56.9 35.7 59.4%
Comparable EBIT (EUR m) 51.6 32.9 56.8% 63.8%
EBIT margin (%) 7.2 5.9 130bps
Comparable EBIT margin (%) 6.5 5.5 100bps 120bps
--------------------------------- -------- ------- ---------- ---------
Developing markets volume grew by 20.7%, with a good performance
across all countries and categories. Both Sparkling and Stills grew
above 20% and we delivered strong results in Adult Sparkling and
Energy.
Organic net sales revenue per case increased by 10.7%. The
segment benefited from pricing initiatives, as well as positive
package and category mix. Net sales revenue grew by 33.6% and 31.6%
on an organic and reported basis, respectively.
-- Poland volumes increased by mid-twenties, with a very strong
performance in Sparkling, thanks to Trademark Coke. Performance has
benefited from cycling the implementation of the sugar tax and our
execution with customers, driving significant share gains in
Sparkling. Energy and Juice also grew by double digits.
-- In Hungary, volumes increased by low-twenties. We saw
double-digit growth in Sparkling, driven by Trademark Coke,
Flavours, and Adult Sparkling. Energy continued its strong
momentum, and Ready-to-drink tea saw a good recovery. A sugar tax
was implemented in July which we are passing on in pricing and mix
to consumers.
-- Volume in the Czech Republic grew by low-twenties. We saw
mid-teens growth in Sparkling driven by Coke Zero, Flavours and
Adult Sparkling. Water volumes grew strongly as the out-of-home
channel cycled prior year's lockdowns.
Comparable EBIT in the Developing segment increased by 56.8% to
EUR51.6 million, an organic growth rate of 63.8%. Comparable EBIT
margin was 6.5%, up 120 basis points on an organic basis as net
sales revenue expansion sufficiently improved operating leverage to
mitigate the higher input costs.
Emerging markets
Half-Year
% Change % Change
2022 2021 Reported Organic
Volume (m unit cases) 794.1 661.5 20.0% -2.6%
Net sales revenue (EUR m) 2,034.1 1,496.5 35.9% 14.2%
Net sales revenue per unit case
(EUR) 2.56 2.26 13.2% 17.3%
Operating profit (EBIT) (EUR m) 71.4 203.8 -65.0%
Comparable EBIT (EUR m) 270.7 208.8 29.6% 15.5%
EBIT margin (%) 3.5 13.6 -1,010bps
Comparable EBIT margin (%) 13.3 14.0 -70bps 20bps
--------------------------------- ---------- ---------- ---------- ---------
Emerging markets' volume fell -2.6% organically and grew 20.0%
on a reported basis, which includes the consolidation of Egypt from
mid-January. Sparkling volumes declined by low-single digits and
Stills volumes were marginally down, both negatively impacted by
Russia and Ukraine. Excluding Russia and Ukraine, organic volumes
and Sparkling both grew high-single digits.
Net sales revenue per case grew 17.3% organically, benefiting
from pricing, as well as positive package mix, partially offset by
country mix. Net sales revenue grew by 14.2% on an organic basis,
or by 35.9% on a reported basis, due to the consolidation of Egypt
from mid-January, also helped by the stronger Russian Rouble and
Nigerian Naira. Organic net sales revenue grew by high-twenties
when also excluding Russia and Ukraine.
-- Volume in Nigeria increased by high-single digits as momentum
continued on tough comparatives. We benefited from strong
improvements in pricing and mix. Sparkling grew by high-single
digits led by low-double digit volume growth in Trademark Coke and
strong double-digit growth in Adult Sparkling. Energy continued to
perform well, led by Predator, and Juice grew strong
double-digits.
-- Russia volumes declined by high-teens, through the process of
depleting inventories of The Coca-Cola Company's branded products
initiated on 8 March.
-- Ukraine volume fell by high-thirties. We stopped production
in Ukraine on 24 February 2022 and closed our plant. In May, in
response to a much-improved security situation in the Western and
Central parts of the country, as well as recurring requests from
employees and customers, we progressively restarted production in
Ukraine distributing and selling beverages where it is safe to do
so.
-- Volume in Romania increased by mid-single digits. Sparkling
volumes grew low-single digits, with mid-single digit growth in
Adult Sparkling and low-double digit growth in Energy. We saw an
ongoing recovery in Stills, which grew by mid-teens, driven by
Water.
-- Volume expansion in Egypt is in line with plans, with growth
of mid-single digits on a tough comparative. Integration continues
to progress well, with focus on implementing our execution
capabilities in the market, particularly across Revenue Growth
Management and Route to Market. Gradual deployment of our key
capabilities in Egypt are helping to drive market share gains in
Sparkling in the period.
Comparable EBIT in the Emerging segment increased by 15.5% and
29.6% on an organic and reported basis respectively, to EUR270.7
million. Operating profit declined 65.0%, primarily due to the
impairment of Russia. Comparable EBIT margin was 13.3%, up 20 basis
points on an organic basis, as positive price mix development
offset higher input costs.
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 33,000 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's management will host a conference call for
investors and analysts on Thursday, 11 August 2022 at 9:00 am BST.
To join the call, in listen-only mode please join via webcast . If
you anticipate asking a question, please click here to register and
find dial-in details.
Next event
8 November 2022 2022 Third 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 6937420246
Manos Iatrelis mi@vando.gr
Special Note Regarding the Information set out herein
Unless otherwise indicated, the condensed consolidated interim
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 2021 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 interim 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.
As of 1 January 2022 the Group has moved its reporting to
organic growth APMs. This is to enable a better understanding of
underlying business performance, that is more consistent with how
Coca-Cola HBC's peer group reports.
Group Financial Review
Income statement Half-Year
2022 2021 % Change % Change
EUR million EUR million Reported Organic(1)
Volume (m unit cases) 1,330.2 1,126.7 18.1% 4.7%
Net sales revenue 4,209.9 3,247.9 29.6% 19.4%
Net sales revenue per unit case
(EUR) 3.16 2.88 9.8% 14.0%
Cost of goods sold (2,759.7) (2,048.4) 34.7%
Comparable cost of goods sold(1) (2,774.1) (2,059.7) 34.7%
Gross profit 1,450.2 1,199.5 20.9%
Comparable gross profit(1) 1,435.8 1,188.2 20.8%
Operating expenses (1,015.3) (863.5) 17.6%
Comparable operating expenses(1) (997.7) (852.0) 17.1%
Exceptional items related to Russia-Ukraine
conflict(2) (183.6) - NM
Share of results of integral equity
method investments(2) 24.4 14.1 73.0%
Operating profit (EBIT)(2) 275.7 350.1 -21.3%
Comparable operating profit (EBIT)(1) 462.5 350.3 32.0% 23.0%
Adjusted EBITDA(1) 663.8 514.7 29.0%
Comparable adjusted EBITDA(1) 666.9 515.1 29.5%
Finance costs, net (42.7) (34.7) 23.1%
Share of results of non-integral
equity method investments(2) 1.4 1.8 -22.2%
Tax (82.0) (83.8) -2.1%
Comparable tax(1) (104.8) (81.5) 28.6%
Net profit(3) 152.9 233.1 -34.4%
Comparable net profit(1,3) 316.9 235.6 34.5%
Basic earnings per share (EUR) 0.418 0.639 -34.6%
Comparable basic earnings per share
(EUR)(1) 0.865 0.646 33.9%
(1) Refer to the ' Alternative Performance Measures' and '
Definitions and reconciliations of APMs' sections.
(2) Refer to the condensed consolidated interim 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 29.6% during the first half of 2022,
compared to the prior-year period, driven by the consolidation of
Egypt, as well as pricing initiatives, volume growth and mix
improvements, supported by favourable foreign currency movements.
On an organic basis, net sales revenue grew by 19.4% during the
first half of 2022, compared to the prior-year period.
Cost of goods sold increased by 34.7% in the first half of 2022,
compared to the prior-year period, both on a comparable and
reported basis, driven by the consolidation of Egypt, as well as
volume growth and input cost inflation across all our key
commodities of sugar, aluminium and PET resin .
Comparable operating expenses increased by 17.1% in the first
half of 2022 compared to the prior-year period driven by higher
distribution and sales expenses and the consolidation of Egypt;
while operating expenses increased by 17.6% in the first half of
2022 compared to the prior-year period further impacted by
increased restructuring costs.
Exceptional items related to Russia-Ukraine conflict refer to
impairment charges for property, plant and equipment and equity
method investments resulting from the Group's restructuring
initiatives in Russia and the deterioration of Russia's
macroeconomic environment.
Comparable operating profit grew by 32.0% in the first half of
2022, compared to the prior-year period, reflecting the benefits
from volume and mix improvements, which were only partially offset
by higher input costs and operating expenses. Operating profit
deteriorated by 21.3% in the first half of 2022, compared to the
prior-year period as the benefits from volume and mix improvements
were more than offset by higher input costs and operating expenses,
as well as impairment charges relating to the Group's operations in
Russia.
Net finance costs increased by EUR8.0 million during the first
half of 2022, compared to the prior-year period, mainly driven by
higher interest expense due to the consolidation of Egypt and
increased interest rate of loans payable to joint ventures.
On a comparable basis, the effective tax rate was 24.9% for the
first half of 2022 and 25.7% for the first half of 2021. On a
reported basis, the effective tax rate was 35.0% for the first half
of 2022, mainly impacted by the impairment charges relating to the
Group's operations in Russia, and 26.4% for the first half of 2021.
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.
Comparable net profit grew by 34.5% compared to the prior-year
period due to higher operating profitability, while net profit
contracted by 34.4%, largely due to the impairment charges relating
to the Group's operations in Russia, net of tax.
Balance Sheet
As at
1 July 31 December
2022 2021 Change
Assets EUR million EUR million EUR million
Total non-current assets 6,306.9 5,357.4 949.5
Total current assets 4,103.9 3,156.9 947.0
Total assets 10,410.8 8,514.3 1,896.5
Liabilities
Total current liabilities 4,014.9 2,516.4 1,498.5
Total non-current liabilities 3,101.2 2,880.8 220.4
Total liabilities 7,116.1 5,397.2 1,718.9
Equity
Owners of the parent 3,275.7 3,114.5 161.2
Non-controlling interests 19.0 2.6 16.4
Total equity 3,294.7 3,117.1 177.6
Total equity and liabilities 10,410.8 8,514.3 1,896.5
Net current assets 89.0 640.5 -551.5
Total non-current assets increased by EUR949.5 million during
the first half of 2022, mainly driven by the acquisition of Egypt.
Net current assets decreased by EUR551.5 million in the first half
of 2022 , mainly driven by declared dividend, decreased investments
in financial assets, increased trade and other payables and current
borrowings, partially offset by increased cash and cash
equivalents, trade receivables and inventories. Total non-current
liabilities increased by EUR220.4 million during the first half of
2022, mainly due to the acquisition of Egypt.
Cash flow
Half-Year
2022 2021 %
EUR million EUR million Change
Net cash from operating activities(1) 532.6 495.9 7.4%
Capital expenditure(1) (199.7) (218.4) -8.6%
Free cash flow(1) 332.9 277.5 20.0%
(1) Refer to the 'Definitions and reconciliations of APMs'
section.
Net cash from operating activities increased by 7.4% or EUR36.7
million during the first half of 2022, compared to the prior-year
period, mainly due to increased operating profitability excluding
non-cash charges, partially offset by cash consumed from working
capital movements.
Capital expenditure decreased by 8.6% in the first half of 2022,
compared to the prior-year period. In the first half of 2022,
capital expenditure amounted to EUR199.7 million of which 55% was
related to investment in production equipment and facilities and
20% to the acquisition of marketing equipment. In the first half of
2021, capital expenditure amounted to EUR218.4 million of which 65%
was related to investment in production equipment and facilities
and 15% to the acquisition of marketing equipment.
In the first half of 2022, free cash flow increased by 20.0% or
EUR55.4 million, compared to the prior-year period, driven by the
increased cash from operating activities and decreased capital
expenditure.
Definitions and reconciliations of Alternative Performance
Measures ("APMs")
1. Comparable APMs(1)
In discussing the performance of the Group, "comparable"
measures are used. In 2022 the Group updated the definitions of
items which are deducted from the directly reconcilable IFRS
measures to calculate comparable APMs so as to provide users more
relevant information on its financial performance, considering the
impact of one-off events in the period as well as reporting by its
peer group. More specifically, comparable measures 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, the acquisition,
integration and divestment-related costs, the Russia-Ukraine
conflict 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. Restructuring costs
resulting from initiatives driven by the Russia-Ukraine conflict
are presented under the "Russia-Ukraine conflict impact" item, to
provide users complete information on the financial implications of
the conflict.
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, integration and divestment-related 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 recognised in
the income statement. They also include any gain or loss recognised
in the income statement from the remeasurement to fair value of
previously held interests and the recycling of items of other
comprehensive income resulting from step acquisitions. Integration
costs comprise direct incremental costs necessary for the acquiree
to operate within the Group. Divestment-related costs comprise
transaction expenses, including advisory, consulting, and other
professional fees as well as any impairment losses or write-downs
to fair value less costs to sell recognised in the income statement
upon classification as held for sale and any subsequent relevant
disposal gains or losses and reversals of impairment recognised in
the income statement. These costs are included within the income
statement line "Operating expenses" or separate line of the income
statement, considering materiality. However, to the extent that
they relate to business combinations or divestments that have been
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) Russia-Ukraine conflict impact
As a result of the conflict between Russia and Ukraine, the
Group recognised impairment charges for property, plant and
equipment, intangible assets and equity method investments,
including those resulting from the Group's restructuring
initiatives in Russia, as well as restructuring costs. The Group
also recognised incremental allowance for expected credit losses
and write-offs of inventory and property, plant and equipment as a
result of the Russia-Ukraine conflict. The aforementioned costs are
included within the income statement lines "Operating expenses" and
"Cost of goods sold" or "Exceptional items related to
Russia-Ukraine conflict", considering materiality, but are excluded
from the comparable results so that the users can obtain a better
understanding of the Group's operating and financial performance
from underlying activity.
5) 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)
Half-year 2022
-------------------------------------------------------------------------------------
Gross Operating Adjusted Net EPS
COGS Profit expenses EBIT EBITDA Tax Profit(1) (EUR)
As reported (2,759.7) 1,450.2 (1,015.3) 275.7 663.8 (82.0) 152.9 0.418
Restructuring
costs - - 3.8 3.8 3.7 (0.8) 3.0 0.008
Commodity hedging (15.5) (15.5) - (15.5) (15.5) 2.8 (12.7) (0.035)
Integration costs - - 8.5 8.5 8.5 - 8.5 0.023
Russia-Ukraine
conflict impact 1.1 1.1 5.3 190.0 6.4 (24.6) 165.4 0.452
Other tax items - - - - - (0.2) (0.2) (0.001)
--------
Comparable (2,774.1) 1,435.8 (997.7) 462.5 666.9 (104.8) 316.9 0.865
---------- -------- ---------- ------- --------- -------- ----------- --------
Half-year 2021
-------------------------------------------------------------------------------------
Gross Operating Adjusted Net EPS
COGS Profit expenses EBIT EBITDA Tax Profit(1) (EUR)
As reported (2,048.4) 1,199.5 (863.5) 350.1 514.7 (83.8) 233.1 0.639
Restructuring
costs - - 0.5 0.5 0.7 (0.1) 0.4 0.001
Commodity hedging (11.3) (11.3) - (11.3) (11.3) 2.2 (9.1) (0.025)
Acquisition costs - - 11.0 11.0 11.0 (2.8) 8.2 0.023
Other tax items - - - - - 3.0 3.0 0.008
Comparable (2,059.7) 1,188.2 (852.0) 350.3 515.1 (81.5) 235.6 0.646
---------- -------- ---------- ------- --------- -------- ----------- --------
(1) Net Profit and comparable net profit refer to net profit and
comparable net profit respectively after tax attributable to owners
of the parent.
Reconciliation of comparable EBIT per reportable segment (numbers
in EUR million)
Half-year 2022
---------------------------------------------
Established Developing Emerging Group
EBIT 147.4 56.9 71.4 275.7
Restructuring costs (5.0) - 8.8 3.8
Commodity hedging (2.2) (5.3) (8.0) (15.5)
Integration costs - - 8.5 8.5
Russia-Ukraine conflict
impact - - 190.0 190.0
------------ ----------- --------- -------
Comparable EBIT 140.2 51.6 270.7 462.5
------------ ----------- --------- -------
Half-year 2021
---------------------------------------------
Established Developing Emerging Group
EBIT 110.6 35.7 203.8 350.1
Restructuring costs (0.4) 0.9 - 0.5
Commodity hedging (4.3) (5.7) (1.3) (11.3)
Acquisition costs 2.7 2.0 6.3 11.0
Comparable EBIT 108.6 32.9 208.8 350.3
------------ ----------- --------- -------
2. Organic APMs
Organic growth
Organic growth enables users to focus on the operating
performance of the business on a basis which is not affected by
changes in foreign currency exchange rates from period to period or
changes in the Group's scope of consolidation ("consolidation
perimeter") i.e. acquisitions, divestments and reorganisations
resulting in equity method accounting. Thus, organic growth is
designed to assist users in better understanding the Group's
underlying performance.
More specifically, the following items are adjusted from the
Group's volume, net sales revenue and comparable EBIT in order to
derive organic growth metrics:
(a) Foreign Currency impact
Foreign Currency impact in the organic growth calculation
reflects the adjustment of prior-period net sales revenue and
comparable EBIT metrics for the impact of changes in exchange rates
applicable to the current period.
(b) Consolidation perimeter impact
Current period volume, net sales revenue and comparable EBIT
metrics, are each adjusted for the impact of changes in the
consolidation perimeter. More specifically adjustments are
performed as follows:
i. Acquisitions:
For current year acquisitions, the results generated in the
current period by the acquired entities are not included in the
organic growth calculation. For prior year acquisitions, the
results generated in the current year over the period during which
the acquired entities were not consolidated in the prior year, are
not included in the organic growth calculation.
For current year step acquisitions where the Group obtains
control of a) entities over which it previously held either joint
control or significant influence and which were accounted for under
the equity method, or b) entities which were carried at fair value
either through profit or loss or other comprehensive income, the
results generated in the current year by the relevant entities over
the period during which these entities are consolidated, are not
included in the organic growth calculation. For such step
acquisitions of entities previously accounted for under the equity
method the share of results for the respective period described
above, is included in the organic growth calculation of the current
year. For such step acquisitions of entities previously accounted
for at fair value through profit or loss any fair value gains or
losses for the respective period described above, are included in
the organic growth calculation. For such step acquisitions in the
prior year, the results generated in the current year by the
relevant entities over the period during which these entities were
not consolidated in the prior year, are not included in the organic
growth calculation. However, the share of results or gains or
losses from fair value changes of the respective entities, based on
their accounting treatment prior to the step acquisition, for the
current-year period during which these entities were not
consolidated in the prior year are included in the organic growth
calculation.
ii. Divestments:
For current year divestments, the results generated in the prior
year by the divested entities over the period during which the
divested entities are no longer consolidated in the current year,
are included in the current year's results for the purpose of the
organic growth calculation. For prior-year divestments, the results
generated in the prior year by the divested entities over the
period during which the divested entities were consolidated, are
included in the current year's results for the purpose of the
organic growth calculation.
iii. Reorganisations resulting in equity method accounting:
For current year reorganisations where the Group maintains
either joint control or significant influence over the relevant
entities so that they are reclassified from subsidiaries or joint
operations to joint ventures or associates and accounted for under
the equity method, the results generated in the current year by the
relevant entities over the period during which these entities are
no longer consolidated, are included in the current year's results
for the purpose of the organic growth calculation. For such
reorganisations in the prior year, the results generated in the
current year by the relevant entities over the period during which
these entities were consolidated in the prior year, are included in
the current year's results for the purpose of the organic growth
calculation. In addition, the share of results in the current year
of the relevant entities, for the respective period as described
above, is excluded from the organic growth calculation for such
reorganisations.
The calculations of the organic growth and the reconciliation to
the most directly related measures calculated in accordance with
IFRS are presented in the below tables. Organic growth (%) is
calculated by dividing the amount in the row titled "Organic
movement" by the amount in the associated row titled "2021
reported" or, where presented, "2021 adjusted". Organic growth for
comparable EBIT margin is the organic movement expressed in basis
points.
Reconciliation of organic measures
Half Year 2022
----------------------------------------------
Volume (m unit cases) Established Developing Emerging Group
2021 reported 274.3 190.9 661.5 1,126.7
Consolidation perimeter
impact - - 150.0 150.0
Organic movement 31.4 39.5 (17.4) 53.5
2022 reported 305.7 230.4 794.1 1,330.2
------------ ----------- --------- --------
Organic growth (%) 11.4% 20.7% (2.6%) 4.7%
------------ ----------- --------- --------
Half Year 2022
----------------------------------------------
Net sales revenue (EUR Established Developing Emerging Group
m)
2021 reported 1,149.8 601.6 1,496.5 3,247.9
Foreign currency impact 12.8 (9.0) 75.6 79.4
2021 adjusted 1,162.6 592.6 1,572.1 3,327.3
Consolidation perimeter
impact - - 238.0 238.0
Organic movement 221.6 199.0 224.0 644.6
2022 reported 1,384.2 791.6 2,034.1 4,209.9
------------ ----------- --------- --------
Organic growth (%) 19.1% 33.6% 14.2% 19.4%
------------ ----------- --------- --------
Half Year 2022
---------------------------------------------
Net sales revenue per Established Developing Emerging Group
unit case (EUR)(1)
2021 reported 4.19 3.15 2.26 2.88
Foreign currency impact 0.05 (0.05) 0.11 0.07
2021 adjusted 4.24 3.10 2.38 2.95
Consolidation perimeter
impact - - (0.23) (0.20)
Organic movement 0.29 0.33 0.41 0.41
2022 reported 4.53 3.44 2.56 3.16
------------ ----------- --------- -------
Organic growth (%) 6.8% 10.7% 17.3% 14.0%
------------ ----------- --------- -------
Half Year 2022
--------------------------------------------
Comparable EBIT (EUR Established Developing Emerging Group
m)
2021 reported 108.6 32.9 208.8 350.3
Foreign currency impact 2.2 (1.4) 18.3 19.1
2021 adjusted 110.8 31.5 227.1 369.4
Consolidation perimeter
impact - - 8.3 8.3
Organic movement 29.4 20.1 35.3 84.8
2022 reported 140.2 51.6 270.7 462.5
------------ ----------- --------- ------
Organic growth (%) 26.5% 63.8% 15.5% 23.0%
------------ ----------- --------- ------
Half Year 2022
---------------------------------------------
Comparable EBIT Margin Established Developing Emerging Group
(%)(1)
2021 reported 9.4% 5.5% 14.0% 10.8%
Foreign currency impact 0.1% (0.2%) 0.5% 0.3%
2021 adjusted 9.5% 5.3% 14.4% 11.1%
Consolidation perimeter
impact - - (1.3%) (0.4%)
Organic movement 0.6% 1.2% 0.2% 0.3%
2022 reported 10.1% 6.5% 13.3% 11.0%
------------ ----------- --------- -------
Organic growth (%) 60bps 120bps 20bps 30bps
------------ ----------- --------- -------
(1) Certain differences in calculations are due to rounding.
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
impairment of equity method investments, the employee share option
and performance share costs and items, if any, reported in line
"Other non-cash items" of the condensed consolidated interim 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, the acquisition, integration and
divestment-related costs, the mark-to-market valuation of the
commodity hedging activity and the Russia-Ukraine conflict.
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:
Half-year Half-year
2022 2021
EUR million EUR million
------------ ------------
Operating profit (EBIT) 275.7 350.1
Depreciation and impairment of property, plant
and equipment, including right-of-use assets 317.2 159.7
Amortisation and impairment of intangible assets 14.4 0.5
Employee performance shares 3.7 4.4
Impairment of equity method investments 52.8 -
------------ ------------
Adjusted EBITDA 663.8 514.7
Share of results of integral equity method investments (24.4) (14.1)
Loss / (Gain) on disposals of non-current assets 2.2 (3.1)
Cash (consumed) / generated from working capital
movements (45.6) 81.6
Tax paid (63.4) (83.2)
------------ ------------
Net cash from operating activities 532.6 495.9
------------ ------------
Payments for purchases of property, plant and
equipment (1) (172.1) (192.0)
Principal repayments of lease obligations (29.5) (29.3)
Proceeds from sales of property, plant and equipment 1.9 2.9
Capital expenditure (199.7) (218.4)
------------ ------------
Free cash flow 332.9 277.5
(1) Payments for purchases of property, plant and equipment for
the first half of 2022 include EUR3.5 million (first half of 2021:
EUR2.9 million) 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 interim 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
1 July 31 December
2022 2021
EUR million EUR million
------------ ------------
Current borrowings 675.7 381.7
Non-current borrowings 2,681.5 2,555.7
Other financial assets (444.8) (834.9)
Cash and cash equivalents (1,328.3) (782.8)
------------ ------------
Net debt 1,584.1 1,319.7
------------ ------------
Principal risks and uncertainties
The Company faces a number of risks and uncertainties that may
have an adverse effect on its operations, performance and future
prospects and has a robust risk management programme to assess
these and evaluate strategies to manage them.
In 2022, a general easing of the COVID-19 pandemic led to the
removal of restrictions on hotels, restaurants and cafés which led
to a significant improvement for our business in this channel. We
continue to monitor the global situation, particularly the impact
of COVID-19 in the southern hemisphere as countries have entered
the winter season. We have noted the continuing high numbers of
COVID-19 cases combined with the return of influenza which had been
suppressed over the past two years as result of COVID-19
restrictions. This is having a significant impact on the medical
systems in some countries although it has not led to a return to
restrictions. There may be similarities in our markets as we move
into the European winter towards the end of the year and as a
result the Company is reviewing its contingency plans as a
precautionary measure.
The conflict between Russia and Ukraine continues to affect our
business in those countries with some continuing impact on our
supply chain. We have continued to focus on the health and safety
of our people in all impacted countries. On 8 March 2022, The
Coca-Cola Company ("TCCC") announced that it is suspending its
business in Russia which has had, and will continue to have, a
significant impact on our business in Russia. The Group is
adjusting its Russian business to focus on local brands. In
addition, economic sanctions imposed on Russia have had a
significant impact on foreign exchange rates and the price of a
number of commodities such as oil , which affects PET prices, and
aluminum. Countersanctions imposed by Russia may have an impact on
our Russian operations as well as other countries in our territory.
We expect the geopolitical environment to remain volatile for some
time.
Related to the Russia/Ukraine crisis and the recovery from the
COVID-19 pandemic, global commodities continue to show a great deal
of volatility putting pressure on our suppliers as well as our
Company directly. The cost of most of the key commodities critical
to our business have continued to increase in 2022.
Economic conditions in all of our markets remain challenging
with increases in inflation and interest rates which we expect to
continue through 2022. This may lead to affordability issues for
consumers and pricing pressure from retail customers.
In addition to the risks and uncertainties referred to above,
the principal risks and uncertainties that the Company expects to
be exposed to in the second half of 2022 are substantially the same
as those outlined in the 2021 Integrated Annual Report for the year
ended 31 December 2021, pages 62 to 65, which are reproduced
below.
The principal risks will be closely monitored during the second
half of the year to identify material changes to the risk
environment.
Our principal risks
Principal Description Potential Key mitigations Link to
risks impact material
issues
1. Plastics Concerns related
and packaging to packaging * Decreased credibility in public discussions * World Without Waste global vision * Packaging and waste management
waste waste and
plastic
pollution. * Long-term damage to our reputation and licence to * Mission 2025 packaging related commitments * Sustainable sourcing
operate
* Partnerships with local communities, NGOs, start-ups
* Increased cost of doing business, including and academia to manage packaging recovery and
discriminatory taxes minimise environmental impacts
* Loss of consumer base
----------------- ------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------------
2. Changing The risk of
retail significant * Reduced availability of our portfolio and overall * Prioritisation of assortment per channel to drive * Economic impact
environment changes to profitability higher margin packs
consumer
purchasing
behaviour * Enhanced marketing campaigns to capture growing
and customer occasions of socialising at home accelerated by
requirements. COVID-19 restrictions
* Refreshed and enhanced key account capabilities and
tools to partner and grow profitable revenue with
customers
* Work closely with our out-of-home channel customers
to drive transactions and support them selling online
to more effectively manage the impact of COVID-19, or
in their reopening as restrictions ease
* Accelerate Right Execution Daily (RED) to support our
commitment to operational excellence
* Develop our digital and e-commerce capabilities to
capture opportunities associated with existing and
new distribution channels
* Localised management plans in specific countries
dependent on channel impact and risk and including
variance in the impact of COVID-19 restrictions
----------------- ------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------------
3. Commodity The risk of
costs raw material * Increased input costs * Pricing volatility managed by Treasury/Procurement * Economic impact
pricing departments for hedgeable raw materials universe
fluctuations, through hedging/fixing of forward prices
particularly * Sustainable sourcing
resin, sugar,
gasoil and * Protocols are in place under the Treasury and
aluminium. Procurement Policies endorsed by the Board
* Reporting and visibility to the Financial Risk
Management Committee and the Audit and Risk Committee
* Recovery through pricing whilst maintaining growth,
avoiding disruption and still being competitive
----------------- ------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------------
4. The risk of
Product-related governments * Cost increases that cannot be passed on in price * Focus on product innovation and expansion to a 24/7 * Corporate citizenship
taxes and imposing taxes beverage portfolio
regulatory and regulatory
changes changes such * Increased costs to meet additional regulatory * Responsible marketing
as beverage requirements * Expand our range of low- and no-calorie beverages
taxes, sugar
upper limits, * Economic impact
sweetener * Brand and reputation damage * Proactive approach to better understand concerns
restrictions, undertaken by Corporate Affairs and Sustainability in
additional conjunction with our The Coca-Cola Company
labelling * Forced changes in the portfolio mix counterparts.
requirements.
* Country-specific response plans to address the
specific localised nature of the risk.
* Group strategy focusing on proactive and reactive
advocacy with strategic plans, tax risk assessments,
assets repository and targeted business unit support
plans in place
----------------- ------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------------
5. Foreign The risk of
exchange foreign exchange * Financial loss * Treasury policy requires, where possible, the hedging * Economic impact
fluctuations volatility of 25% to 80% of rolling 12-month forecasted
and rate transactional foreign currency exposure
fluctuations * Increased cost base
caused by
uncertainty * Hedging beyond 12 months may occur in exceptional
and complexity * Asset impairment cases subject to approval of Group CFO
of macroeconomic
environment
and geopolitical * Limitations on cash repatriation * Derivative financial instruments are used, where
developments, available, to reduce net exposure to currency and
exacerbated commodity price fluctuations
by COVID-19.
----------------- ------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------------
6. Cyber A cyber attack
incidents or data centre * Financial loss * Implement a NIST-aligned cyber security and privacy * Economic impact
failure control framework and monitor compliance
resulting
in business * Operational disruption
disruption, * Safeguard critical IT and operational assets
or breach
of corporate * Damage to corporate reputation
or personal * Enhanced ability to detect, respond and recover from
data cyber incidents and attacks
confidentiality. * Non-compliance with data protection legislation (e.g.
GDPR)
* Foster a positive culture of cyber security
* Monitor threat landscape and remediate associated
vulnerabilities
* Cyber-related crisis management (IMCR) exercise with
Executive Leadership Team
----------------- ------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------------
7. Geopolitical Volatile and
and security challenging * Safety of our people * Monitoring systems established with defined * Employee wellbeing and engagement
environment macroeconomic, indicators to provide warning of escalation
security and
geopolitical * Disruptions to our operations * Economic impact
conditions. * Security risk assessments developed on a
The risk of country-by-country basis to inform robust security
civil unrest * Financial impact of economic and other sanctions plans
and conflict
with other
countries. * Business continuity programmes take into account
risks associated with unrest and conflict and the
impact of sanctions
* Continued development and training in IMCR programme
----------------- ------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------------
8. Managing The risks
our carbon and * Opportunity to reduce costs and enhance relationships * Approved science-based targets for 2030 and net zero * Climate change
footprint opportunities with key stakeholders through increased use of commitment for 2040
associated renewable energy and new technologies
with reducing * Sustainable sourcing
carbon emissions * Energy management programmes and transition to
along our * Reputation costs of not meeting our sustainability renewable and clean energy
value chain. commitments
* Engagement and partnering with local and
* Costs associated with moving to low GHG emissions, international stakeholders
low-emission coolers, vehicles
* Focus on sustainable procurement
* Future carbon taxes
* Areas of risk monitored by country risk teams and
* Scarcity of resources impacting production specific tactical plans in place across the
operations.
* Physical risk analysis including quantification and
stress testing (consistent with TCFD requirements)
and natural disaster plans in place across the
operations
* Review of Egyptian operations to understand impact on
Group
----------------- ------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------------
9. Water The risks
availability related to * Lack of water for local communities which diminishes * Identification and implementation of water * Water stewardship
and usage water our licence to operate and damages our brand stewardship programmes in water priority locations to
availability, reputation mitigate shared water risks
water stress * Sustainable sourcing
and water
quality in * Insufficient water or increased costs to manufacture * Alliance for Water Stewardship certification for all
our areas our products plants
of operation,
exacerbated
by the effects * Source vulnerability assessment for all plants
of climate
change and
excessive * Implement water usage reduction plans
water
consumption
in a catchment
area leading
to unsustainable
water
availability.
----------------- ------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------------
10. Health The risk to
and Safety the health * Fatalities and/or serious injury and illness of * Deployment of Behaviour Based Safety (BBS) programmes * Employee wellbeing and engagement
and safety employees, contractors, third parties and members of
of our people the public
as a result * End-to-End (E2E) contractor management process
of occupational
workplace * Business continuity for people being absent from work
accidents, due to infection or self-isolation due to COVID-19 * Health and Safety Board to continue
incidents
and illnesses
(including * Mental wellbeing of our people * The Coca-Cola Company lifesaving rules in place and
COVID-19 incorporated in CCHBC Baseline Assessment programme
management).
* COVID-19 pandemic protocols in place across the
entire organisation and reviewed regularly
* Business continuity plans updated and tested
* Regular country and System lessons learned shared
across the entire organisation
* Increased focus on mental wellbeing in Employee
Assistance Programme
----------------- ------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------------
11. People Inability
retention to attract, * Failure to achieve our growth plans * Upgrade our Employer Value Proposition and Employer * Employee wellbeing and engagement
retain and Brand
engage
sufficient * Human rights, diversity and inclusion
numbers of * Develop leaders and people for key positions
qualified internally, improve leaders' skills and commitment to
and experienced talent development * Corporate citizenship
employees
in highly
competitive * Continuous employee listening to address culture and
talent markets. engage effectively
* Promote an inclusive environment that allows all
employees to achieve their full potential
* Create shared value with the communities in which we
work to ensure we are seen and considered as an
ethical business with an attractive purpose
* Expand talent pool by hiring more diverse workforce
----------------- ------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------------
12. Suppliers Inability
and sustainable to secure * Production disruptions * Contracted volumes of key ingredients and packaging * Economic impact
sourcing supply of materials
key ingredients,
packaging * Increased input costs * Sustainable sourcing
and services * Contracted prices when feasible
at a reasonable
cost because
of supply-demand * Ensure hedgeable contracts
imbalances
and/or crop
yields. * Expand supplier base and introduce new/alternative
suppliers
* Secure raw materials for suppliers to provide
security of supply
----------------- ------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------------
13. Ethics The risk of
and compliance fraud against * Damage to our corporate reputation * Annual 'Tone from the Top' messaging * Corporate governance
the Company
as well as
risk of * Significant financial penalties * Code of Business Conduct, ABAC and commercial
Anti-Bribery compliance training and awareness campaigns for our
and Corruption entire workforce and training on international
(ABAC) fines * Management time diverted to resolving legal issues sanctions for our employees exposed to this risk
or sanctions
if our
employees, * Economic loss because of fraud and reputational * All third parties that we engage must comply with our
or the third damages, fines and penalties, in the event of Supplier Guiding Principles, which include ABAC and
parties we non-compliance international sanctions compliance
engage to
deal with
governments, * All third parties that we engage to deal with
fail to comply governments on our behalf are subject to ABAC due
with ABAC diligence. Screening of third parties and
requirements. transactions potentially exposed to international
The risk of sanctions risk
inadvertent
non-compliance
with * Cross-functional joint task force in Nigeria that
international proactively addresses risks in our key operations
sanctions
in certain
countries. * Risk-based internal control framework and assurance
programme with local management accountability
* Periodic risk-based internal audits of ABAC
compliance programme
* Speak Up! hotline
----------------- ------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------------
14. Quality The risk of
serious product * Illness to consumers * Full implementation of CCHBC Quality and Food Safety * Product quality
quality issues prevention programmes
or contamination
of our products. * Reputation damage
* Quality and Food Safety management system
certification
* Regulatory intervention
* Quality and Food Safety capabilities development
* Adverse financial impact programmes implementation as part of Maturity Matrix
programme
* Elevated supplier quality management
* Continued development and training in IMCR programme
----------------- ------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------------
15. Strategic We rely on
stakeholder our strategic * Termination of agreements or unfavourable renewal * Management focus on effective day-to-day interaction * Economic impact
relationships relationships terms could adversely affect profitability with our strategic partners
and agreements
with The * Corporate governance
Coca-Cola * Working together as effective partners for growth
Company
(including
Costa Coffee), * Engagement in joint projects and business planning
Monster Energy with a focus on strategic issues
and our premium
spirits
partners. * Participation in 'top-to-top' senior management
forums
----------------- ------------------------------------------------------------ ------------------------------------------------------------ ---------------------------------------------
Related party transactions
Related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial positions or the performance of Coca-Cola
HBC during the period, as well as any changes in the related party
transactions as described in the 2021 Integrated Annual Report that
could have a material effect on the financial positions or
performance of the Group in the first six months of the current
financial year, are described in section "Condensed consolidated
interim financial statements for the six months ended 1 July 2022",
note 16 "Related party transactions".
Going concern statement
In 2022, the Group experienced a significant recovery from the
COVID-19 pandemic as remaining restrictions were lifted, reopening
its markets and the business returned 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 as we move into the latter stages of the
year.
As part of the consideration of whether to adopt the going
concern basis in preparing the interim report and financial
statements, management has considered the Group's financial
performance in the period as well as its 2021 quantitative
viability exercise, including the performance of various stress
tests, which confirms the Group's ability to generate cash in the
year ending 31 December 2022 and beyond. Management has also
considered the events involving Ukraine and Russia and no impact
has been identified on the Group's ability to continue as a going
concern.
Management has also considered the Group's strong balance sheet
and liquidity position, its leading market shares and largely
variable cost base, together with the unique portfolio of brands
and resilient and talented people, which it believes will allow the
Group to fully overcome the challenges posed by the volatile
geopolitical and macroeconomic environment.
Accordingly, and having also considered the principal risks, the
Directors continue to adopt the going concern basis of accounting
in preparing these condensed consolidated interim financial
statements and have not identified any material uncertainties to
the Group's ability to continue trading as a going concern over a
period of at least twelve months from the date of approval of these
condensed consolidated interim financial statements.
Responsibility statement
The Directors of the Company, whose names are set out below,
confirm that to the best of their knowledge:
(a) the condensed consolidated interim financial statements are
prepared in accordance with International Accounting Standard (IAS)
34, 'Interim Financial Reporting', as issued by the International
Accounting Standards Board (IASB) and IAS 34, 'Interim Financial
Reporting', as issued by the International Accounting Standards
Board (IASB) and adopted by the European Union (EU) and give a true
and fair view of the assets, liabilities, financial position and
profit or loss of the undertakings included in the consolidation as
a whole for the period ended 1 July 2022 as required by the
Disclosure Guidance and Transparency Rules sourcebook of the UK FCA
("DTR") 4.2.4R; and
(b) the interim management report includes a fair review of the
information required by:
-- DTR 4.2.7R of the DTRs, being an indication of important
events that have occurred during the first six months of the
current financial year and their impact on the condensed
consolidated interim financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
-- DTR 4.2.8 R of the DTRs, being related party transactions
that have taken place in the first six months of the current
financial year and that have materially affected the financial
position or performance of the Group during that period, and any
changes in the related party transactions described in the 2021
Integrated Annual Report for Coca-Cola HBC AG and its subsidiaries
for the year ended 31 December 2021, that could have a material
effect on the financial position or performance of the Group in the
first six months of the current financial year.
Name Title
Anastassis G. David Non-Executive Chairman
Zoran Bogdanovic Chief Executive Officer
Anastasios I. Leventis Non-Executive Director
Henrique Braun Non-Executive Director
Christo Leventis Non-Executive Director
Bruno Pietracci Non-Executive Director
Ryan Rudolph Non-Executive Director
Reto Francioni Senior Independent Non-Executive
Director
Charlotte J. Boyle Independent Non-Executive Director
Anna Diamantopoulou Independent Non-Executive Director
William W. (Bill) Douglas Independent Non-Executive Director
III
Olusola (Sola) David-Borha Independent Non-Executive Director
Alexandra Papalexopoulou Independent Non-Executive Director
Signed on behalf of the Board
Zoran Bogdanovic
Chief Executive Officer
11 August 2022
Independent review report to Coca-Cola HBC AG
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed the condensed consolidated interim financial
statements (the "interim financial statements") in the Half-yearly
financial report of Coca-Cola HBC AG (the "Company") for the six
months ended 1 July 2022 (the "Half-yearly financial report").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with
International Accounting Standard 34, 'Interim Financial Reporting'
as adopted by the European Union and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
The interim financial statements comprise:
-- the condensed consolidated interim balance sheet as at 1 July 2022;
-- the condensed consolidated interim income statement for the six month period then ended;
-- the condensed consolidated interim statement of comprehensive
income for the six month period then ended;
-- the condensed consolidated interim statement of changes in
equity for the six month period then ended;
-- the condensed consolidated interim cash flow statement for
the six month period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Half-yearly
financial report have been prepared in accordanc e with IAS 34,
'Interim Financial Reporting', as adopted by the European Union and
the Disclosure Guidance and Transparency Rules sourcebook of the
United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410, 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity'
issued by the International Auditing and Assurance Standards Board.
A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed. However, future events or
conditions may cause the group to cease to continue as a going
concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Half-yearly financial report, including the interim
financial statements, is the responsibility of, and has been
approved by the directors. The directors are responsible for
preparing the Half-yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority. In preparing the Half-yearly
financial report, including the interim financial statements, the
directors are responsible for assessing the group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the Half-yearly financial report based on
our review. Our conclusion, including our Conclusions relating to
going concern, is based on procedures that are less extensive than
audit procedures, as described in the Basis for conclusion
paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of
complying with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority and
for no other purpose. We do not, in giving this conclusion, accept
or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
____________________________________________
Fotis Smyrnis
Certified Accountant Auditor (SOEL Reg. No. 52861)
For and on behalf of PricewaterhouseCoopers S.A.
Certified Auditors (SOEL Reg. No. 113)
11 August 2022
Athens, Greece
Notes:
(a) The maintenance and integrity of the Company's website is
the responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the interim financial statements since
they were initially presented on the website.
(b) Legislation in the United Kingdom and Switzerland governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Condensed consolidated interim financial statements for the six
months ended 1 July 2022
Condensed consolidated interim income statement (unaudited)
Six months ended
1 July 2022 2 July 2021
--------------------------------------------- -----
Note EUR million EUR million
--------------------------------------------- ----- ------------ ------------
Net sales revenue 3 4,209.9 3,247.9
Cost of goods sold (2,759.7) (2,048.4)
--------------------------------------------- ----- ------------ ------------
Gross profit 1,450.2 1,199.5
Operating expenses (1,015.3) (863.5)
Exceptional items related to Russia-Ukraine
conflict 4 (183.6) -
Share of results of integral equity
method investments 24.4 14.1
--------------------------------------------- ----- ------------ ------------
Operating profit 3 275.7 350.1
Finance costs, net 6 (42.7) (34.7)
Share of results of non-integral equity
method investments 1.4 1.8
--------------------------------------------- ----- ------------ ------------
Profit before tax 234.4 317.2
Tax 7 (82.0) (83.8)
--------------------------------------------- ----- ------------ ------------
Profit after tax 152.4 233.4
--------------------------------------------- ----- ------------ ------------
Attributable to:
Owners of the parent 152.9 233.1
Non-controlling interests (0.5) 0.3
--------------------------------------------- ----- ------------ ------------
152.4 233.4
--------------------------------------------- ----- ------------ ------------
Basic and diluted earnings per share
(EUR) 8 0.42 0.64
Condensed consolidated interim statement of comprehensive income
(unaudited)
Six months ended
1 July
2022 2 July 2021
---------------------------------------------------------
EUR million EUR million
--------------------------------------------------------- ------------- ------------
Profit after tax 152.4 233.4
Other comprehensive income:
Items that may be subsequently reclassified
to income
statement:
Cost of hedging (0.3) (1.0)
Net gain of cash flow hedges 24.5 42.1
Foreign currency translation 135.9 20.0
Share of other comprehensive income of equity
method
investments 44.3 7.2
Income tax relating to items that may be subsequently
reclassified
to income statement (3.9) (6.2)
--------------------------------------------------------- ------------- ------------
200.5 62.1
Items that will not be subsequently reclassified
to income
statement:
Valuation loss on equity investments at fair
value through other
comprehensive income (0.1) -
Actuarial gain 39.2 14.5
Income tax relating to items that will not be
subsequently
reclassified to income statement (1.1) 0.3
38.0 14.8
--------------------------------------------------------- ------------- ------------
Other comprehensive income for the period, net
of tax 238.5 76.9
--------------------------------------------------------- ------------- ------------
Total comprehensive income for the period 390.9 310.3
--------------------------------------------------------- ------------- ------------
Total comprehensive income attributable to:
Owners of the parent 393.6 310.0
Non-controlling interests (2.7) 0.3
390.9 310.3
--------------------------------------------------------- ------------- ------------
Condensed consolidated interim balance sheet (unaudited)
As at
1 July 2022 31 December
2021
-------------------------------------
Note EUR million EUR million
------------------------------------- ----- ------------ ------------
Assets
Intangible assets 9 2,526.8 2,043.3
Property, plant and equipment 9 3,255.6 2,830.9
Other non-current assets 524.5 483.2
------------------------------------- ----- ------------ ------------
Total non-current assets 6,306.9 5,357.4
------------------------------------- ----- ------------ ------------
Inventories 835.2 519.8
Trade, other receivables and assets 1,431.2 975.3
Other financial assets 10 509.2 878.9
Cash and cash equivalents 10 1,328.3 782.8
------------------------------------- ----- ------------ ------------
4,103.9 3,156.8
Assets classified as held for sale - 0.1
------------------------------------- ----- ------------ ------------
Total current assets 4,103.9 3,156.9
------------------------------------- ----- ------------ ------------
Total assets 10,410.8 8,514.3
------------------------------------- ----- ------------ ------------
Liabilities
Borrowings 11 675.7 381.7
Other current liabilities 3,339.2 2,134.7
------------------------------------- ----- ------------ ------------
Total current liabilities 4,014.9 2,516.4
------------------------------------- ----- ------------ ------------
Borrowings 11 2,681.5 2,555.7
Other non-current liabilities 419.7 325.1
------------------------------------- ----- ------------ ------------
Total non-current liabilities 3,101.2 2,880.8
------------------------------------- ----- ------------ ------------
Total liabilities 7,116.1 5,397.2
------------------------------------- ----- ------------ ------------
Equity
Owners of the parent 3,275.7 3,114.5
Non-controlling interests 19.0 2.6
------------------------------------- ----- ------------ ------------
Total equity 3,294.7 3,117.1
------------------------------------- ----- ------------ ------------
Total equity and liabilities 10,410.8 8,514.3
------------------------------------- ----- ------------ ------------
Condensed consolidated interim 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
12) 2.2 3.6 - - - - - 5.8 - 5.8
Share-based
compensation:
Performance
shares - - - - - 4.4 - 4.4 - 4.4
Appropriation
of reserves - - - 8.9 - (8.8) (0.1) - - -
Dividends (Note
14) - (235.8) - - - - 2.2 (233.6) (0.1) (233.7)
Transfer of
cash flow
hedge reserve,
including
cost of
hedging to
inventories,
net of
deferred
tax(1) - - - - - (4.1) - (4.1) - (4.1)
---------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
2,016.6 3,089.2 (6,472.1) (146.6) (1,242.1) 258.2 4,900.0 2,403.2 2.5 2,405.7
Profit for the
period,
net of tax - - - - - - 233.1 233.1 0.3 233.4
Other
comprehensive
income
for the
period, net
of tax - - - - 27.2 34.9 14.8 76.9 - 76.9
---------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Total
comprehensive
income
for the
period net
of tax (2) - - - - 27.2 34.9 247.9 310.0 0.3 310.3
---------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Balance as at 2
July
2021 2,016.6 3,089.2 (6,472.1) (146.6) (1,214.9) 293.1 5,147.9 2,713.2 2.8 2,716.0
---------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Shares issued
to employees
exercising
stock
options (Note
12) 5.7 8.1 - - - - - 13.8 - 13.8
Share-based
compensation:
Performance
shares - - - - - 10.7 - 10.7 - 10.7
Movement in
shares
held for
equity
compensation
plan - - - - - (0.1) - (0.1) - (0.1)
Appropriation
of reserves - - - - - (0.2) 0.2 - - -
Dividends (Note
14) - - - - - - - - (0.2) (0.2)
Transfer of
cash flow
hedge reserve,
including cost
of
hedging to
inventories,
net
of deferred
tax - - - - - (15.8) - (15.8) - (15.8)
---------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
2,022.3 3,097.3 (6,472.1) (146.6) (1,214.9) 287.7 5,148.1 2,721.8 2.6 2,724.4
Profit for the
period,
net of tax - - - - - - 314.1 314.1 - 314.1
Other
comprehensive
income
for the
period, net
of tax - - - - 60.9 22.5 (4.8) 78.6 - 78.6
---------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Total
comprehensive
income
for the
period, net
of tax - - - - 60.9 22.5 309.3 392.7 - 392.7
---------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
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
---------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
(1) The amount included in other reserves of EUR4.1 million gain
for the first half of 2021 represents the cash flow hedge reserve,
including cost of hedging, transferred to inventories of EUR5.1
million gain, and the deferred tax expense thereof amounting to
EUR1.0 million.
(2) The amount included in the exchange equalisation reserve of
EUR27.2 million gain for the first half of 2021 represents the
exchange gain attributed to the owners of the parent, primarily
related to the Russian Rouble, including EUR7.2 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 EUR34.9 million gain for the first half of 2021
consists of cash flow hedges gain of EUR41.1 million and the
deferred tax expense thereof amounting to EUR6.2 million.
The amount of EUR247.9 million gain attributable to owners of
the parent comprises profit for the period of EUR233.1 million,
actuarial gains of EUR14.5 million and deferred tax income of
EUR0.3 million.
The amount of EUR0.3 million gain included in non-controlling
interests for the first half of 2021 represents the share of
non-controlling interests in profit for the period.
Condensed consolidated interim 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
2022 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
Shares issued to
employees
exercising
stock
options (Note
12) 0.1 0.1 - - - - - 0.2 - 0.2
Share based
compensation:
Performance
shares - - - - - 3.9 - 3.9 - 3.9
Appropriation of
reserves - - - 15.4 - (22.4) 7.0 - - -
Arising on
acquisition - - - - - - - - 170.7 170.7
Purchase of
shares
held by
non-controlling
interests - - - - - - 42.6 42.6 (151.5) (108.9)
Dividends (Note
14) - (262.6) - - - - 2.4 (260.2) (0.1) (260.3)
Transfer of cash
flow
hedge reserve,
including cost
of
hedging, to
inventories,
net
of deferred
tax(3) - - - - - (18.9) - (18.9) - (18.9)
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
2,022.4 2,834.8 (6,472.1) (131.2) (1,154.0) 272.8 5,509.4 2,882.1 21.7 2,903.8
Profit for the
period
net of tax - - - - - - 152.9 152.9 (0.5) 152.4
Other
comprehensive
income
for the period,
net
of tax - - - - 181.0 21.6 38.1 240.7 (2.2) 238.5
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Total
comprehensive
income
for the
period, net
of tax(4) - - - - 181.0 21.6 191.0 393.6 (2.7) 390.9
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Balance as at 1
July
2022 2,022.4 2,834.8 (6,472.1) (131.2) (973.0) 294.4 5,700.4 3,275.7 19.0 3,294.7
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
(3) The amount included in other reserves of EUR18.9 million
gain for the first half of 2022 represents the cash flow hedge
reserve, including cost of hedging, transferred to inventories of
EUR23.6 million gain, and the deferred tax expense thereof
amounting to EUR4.7 million.
(4) The amount included in the exchange equalisation reserve of
EUR181.0 million gain for the first half of 2022 represents the
exchange gain attributed to the owners of the parent, primarily
related to the Russian Rouble and the Nigerian Naira, partially
offset by the loss related to the Egyptian Pound, including EUR42.9
million gain relating to the share of other comprehensive income of
equity method investments.
The amount of other comprehensive income net of tax included in
other reserves of EUR21.6 million gain for the first half of 2022
consists of cash flow hedges gain of EUR24.2 million, share of
other comprehensive income of equity method investments of EUR1.4
million gain, valuation losses of EUR0.1 million on equity
investments at fair value through other comprehensive income, and
the deferred tax expense thereof amounting to EUR3.9 million.
The amount of EUR191.0 million gain attributable to owners of
the parent comprises profit for the period of EUR152.9 million,
actuarial gains of EUR39.2 million and deferred tax expense thereof
amounting to EUR1.1 million.
The amount of EUR2.7 million losses included in non-controlling
interests for the first half of 2022, represents the exchange loss
attributed to the non-controlling interests of EUR2.2 million, and
the share of non-controlling interests in profit for the year of
EUR0.5 million loss.
Condensed consolidated interim cash flow statement
(unaudited)
Six months ended
Note 1 July 2 July 2021
2022
------------------------------------------------- -----
EUR million EUR million
------------------------------------------------- ----- ------------ ------------
Operating activities
Profit after tax for the period 152.4 233.4
Finance costs, net 6 42.7 34.7
Share of results of non-integral equity
method investments (1.4) (1.8)
Tax charged to the income statement 82.0 83.8
Depreciation and impairment of property,
plant and equipment 4, 9 317.2 159.7
Employee performance shares 3.7 4.4
Impairment of equity method investments 4 52.8 -
Amortisation and impairment of intangible
assets 4, 9 14.4 0.5
------------------------------------------------- ----- ------------ ------------
663.8 514.7
Share of results of integral equity method
investments (24.4) (14.1)
Loss / (Gain) on disposals of non-current
assets 2.2 (3.1)
Increase in inventories (244.7) (126.2)
Increase in trade and other receivables (349.6) (249.1)
Increase in trade and other payables 548.7 456.9
Tax paid (63.4) (83.2)
Net cash inflow from operating activities 532.6 495.9
------------------------------------------------- ----- ------------ ------------
Investing activities
Payments for purchases of property, plant
and equipment (168.6) (189.1)
Proceeds from sales of property, plant and
equipment 1.9 2.9
Payments for business combinations, net
of cash acquired 15 (249.0) -
Payments related to acquisition of non-integral
equity method investments (6.5) -
Loans to related parties (0.4) -
Net payments for investments in financial
assets at amortised cost (249.0) (299.1)
Net proceeds from / (payments for) investments
in financial assets at
fair value through profit or loss 638.4 (285.7)
Net receipts from integral equity method
investments 16 2.0 6.5
Net receipts from non-integral equity method
investments 16 0.6 0.5
Interest received 1.3 0.3
Payment for acquisition of joint operation - (0.9)
Net cash outflow from investing activities (29.3) (764.6)
------------------------------------------------- ----- ------------ ------------
Financing activities
Proceeds from shares issued to employees,
exercising stock options 12 0.2 5.8
Payments for shares held by non-controlling
interests 15 (108.9) -
Proceeds from borrowings 346.9 63.7
Repayments of borrowings (202.9) (54.2)
Principal repayments of lease obligations (29.5) (29.3)
(Payments for) / Proceeds from settlement
of derivatives regarding
financing activities (1.4) 3.7
Interest paid (27.5) (24.6)
Dividends paid to non-controlling interests (0.1) -
Net cash outflow from financing activities (23.2) (34.9)
------------------------------------------------- ----- ------------ ------------
Net increase / (decrease) in cash and cash
equivalents 480.1 (303.6)
------------------------------------------------- ----- ------------ ------------
Movement in cash and cash equivalents
Cash and cash equivalents at 1 January 782.8 1,215.8
Net increase / (decrease) in cash and cash
equivalents 480.1 (303.6)
Effect of changes in exchange rates 65.4 0.8
------------------------------------------------- ----- ------------ ------------
Cash and cash equivalents at the end of
the period 1,328.3 913.0
------------------------------------------------- ----- ------------ ------------
The accompanying notes form an integral part of these condensed
consolidated interim financial statements
Selected explanatory notes to the condensed consolidated interim
financial statements (unaudited)
1. Basis of preparation and accounting policies
Basis of preparation
These condensed consolidated interim 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 interim 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 for the year ended 31 December 2021.
Going concern
As part of the consideration of whether to adopt the going
concern basis in preparing the interim report and financial
statements, management has considered the Group's financial
performance in the period as well as its 2021 quantitative
viability exercise, including the performance of various stress
tests , which confirms the Group's ability to generate cash in the
year ending 31 December 2022 and beyond. Management has also
considered the events involving Ukraine and Russia and no impact
has been identified on the Group's ability to continue as a going
concern. Therefore, management considers it appropriate to adopt
the going concern basis of accounting in preparing the condensed
consolidated interim financial statements.
Accounting policies
The accounting policies used in the preparation of the condensed
consolidated interim financial statements of Coca-Cola HBC AG
("Coca-Cola HBC", the "Company" or the "Group") are consistent with
those used in the 2021 annual financial statements , except for the
adoption of applicable amendments to accounting standards effective
as of 1 January 2022. 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 2022 and were adopted by the Group. The adoption of these
amendments did not have a significant impact on the Group's
condensed consolidated interim financial statements.
Amendments to IAS 16 - Proceeds before intended use: This
amendment prohibits an entity from deducting from the cost of an
item of property, plant and equipment any proceeds received from
selling items produced while the entity is preparing the asset for
its intended use. Instead, an entity recognises the proceeds from
selling such items, and the costs of producing those items, in
profit or loss. The financial performance of the asset is not
relevant to this assessment. Entities must disclose separately the
amounts of proceeds and costs relating to items produced that are
not an output of the entity's ordinary activities.
Amendments to IAS 37 - Onerous Contracts, Cost of Fulfilling a
Contract: This amendment clarifies that the direct costs of
fulfilling a contract include both the incremental costs of
fulfilling the contract and an allocation of other costs directly
related to fulfilling contracts. Before recognising a separate
provision for an onerous contract, the entity recognises any
impairment loss that has occurred on assets used in fulfilling the
contract.
Amendments to IFRS 3 - Reference to the Conceptual Framework:
Minor amendments were made to IFRS 3 Business Combinations to
update the references to the Conceptual Framework for Financial
Reporting without changing its requirement and add an exception for
the recognition of liabilities and contingent liabilities within
the scope of IAS 37 'Provisions, Contingent Liabilities and
Contingent Assets' and Interpretation 21 'Levies'. The amendments
also confirm that contingent assets should not be recognised at the
acquisition date.
Annual improvements 2018-2020 cycle: Minor amendments to the
following standards were made:
-- IFRS 9 Financial Instruments: the amendment clarifies which
fees should be included in the 10% test for derecognition of
financial liabilities. These fees include only those paid or
received between the borrower and the lender, including fees paid
or received by either the borrower or lender on the other's
behalf.
-- IFRS 16 Leases: the amendment removes the illustration of
payments from the lessor relating to leasehold improvements in
Illustrative Example 13 accompanying IFRS 16, in order to remove
potential confusion regarding the treatment of lease incentives
when applying IFRS 16.
Amendments to IFRS 16 - COVID-19 related rent concessions beyond
30 June 2021: As a result of the COVID-19 pandemic, rent
concessions have been granted to lessees. In May 2020, the IASB
published an amendment to IFRS 16 that provided an optional
practical expedient for lessees from assessing whether a rent
concession related to COVID-19 is a lease modification. On 31 March
2021, the IASB published an additional amendment to extend the date
of the practical expedient from 30 June 2021 to 30 June 2022.
Lessees can elect to account for such rent concessions in the same
way as they would if they were not lease modifications. In many
cases, this will result in accounting for the concession as
variable lease payments in the period(s) in which the event or
condition that triggers the reduced payment occurs.
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 at each balance sheet date. The principal exchange
rates used for translation purposes in respect of one Euro are:
Average rate for the six
months ended Closing rate as at
1 July 2022 2 July 2021 1 July 2022 31 December 2021
------------------- ------------- ------------ ------------- ------------------
US Dollar 1.09 1.21 1.04 1.13
UK Sterling 0.84 0.87 0.86 0.84
Polish Zloty 4.63 4.54 4.67 4.60
Nigerian Naira 456.20 489.38 437.00 481.32
Hungarian Forint 374.20 357.92 394.17 370.08
Swiss Franc 1.03 1.09 1.00 1.04
Russian Rouble 85.44 89.62 59.45 83.87
Romanian Leu 4.94 4.90 4.94 4.95
Ukrainian Hryvnia 31.72 33.49 30.78 30.78
Czech Koruna 24.63 25.85 24.74 24.95
Serbian Dinar 117.60 117.58 117.43 117.56
Egyptian Pound 18.87 - 19.79 -
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 29 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, Egypt, 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
1 July 2022 2 July 2021
-------------- -------------------------------- --------------------------------
Established 305.7 274.3
Developing 230.4 190.9
Emerging 794.1 661.5
Total volume 1,330.2 1,126.7
-------------- -------------------------------- --------------------------------
(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. For coffee one
unit case corresponds to 0.5 kilograms or 5.678 litres. Volume data
is derived from unaudited operational data.
Net sales revenue per reportable segment for the six months
ended 1 July 2022 and 2 July 2021 is presented below:
Six months ended
1 July 2022 2 July 2021
EUR million EUR million
------------------------- --------------------------------- ---------------------------------
Established 1,384.2 1,149.8
Developing 791.6 601.6
Emerging 2,034.1 1,496.5
Total net sales revenue 4,209.9 3,247.9
------------------------- --------------------------------- ---------------------------------
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
ended 1 July 2022 and 2 July 2021 is presented below :
Six months ended
1 July 2022 2 July 2021
EUR million EUR million
--------------------------------- --------------------------------- ---------------------------------
Volume in million unit cases(1)
NARTD(2) 1,328.8 1,125.3
Premium spirits 1.4 1.4
Total volume 1,330.2 1,126.7
--------------------------------- --------------------------------- ---------------------------------
Net sales revenue (EUR million)
NARTD 4,109.6 3,160.3
Premium spirits 100.3 87.6
Total net sales revenue 4,209.9 3,247.9
--------------------------------- --------------------------------- ---------------------------------
(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. For coffee one
unit case corresponds to 0.5 kilograms or 5.678 litres.
(2) NARTD: non-alcoholic, ready-to-drink beverages as well as
coffee.
b) Other income statement items
Six months ended
1 July 2022 2 July 2021
EUR million EUR million
------------------------------------------------ ------------ ------------
Operating profit
Established 147.4 110.6
Developing 56.9 35.7
Emerging 71.4 203.8
Total operating profit 275.7 350.1
------------------------------------------------ ------------ ------------
Reconciling items
Finance costs, net (42.7) (34.7)
Tax (82.0) (83.8)
Share of results of non-integral equity method
investments 1.4 1.8
Non-controlling interests 0.5 (0.3)
------------------------------------------------
Profit after tax attributable to owners of
the parent 152.9 233.1
------------------------------------------------ ------------ ------------
4. Russia-Ukraine conflict impact
a) Operations in Russia and Ukraine
Goodwill and other indefinite-lived intangible assets are tested
for impairment annually and when there is an indication of
impairment. Determining whether goodwill or indefinite-lived
intangible assets are impaired requires an estimation of the
value-in-use of the cash -- generating units to which they have
been allocated, in order to determine the recoverable amount of
these cash-generating units. The value-in-use calculation requires
the Group to estimate the future cash flows expected to arise from
the cash-generating unit, discounted at an appropriate rate.
Estimating the future cash flows involves a significant degree of
uncertainty. Cash flow projections are based on financial budgets
as well as operation and market-specific high-level assumptions
including growth rates, discount rates, forecast selling prices and
direct costs.
The Group performed its annual impairment test in 2021, where
the recoverable amount was higher than the carrying amount for all
cash-generating units and therefore no impairment was recorded.
During the first half of 2022, macroeconomic factors, sanctions
and other regulations as a result of the Russia-Ukraine conflict
indicated a material deterioration of the discount rate used to
determine the recoverable amount of the Group's Russian
cash-generating unit. In addition, TCCC announced in March 2022
that it is suspending its business in Russia. In response to this
decision, the Group is implementing a restructuring plan in
connection with its Russian operations to adjust the business
accordingly, focusing on local brands. These events indicated
potentially material changes in expected cash flow projections used
to determine the recoverable amount of the Russian cash-generating
unit, compared to previously used forecasts.
As a result, the Group proceeded with an interim impairment test
of the Russian cash-generating unit's recoverable amount, including
goodwill. The recoverable amount was determined based on
value-in-use calculations consistent with those performed in 2021,
updated to consider management's revised best estimates of expected
cash flow projections and a higher discount rate, reflective of the
macroeconomic uncertainty in Russia. As a result of this exercise,
it was identified that the carrying value exceeded the recoverable
amount of the Russian cash-generating unit, resulting in a pre-tax
impairment charge to goodwill and property, plant and equipment of
EUR13.7 million and EUR15.0 million respectively, recorded in line
'Exceptional items related to Russia-Ukraine conflict' in the
condensed consolidated interim income statement.
The following table sets out the key assumptions used in the
impairment assessment of the Russian cash-generating unit for the
half-year 2022 results and 2021:
2022 2021
--------------------------- ------ -----
Growth rate in perpetuity 4.0% 3.0%
Discount rate 26.5% 6.5%
In addition, the implementation from the Group of the
restructuring plan in connection with its Russian operations, has
resulted in pre-tax impairment losses predominantly related to
buildings and production equipment of EUR102.1 million during the
first half of 2022, recorded in line 'Exceptional items related to
Russia-Ukraine conflict' in the condensed consolidated interim
income statement, as well as restructuring costs of EUR2.2 million.
Impairment losses were recorded based on a value-in-use exercise,
as no reliable estimate of an exit price less costs to dispose
could be made under the current extremely volatile market
conditions.
As a result of the Russia-Ukraine conflict, operations of the
Group's Ukrainian subsidiary were temporarily suspended for the
period March-April 2022. During May 2022, the Group resumed
production and distribution of products in Ukraine, where safe to
do so. Non-current assets of Ukraine represented approximately 1%
of the Group's total non-current assets as at 1 July 2022. An
interim impairment test of the Ukrainian cash-generating unit,
based on a value-in-use exercise was performed, as it was
considered that, whilst operations have resumed, significant
changes in the relevant market with an adverse effect in the
cash-generating unit had taken place during the period. No
impairment was identified as a result of this impairment testing.
The Group's carrying amount of goodwill and other indefinite-lived
intangibles for its Ukrainian cash-generating unit was EURnil as at
1 July 2022.
An amount of EUR4.2 million losses directly attributable to the
Russia-Ukraine conflict, primarily related to inventory and
property, plant and equipment write-offs, have been incurred by the
Group's Ukrainian subsidiary during the first half of 2022 and have
been recorded mainly in line "Operating expenses" of the condensed
consolidated interim income statement.
b) Equity method investments
The impact of the Russia-Ukraine conflict on the macroeconomic
environment of Russia as described above, was also considered an
impairment indicator by the Group under IAS 36 'Impairment of
assets', in connection with its integral, joint venture investment
in Multon A.O. group of companies ("Multon"). Multon is engaged in
the production and distribution of juices in Russia and is jointly
controlled by the Group and TCCC. The Group performed an interim
impairment test in connection with its investment in Multon. The
recoverable amount of the investment was determined based on a fair
value exercise, considering management's best estimates of expected
cash flow projections and appropriate discount rate, reflective of
the macroeconomic uncertainty in Russia, which was classified as a
Level 3 measurement. The recoverable amount of the Group's
investment in Multon resulting from this exercise amounted to
EUR174.2 million. This resulted in a pre-tax impairment charge of
EUR52.8 million, which is recorded in line "Exceptional items
related to Russia-Ukraine conflict" in the condensed consolidated
interim income statement.
The following table sets out the key assumptions used in the
fair value exercise for the half-year 2022 results:
2022
--------------------------- ------
Growth rate in perpetuity 4.0%
Discount rate 28.6%
c) Foreign-currency risk
The Group is exposed to the effect of foreign currency risk on
future transactions, recognised monetary assets and liabilities
that are denominated in currencies other than the local entity's
functional currency, as well as net investments in foreign
operations. As described in the 2021 Integrated Annual Report, the
Group actively manages its foreign currency risk. The
Russia-Ukraine conflict has, among other things, resulted in
increased volatility in currency markets, especially in connection
with the Russian Rouble.
The following tables present details of the Group's sensitivity
to reasonably possible increases and decreases in the Euro and US
Dollar against the Russian Rouble and Ukrainian Hryvnia. In
determining reasonable possible changes, the historical volatility
over a 12-month period of the respective foreign currencies in
relation to the Euro and the US Dollar has been considered. The
sensitivity analysis determines the potential gains and losses in
the income statement or equity arising from the Group's foreign
exchange positions as a result of the corresponding percentage
increases and decreases in the Group's main foreign currencies
relative to the Euro and the US Dollar. The sensitivity analysis
includes outstanding foreign-currency-denominated monetary items,
external loans, and loans between operations within the Group where
the denomination of the loan is in a currency other than the
functional currency of the local entity.
2022 exchange risk sensitivity to reasonably possible changes in
the Euro against Russian Rouble and Ukrainian Hryvnia
Euro strengthens
against Euro weakens against
local currency local currency
------------------- ---------------- ---------------------------- --------------------------
(Gain)
Loss / (gain) / loss
(Gain) Loss /
% historical in income / loss in income (gain)
volatility
over a statement in equity statement in equity
12-month period EUR million EUR million EUR million EUR million
------------------- ---------------- -------------- ------------ ------------ ------------
Russian Rouble 49.4% (5.4) - 15.8 -
------------------- ---------------- -------------- ------------ ------------ ------------
Ukrainian Hryvnia 11.9% 0.6 - (0.8) -
------------------- ---------------- -------------- ------------ ------------ ------------
2022 exchange risk sensitivity to reasonably possible changes in
the US Dollar against Russian Rouble and Ukrainian Hryvnia
US Dollar strengthens US Dollar weakens
against against
local currency local currency
------------------- ---------------- ---------------------------- --------------------------
(Gain)
Loss / (gain) / loss
(Gain) Loss /
% historical in income / loss in income (gain)
volatility
over a statement in equity statement in equity
12-month period EUR million EUR million EUR million EUR million
------------------- ---------------- -------------- ------------ ------------ ------------
Russian Rouble 48.7% (2.6) (2.6) 7.8 7.7
------------------- ---------------- -------------- ------------ ------------ ------------
Ukrainian Hryvnia 9.8% 0.3 - (0.4) -
------------------- ---------------- -------------- ------------ ------------ ------------
d) Other topics
As a result of sanctions and other regulations implemented in
the first half of 2022, there have been changes in required
regulatory approvals, potentially impacting the transfer and usage
of cash outside of Russia. Cash and cash equivalents held by the
Group's operations in Russia, including its joint venture, amounted
to EUR177.3 million equivalent in Russian Rouble, US Dollar and
Euro as at 1 July 2022. The aforementioned changes restrict the
usage outside the country of cash held in Russia, however, are not
expected to have a material impact on the Group's liquidity, as the
cash and cash equivalents held in Russia are expected to be used in
the forthcoming financial periods mainly for working capital
purposes in the Russian operations.
The Group is continuously monitoring performance of its Russian
and Ukrainian operations as well as the developments in the region,
to ensure timely actions and initiatives are undertaken to minimize
potential adverse impact for the Group.
5. Restructuring costs
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
costs per reportable segment for the six months ended 1 July 2022
and 2 July 2021 are presented below:
Six months ended
1 July 2022 2 July 2021
EUR million EUR million
--------------------------- -------------------------------- --------------------------------
Established (5.0) (0.4)
Developing - 0.9
Emerging 11.0 -
Total restructuring costs 6.0 0.5
--------------------------- -------------------------------- --------------------------------
6. Finance costs, net
Six months ended
1 July 2022 2 July 2021
EUR million EUR million
----------------------------- -------------------------------- --------------------------------
Interest income (3.9) (2.3)
Finance costs 41.0 33.5
Net foreign exchange losses 5.6 3.5
Finance costs, net 42.7 34.7
----------------------------- -------------------------------- --------------------------------
7. Tax
Six months ended
1 July 2022 2 July 2021
EUR million EUR million
-------------------- -------------------------------- --------------------------------
Profit before tax 234.4 317.2
Tax (82.0) (83.8)
Effective tax rate 35.0% 26.4%
-------------------- -------------------------------- --------------------------------
The Group's effective tax rate for 2022 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.
8. 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 (first half
of 2022: 366,162,423, first half of 2021: 364,525,100). 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.
9. Intangible assets and property, plant and equipment
Intangible Property,
plant
assets and equipment
EUR million EUR million
----------------------------------------------------- ------------ --------------
Net book value as at 1 January 2022 excluding
right-of-use assets 2,043.3 2,668.3
Additions - 231.6
Arising from business combinations (Note 15) 519.6 281.4
Disposals - (4.3)
Depreciation, impairment and amortisation (Note
4) (14.4) (285.3)
Foreign currency translation (21.7) 153.6
Net book value as at 1 July 2022 excluding
right-of-use assets 2,526.8 3,045.3
----------------------------------------------------- ------------ --------------
Net book value as at 1 January 2022 of right-of-use
assets 162.6
Net book value as at 1 July 2022 of right-of-use
assets (Note 13) 210.3
----------------------------------------------------- ------------ --------------
Net book value as at 1 July 2022 3,255.6
----------------------------------------------------- ------------ --------------
Right-of-use assets arising from acquisition of Coca-Cola
Bottling Company of Egypt S.A.E. amounted to EUR37.8 million (Note
15).
10. 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 2021 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 1 July 2022, the Group has net debt of EUR1.6 billion
(Note 11). In addition, as at 1 July 2022, the Group has cash and
cash equivalents and other financial assets of EUR1.8 billion, an
undrawn Revolving Credit Facility of EUR0.8 billion, as well as
EUR0.5 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's Standard & Poor's and Moody's credit
ratings as disclosed in the 2021 Integrated Annual Report were
reaffirmed in March and May 2022 respectively, however Standard and
Poor's changed the outlook from stable to negative.
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 2021 Integrated Annual Report. The
money market funds recorded at fair value are included in Level 1
within the fair value hierarchy. As at 1 July 2022, the fair value
of the money market funds amounted to EURnil (EUR638.8 million as
at 31 December 2021). As at 1 July 2022, the total derivatives
included in Level 2 were financial assets of EUR52.1 million and
financial liabilities of EUR20.6 million. The Group recognises
embedded derivatives whose risks and economic characteristics were
not considered to be closely related to the commodity contract in
which they were embedded. The valuation techniques used to
determine their fair value maximised the use of observable market
data. The fair value of the embedded derivatives as at 1 July 2022
amounted to a financial asset of EUR0.8 million and are classified
within Level 2.
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 1 July 2022 amounted to a financial asset of EUR18.3
million and financial liability of EUR1.5 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 1 July 2022 amounted to a
financial liability of EUR11.1 million.
There were no transfers between Levels 1, 2 and 3 during the six
months ended 1 July 2022. The fair value of bonds and notes payable
applying the clean market price, as at 1 July 2022, was EUR2,170.1
million compared to their book value of EUR2,386.8 million, as at
the same date.
11. Net debt
As at
31 December
1 July 2022 2021
EUR million EUR million
----------------------------------------------------- ------------ -------------
Current borrowings 675.7 381.7
Non-current borrowings 2,681.5 2,555.7
Less: Cash and cash equivalents (1,328.3) (782.8)
- Financial assets at amortised cost (444.8) (196.1)
- Financial assets at fair value through
profit or loss - (638.8)
------------ -------------
Less: Other financial assets (444.8) (834.9)
----------------------------------------------------- -------------
Net debt 1,584.1 1,319.7
----------------------------------------------------- ------------ -------------
In December 2019 the Group established a loan facility of US$
85.0 million to finance the purchase of production equipment by the
Group's subsidiary in Nigeria. The facility has been partially
drawn down by Nigerian Bottling Company Ltd ("NBC") over the course
of 2020 and 2021 and matures in 2027 as disclosed in the 2021
Integrated Annual Report. The obligations under this facility are
guaranteed by Coca-Cola HBC AG. As at 1 July 2022, the outstanding
liability amounted to EUR65.0 million (EUR63.2 million as at 31
December 2021).
Cash and cash equivalents include an amount of EUR190.9 million
equivalent in Nigerian Naira. This includes an amount of EUR12.1
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 EUR444.8 million (31 December 2021: EUR189.9 million)
and also include an amount of EURnil (31 December 2021: EUR6.2
million) 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 interim balance sheet are derivative
financial instruments of EUR60.3 million (31 December 2021: EUR39.2
million) and related party loans receivable of EUR4.1 million (31
December 2021: EUR4.8 million).
12. Share capital, share premium and treasury shares
Number of Share Share
shares
(authorised capital premium
and issued) EUR million EUR million
--------------------------------------- ------------ ------------ ------------
Balance as at 1 January 2021 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 14) - - (235.8)
Balance as at 31 December 2021 371,795,418 2,022.3 3,097.3
--------------------------------------- ------------ ------------ ------------
Shares issued to employees exercising
stock options 13,583 0.1 0.1
Dividends (Note 14) - - (262.6)
---------------------------------------
Balance as at 1 July 2022 371,809,001 2,022.4 2,834.8
--------------------------------------- ------------ ------------ ------------
In 2021, the share capital of Coca-Cola HBC increased by the
issuance of 1,282,821 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.
For the six months ended 1 July 2022, the share capital of
Coca-Cola HBC increased by the issuance of 13,583 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 EUR0.2 million.
An amount of EUR15.4 million in the first half of 2022 (first
half of 2021: EUR8.9 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 interim statement of
changes in equity.
Following the above changes, on 1 July 2022 the share capital of
the Group amounted to EUR2,022.4 million and comprised 371,809,001
shares with a nominal value of CHF 6.70 each.
13. Leases
The leases which are recorded on the consolidated interim
balance sheet are principally in respect of vehicles and buildings.
T he Group's right-of-use assets and lease liability are presented
below:
1 July 2022 31 December 2021
EUR million EUR million
------------------------------------ ------------ -----------------
Land and buildings 73.6 63.2
Plant and equipment 136.7 99.4
Total right-of-use assets (Note 9) 210.3 162.6
------------------------------------ ------------ -----------------
Current lease liabilities 57.5 50.9
Non-current lease liabilities 152.4 109.4
Total lease liabilities 209.9 160.3
------------------------------------ ------------ -----------------
14. Dividends
On 22 June 2021, the shareholders of Coca-Cola HBC AG at the
Annual General Meeting approved a dividend distribution of 0.64
euro per share. 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 shareholders of Coca-Cola HBC AG approved a dividend
distribution of 0.71 euro per share at the Annual General Meeting
held on 21 June 2022. The total dividend amounted to EUR262.6
million and was paid on 2 August 2022. Of this an amount of EUR2.4
million related to shares held by the Group.
15. Business combinations
Acquisition of Coca-Cola Bottling Company of Egypt S.A.E.
On 12 August 2021, the Group entered into a sale and purchase
agreement to acquire approximately 52.7% of Coca-Cola Bottling
Company of Egypt S.A.E. ("CCBCE"), the bottling partner of 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 have
been 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, based on CCBCE's past performance, net
financial position and working capital movement, expected to be
transferred within the third quarter of 2022. This additional
payment is still under discussion with MBL according to the terms
of the sale and purchase agreement. An amount of US Dollar 83
million is considered reasonable by the Group and could
substantially vary depending on the outcome of those discussions
under the sale and purchase agreement.
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 principal
amount of the convertible loan and any unpaid interest at the time
of its transfer. The loan was convertible at its original maturity
in March 2022 into new CCBCE shares at fair market value and was
eliminated upon consolidation of CCBCE. The conversion option was
not subsequently exercised.
Details of the MBL acquisition with regards to provisionally
determined fair values of the net assets acquired, non-controlling
interests and goodwill are presented in the below table. The net
assets acquired reflect the additional payment at the provisional
amount of US Dollar 83 million / EUR76.8 million.
Fair Value
--------------------------------------
EUR million
-------------------------------------- ------------
Franchise agreements 367.7
Property, plant and equipment 319.2
Inventories 59.3
Trade, other receivables and assets 64.5
Cash and cash equivalents 15.9
Borrowings (217.0)
Trade and other payables (126.4)
Net deferred tax liabilities (122.7)
---------------------------------------- ------------
Net identifiable assets acquired 360.5
Less: Non-controlling interests (170.7)
Add: Goodwill arising on acquisition 151.9
---------------------------------------- ------------
Net assets acquired 341.7
---------------------------------------- ------------
Fair values on acquisition are provisional and will be finalised
within 12 months of the acquisition date. No significant changes to
net identifiable assets acquired have been identified compared to
the relevant amounts disclosed as part of the Group's 2021
integrated annual report.
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.
The Group incurred acquisition and integration costs of EUR13.9
million in 2021 regarding the acquisition of CCBCE, which were
included in operating expenses.
On 12 August 2021, the Group entered into an additional sale and
purchase agreement to acquire approximately 42% of 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.
The acquired business contributed revenue of EUR238.0 million to
the Group for the period from 14 January 2022 to 1 July 2022, while
it recorded a total net loss of EUR5.0 million for the same period.
If the acquisition had occurred on 1 January 2022, consolidated
revenue for the half-year ended 1 July 2022 would have been higher
by EUR18.8 million, while net loss recorded would not have been
significantly different.
The fair value of trade, other receivables and assets acquired
includes trade receivables with a fair value of EUR28.3 million.
The gross contractual amount for trade receivables acquired was
EUR42.0 million, of which EUR13.7 million was considered to be
uncollectible.
16. Related party transactions
a) The Coca-Cola Company
As at 1 July 2022 , TCCC and its subsidiaries indirectly owned 2
1 .0% (31 December 2021: 21.0%) of the issued share capital of
Coca-Cola HBC. The below table summarises transactions with TCCC
and its subsidiaries:
Six months ended
1 July 2022 2 July 2021
EUR million EUR million
--------------------------------------------- -------------- --------------
Purchases of concentrate, finished products
and other items 963.2 777.7
Net contributions received for marketing
and promotional incentives 52.6 31.6
Sales of finished goods and raw materials 2.0 1.9
Other income 2.0 1.3
Other expenses 2.2 2.1
As at 1 July 2022, the Group was owed EUR64.7 million (EUR52.8
million as at 31 December 2021) by TCCC, and owed EUR407.4 million
(EUR223.1 million as at 31 December 2021) to TCCC.
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 2021: 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
1 July 2022 2 July 2021
EUR million EUR million
------------------------------------------- -------------- --------------
Purchases of coolers and other equipment,
raw and other materials 73.6 70.1
Maintenance, rent and other expenses 15.6 12.3
As at 1 July 2022, Coca-Cola HBC owed EUR 40.2 million (EUR14.9
million as at 31 December 2021) to and was owed EUR 2.1 million
including dividend receivable of EUR1.7 million (EUR0.8 million and
EURnil as at 31 December 2021 respectively) from Frigoglass and its
subsidiaries. As at 1 July 2022, Coca-Cola HBC owed EUR 1.3 million
(EUR0.9 million as at 31 December 2021) and had a lease liability
of EUR 5.7 million (EUR6.0 million as at 31 December 2021) to AG
Leventis (Nigeria) Plc. Capital commitments to Frigoglass and its
subsidiaries as at 1 July 2022, amounted to EUR 28.1 million
(EUR33.5 million as at 31 December 2021) 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 EUR27.3
million as at 1 July 2022 (31 December 2021: EUR25.2 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.
c) Other related parties
Other
During the six months ended 1 July 2022, the Group incurred
other expenses of EUR 7.6 million (EUR7.3 million in the respective
prior-year period) 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 EUR1.2 million (EUR0.8 million in the respective
prior-year period) from other related parties. In addition, during
the six months ended 1 July 2022, the Group purchased inventory of
EUR1.3 million (EURnil in the respective prior year period) from
other related parties. As at 1 July 2022, the Group owed EUR 2.8
million (EUR0.6 million as at 31 December 2021) to and was owed
EURnil (EUR0.9 million loans receivable as at 31 December 2021)
from other related parties .
During the six months ended 1 July 2022, the Group received
dividends of EUR0.6 million from other related parties (EUR0.5
million in the respective prior year period), which are included in
line `Net receipts from non-integral equity method investments' of
the condensed consolidated interim cash flow statement .
d) Joint ventures
The below table summarises transactions with joint ventures:
Six months ended
1 July 2022 2 July 2021
EUR million EUR million
------------------------------------------- ------------------ -----------------
Purchases of inventories 6.5 2.7
Sales of finished goods and raw materials 6.2 2.1
Other income 7.5 7.2
Other expenses 10.3 6.0
As at 1 July 2022, the Group owed EUR 201.8 million including
loans payable of EUR 92.1 million (EUR149.8 million as at 31
December 2021 including loans payable of EUR63.2 million) to, and
was owed EUR 26.5 million including loans receivable of EUR 7.5
million and dividend receivable of EUR7.7 million (EUR13.9 million
as at 31 December 2021 including loans receivable of EUR7.1 million
and dividend receivable of EURnil) from joint ventures. During the
six months ended 1 July 2022, the Group received dividends of
EUR2.0 million from integral joint ventures (EUR6.5 million in the
respective prior year period), which are included in line `Net
receipts from integral equity method investments' of the condensed
consolidated interim cash flow statement .
e) Directors
There have been no transactions between Coca-Cola HBC and the
Directors and senior management except for remuneration for the six
months ended 1 July 2022.
There were no other significant transactions with other related
parties for the period ended 1 July 2022.
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 16 July 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 December
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
premises 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 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 EUR18.9 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.
Considering the above, there have been no significant adverse
changes in contingencies since 31 December 2021 (as described in
our 2021 Integrated Annual Report available on the Coca-Cola HBC's
web site: www.coca-colahellenic.com ).
18. Commitments
As at 1 July 2022 the Group had capital commitments including
commitments for leases and the share of its joint ventures' capital
commitments amounting to EUR259.2 million (31 December 2021:
EUR166.1 million), which mainly relate to plant and machinery
equipment.
19. Number of employees
The average number of full-time equivalent employees in the
first half of 2022 was 33,393 ( 2021: 26,787 ).
20. Post balance sheet events
a) Control of Multon A.O. group of companies
The Group has a 50% interest in Multon, which is engaged in the
production and distribution of juices in Russia and is jointly
controlled by the Group and TCCC. On 8 March 2022, as a result of
the Russia-Ukraine conflict, TCCC announced that it was suspending
its business in Russia.
On 10 August 2022, TCCC unilaterally waived certain of its
governance rights in connection with its 50% interest in Multon,
while retaining consent rights in respect of certain limited board
and shareholder reserved matters that are protective in nature. The
waived rights include, among others, TCCC's appointment rights over
Multon's board and management, as well as TCCC's approval rights
over Multon's financial budgets. These rights were accordingly
assumed by the Group.
As a result, considering the criteria set out in IFRS 10
'Consolidated financial statements', the Group has concluded that,
effective 11 August 2022 it controls Multon. This resulted in the
Group consolidating Multon from 11 August 2022.
Due to the timing of TCCC unilaterally waiving certain of its
governance rights, information on the fair values of the net assets
acquired, non-controlling interests and any goodwill or bargain
purchase is not available at the time of publication. The Group is
currently working on a valuation exercise to establish these fair
values.
The provisionally determined fair value of the Group's
previously held interest in Multon, following TCCC unilaterally
waiving certain of its governance rights, amounted to approximately
EUR240 million. As a result, a net loss from the remeasurement of
the previously held interest in Multon and the reclassification to
the income statement of amounts relating to the Group's share of
Multon's other comprehensive income amounting to EUR82 million
approximately is expected to be recorded by the Group in the third
quarter of 2022.
b) Other post balance sheet events
On 9 August 2022, the Group announced that it had reached an
agreement to acquire ESM Effervescent Sodas Management Limited, the
owner of the super-premium adult sparkling beverage and mixer
product line under the Three Cents brand, for an enterprise value
of approximately EUR45 million, subject to certain closing
adjustments. Completion of the acquisition is subject to customary
closing conditions and regulatory approvals, and is expected in the
second half of 2022.
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