1. Water priority locations are defined based on our
comprehensive risk assessment (i.e. access to WASH,
water stress and other local risks).
50
“It’s exciting to work with new
technologies that contribute
to our NetZeroby40 target.
Our efforts to increase rPET
supply at our Krakow plant
will impact emissions related
to our product packaging,
which is nearly a third
oftheCompany’s total
carbonemissions.”
The future of packaging towards
net zero
Our business uses various packaging
materials and delivery methods, each
withdifferent carbon footprints. Because
nearlyathird of our carbon emissions are
attributable to our product packaging, it is
essential that we innovate in this area to
achieve our ambitious NetZeroby40 target.
Bottles made from rPET have a much
lowercarbon footprint than PET bottles
made from virgin material, but high-quality
food-grade rPET is both scarce
andexpensive.
To improve our supply of rPET we have
introduced innovative technology on-site
atour Krakow plant in Poland which allows
ustoprocess non-food grade ‘hot washed’
PET flakes, which are readily available,
toproduce high-quality food-grade rPET.
Thishelps getaround the need for highly
segregated recycling, which is currently
rare. To further increase the use of rPET
inour portfolio, wewill also introduce this
process in Italy in2022 and Romania in 2023.
Anna Gronostajska
Quality, Safety and
Environment Manager
Future‑focused
packaging
51INTEGRATED ANNUAL REPORT 2021
Key performance indicators
Tracking our
progress
We measure our performance against our strategic
objectives using specific key performance indicators
(KPIs). These KPIs allow us, and our stakeholders,
totrackour progress in delivering on our targets.
These are also the financial and operational
milestones which wefocus on in implementing
ourGrowth Story 2025 strategy.
See p123 for a full description of the MIP.
Growth pillar
Leverage our unique
24/7 portfolio
Growth pillar
Win in the
marketplace
1. Performance, unless stated otherwise, is negatively impacted by the change in classification of our Russian Juice business, Multon, from a joint operation to a joint venture, following
its re‑organisation in May 2020. Performance is also positively impacted by the acquisition of Bambi in June 2019, when compared to 2019. Unless stated otherwise, performance
compared to 2019 is presented on a like-for-like basis.
21
-9
-6
-3
0
3
6
9
12
15
201820192021
2020
-5.7
13.0
3.3
4.2
Like-for-like
-4.6
Like-for-like
14.0
Like-for-like
2.6
Volume growth (%)
How we measure our progress
Volume is measured in unit cases, where one unit
case represents 5.678 litres. We grow volume as
we expand per capita consumption of our products
and expand into new market or categories.
What happened in the year
Volume grew by 13%, or 14% on a like-for-like
1
basis. Volumes grew rapidly as our Established and
Developing markets reopened and the Emerging
markets benefited from strong recovery.
Link to remuneration
Revenue growth is used to assess business
performance for the purpose of annual
Management Incentive Plan (MIP) bonus awards,
and volume is a key component of revenue.
See p123 for a full description of the MIP.
-6
-4
-2
0
2
4
6
2018
20192021
2020
-4,1
5.8
1.0
1.7
-10
-5
0
5
10
15
20
25
201820192021
2020
-9.6
19.6
4.4
6.0
Like-for-like
-8.5
Like-for-like
20.6
Like-for-like
3.7
Currency‑neutral revenue
(%)
Currency‑neutral revenue growth (%)
How we measure our progress
We measure revenues on a currency-neutral and
like-for-like basis to allow better focus on the
underlying performance of the business. We grow
currency-neutral revenue per case through pricing
and other RGM actions.
What happened in the year
Currency-neutral revenue per case grew by 5.8%,
or by 3.9% excluding pricing taken to pass on the
Polish sugar tax, as positive category mix and
package mix as well as pricing actions drove
improvement. Currency-neutral revenue grew
by19.6%, or by 20.6% on a like‑for‑like basis.
Link to remuneration
Revenue growth is used to assess business
performance for the purpose of our MIP awards.
52
Growth pillar
Cultivate the potential
of our people
Growth pillar
Earn our licence
to operate
Read more on pages 39-43.
Read more on pages 54-55.
How we measure our progress
Progress on Mission 2025 as well as progress
towards ourNetZeroby40 ambition.
What happened in the year
We made progress against most areas of
commitments; however, we need to accelerate
ourimprovement in packaging. Please see details
ofour performance on the following page.
Link to remuneration
Our efforts and ambitions are long term and
cumulative, therefore greenhouse gas reduction
isused to determine long‑term PSP awards.
Greenhouse gas reductions have a 15% weighting
in PSP determinations. The benefit of this KPI is
that it is quantifiable, and several of our Mission
2025 commitments feed into its progress.
Growth pillar
Fuel growth through
competitiveness and investment
See p123 for a full description of the MIP.
3
45
0
20
40
60
80
100
Global Top
Decile norm
Employee
engagement
88
85
6
8
10
12
2018
201920202021
10.8
11.0
11.6
10.2
Like-for-like
10.6
0
200
400
600
800
1000
2018
201920202021
672.3
831.0
758.7
680.7
Comparable EBIT margin (%)Comparable EBIT (%)
See p123 for a full description of the PSP.
4
5
6
7
8
2018
201920202021
7.6
7.5
6.9
6.4
8
10
12
14
16
2018
201920202021
11.1
14.8
14.2
13.7
CapEx as percentage of NSR (%)ROIC (%)
How we measure our progress
We measure capital expenditure (CapEx) as a
percentage of net sales revenue (NSR), and ROIC
(return on invested capital), to ensure prudent capital
allocation and efficient working capital management.
Disciplined investment supports our growth.
What happened in the year
CapEx as a percentage of NSR reached
7.5%,within our targeted range for this metric.
Weprioritised investments based on our strategy,
particularly focusing on growth markets, digital
andsustainability. ROIC increased by 370bps
to14.8%as operating profit improved and we
continued to carefully controlnet working capital.
40bps of the improvement was due to a property
divestment in Cyprus.
Link to remuneration
ROIC is given a 42.5% weighting in the assessment
of performance conditions used to determine
long-term Performance Share Plan (PSP) awards.
How we measure our progress
We measure this by comparable EBIT and
comparable EBIT margin progress. Wegenerate
positive operational leverage as wegrow revenues
on our efficient cost base. Using a comparable
measure allows us to adjust for one-off items which
impact comparability ofperformance year on year.
What happened in the year
Comparable EBIT grew by 23.6%. Comparable
EBIT margins grew by 60bps taking EBIT margins
to 11.6% as revenue recovery generated operating
leverage in the business. 30bps of the expansion
was due to a property divestment in Cyprus.
Link to remuneration
Comparable EBIT is used to assess business
performance for the purpose of our MIP awards.
Employee engagement score (%)
How we measure our progress
We conduct an engagement survey with an
independent third party and measure our results
against the norm for companies which perform
highly on this metric.
What happened in the year
Our employee engagement is above the global
topdecile norm.
Link to remuneration
Maintaining our high engagement score is part
ofthe CEO’s individual performance metrics.
These are used along with business performance
measures to determine the CEO’s annual MIP
bonus award.
53INTEGRATED ANNUAL REPORT 2021
Sustainability targets
Mission 2025 –
our sustainability
commitments
Sustainability is integrated into
every aspect of our business.
Itisfundamental to our business
strategy, which aims to create
andshare value with all of
ourstakeholders.
Our Mission 2025 approach
isbased on our stakeholder
materiality matrix and is fully aligned
with the United Nations Sustainable
Development Goals (SDGs) and
their targets. Our six key focus
areas reflect our value chain:
reducing emissions; water use
andstewardship; packaging
(WorldWithout Waste); ingredient
sourcing; nutrition; and our people
and communities.
Thetable provides data on the
progress of each of the six
sustainability pillars.
5
Note: The 17 SDGs are an urgent call for action
byallcountries – developed and developing
– ina global partnership. Each of the 17 goals
hasveryspecific targets, referenced by the
numbers shown above. You can read more
about the SDGs and these targets here:
https://sustainabledevelopment.un.org/sdgs.
Earn our
licence to
operate
Sustainability
areasMaterial issues
UN’s Sustainable Development Goals
2025 commitments
1
2021
performanceStatus
Climate and
renewable
energy
• Climate change
• Economic impact
7.2
7.3
9.411.6
30%
reduction in carbon ratio
indirectoperations
36%
Overachieved 2025 goal.
12.213.1
50%
increase in energy-efficient
refrigerators to half of our coolers
in the market
42%
50%
of our total energy from renewable
andclean
2
sources
53%
Overachieved 2025 goal.
100%
total electricity used in the EU
andSwitzerland from renewable
andclean
2
sources
99%
Water
reduction and
stewardship
• Water stewardship
• Economic impact
6.1
6.4
6.5
6.6
9.411.6
20%
water reduction in plants
locatedinwater‑risk areas
(waterpriority locations)
8%
Further implementation of
successful practices and
innovations for those locations
is planned.
12.1
12.2
12.4
15.117.17
100%
help secure water availability for
allour communities inwater‑risk
areas (water priority locations)
21%
Four projects out of
19locations. Two more projects
agreed and will start in2022.
World Without
Waste
• Packaging and waste
management
• Economic impact
8.49.411.6
75%
help collect the equivalent of 75%
of our primary packaging
46%
Action plan in place to deliver
roadmap targets, see page 49.
12.1
12.2
12.5
14.117.17
35%
of total PET used from
recycledPET and/or PET from
renewablematerial
10%
While we had a number of 100%
rPET launches, their impact was
diluted due to strong growth in
markets such as Nigeria which
don’t currently use rPET.
100%
of consumer packaging to
berecyclable
3
99.9%
Ingredient
sourcing
• Product quality
• Human rights, diversity
andinclusion
• Economic impact
• Sustainable sourcing
8.3
8.8
9.412.1
12.2
12.4
12.6
12.7
100%
of our key agricultural ingredients
sourced in line with sustainable
agricultural principles
80%
Acceleration of 2021 volume
required new suppliers to be
added, who will be certified
inthe near future.
13.1
Nutrition
• Product quality
• Nutrition
• Responsible marketing
3.412.8
25%
reduce calories per 100ml
ofsparkling softdrinks
(allCCHcountries)
4
15%
Our people
and
communities
• Human rights, diversity
andinclusion
• Employee wellbeing
andengagement
• Corporate citizenship
• Packaging andwaste
management
• Economic impact
3.4
3.6
4.3
4.4
5.5
10%
community participants in
first-time managers’ development
programmes
6%
8.5
8.6
8.8
10.2
10.4
11.6
1 MLN
train one million young people
through #YouthEmpowered
548,835
Cumulative number 2017‑2021;
2021‑only number is210,422.
12.2
12.4
16.717.16
17.17
20
engage in 20 zero-waste
partnerships (cityand/or coast)
11
5
10%
of employees take part
involunteeringinitiatives
7%
Due to continued COVID-19
restrictions, no mass
volunteering events
werepossible.
ZER0
target zero fatalities among
ourworkforce
ZER0
50%
reduced (lost time) accident rate
per 100 FTE
38%
Themain causes for the
accidents were falls, slips
andtrips.
50%
of managers are women
39%
54
1. Baseline 2017.
2. Clean source means CHP using natural gas.
3. Technical recyclability by design.
4. Baseline 2015.
5. Supported by The Coca-Cola Foundation.
Key to performance status
Each of the Mission 2025 commitments
is broken down into aseries of annual
targets that need to be met in order
tobe fully on track with our 2025 goal.
Thecolour coding below reflects the
current status in relation to the desired
position at this point in time on the
trajectory towards 2025 and our agreed
action plans, i.e.:
We are not fully on track, but
wedo not believe there is risk
tomeeting the target
We are not on track, and without
corrective action there is risk
thatwe will miss the target
We are fully ahead or on track
tomeeting the target
Sustainability
areasMaterial issues
UN’s Sustainable Development Goals
2025 commitments
1
2021
performanceStatus
Climate and
renewable
energy
• Climate change
• Economic impact
7.2
7.3
9.411.6
30%
reduction in carbon ratio
indirectoperations
36%
Overachieved 2025 goal.
12.213.1
50%
increase in energy-efficient
refrigerators to half of our coolers
in the market
42%
50%
of our total energy from renewable
andclean
2
sources
53%
Overachieved 2025 goal.
100%
total electricity used in the EU
andSwitzerland from renewable
andclean
2
sources
99%
Water
reduction and
stewardship
• Water stewardship
• Economic impact
6.1
6.4
6.5
6.6
9.411.6
20%
water reduction in plants
locatedinwater‑risk areas
(waterpriority locations)
8%
Further implementation of
successful practices and
innovations for those locations
is planned.
12.1
12.2
12.4
15.117.17
100%
help secure water availability for
allour communities inwater‑risk
areas (water priority locations)
21%
Four projects out of
19locations. Two more projects
agreed and will start in2022.
World Without
Waste
• Packaging and waste
management
• Economic impact
8.49.411.6
75%
help collect the equivalent of 75%
of our primary packaging
46%
Action plan in place to deliver
roadmap targets, see page 49.
12.1
12.2
12.5
14.117.17
35%
of total PET used from
recycledPET and/or PET from
renewablematerial
10%
While we had a number of 100%
rPET launches, their impact was
diluted due to strong growth in
markets such as Nigeria which
don’t currently use rPET.
100%
of consumer packaging to
berecyclable
3
99.9%
Ingredient
sourcing
• Product quality
• Human rights, diversity
andinclusion
• Economic impact
• Sustainable sourcing
8.3
8.8
9.412.1
12.2
12.4
12.6
12.7
100%
of our key agricultural ingredients
sourced in line with sustainable
agricultural principles
80%
Acceleration of 2021 volume
required new suppliers to be
added, who will be certified
inthe near future.
13.1
Nutrition
• Product quality
• Nutrition
• Responsible marketing
3.412.8
25%
reduce calories per 100ml
ofsparkling softdrinks
(allCCHcountries)
4
15%
Our people
and
communities
• Human rights, diversity
andinclusion
• Employee wellbeing
andengagement
• Corporate citizenship
• Packaging andwaste
management
• Economic impact
3.4
3.6
4.3
4.4
5.5
10%
community participants in
first-time managers’ development
programmes
6%
8.5
8.6
8.8
10.2
10.4
11.6
1 MLN
train one million young people
through #YouthEmpowered
548,835
Cumulative number 2017‑2021;
2021‑only number is210,422.
12.2
12.4
16.717.16
17.17
20
engage in 20 zero-waste
partnerships (cityand/or coast)
11
5
10%
of employees take part
involunteeringinitiatives
7%
Due to continued COVID-19
restrictions, no mass
volunteering events
werepossible.
ZER0
target zero fatalities among
ourworkforce
ZER0
50%
reduced (lost time) accident rate
per 100 FTE
38%
Themain causes for the
accidents were falls, slips
andtrips.
50%
of managers are women
39%
55INTEGRATED ANNUAL REPORT 2021
Managing risk and materiality
Material
issues
To understand which issues matter most
toour business, our stakeholders and the
communities where we operate, we conduct
a rigorous materiality assessment each
year.As part of this process, we consider
abroadrange of issues including external
trends inthe food and beverage industry;
issuesidentified in international standards
and benchmarks; the UN Sustainable
Development Goals; and input
fromstakeholders.
Our annual materiality assessment is carried
out in four phases: 1) identify material issues;
2) assess impact on or importance to
stakeholders; 3) assess impact on society
and environment; and 4) review and validate
findings. With this process we can manage
the risks and opportunities material issues
present and address the challenges
wearefacing.
In line with the Global Reporting Initiative
(GRI) Standards, we define material issues
asthose having significant economic,
environmental and social impacts or
thosewhich substantively influence the
assessments and decisions of stakeholders.
Materialissues are integrated in our strategy,
our short-, medium-, and long-term goals,
and are linked to management of our
principal risks and opportunities.
This ensures that our approach to
sustainability is focused on achieving the
greatest impact and tackling the issues that
matter most.
Our materiality process also informs our
disclosure, including the content of this
report. Our Integrated Annual Report is
aligned with the principles and elements
ofthe International Integrated Reporting
Council’s (IIRC) framework and prepared in
accordance with the GRI Standards, amongst
others. Periodically, we adjust our approach
as standards and best practice evolve.
Our annual materiality survey, a key part
ofour materiality process, is performed
together with The Coca-Cola Company.
Atthe end of 2021 we approached around
1,860 external and internal stakeholders,
including consumers, customers, suppliers,
employees, communities, governments,
non-governmental organisations, investors,
trade associations and academics.
Theoutcome of the survey is a ranking
ofmaterial issues, plotted in the materiality
matrix. By assessing the importance of
these issues to our stakeholders and their
decisions, combined with an assessment of
the impact on society and the environment,
we derive the relative materiality of each
issue and prioritise them accordingly.
Although these are the material issues
facing our business, they should not be
viewed inisolation as they are interconnected
andimpacting each other. The Social
Responsibility Committee of the Board
subsequently endorses the prioritised list of
issues, resulting in the materiality matrix below.
The Coca-Cola Company and its global bottling partners, including
Coca‑Cola HBC, have identified eight material risks relating to the
physical and transitional impact of climate change on our business
and these are depicted in the following diagram.
For more details on these eight risks, please see previous pages 68
and69, where the colour codes of the risks reflect the diagram below.
CauseRiskAgriculture and
ingredients
PackagingManufacturingDistributionCold drink
equipment
Customers and
communities
Estimated share of carbon emissions
25%31%11%6%27%
Business impacts: Physical risks of climate change
Changes to
weather and
precipitation
patterns
Limits availability
of ingredients
and raw
materials
Extreme
weather
events
Disrupts
production
Disrupts/limits
distribution
Water
scarcity
Disrupts/limits
production
Business impacts: Risks of transition to a low‑carbon economy
GHG
regulation
Increases cost
ofpackaging
materials
Increases cost of manufacturing,
distribution and cold drink
equipment
Changes to
consumer
perceptions
Reputational risk
Water
regulation
Disrupts/limits
production
70
Managing water risk
across our territory
In 2021, we conducted a
detailed assessment of the
impact of climate change on
the availability and cost of water
across all of our markets under
different climate scenarios.
We recognise that we have a responsibility
over and above meeting our production
needs. Access to clean water is a
fundamental human right and we are
committed to ensuring water security for
local communities as well as our business
inareas of water stress.
Climate change is expected to increase
thelevel of water stress in a number of our
countries, making water scarcer and more
valuable in those countries. This means that
our costs will increase, both to meet the
needs of our business but also to ensure
wecan replenish the watersheds in those
countries to support local communities.
In our 2021 water risk assessment, we
focussed on our production facilities to
determine which plants are more likely to be
affected by climate change, the extent to
which they may be affected and the financial
impact of ensuring sustainable supply for
both our production and the local community.
In future years, we will gradually broaden the
scope of our assessment to also consider
water risks associated with our supply chain.
To conduct the 2021 assessment, we
estimated annual production volumes up
to2030 and 2040 for each plant, based on
long-range planning estimates. We then
determined the water utilisation rates for
each plant for normal and peak production
as well as the capacity of our water sources
without considering the impact of climate
change. This allowed us to create a
baselinemodel.
We then used data available from the World
Resources Institute’s (WRI) Aqueduct Water
Risk Atlas to identify the impact of climate
change on the watersheds supporting
eachplant using both an optimistic and a
pessimistic scenario for climate change
impact. In this assessment, the impact of
climate change is the difference between
water utilisation rates in our baseline and
theWRI scenarios.
The additional increase in water utilization
rates, converted into water volume, was
multiplied by the ‘true cost of water’
1
to
provide an estimate of the financial impact
of both increased production demand and
climate change. For plants in water-stressed
areas – our water priority plants – the cost of
replenishing the watershed based on water
withdrawal was added.
We estimated the additional operating
expense required for each plant to meet
additional water needs, as well as one-off
CapEx requirements where appropriate to
support our risk mitigation programme.
In general terms, our assessment indicated
that climate change is not likely to increase
the number of plants assessed as water
priority plants in our existing territory,
although it is expected to increase the level
of water stress in those areas. Climate
change is unlikely to impact the useful
economic life of any of our plants; however
we will need to invest in additional water
infrastructure to meet our needs as well as
maintain our commitments to replenish the
local watershed in water priority areas.
Optimistic climate scenario
The optimistic scenario we used for
assessment purposes represents a world
with stable economic growth and global and
national institutions making slow but steady
progress towards achieving development
goals. Globally, carbon emissions start
declining by 2040 and temperature increases
are limited to between 1.1 and 2.6 degrees
(RCP4.5).
Under this scenario, our operations in
Armenia, Bulgaria, Greece, Cyprus, Russia,
Italy and Nigeria would be located in
water-risk areas.
By 2030, average baseline water stress is
expected to increase by 30%. To meet our
production needs as well as replenish the
local watersheds in our water priority areas,
we estimate our annual water costs will
increase by 40% over and above our baseline
costs, and additional one-off CapEx costs
inthe lead‑up to 2030 of €42million will
berequired.
By 2040 under this scenario, average
baseline water stress is expected to increase
by 47%. To address these risks, we estimate
our annual water costs will increase by
42%over and above our baseline cost
andadditional one‑off CapEx costs in the
lead-up to 2040 of €79million will be required.
Pessimistic climate scenario
The pessimistic scenario used in our analysis
represents a world with uneven economic
development, including higher population
growth but lower GDP growth. Globally,
carbon emissions continue to rise and
average temperature rises between 2.6
and4.8 degrees (RCP8.5).
As with the optimistic scenario, our facilities
in Armenia, Bulgaria, Greece, Cyprus, Russia,
Italy and Nigeria would be located inwater‑
risk areas under the pessimistic scenario.
By 2030, average baseline water stress is
expected to increase by 27%. We estimate
our annual water costs to meet our
production needs as well as replenish the
local watersheds in our water priority areas
will increase by 45% over and above our
baseline costs. Additional one-off CapEx
costs in the lead-up to 2030 of €30million
will be required.
By 2040, average baseline water stress is
expected to increase by 46%. We estimate
our annual water costs to meet our
production needs as well as replenish the
local watersheds in our water priority areas
will increase by 41% over and above our
baseline costs and additional one-off CapEx
costs in the lead-up to 2040 of €78million
will be required.
Note: The ‘pessimistic’ scenario has less
impact on our business than the ‘optimistic’
scenario in a number of areas. This is because
under the pessimistic scenario used in the
Aqueduct modelling, there is less urban
growth. As the majority of our plants are
located in or near large urban areas, there
isless stress on the local watersheds.
Mitigating water risk
Efforts to address the risks identified in this
analysis could include watershed protection
and restoration, rainwater harvesting, and
infrastructure improvements to provide
communities with greater access to water
for drinking and sanitation. We will continue
to implement water usage reduction
plansand obtain certification for our
plantsunder the Alliance for Water
Stewardshipprogramme.
For more information on our efforts to
addresswater challenges, see page 50.
1. The ‘true cost of water’ is a Coca-Cola system
multiplier that is used to calculate both the internal
costs of water but also a number of external factors
such as potential for increased taxes and levies.
71INTEGRATED ANNUAL REPORT 2021
Business model and prospects
Our business model and strategy, outlined
on pages 6-9 of this report, documents the
key factors that underpin the evaluation of
our prospects. These factors include our:
• attractive geographic diversity;
• strong sales and execution capabilities;
• ability to innovate;
• market leadership;
• global brands; and
• diverse beverage portfolio.
As for many companies, the COVID-19
pandemic continued to present a challenging
environment for the Group. Despite
significant changes to how consumers
purchase and consume our products and
the impact on our customers, our strong
cash position and ability to innovate has
shown the Group’s business tobe robust.
In2021 we experienced a gradual recovery
from the COVID-19 pandemic as restrictions
onkey channels lifted. Therecontinues to be
uncertainty associated with the risk of new
variants and the ability of governments to
manage the economic recovery.
In the latter stages of 2021, tensions
increased between the governments of
Russia and Ukraine, which led to military
conflict in early 2022. Economic sanctions
were imposed on Russia by the US, UK and
EU as well as many other countries, and
counter sanctions by the Russian
government in retaliation. On the 8th March
2022, The Coca-Cola Company (TCCC)
announced that it is suspending its business
in Russia. At the time of publication the
Group is working closely with TCCC to
implement this decision.
In addition, economic sanctions imposed
onRussia have had a significant impact
onforeign exchange rates for the Rouble
andthe price of a number of commodities
suchas 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. Although there remains a lot
ofuncertainty around how and when this
conflict may be resolved, we have considered
as best we can, the potential impact
inourfinancial projections inanumber
ofthescenarios.
The Board considers that there will be
changes to our markets over the longer
term but continues to believe that our
diverse geographic footprint, including
exposure to emerging markets that have
lowper capita consumption and therefore
greater opportunity for growth, and a
provenstrategy in combination with our
leadingmarket position, offer significant
opportunities for future growth.
Our Board has historically applied and
continues to apply a prudent approach to
the Group’s decisions relating to major
projects and investments. From 2017 to
2021, we generated free cash flow of €467
million per year on average.
Key assumptions of the business
plan and related viability period
The Group maintains a well-established
strategic business planning process
whichhas formed the basis of the Board’s
quantitative assessment of the Group’s
viability, with the plan reflecting our current
strategy over a rolling five-year period.
The financial projections in the plan are
based on assumptions for the following:
• key macroeconomic data that could
impact our consumers’ disposable
incomeand consequently our sales
volume and revenues;
• various scenarios relating to the ability
ofgovernments in some key markets
tomanage economic recovery from the
impact of COVID‑19 pandemic;
• key raw material costs, including
theimpact of climate change on the
availability and cost of water under two
different climate scenarios (see also
page71 for more information on our
quantitative assessment of the impact
ofclimate change on water availability and
cost. In addition to 2030 and 2040, we also
included interim calculations to 2026 for
the purpose of our viability assessment);
and the impact of the Russia/Ukraine
conflict on commodity costs;
Viability
statement
72
• loss of sales volume and revenues as
aresult of TCCC’s suspension of its
operations for a period of time in Russia;
• foreign currency rates; including the
impact of extended economic sanctions
against Russia and the impact on foreign
exchange rates as a result of the Russia/
Ukraine conflict;
• spending for production overhead and
operating expenses;
• working capital levels; and
• capital expenditure.
The Board has assessed that a viability
period of five years remains the most
appropriate. This is due to its alignment
withthe Group’s strategic business planning
cycle, consistency with the evaluated
potential impacts of our principal risks as
disclosed on pages 62-65 and our
impairment review process, where goodwill
and indefinite-lived intangible assets are
tested based on our five-year forecasts.
Assessment of viability
Qualitatively, we analysed the output of our
robust enterprise risk management and
internal business planning and liquidity
management processes, to ensure that the
risks to the Group’s viability are understood
and are being effectively managed.
The acquisition and integration of Coca-
Cola Bottling Company of Egypt (‘CCBCE’)
will occur during the period covered by the
viability statement. Considering the due
diligence and operational review process
performed as well as the acquisition business
case, no risks to the Group’s viability over
the five-year period of this assessment have
been identified as a result of the acquisition.
The Board has concluded that the Group’s
well-established processes across
multiplestreams continues to provide a
comprehensive framework that effectively
supports the operational and strategic
objectives of the Group. It also provides a
robust basis for assessment and confirmation
of the Group’s ability to continue operations
and meet its obligations as they fall due over
the period of assessment.
Supporting the qualitative assessment was
aquantitative analysis performed as part of
strategic business planning. This assessment
included, but was not limited to, the Group’s
ability to generate cash.
As part of our assessment, we considered
the continuing impact of the COVID-19
pandemic to the business and found this
tobe limited, considering the strong
performance throughout the development
of the pandemic across our territories and
the re-opening of global economies
alongwith the progress of vaccination
programmes. However, we also considered
the potential effect of further economic
disruption due to market specifics and the
impact from emergence of COVID-19
variants, along with the Group’s proposed
responses. We also considered to the extent
possible, the potential impact of TCCC’s
decision to suspend its operations in Russia
for a period of time, as well as sanctions and
counter sanctions as a result of the Russia/
Ukraine conflict.
We have continued to stress test the plan
against several severe but plausible
downside scenarios linked to certain
principal risks as follows:
Scenario 1: The impact of changes to
foreign exchange rates was considered,
particularly the depreciation of foreign
currencies including the Russian Rouble,
alsoconsidering effects from the Russia/
Ukraineconflict, and Nigerian Naira. Principal
risks:foreign exchange fluctuations,
commoditycosts and geopolitical and
securityenvironment.
Scenario 2: Lower estimates for sales
volumes for various reasons including the
ability of a range of stakeholders, including
governments, in several of our key markets
to manage economic recovery from
COVID-19 pandemic, and the potential
impact of the Russia/Ukraine conflict.
Principal risk: Geopolitical and
securityenvironment.
Scenario 3: Lower estimates for sales
revenue for various reasons including the
longer term, changes brought on by
COVID-19 pandemic on consumer demand
and preferred channels. Principal risk:
Changing retail environment.
Scenario 4: Continued stakeholder focus
onissues relating to sugar and packaging
resulting in the potential for discriminatory
taxation. Principal risks: Plastics and
packaging waste and Product-related taxes
and regulatory changes.
Scenario 5: The impact of higher raw
material costs, was also considered. Principal
risks: Foreign exchange fluctuations and
Commodity costs.
Scenario 6: The impact of higher
operational costs of water, as a result of
theeffects of climate change under two
different climate scenarios, as well as the
capital expenditure required to meet our
water needs as well as the needs of local
communities in water stressed areas.
Principal risk: Water availability and usage.
The above scenarios were tested both in
isolation and in combination. The stress
testing showed that due to the stable cash
generation of our business, the Group would
be able to withstand the impact of these
scenarios occurring over the period of the
financial forecasts. This could be conducted
by making adjustments, if required, to our
operating plans within the normal course
ofbusiness, including but not limited to
adjustments to our operations and temporary
reductions in discretionary spending.
Following a thorough and robust
assessment of the Group’s risks that
couldthreaten our business model, future
performance, solvency or liquidity, the
Boardhas concluded that the Group is
wellpositioned to effectively manage its
financial, operational and strategic risks.
Viability Statement
Based on our assessment of the Group’s
prospects, business model and viability as
outlined above, the Directors can confirm
that they have a reasonable expectation that
the Group will be able to continue operating
and meet its liabilities as they fall due over the
five-year period ending 31 December 2026.
73INTEGRATED ANNUAL REPORT 2021
Strong recovery and momentum
The business delivered a very strong
recovery in 2021, with all key metrics above
pre-pandemic levels. This is the result
ofconsistent focus on our strategic
prioritiesand disciplined execution in
avolatileenvironment.
Performance highlights included:
• FX-neutral revenue growth of 20.6%
like-for-like
1
. Reported revenues +16.9%
• Volume growth of 14.0% like-for-like,
or13.0% on a reported basis, propelled by
the Emerging and Established segments
• Revenue growth management initiatives,
led by pricing drove FX-neutral revenue
per case up to 5.8%
• Comparable EBIT grew by 23.6% with
margins +60bps to 11.6%. Reported EBIT
grew by 21.0%
• Operating costs as a percent of revenue
improved by 2.2pp, driven by operating
leverage, cost saves higher than plan;
30bps benefit from the Cyprus
propertysale
• This improvement in EBIT and EBIT
margins was achieved while increasing
marketing expenditure by 63%, almost
back to pre-pandemic levels
• Consistent investment behind our
strategic priorities is building growth
momentum. We expanded the roll out
ofCosta Coffee and launched Caffè
Vergnano in Q4. Weannounced our
geographical expansion into Egypt with
the acquisition of Coca‑Cola Bottling
Company of Egypt, which closed in
January 2022. And we announced our
commitment to net zero emissions
by2040
• Strong earnings growth, record high free
cash flow and increased dividend pay-out
target range to 40-50%
• The balance sheet remains robust
andflexible.
Financial review
1. Performance, unless stated otherwise, is negatively
impacted by the change in classification of our Russian
Juice business, Multon, from a joint operation to a joint
venture, following its re-organisation in May 2020.
Performance is also positively impacted by the
acquisition of Bambi in June 2019, when compared
to2019. Unless stated otherwise, performance
compared to 2019 is presented on a like-for-like basis.
2. For details on APMs refer to ‘Alternative Performance
Measures’ and ‘Definitions and reconciliations
ofAPMs’sections.
3. Refer to the condensed consolidated income statement.
4. Net Profit and comparable net profit refer to net profit
and comparable net profit respectively after tax
attributable to owners of the parent.
Strong
execution
momentum
“The business delivered
a very strong recovery
metrics above
74
Income statement
Category growth and ongoing market share
gains drove full year volume up 14.0% on a
like-for-like basis, while reported volume was
up 13.0%, still impacted by the reorganisation
in the structure of our Russian Juice
business (Multon).
FX-neutral revenue per case expanded
by5.8%, or 3.9% excluding pricing taken
topass on the Polish sugar tax. The strength
ofour brand portfolio was evident, with price
taken in 95% of our markets, while market
share expanded.
Category mix improved as we drove the
Sparkling and Energy categories. Package
mix was also accretive thanks to single-serve
incidence in the at-home channel, and
thereopening of out‑of‑home. The rapid
Emerging segment volume growth resulted
in negative country mix at consolidated
Group level.
2021 FX-neutral revenue increased by 20.6%
on a like-for-like basis.
Prioritisation of the growth opportunities
across our 24/7 portfolio continues to drive
performance and has created a stronger
andmore resilient mix of categories.
Weaccelerated market share gains in
non-alcoholic ready-to-drink beverages
(NARTD) adding 90bps in value share in
2021, while also improving or maintaining
our Sparkling share position in the
majorityof markets.
Reported revenues increased by 16.9%,
which also reflects the negative impact
ofthe change in accounting treatment
ofour Russian juice business (Multon) and
theweakening of the Russian Rouble versus
the Euro.
Comparable gross profit grew by 11.7%
while gross profit margins declined by 170
basis points to 36.2%. We saw headwinds
from input cost inflation across all our
keycommodities of sugar, aluminium
andPETresin in the second half of the
yearinparticular.
FX- neutral raw material cost per case
increased by 8.0%, while comparable COGS
per case increased by 6.3% in the year.
Comparable operating costs increased by
only 7.5% or €125.4 million as we retained
careful cost discipline throughout the year.
We invested behind growth opportunities
incresing marketing spend by 63% in the
year. Balancing investment in revenue
generating activities with cost savings
elsewhere, resulted in a 2.2 percentage
pointimprovement in comparable operating
costs as a percent of revenue, which
reached 25.1%.
Comparable EBIT increased by 23.6%
to€831.0 million,taking comparable EBIT
margins up 60 basis points year on year, to
11.6%. This includes a 30-basis point benefit
from the sale of a property in Cyprus in
December. This divestment is part of our
normal course of business of efficiently
managing our fixed asset base. Nevertheless,
we do not expect a disposal of this
magnitude to repeat.
Comparable taxes amounted to €188.2
million, representing a comparable tax rate
of 24.5%, 420bps lower than the rate in
theprior year as we lapped one‑off tax
charges in 2020.
Net financing costs decreased to €67.6
million, €2.5 million lower compared with
theprior year.This led to a 34% increase
ofcomparable net profit to €578.1 million.
Key financial information
20212020
%
change
Volume (million unit cases)2,412.72,135.613.0
Net sales revenue (€ million)7,168.46,131.816.9
Net sales revenue per unit case (€)2.972.873.5
Currency-neutral net sales revenue
2
(€ million) 7,168.45.994.919.6
Currency-neutral net sales revenue per unit case
2
(€)2.972.815.8
Operating profit (EBIT)
3
(€ million)799.3660.721.0
Comparable EBIT
2
(€ million)831.0672.323.6
EBIT margin (%)11.210.840bps
Comparable EBIT margin
2
(%)11.611.060bps
Net profit (€ million)547.2414.931.9
Comparable net profit
2,4
(€ million)578.1431.434.0
Comparable basic earnings per share
2,4
(€)1.5841.18533.7
Percentage changes are calculated on precise numbers.
Balance sheet
2021
€ million
2020
€ million
Assets
Total non-current assets5,357.45,046.0
Total current assets3,156.92,527.1
Total assets8,514.37,573.1
Liabilities
Total current liabilities2,516.42,026.2
Total non-current liabilities2,880.82,913.6
Total liabilities5,397.24,939.8
Equity
Owners of the parent3,114.52,630.7
Non-controlling interests2.62.6
Total equity3,117.12,633.3
Total equity and liabilities8,514.37,573.1
Figures are rounded.
75INTEGRATED ANNUAL REPORT 2021
Borrowings
Our medium- to long-term aim is to maintain
a ratio of net debt to comparable adjusted
EBITDA in the range of 1.5 – 2.0 times.
In2021, we ended the year with a ratio of
1.1times. In January we completed the
acquisition of Coca‑Cola Bottling Company
of Egypt, taking our leverage to 1.6 times.
Our primary funding strategy in the debt
capital markets involves raising financing
through our wholly owned Dutch financing
subsidiary, Coca‑Cola HBC Finance B.V.
We use our €5 billion Euro Medium Term
Note (EMTN) and our €1 billion Euro
Commercial Paper (ECP) programmes
asthe main basis for financing.
We finished 2021 with an outstanding
balance of €235 million on our Commercial
Paper Programme. We did not issue any new
notes under our Euro Medium Term Note
programme. Our next bond maturity is not
due until November 2024.
At the end of 2021, the Group had €2.6
billion and €0.8 billion available under the
EMTN and ECP programmes respectively
and also €0.8 billion of an undrawn
revolvingcredit facility (RCF). None of the
aforementioned credit facilities carry any
financial covenants which would restrict the
Group’s access to capital.
Dividend
In view of the Group’s progressive dividend
policy, the strength of its balance sheet
andhealthy liquidity position, the Board of
Directors has proposed a dividend of €0.71
per share. This is a 10.9% increase from
the€0.64 per share for 2020. The dividend
payment will be subject to shareholders’
approval at our Annual General Meeting.
Furthermore, we have increased the
targetpayout ratio to 40 to 50% from
35to45%previously.
FX-neutral revenue growth
year on year
19.6%
Comparable EBIT
€831m
Comparable EBIT margin
growth year on year
+60bps
Cash flow
2021
€ million
2020
€ million
Cash flow from operating activities1,142962
Payments for purchases of property, plant and equipment
1
(514)(419)
Proceeds from sales of property, plant and equipment3613
Principal repayments of lease obligations (63)(59)
Free cash flow601497
1. Payments for purchases of property, plant and equipment for 2021 include €7.1 million (2020: €nil) relating to
repayment of borrowings undertaken to finance the purchase of production equipment by the Group’s subsidiary
inNigeria, classified as ‘Repayments of borrowings’ in the condensed consolidated cash flow statement.
Figures are rounded.
Financial review continued
Balance sheet
The balance sheet strengthened further in
2021, increasing the headroom to support
investment in the business as well as the
potential for future inorganic expansion.
Total non-current assets increased by
€311.4 million, mainly driven by additions
ofproperty, plant and equipment, currency
translation and the acquisition of a minority
equity shareholding in Caffè Vergnano.
Net current assets rose by €139.6 million in
2021 mainly as a result of higher investments
in financial assets. Trade receivables and
inventory also increased, only partially offset
by lower cash and cash equivalents and higher
trade payables. Total non-current liabilities
decreased by €32.8 million in 2021, largely
due to the reclassification of the current
portion of loans payable to joint ventures
from non-current to current liabilities.
Cash flow
Due to an improvement in operating profit
and working capital, net cash from operating
activities increased by 18.8% during the year.
Capital expenditure, net of receipts from
thedisposal of assets and including principal
repayments of lease obligations, increased
by 16.4% year-on-year. Investment focused
on four key areas: Building additional
production capacity in priority markets and
categories; expanding the coverage of our
coolers in the market, which are a key driver
of improved single‑serve mix; accelerating
investments in our digital agenda; and
continued support of our sustainability
commitments.
Capital expenditure represented 7.5% of
netsales revenue, at the upper end of our
6.5%-7.5% target.
We generated €601.3 million of free cash flow
in 2021, up 21.0% from the €497.0 million
generated in 2020. This result reflects higher
operating profitability, working capital
improvements partially offset by higher
capital expenditures.
76
Economic value
HIgher profits combined with lower average
net borrowings in 2021 resulted in a significant
increase in return on invested capital (ROIC)
from 11.1% in 2020 to 14.8% in 2021.
Adjusted for the property sale in Cyprus,
ROIC was 14.4%.
At the same time, our weighted average
cost of capital (WACC) increased from 7.8%
in 2020 to 7.9% in 2021. We continued to
grow the positive economic value generated
by our operations.
Financial risk management
The gradual relaxation of COVID-19 –
related mobility restrictions contributed
toboost economic growth in many of the
geographies where we operate. While this
positively affected several currencies relevant
to the Group, this strong recovery in demand,
coupled with supply chain disruptions led to
the rapid rise of commodity prices including
oil, aluminium and sugar throught 2021.
Effective financial risk management proved
successful in mitigating a material part of
input cost increases for 2021. At the same
time by adding new risk managed commodity
prices and countries, we enlarged our
application of financial risk management
andsecured good entry points for future
commodity exposures as well.
In terms of foreign exchange risk, the Group
is exposed to exchange rate fluctuation of
the Euro versus the US Dollar and the local
currency of each country of our operations.
Our risk management strategy involves
hedging transactional exposures arising from
currency fluctuations, with available financial
instruments on a 12‑month rollingbasis.
Asa matter of Group policy, translational
exposures are not hedged.
Higher commdity prices,along with the
strong Russian macroeconomic position
and prompt tightening of monetary policy,
supported the strong performance of the
Russian Rouble until the fourth quarter
of2021. At that point, rising geopolitical
tensions had a negative impact on the
Rouble, which was mitigated by our active
financial risk management strategy to a large
extent in the year.
Following a devaluation early in 2021,
theNigerian Naira continued to weaken
gradually. The market is still affected by
lingering shortages of foreign currency in the
local foreign exchange market. The Group
continues to make use of risk management
instruments offered in Nigeria, which
compensate a part of the financial impact
ofthe weakening Naira, albeit not assisting
with the limited liquidity in hard currency.
Our general policy is to retain a minimum
amount of liquidity reserves in the form
ofcash and cash equivalents on our balance
sheet. During 2021, we invested our excess
cash primarily in short-term time deposits
and money-market funds.
Looking ahead
With the release of our full year 2021
resultsannouncement on 22nd February,
Coca‑Cola HBC set guidance for the year
ina wide range that considered geopolitical
risks, aswell as headwinds from commodities
andcurrencies. However, in the days that
followed this, the conflict in Ukraine developed
further andfaster than anticipated.
As of the publication of our integrated
annual report, we believe that it is still too
early to quantify the impact that the evolving
geopolitical crisis and many governments’
developing reactions to it will have on our
business or on our full year 2022 results.
Given that we generated c. 20% of 2021
volumes and EBIT from Russia and Ukraine,
combined with the uncertainty of the
duration and economic impact, we no longer
believe that it is prudent to provide guidance
for our group’s current financial year.
Ben Almanzar
Chief Financial Officer
Total tax by category in 2021 (%)
49.3%
4.2%
37.9%
4.0%
0.2%
4.4%
Corporate income tax
Withholding tax
Payroll taxes
VAT (cost)
Environmental taxes
Other taxes
2,386m
235m
160m
156m
Bonds issued
Commercial paper
Leases
Other
2021 Borrowing structure (€ m)
€2,937m
Taxes we contribute to our
communities
When considering tax, Coca-Cola
HBCgives due consideration to the
importance of earning community trust.
More specifically, we commit to continue
paying taxes in the countries where value
is created and ensure that we are fully
compliant with the spirit as well as the
letter of tax laws and regulations across
all jurisdictions we operate in. In addition,
we commit to being open and transparent
with tax authorities about the Group’s tax
affairs and to disclose relevant information
toenable tax authorities to carry out
theirreviews.
We support the communities in the
countries where we operate directly,
bycreating economic wealth, and also
indirectly, by paying taxes. These taxes
include corporate income tax calculated
on each country’s taxable profit,
employer taxes and social security
contributions, net VAT cost and other
taxes that are reflected as operating
expenses. Excise taxes and taxes borne
by employees are not included.
77INTEGRATED ANNUAL REPORT 2021
Segment highlights
Financial review continued
Established markets
Established segment FX-neutral revenues grew by 13.9%,
propelled by both volume and price/mix in 2021. The segment’s
revenues closed only 2.1% below 2019 levels.
Italy, Greece and Ireland all grew volumes by double digits
thanksto a very good performance from the out‑of‑home
channel enabled by strong execution. There is room for further
improvements as we look ahead, considering that volumes in
theout‑of‑home channel still remain below 2019 in every market
in the segment. Meanwhile, the at-home channel finished with
volumes 5% above 2019.
EBIT grew by 44% while margins expanded 250 basis points,
ofwhich 90 basis points was due to the property sale in Cyprus.
The rest is mainly due to positive operational leverage
onrevenuegrowth.
Volume vs. 2020
9.9%
FX-neutral net
salesrevenue per
casevs.2020
3.7%
Developing markets
The Developing segment’s currency-neutral revenue increased
by 18.0% with price/mix expanding 17.0%. FX-neutral revenues
arenow 5.7% above 2019 levels.
Performance was impacted by the Polish sugar tax. Without it,
thesegment’s price/mix growth was 5.8%, and volume
growthwas up 4.4%.
It should be noted that Poland’s volume decline was in line with
ourexpectations given the magnitude of the price increases
tooffset discriminatory taxation. We are particularly pleased with
performance of single-serve formats, low- and no-sugar variants
aswell as our market share gains. We expect Poland’s volumes
toreturn to growth in 2022.
EBIT grew by 4.3% with EBIT margin weighed down by the sugar tax.
Volume vs. 2020
0.8%
FX-neutral net
salesrevenue per
casevs.2020
17.0%
Emerging markets
We saw sustained, strong momentum in the Emerging segment
with like-for-like revenue up 27.1%. FX-neutral revenues are now
24% above 2019 levels propelled by Russia, Nigeria and Ukraine
aswell as recovery in the rest of the segment.
Nigerian volumes grew by nearly 30%. Strong performance
inSparkling and Energy is driving very healthy category mix.
Combining this with the pricing taken throughout the year,
allowedhigh‑teens price/mix in Nigeria in 2021.
In Russia volume growth was 25% like for like. The category is
benefiting from the healthy consumer demand. Our teams have
harnessed these conditions, withstrong activations in the
premium part of the market.
EBIT grew by 17.3% and Emerging remains our highest
marginsegment.
Volume vs. 2020
18.6%
FX-neutral net
salesrevenue per
casevs.2020
5.3%
78
20212020% change
Volume (million unit cases)5905379.9
Net sales revenue (€ million)2,4792,17514.0
Operating profit (EBIT) (€ million)28620340.5
Comparable EBIT (€ million)30120943.9
Total taxes
1
(€ million)13111117.4
Population
2
(million)9494–
GDP per capita (US$)44,41439,55212.4
Bottling plants (number)1515–
Employees (number)6,2516,407(2.4)
Water footprint (billion litres)3.7513.7440.2
Carbon emissions (tonnes)65,57767,450(2.8)
Safety rate (lost time accidents
>1day per 100 employees)0.440.55(20.0)
1. Total taxes include corporate income tax, withholding tax and deferred tax, as well as social security costs and other taxes that are reflected as operating expenses; asperIFRSaccounts.
2. Population source: International Monetary Fund, World Economic Outlook Database, October 2021.
Volume breakdown by country (%)
43%
18%
13%
13%
11%
2%
Italy
Greece
Austria
Republic of Ireland
and Northern Ireland
Switzerland
Cyprus
20212020% change
Volume (million unit cases)4164120.8
Net sales revenue (€ million)1,3661,17116.6
Operating profit (EBIT) (€ million)105977.9
Comparable EBIT (€ million)1071024.3
Total taxes
1
(€ million)4663(27.6)
Population
2
(million)7676–
GDP per capita (US$)19,62217,49412.0
Bottling plants (number)99–
Employees (number)4,2614,581(7.0)
Water footprint (billion litres)3.2143.1591.7
Carbon emissions (tonnes)45,63344,9271.6
Safety rate (lost time accidents
>1day per 100 employees)0.470.3342.4
1. Total taxes include corporate income tax, withholding tax and deferred tax, as well as social security costs and other taxes that are reflected as operating expenses; asperIFRSaccounts.
2. Population source: International Monetary Fund, World Economic Outlook Database, October 2021.
Volume breakdown by country (%)
43%
22%
12%
8%
7%
6%
2%
Poland
Hungary
Czech Republic
Baltics
Croatia
Slovakia
Slovenia
20212020% change
Volume (million unit cases)1,4071,18718.6
Net sales revenue (€ million)3,3242,78619.3
Operating profit (EBIT) (€ million)40936013.5
Comparable EBIT (€ million)42436117.3
Total taxes
1
(€ million)18916912.2
Population
2
(million)4534481.1
GDP per capita (US$)6,3345,70511.0
Bottling plants (number)3232–
Employees (number)16,70016,734(0.2)
Water footprint (billion litres)10.7218.65423.9
Carbon emissions (tonnes)314,582319,544(1.6)
Safety rate (lost time accidents
>1day per 100 employees)0.140.1127.3
1. Total taxes include corporate income tax, withholding tax and deferred tax, as well as social security costs and other taxes that are reflected as operating expenses; asperIFRSaccounts.
2. Population source: International Monetary Fund, World Economic Outlook Database, October 2021. Population includes N. Macedonia.
Figures are rounded. Percentage changes are calculated on precise numbers.
Volume breakdown by country (%)
28%
27%
14%
10%
10%
4%
3%
2%
1%
1%
Nigeria
Russian Federation
Romania
Serbia and Montenegro
Ukraine
Bulgaria
Belarus
Bosnia and Herzegovina
Armenia
Moldova
79INTEGRATED ANNUAL REPORT 2021
Non‑financial reporting directive
This spread constitutes our
non-financial information
statement. The below provides
page references mapping
outhow our report complies
with relevant regulation on
non-financial information.
This information
issupplementary.
Values pages 16-17
• Winning with customers
• Nurturing our people
• Excellence
• Integrity
• Learning
• Performing as one
Environmental matters
• Environmental policy
• Climate Change policy
• Packaging waste management policy
• Sustainable Agricultural Guiding Principles
• Water Stewardship policy
• Biodiversity statement
Employees
• Code of Business Conduct
• Diversity and Inclusion policy
• Occupational Health and Safety policy
• Quality and Food Safety policy
Human rights
• Human Rights policy
• Supplier Guiding Principles
• Slavery and Human Trafficking statement
Social matters
• Health and Wellness policy
• HIV/AIDS policy
• Code of Business Conduct
• Supplier Guiding Principles
• GMO position statement
• Community Contributions policy
• Premium spirits Responsible
Marketingpolicy
• Public policy engagement
• Quality and Food Safety policy
Anti‑bribery and Corruption
• Code of Business Conduct
• Anti-bribery policy and compliance
handbook
• Supplier Guiding Principles
• Community contributions policy
Principal risk
• Risk policy
The Executive Leadership Team
pages 104-106
Our purpose pages 16-17
We are devoted to growing
every customer and delighting
every consumer 24/7 by
nurturing passionate and
empowered teams of people
while enriching our communities
and caring for the environment.
How our Board considers
stakeholders in decision making
pages 100-101
Social Responsibility Committee
pages 116-117
Our purpose
Policies and values
Underpinning our business and setting
the direction for how we achieve
Effective oversight
Our Board and senior management
ensure we stay on course to achieve
Delivering 24/7 takes
80
Positive influence
Being conscious of stakeholders, risks,
market changes and material issues,
while responding through our business
Executing our vision
execute on each of our five growth pillars,
considering all stakeholder at every step
of the journey.
Defining our success
our remuneration and sustainability
commitments are interlinked.
Growth pillars pages 16-17Remuneration report
pages 118-140
Business model pages 8-9
1
2
3
4
5
Leverage our
unique 24/7 portfolio
Win in the
marketplace
Fuel growth through
competitiveness
Cultivate the potential
of our people
Earn our licence
to operate
The CEO’s individual performance is
measured in key strategic areas and taken
into account for MIP. These strategic areas
include the Company’s performance in
the highest scores in 8 of the 10 most
recognized ESG benchmarks, DJSI, CDP,
MSCI, ecoact, FTSE4GOOD, MSCI and
linked to a reduction in CO
2
emissions.
The CO
2
emissions target in the PSP
implicitly captures reduction in plastics,
which was a key driver of its selection
See pages 123, 134-135
CEO pay ratio
See page 137
Mission 2025 sustainability
pages 54-55
• Emissions reduction
• Water reduction and stewardship
• World Without Waste
• Ingredient sourcing
• Nutrition
• Our people and communities
Stakeholder engagement
pages10‑13
Market trends pages 14-15
• Regulatory environment
• Sustainability
Principal risks pages 62-65
Material issues page 56
GRI Content Index
https://www.coca‑colahellenic.com/
content/dam/cch/us/documents/
oar/Coca‑Cola‑HBC‑2021‑GRI‑
Content-Index.pdf.downloadasset.pdf
EU taxonomy
The Taxonomy Regulation is a key
component of the European Commission’s
action plan to redirect capital flows towards
a more sustainable economy. The EU
Taxonomy, a classification system for
sustainable activities in support of the
EU’sGreen Deal, has been introduced
thisyear, covering as of now two of the
sixenvironmental objectives in the
supplementing Delegated Acts: climate
change mitigation and climate change
adaptation. Under the EU Taxonomy,
non-financial companies are to disclose
which percentage of their turnover, CapEx,
and OpEx meets its criteria.
As a company domiciled in Switzerland,
CCHBC is not in scope of the EU Non-
Financial Reporting Directive (NFRD),
thuswe are not subject to reporting on
theEU Taxonomy. However, we have
beenvoluntarily complying with other
requirements of the NFRD since 2018.
Aninternal cross-functional team has been
working to evaluate the Group’s activities
with regards to the EU taxonomy.
For 2021, we have examined the
taxonomy-eligible economic activities
listed in the Delegated Acts and concluded
that the primary economic activity of
CCHBC – manufacturing of beverages
andfood products – is not included in
theEU Taxonomy annexes and that no
othertaxonomy-eligible activities have
beenidentified.
In 2022, we will remain alert to the
evolvingEU legislation around corporate
sustainability disclosure requirements,
andwe will continue our work to maintain
top-quality ESG reporting.
81INTEGRATED ANNUAL REPORT 2021
82
Corporate
Governance
Contents
Corporate Governance
84Chairman’s introduction to corporate governance
88Board of Directors
92Corporate Governance Report
118Directors’ Remuneration Report
141Statement of Directors’ Responsibilities
1422021 SASB Index
83INTEGRATED ANNUAL REPORT 2021
Governing adaptation
and change
Letter from the
Chairman of the Board
Managing and mitigating the effects
2021 saw further disruption from the ongoing COVID-19 pandemic
and, again, agility and adaptation were required across the Group to
face a wealth of challenges. The Board’s key priority in this regard
remained the safety of our people, customers, partners and
communities. A number of measures continue to be in place to
support the physical and mental wellbeing and health of our people
as they work to maintain product supply and continue to serve our
customers. We are developing programmes to ensure safe and
productive workplaces for our people as we transition into a
post-COVID working environment.
We have also positioned the Company well to take advantage of
new, emerging opportunities in the post-pandemic recovery period.
In particular, we continue to invest in digital commerce channels
where we are seeing revenue growth, boosted by shifting consumer
habits amplified by the COVID‑19 pandemic, and the Board intends
to continue to invest capital and management attention in this area.
Coca‑Cola Bottling Company of Egypt
In August 2021, we announced the acquisition of the Coca-Cola
Bottling Company of Egypt S.A.E., a leading producer of non‑alcoholic
ready‑to‑drink beverages in Egypt.The Board is excited by the
considerable opportunities arising from access to the second largest
non-alcoholic ready-to-drink market in Africa by volume and the
expansion of our emerging markets footprint.
The Board was actively engaged in the acquisition process which
isdiscussed in the Applied Governance section of this report
onpage 96.
Net zero emissions
Building on our long history of ambitious sustainability targets, in
2021 the Board endorsed NetZeroby40, the Company’s commitment
of reaching net zero greenhouse gas emissions across our entire
value chain by 2040.
Via an existing, approved science-based target, by 2030 the Company
aims to reduce its value chain emissions in Scopes 1,2 and 3 by 25%.
With our NetZeroby40 target, we have set our sights on a further 50%
reduction in the following decade. To address the 90% of emissions
in Scope 3 resulting from third party actions, we will broaden our
existing partnership approach with suppliers. The detailed actions
and initiatives required to achieve this ambition are reviewed by the
Board’s Social Responsibility Committee.
Celebrating our 70th year
70 years after our business was founded in Nigeria, in 1951, the
Board is focused on ensuring the Company’s enduring success for
the next 70 years. The Board’s priorities reflect our understanding
ofwhat is needed to ensure resilience while pursuing growth and
1. Represents the annual base salary as at the last review in May 2021.
2. ESPP employer contributions may vary depending on the MIP payout provided that the Chief Executive Officer decides to contribute a portion of the MIP towards the ESPP.
Thefigures provided have been calculated on the basis of the applicable MIP payout and the Chief Executive Officer deciding to contribute 3% to the ESPP.
Additional notes to the Executive Director’s remuneration policy table
1. ‘Base pay’ includes the monthly instalments linked to the base salary for 2021 and 2020.
2. ‘Cash and non-cash benefits’ includes the value of all benefits paid during 2021. These are outlined in the ‘Cash and non-cash benefits’ section on page 134 and include any
gross-ups for the tax benefit.
3. Annual bonus for 2021 includes the MIP payout, receivable early in 2022 for the 2021 performance year, including the amount deferred in shares.
4. ‘Employee Share Purchase Plan’ reflects the value of Company matching share contributions under the ESPP.
5. ‘Long-term incentives’ for 2021 reflects the 2019 awards made under the Performance Share Plan and the dividend equivalent shares paid on PSP shares that will vest in early 2022.
The number of shares due to vest to the Chief Executive Officer for the 2019 award is 65,435. The Chief Executive Officer will also get 4,324 shares representing the dividend
equivalents for the awarded shares for 2019, 2020 and 2021. The value reflects the number of shares multiplied by the average market price over the last three months of the
financial year. The figure will be restated in next year’s report based on the share price at vesting (as has been done for the 2018 award in the 2020 figure above). €81,574 of the
€2,060,637 total vested value of the 2019 award was due to increase in share price since date of grant.
6. ‘Retirement benefits’ includes the pension plan under Swiss law. Employer contributions are 15% of annual base salary. The disclosed figure also includes risk and administration
costs of €11,042.
133INTEGRATED ANNUAL REPORT 2021
Directors’ remuneration report continued
Fixed pay for 2021
Base salary
In 2021, Zoran Bogdanovic’s salary was increased to €815,000 representing an increase of 3.2% effective 1 May 2021. Following the freeze
in2020, the Committee believed that as the Company emerged from the COVID‑19 pandemic, an increase for the CEO in line with other
employees was appropriate. The average increase for our other head office employees was 3.1%.
Retirement benefits
Zoran Bogdanovic receives an annual retirement benefit of 15% of base salary, aligning to the retirement benefit provided under Swiss law
and based on the age brackets defined by federal Swiss legislation. During the year, €133,042 of retirement benefit was received inclusive
of€11,042 for risk and administration costs.
Cash and non‑cash benefits
Zoran Bogdanovic received additional benefits during 2021. These included cost of living and foreign exchange rate adjustment (€281,406),
private medical insurance (€17,841), partner allowance (€1,000), home trip allowance (€3,094), tax support (€16,239), company car (€26,439),
housing allowance (€105,952), Company matching contribution related to the ESPP (€30,303 – reflecting the maximum match of 3% under
the plan), tax equalisation (€292,134), and the value of social security contributions (€108,400).
Variable pay for 2021
MIP performance outcomes – 2021
2021 was the first year in which the Company operated a multiplicative annual bonus under which the payout is calculated by multiplying
theoutcome from the Business Performance element by the outcome for the Individual Performance element.
The Business Performance element for the 2021 MIP was based on the following metrics:
• Net Sales Revenue, with an opportunity of 56% of salary for maximum performance (28% of salary for target performance).
• Comparable EBIT, with an opportunity of 56% of salary for maximum performance (28% of salary for target performance).
• Free cash flow, with an opportunity level of 28% of salary for maximum performance (14% of salary for target performance).
The outcome of the Business Performance element is multiplied by the outcome for the Individual Performance element.
The financial metrics, the associated targets and level of achievement are set out below.
The CEO’s individual performance was determined based on to receiving the highest scores in 8 out of the 10 most recognized ESG
benchmarks, ranking 8 in Refinitiv’s Diversity and Inclusion Index, Employee Sustainable Engagement maintained at the same level,
completion of strategic M&A projects such asthe acquisition of Coca‑Cola Bottling Company of Egypt, the stake in Caffè Vergnano,
andthefinancial results which surpassed the consensus and 2020 financial results.
A few of our business units received government in the first half of the year in 2021 amounting to 4.7m EUR. There was no mechanism
inplace to return those funds. In addition, the results were positively impacted by the sale of the Cyprus plant. Therefore, the Committee,
took the decision to apply discretion to reduce the formulaic outcome of the MIP for the CEO and the Executive LeadershipTeam.
Assuchthe formulaic business results would have been 200% resulting in 140% of the salary.
Metric
Performance level (payout % of Target opportunity)
1. The shareholding requirement was introduced from the date of the 2015 PSP award, 10 December 2015 and has been updated to 300% in 2020.
2. Zoran Bogdanovic holds 19,113 stock options with an exercise price of £15.50 dating from the Stock Option 2010 Grant. This grant was originally due to expire on 9 December 2020.
However, due to a restriction on trading in company shares, these options were not able to be exercised. The Remuneration Committee therefore agreed a temporary extension
inthe expiration date of these options of 30 days after the end of the restricted period, in line with the provisions of the relevant plan rules. He exercised 43,538 options which were
due to expire 2021.
3. Anastassis G. David is a beneficiary of:
(a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect
to 85,355,019 shares held by Kar‑Tess Holding and
(b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest
withrespect to 832,268 shares held by Ari Holdings Limited.
4. Anastasios I. Leventis is a beneficiary of:
(a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect
to 85,355,019 shares held by Kar‑Tess Holding and
(b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest
withrespect to 286,880 shares held by its trustee, Selene Treuhand AG and
(c) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Avgie Leventis, that has an indirect interest with respect
to2,138,277 shares held by Carlcan Holding Limited.
5. Christo Leventis is a beneficiary of:
(a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect
to 85,355,019 shares held by Kar‑Tess Holding and
(b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest
withrespect to 482,228 shares held by its trustee, Selene Treuhand AG and
(c) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Avgie Leventis, that has an indirect interest with respect
to2,138,277 shares held by Carlcan Holding Limited.
Approval of the Directors’ Remuneration Report
The Directors’ Remuneration Report set out on pages 118 to 140 was approved by the Board of Directors on 16 March 2022 and signed
onits behalf by Charlotte J. Boyle, Chair of the Remuneration Committee.
Charlotte J. Boyle
Chair of the Remuneration Committee
16 March 2022
140
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report,
including the consolidated Financial Statements, and the Corporate
Governance Report including the Remuneration Report and the
Strategic Report, in accordance with applicable law and regulations.
The Directors, whose names and functions are set out on pages
88‑90, confirm to the best of their knowledge that:
(a) The Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy.
(b) The consolidated Financial Statements, which have been
prepared in accordance with International Financial Reporting
Standards, as issued by the IASB, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the Company
and the undertakings included in the consolidation of the Group
taken as a whole.
(c) The Annual Report includes a fair review of the development and
performance of the business and the position of the Company and
the undertakings included in the consolidated Coca‑Cola HBC Group
taken as a whole, together with a description of the principal risks and
uncertainties that they face.
The activities of the Group, together with the factors likely to
Materiality• Overall materiality: €36.7 million (2020: €29.6 million) based on 5% of profit before tax.
• Performance materiality: €27.5 million (2020: €22.2 million)
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Key audit matters
Key audit matters are those matters that, in the auditor’s professional judgement, were of most significance in the audit of the financial
statements of the current year and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon,
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide
aseparate opinion on these matters. This is not a complete list of all risks identified by our audit.
146
Key audit matterHow our audit addressed the key audit matter
Goodwill and indefinite‑lived intangible assets
Refer to Note 13 Intangible assets.
Goodwill and indefinite-lived intangible assets as at 31 December
2021 amount to €1,759.3 million and €269.6 million, respectively.
The above amounts have been allocated to individual cash-generating
units (‘CGUs’), which in accordance with International Accounting
Standard (‘IAS’) 36 require the performance of an impairment
assessment at least annually or whenever there is an indication of
impairment. The impairment assessment involves the determination
of the recoverable amount of the CGU, being the higher of the
value-in-use and the fair value less costs to dispose of.
This area was a key matter for our audit due to the size of goodwill
and indefinite-lived intangible assets balances and because the
determination of whether elements of goodwill and of indefinite-lived
intangible assets are impaired involves complex and subjective
estimates made by management about the future results of the
CGUs. These estimates include assumptions surrounding revenue
growth rates, costs, foreign exchange rates and discount rates.
Furthermore, the ongoing COVID-19 pandemic, macroeconomic
volatility, competitor activity and regulatory/fiscal developments
could adversely affect each CGU and potentially the carrying amount
of goodwill and indefinite-lived intangible assets.
Management has identified the Italy CGU to be sensitive to possible
changes in the assumptions used, which could result in the calculated
recoverable amount being lower in future periods than the carrying
value of the CGU. Additional sensitivity disclosure has been included
in the financial statements in respect of this CGU.
No impairment charge was recorded in 2021.
We evaluated the appropriateness of management’s identification of
the Group’s CGUs, related control activities and the process by which
management prepared the CGUs’ value-in-use calculations.
We tested the mathematical accuracy of the CGUs’ value-in-use
calculations and compared the cash flow projections included therein
to the financial budgets, approved by the directors, covering a
one-year period, and management’s projections for the subsequent
four years. In addition, we evaluated the reliability of the cash flow
projections by comparing key elements of the prior year projections
with actual results.
We challenged management’s cash flow projections in relation to the
assumptions applied to the value-in-use calculations focusing on
future performance in light of the gradual recovery from COVID-19
global pandemic with respect to short-term and long-term revenue
growth rates and the level of costs.
With the support of our valuation specialists, we assessed the
appropriateness of certain assumptions including discount, annual
revenue growth, perpetuity revenue growth and foreign exchange
rates. We also evaluated management’s assessment of the potential
effect of climate change to the cost of water.
We performed our independent sensitivity analyses on the key
driversof the value‑in‑use calculations for the CGUs with significant
balances of goodwill and indefinite-lived intangible assets.
As a result of our work, we found that the determination by
management that no impairment was required for goodwill and
indefinite-lived intangible assets was supported by assumptions
within reasonable ranges.
We assessed the appropriateness and completeness of the related
disclosures in Note 13, as regards to goodwill and indefinite-lived
intangible assets and considered them to be reasonable.
Uncertain tax positions
Refer to Note 10 Taxation and Note 29 Contingencies.
The Group operates in numerous tax jurisdictions and is subject to
periodic tax inspections, in the normal course of business, by local
taxauthorities on a range of tax matters in relation to corporate tax,
transfer pricing and indirect taxes. As at 31 December 2021, the
Group has current tax liabilities of € 80.1 million, which include
€52.6million of provisions for tax uncertainties.
The impact of changes in local tax regulations and ongoing
inspections by local tax authorities, could materially impact the
amounts recorded in the financial statements.
Where the amount of tax payable is uncertain, the Group establishes
provisions based on management’s estimates with respect to
thelikelihood of material tax exposures and the probable amount
oftheliability.
We consider this area as a key audit matter given the level of
judgement and uncertainty involved in estimating tax provisions
andthe complexities of dealing with tax rules and regulations
innumerous jurisdictions.
In order to understand and evaluate management’s judgements,
weconsidered the status of current tax authority inspections
andenquiries, the outcome of previous tax authority inspections,
judgemental positions taken in tax returns and current year estimates
as well as recent developments in the tax jurisdictions in which the
Group operates.
We challenged management’s key assumptions, particularly in cases
where there had been significant developments with tax authorities.
Our component audit teams, through the use of tax specialists with
local knowledge and relevant expertise, assessed the tax positions
taken by the subsidiary undertakings in scope, in the context of
applying local tax laws and evaluating the local tax assessments.
Additionally, with our group engagement team tax specialists
wefurther evaluated management’s estimation of tax exposures
andcontingencies in order to assess the adequacy of the Group’s
taxprovisions.
We held virtual meetings with the local management to discuss
theindividual tax position of the in‑scope subsidiary undertakings
andwith the Group engagement tax team for the Group’s overall
taxexposure.
From the evidence obtained we consider the provisions in relation to
uncertain tax positions as at 31 December 2021 to be reasonable.
We also evaluated the related disclosures provided in the financial
statements in Note 10 and Note 29 and concluded that these
areappropriate.
147INTEGRATED ANNUAL REPORT 2021
Independent auditor’s report continued
The COVID-19 global pandemic, which was a key audit matter last year, continued to be an area of focus in light of uncertainty over
theeffective containment of the pandemic and any potential impact to the Group. The audit procedures performed did not identify any
significant impact on the control environment, as a result of the COVID-19 global pandemic and remote working, the recoverability of trade
receivables and management’s assessment of the going concern basis of accounting. Having considered the gradual recovery from the
COVID-19 global pandemic and the audit effort required in 2021 and to the date of this audit report, the impact of the COVID-19 global
pandemic is no longer included as a key audit matter.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed sufficient work to be able to provide an opinion on the financial statements
asa whole, taking into account the operating structure of the Group, the accounting processes and controls, and the industry in which the
Group operates.
The Group operates through its trading subsidiary undertakings in 27 European countries and in Nigeria, as set out in Notes 1 and 6 of the
financial statements. The processing of the accounting records for these subsidiary undertakings is largely centralised in a shared services
centre in Bulgaria, except for the subsidiary undertakings in Russia, Ukraine, Belarus, Armenia and North Macedonia, which process their
accounting records locally. The Group also operates centralised treasury functions in the Netherlands and in Greece and a centralised
procurement function for key raw materials in the Netherlands.
Based on the significance to the financial statements and in light of the key audit matters as noted above, we identified 15 subsidiary
undertakings and one joint venture in 14 countries spread across all of the Group’s reportable segments (including the significant trading
subsidiary undertakings in Russia, Italy, Nigeria, Poland, Romania and Switzerland) which, based on our scoping analysis, required a full scope
audit of their financial information. In addition, audit procedures were performed with respect to the centralised treasury functions by the
group engagement team and with respect to the centralised procurement function by the component audit team in the Netherlands.
Thegroup engagement team also performed analytical review and other procedures on balances and transactions of subsidiary
undertakings not covered by the procedures described above.
At the planning phase of the audit process, we held a one-day virtual audit planning workshop focusing on planning and risk assessment
activities, fraud assessment, COVID-19 global pandemic considerations, auditor independence, accounting and auditing developments,
including climate change, and centralised testing procedures. This audit planning workshop was attended by all audit teams, including those
responsible for the Group’s subsidiary undertakings that are subject only to a statutory audit. The group engagement team was also
responsible for planning, designing and overseeing the audit procedures performed at the shared services centres in Bulgaria and Greece.
Inaddition, we performed work centrally on IT general controls, cybersecurity risks and the upgrade of the Group’s ERP system and shared
audit comfort with the component teams while the group engagement team performed audit procedures with respect to the Group
consolidation, financial statement disclosures and a number of other areas that require significant judgement and estimates, including
goodwill and intangible assets and the Group’s overall going concern assessment.
We issued Group audit instructions to the component audit teams setting out the work to be performed and we had an active dialogue
throughout the year. Due to the travel and other restrictions put in place in response to the ongoing COVID-19 global pandemic, the group
engagement team held frequent virtual meetings to oversee the work performed. In addition to holding formal periodic meetings, the group
engagement team had ongoing informal interactions with the component audit teams to be continuously updated and to monitor their
progress and results of their procedures. Furthermore, the group engagement team remotely reviewed component auditor working papers
and undertook other forms of interaction as considered necessary, depending on the significance of the component and the extent of
accounting and audit issues arising. Moreover, the group engagement team participated in the virtual meetings and discussions between
thecomponent audit teams and the management of the trading subsidiary undertakings in Russia, Italy, Nigeria, Poland, Romania, Greece,
and Switzerland, and the management of the joint venture in Russia, to discuss business performance and outlook, matters relating to the
ongoing COVID-19 global pandemic, regulation and taxation, and any specific accounting and auditing matters identified, including fraud
andinternal controls.
Based on the above, the undertakings which were in scope for the purpose of our audit accounted for 85% of consolidated net sales revenue,
84% of consolidated profit before tax and 87% of consolidated total assets of the Group. This, together with the additional procedures
performed at Group level, gave us appropriate audit evidence for our opinion on the financial statements.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together
with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on
the individual financial statement line items and disclosures and to evaluate the effect of misstatements, both individually and in aggregate,
on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole, as follows:
Overall group materiality€36.7 million (2020: €29.6 million).
How we determined it5% of profit before tax.
Rationale for benchmark
applied
We chose profit before tax as the benchmark because, in our view, it is one of the principal measures
considered by users and is a generally accepted benchmark. We chose 5% which is within the range
ofacceptable quantitative materiality thresholds in generally accepted auditing practice.
148
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range
ofmateriality allocated across components was from €2.7 million to €15.0 million.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the
natureand extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes.
Ourperformance materiality was 75% of overall materiality, amounting to €27.5 million.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and
aggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit & Risk Committee that we would report to them misstatements identified during our audit above €1.5 million
(2020:€1.0 million) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Group’s ability to continue to adopt the going concern basis of accounting included:
• Verification that the cash flow projections used in the goodwill impairment, going concern and viability assessments were consistent;
• Review of management’s assessment supporting the Group’s ability to continue to adopt the going concern basis of accounting, ensuring
appropriate stress test scenarios were considered;
• Assessment of the reasonableness of management’s assumptions used in the cash flow projections.
• Testing of the mathematical integrity of the cash flow forecasts and reconciled these to the Board approved budget and management’s
projections for the subsequent periods;
• Evaluation of the Group’s liquidity for the period under assessment by considering the Group’s available cash resources, committed
undrawn credit facilities and other debt instruments in place as well as the maturity profile of the Group’s debt. We confirmed the
outstanding amounts of the financing facilities and verified their nature, terms and conditions;
• Consideration whether climate change is expected to have any significant impact during the period of the going concern assessment; and
• Evaluation of the appropriateness of the related disclosures provided in the financial statements in Note 2 and Note 31.
Based on the work performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group’s ability to continue as a going concern for a period of at least twelve months from when
the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation
ofthe financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s ability to continue
as a going concern.
In relation to the Group’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt
the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements, our auditor’s report
thereonand the Swiss statutory reporting, which we obtained prior to the date of this auditor’s report. The directors are responsible for the
other information which includes reporting based on the Task Force on Climate-related Financial Disclosures (‘TCFD’) recommendations.
Ouropinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except
to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to
be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures
to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information.
If,based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report based on these responsibilities.
149INTEGRATED ANNUAL REPORT 2021
Independent auditor’s report continued
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate
governance statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code specified for our review.
Our additional responsibilities with respect to the corporate governance statement as other information, are described in the Reporting
onother information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance
statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material
to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and
anexplanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis
ofaccounting in preparing them, and their identification of any material uncertainties relating to the Group’s ability to continue to do so
over a period of at least twelve months from the date of approval of the financial statements;
• The directors’ explanation as to their assessment of the Group’s prospects, the period this assessment covers and why the period
isappropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the Group will be able to continue in operation and meet
its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the Group was substantially less in scope than an audit and only
consisted of making inquiries and considering the directors’ process supporting their statement; checking that the statement is in alignment
with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial
statements and our knowledge and understanding of the Group and its environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the
information necessary for the members to assess the Group’s position, performance, business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
• The section of the Annual Report describing the work of the Audit & Risk Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the Group’s compliance with the
Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities in the Annual Report, the directors are responsible for the preparation
of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors
are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s 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.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but
is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable
of detecting irregularities, including fraud, is detailed below.
150
Based on our understanding of the Group and the industry in which it operates, we considered the extent to which non‑compliance with
applicable laws and regulations might have a material effect on the financial statements, including, but not limited to, the corporate regulations
arising from its listings on the London Stock Exchange and Athens Exchange, tax laws and regulations applicable to Coca‑Cola HBC and
itssubsidiaries and regulations relating to unethical and prohibited business practices. We evaluated management’s incentives and
opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and where management
made subjective judgements in respect of significant accounting estimates that involved making assumptions and considering future events
that are inherently uncertain. The group engagement team shared this risk assessment with the component auditors so that they could
include appropriate audit procedures in response to such risks in their work. Audit procedures performed by the group engagement team
and/or component auditors included among others:
• Discussions with management, internal audit, internal legal counsel, management’s experts and external legal advisors, where relevant,
including consideration of known or suspected instances of non‑compliance with laws and regulation and fraud;
• Evaluation and testing of the operating effectiveness of management’s controls designed to prevent and detect irregularities;
• Assessment of matters reported on the Group’s whistleblowing helpline and the results of management’s investigation of such matters;
• Reading the minutes of Board meetings to identify any inconsistencies with other information provided by management;
• Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to
impairment of goodwill and indefinite‑lived intangible assets and uncertain tax positions (see related key audit matters above);
• Identifying and testing journal entries, in particular any entries posted with unusual account combinations, journal entries posted by senior
management and consolidation entries.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance
with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not
detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques.
However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek
totarget particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw
aconclusion about the population from which the sample is selected.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit.
We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform
auditprocedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made
by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group
toexpress an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit.
Weremain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Those charged with
governance are responsible for overseeing the Group’s financial reporting process.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
audit of the financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor’s
report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that
amatter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
151INTEGRATED ANNUAL REPORT 2021
Independent auditor’s report continued
Use of this report
This report, including the opinions, has been prepared for and only for Coca‑Cola HBC AG for the purpose of the Disclosure Guidance
andTransparency Rules sourcebook and the Listing Rules of the FCA and for no other purpose. We do not, in giving these opinions, accept
orassume 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.
Other required reporting
Appointment
We have been the Group’s auditors since 2003 and following a tender process that the Group conducted in 2015, at the recommendation
ofthe Audit & Risk Committee, we were reappointed by the directors on 11 December 2015 to audit the financial statements for the year
ended 31 December 2016 and subsequent financial periods.
Assurance Report on the European Single Electronic Format pursuant to the Athens Exchange listing requirements
We have examined the digital files of Coca‑Cola HBC, which were compiled in accordance with the European Single Electronic Format
(ESEF)defined by the Commission Delegated Regulation (EU) 2019/815, as amended by Regulation (EU) 2020/1989 (hereinafter “ESEF
Regulation”), and which include the consolidated financial statements of the Group for the year ended 31 December 2021, in XHTML format
549300EFP3TNG7JGVE49‑2021‑12‑31‑en.xhtml, as well as the provided XBRL file 549300EFP3TNG7JGVE49‑2021‑12‑31‑en.zip with
the appropriate marking up, on the aforementioned consolidated financial statements.
Regulatory framework
The digital files of the European Single Electronic Format (ESEF) are compiled in accordance with ESEF Regulation and 2020 / C 379/01
Interpretative Communication of the European Commission of 10 November 2020, as provided by the Greek Law 3556/2007 and the
relevant announcements of the Hellenic Capital Market Commission and the Athens Exchange (hereinafter “ESEF Regulatory Framework”).
In summary, this Framework includes the following requirements:
• All annual financial reports should be prepared in XHTML format.
• For consolidated financial statements in accordance with International Financial Reporting Standards, the financial information stated
inthe consolidated balance sheet, the consolidated income statement and consolidated statement of comprehensive income, the
consolidated cash flow statement and the consolidated statements of changes in equity should be marked‑up with XBRL ‘tags’, according
to the ESEF Taxonomy, as in force. The technical specifications for ESEF, including the relevant classification, are set out in the ESEF
Regulatory Technical Standards.
The requirements set out in the current ESEF Regulatory Framework are suitable criteria for formulating a reasonable assurance conclusion.
Responsibilities of the management and those charged with governance
Management is responsible for the preparation and submission of the consolidated financial statements of the Group, for the year ended
31December 2021 in accordance with the requirements set by the ESEF Regulatory Framework, as well as for those internal controls that
management identifies as necessary, to enable the compilation of digital files free of material error due to either fraud or error.
Auditor’s responsibilities
Our responsibility is to plan and carry out this assurance work, in accordance with no. 214/4 / 11.02.2022 Decision of the Board of Directors
of the Hellenic Accounting and Auditing Standards Oversight Board (HAASOB) and the “Guidelines in relation to the work and the assurance
report of the Certified Public Accountants on the European Single Electronic Format (ESEF) of issuers with securities listed on a regulated
market in Greece” as issued by the Board of Certified Auditors on 14/02/2022 (hereinafter “ESEF Guidelines”), providing reasonable
assurance that the consolidated financial statements of the Group prepared by management in accordance with ESEF comply in all material
respects with the applicable ESEF Regulatory Framework.
Our work was carried out in accordance with the Code of Ethics for Professional Accountants of the International Ethics Standard Board for
Accountants (IESBA Code).
The assurance work we conducted is limited to the procedures provided by the ESEF Guidelines and was carried out in accordance with
International Standard on Assurance Engagements 3000, “Assurance Engagements other than Audits or Reviews of Historical Financial
Information’’. Reasonable assurance is a high level of assurance, but it is not a guarantee that this work will always detect a material
misstatement regarding non-compliance with the requirements of the ESEF Regulation.
152
Notes:
a. The maintenance and integrity of the Coca‑Cola HBC AG 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 financial statements since they were initially presented on the website.
b. Legislation in the UK and Switzerland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Fotis Smyrnis
the Certified Auditor, Reg. No. 52861
for and on behalf of PricewaterhouseCoopers S.A.
Certified Auditors, Reg. No. 113
Athens, Greece
23 March 2022
Conclusion
Based on the procedures performed and the evidence obtained, we conclude that the consolidated financial statements of the Group for
theyear ended 31 December 2021, in XHTML file format 549300EFP3TNG7JGVE49‑2021‑12‑31‑en.xhtml, as well as the provided XBRL
file549300EFP3TNG7JGVE49‑2021‑12‑31‑en.zip with the appropriate marking up, on the aforementioned consolidated financial
statements have been prepared, in all material respects, in accordance with the requirements of the ESEF Regulatory Framework.
Other matter
PwC Switzerland has reported separately on the Group and Company financial statements of Coca‑Cola HBC AG for the year ended
31December 2021 for Swiss statutory purposes. The reports are available in pages 212 and 216.
153INTEGRATED ANNUAL REPORT 2021
Consolidated financial statements
Consolidated income statement
For the year ended 31 December
Note
2021
€ million
2020
€ million
Net sales revenue6, 77,168.46,131.8
Cost of goods sold(4,570.2)(3,810.3)
Gross profit2,598.22,321.5
Operating expenses8(1,833.3)(1,682.2)
Share of results of integral equity method investments1534.421.4
Operating profit6799.3660.7
Finance income5.33.8
Finance costs(72.9)(73.9)
Finance costs, net9(67.6)(70.1)
Share of results of non-integral equity method investments153.23.3
Profit before tax734.9593.9
Tax10(187.4)(178.9)
Profit after tax547.5415.0
Attributable to:
Owners of the parent547.2414.9
Non-controlling interests0.30.1
547.5415.0
Basic earnings per share (€)111.501.14
Diluted earnings per share (€)111.491.14
Consolidated statement of comprehensive income
For the year ended 31 December
Note
2021
€ million
2020
€ million
Profit after tax547.5415.0
Other comprehensive income:
Items that may be subsequently reclassified to income statement:
Profit for the year, net of tax––––––414.9414.90.1415.0
Other comprehensive loss for
theyear, net of tax––––(277.4)15.0(10.5)(272.9)–(272.9)
Total comprehensive income
forthe year, net of tax
2
––––(277.4)15.0404.4142.00.1142.1
Balance as at 31 December 20202,014.43,321.4(6,472.1)(155.5)(1,242.1)266.74,897.92,630.72.62,633.3
1. The amount included in other reserves of €0.2 million gain for 2020 represents the cash flow hedge reserve, including cost of hedging, transferred to inventory of €0.1 million loss,
and the deferred tax income thereof amounting to €0.3 million.
2. The amount included in the exchange equalisation reserve of €277.4 million loss for 2020 represents the exchange loss attributed to the owners of the parent, including €22.5 million
loss 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 €15.0 million gain for 2020 consists of loss on valuation of equity investments at fair value
through other comprehensive income of €0.2 million, cash flow hedges gain of €20.5 million, share of other comprehensive income of equity method investments of €2.9 million loss
and the deferred tax expense thereof amounting to €2.4 million.
The amount of €404.4 million gain attributable to owners of the parent comprises profit for the year of €414.9 million plus actuarial losses of €12.5 million, minus deferred tax income
of €2.0 million.
The amount of €0.1 million gain included in non-controlling interests for 2020 represents the share of non-controlling interests in profit for the year.
The accompanying notes form an integral part of these consolidated financial statements.
Consolidated financial statements continued
156
Consolidated statement of changes in equity continued
Attributable to owners of the parent
Non-
controlling
interests
€ million
Total
equity
€ million
Share capital
€ million
Share
premium
€ million
Group
reorganisation
reserve
€ million
Treasury
shares
€ million
Exchange
equalisation
reserve
€ million
Other
reserves
€ million
Retained
earnings
€ million
Total
€ million
Balance as at 1 January 20212,014.43,321.4(6,472.1)(155.5)(1,242.1)266.74,897.92,630.72.62,633.3
Profit for the year, net of tax––––––547.2547.20.3547.5
Other comprehensive income for
the year, net of tax––––88.157.410.0155.5–155.5
Total comprehensive income for
the year, net of tax
4
––––88.157.4557.2702.70.3703.0
Balance as at 31 December 20212,022.33,097.3(6,472.1)(146.6)(1,154.0)310.25,457.43,114.52.63,117.1
3. The amount included in other reserves of €19.9 million gain for 2021 represents the cash flow hedge reserve, including cost of hedging, transferred to inventory of €24.0 million gain,
andthedeferred tax expense thereof amounting to €4.1 million.
4. The amount included in the exchange equalisation reserve of €88.1 million gain for 2021 represents the exchange gain attributed to the owners of the parent, primarily related
totheSwiss Franc and the Russian Rouble, including €14.5 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 €57.4 million gain for 2021 consists of cash flow hedges gain of €66.8 million, share of other
comprehensive income of equity method investments of €0.1 million gain and the deferred tax expense thereof amounting to €9.5 million.
The amount of €557.2 million gain attributable to owners of the parent comprises profit for the year of €547.2 million, actuarial gains of €16.1 million and deferred tax expense
of€6.1million.
The amount of €0.3 million gain included in non-controlling interests for 2021 represents the share of non-controlling interests in profit for the year.
For further details, refer to Note 24 ‘Financial risk management and financial instruments’, Note 26 ‘Equity’ and Note 28 ‘Share-based payments’.
The accompanying notes form an integral part of these consolidated financial statements.
157INTEGRATED ANNUAL REPORT 2021
Consolidated cash flow statement
For the year ended 31 December
Note
2021
€ million
2020
€ million
Operating activities
Profit after tax547.5415.0
Finance costs, net967.670.1
Share of results of non-integral equity method investments15(3.2)(3.3)
Tax charged to the income statement10187.4178.9
Depreciation of property, plant and equipment14330.3372.5
Impairment of property, plant and equipment146.015.6
Employee performance shares14.99.5
Amortisation of intangible assets131.00.9
1,151.51,059.2
Share of results of integral equity method investments15(34.4)(21.4)
Gain on disposals of non-current assets8(28.4)(1.4)
(Increase)/decrease in inventories(114.5)9.4
(Increase)/decrease in trade and other receivables(109.0)178.5
Increase/(decrease) in trade and other payables419.3(79.6)
Tax paid(142.3)(183.2)
Net cash inflow from operating activities1,142.2961.5
Investing activities
Payments for purchases of property, plant and equipment(506.5)(419.2)
Proceeds from sales of property, plant and equipment35.813.4
Payments for business combinations23(5.6)–
Payment for acquisition of joint operation(0.9)–
Net payment for acquisition of integral equity method investment15–(0.5)
Net receipts from integral equity method investments2747.827.1
Payments for acquisition of non-integral equity method investments15(87.0)(2.4)
Net receipts from non-integral equity method investments271.91.3
Joint arrangement reclassification15–(13.1)
Net (payments for)/proceeds from investments in financial assets at amortised cost(102.8)264.4
Net (payments for)/proceeds from investments in financial assets at fair value through
profit or loss(640.6)370.4
Loans to related parties(0.9)(2.5)
Interest (paid)/received(0.3)0.2
Net cash (outflow)/inflow from investing activities(1,259.1)239.1
Financing activities
Proceeds from shares issued to employees exercising stock options2619.67.6
Proceeds from borrowings129.3211.8
Repayments of borrowings(133.8)(655.8)
Principal repayments of lease obligations(63.1)(58.7)
Dividends paid to owners of the parent26(233.6)(225.7)
Dividends paid to non-controlling interests(0.2)(0.2)
Proceeds from/(payments for) settlement of derivatives regarding financing activities4.9(1.1)
Interest paid(45.5)(64.7)
Net cash outflow from financing activities(322.4)(786.8)
Net (decrease)/increase in cash and cash equivalents(439.3)413.8
Movement in cash and cash equivalents
Cash and cash equivalents at 1 January1,215.8823.0
Net (decrease)/increase in cash and cash equivalents (2020: Net increase in cash and cash
Cash and cash equivalents at 31 December25782.81,215.8
The accompanying notes form an integral part of these consolidated financial statements.
Consolidated financial statements continued
158
Notes to the consolidated financial statements
1. Description of business
Coca‑Cola HBC AG and its subsidiaries (the ‘Group’ or ‘Coca‑Cola HBC’ or ‘the Company’) are principally engaged in the production,
salesanddistribution of primarily non‑alcoholic ready‑to‑drink beverages, under franchise from The Coca‑Cola Companysales and distribution of primarily non‑alcoholic ready‑to‑drink beverages, under franchise from The Coca‑Cola Company. The Company
distributes its products in Nigeria and 27 countries in Europe. Information on the Company’s operations by segment is included in Note 6.
On 11 October 2012, Coca‑Cola HBC, a Swiss stock corporation (Aktiengesellschaft/Société Anonyme) incorporated by Kar‑Tess Holding
(arelated party of the Group, refer to Note 27), announced a voluntary share exchange offer to acquire all outstanding ordinary registered
shares and all American depositary shares of Coca‑Cola Hellenic Bottling Company S.A. As a result of the successful completion of this offer,
on 25 April 2013 Coca‑Cola HBC acquired 96.85% of the issued Coca‑Cola Hellenic Bottling Company S.A. shares, including shares
represented by American depositary shares, and became the new parent company of the Group. On 17 June 2013, Coca‑Cola HBC completed
its statutory buy‑out of the remaining shares of Coca‑Cola Hellenic Bottling Company S.A. that it did not acquire upon completion of its
voluntary share exchange offer. Consequently, Coca‑Cola HBC acquired 100% of Coca‑Cola Hellenic Bottling Company S.A. which was
eventually delisted from the Athens Exchange, from the London Stock Exchange where it had a secondary listing and from theNew York
Stock Exchange where American depositary shares were listed.
The shares of Coca‑Cola HBC started trading in the premium segment of the London Stock Exchange (Ticker symbol: CCH) and on the
Athens Exchange (Ticker symbol: EEE) and regular way trading in Coca‑Cola HBC American depositary shares commenced on the New York
Stock Exchange (Ticker symbol: CCH) on 29 April 2013. On 24 July 2014, the Group proceeded to the delisting of its American depositary
shares from the New York Stock Exchange and terminated its reporting obligations under the US Securities Exchange Act of 1934.
Thederegistration of Coca‑Cola HBC shares under the US Securities Exchange Act of 1934 and the termination of its reporting obligations
became effective on 3 November 2014.
2. Basis of preparation and consolidation
Basis of preparation
The consolidated financial statements of the Group for the year ended 31 December 2021 have been prepared in accordance with International
Financial Reporting Standards (‘IFRS’) as adopted by the European Union (‘EU‘) and in compliance with Swiss law. The consolidated financial
statements of the Group for theyear ended 31 December 2020 were prepared in accordance with IFRS as issued by the International
Accounting Standards Board (‘IASB’) and in compliance with Swiss law. IFRS as adopted by the EU differ in certain respects from IFRS
asissued by the IASB. These differences have no impact on the Group’s consolidated financial statements for the periods presented.
These consolidated financial statements were approved for issue by the Board of Directors on 22 March 2022 and are expected to be
verified at the Annual General Meeting to be held on 21 June 2022.
Going concern
In 2021, the Group experienced a gradual recovery from the COVID-19 pandemic as evidenced by the reopening of its markets and return
topre‑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 part of the consideration of whether to adopt the going concern basis in preparing the consolidated financial statements, management
has reviewed a range of scenarios and forecasts as part of its continuous focus on risk management, including the potential financial impact
of a slower COVID-19 pandemic recovery, along with the Group’s proposed responses. The relevant assumptions have been modelled on
theestimated potential impact of severe but plausible downside scenarios, linked to the Group‘s principal risks. The Group’s strong balance
sheet and liquidity position, its leading market shares and largely variable cost base, together with its unique portfolio of brands and resilient
and talented people will, management believe, allow the Group to fully overcome the challenges posed by the ongoing COVID-19 pandemic.
In addition, management considered the potential effect of climate change-related risks to the cost of water and concluded that there
isnoimpact over the period of assessment.
Having considered the outcome of these assessments, based on a quantitative viability exercise, it is deemed appropriate that the Group
continues to adopt the going concern basis for the preparation of the consolidated financial statements under the historical cost convention,
as modified by the revaluation of financial assets at fair value through profit or loss, investments in equity instruments classified at fair value
through other comprehensive income and derivative financial instruments.
Change in accounting estimate
In the current financial year, the Group has applied a change in the estimate of useful lives applicable to certain categories of production
equipment, included within the plant and equipment asset category (Note 14). As a result, effective 1 January 2021, the expected useful life
of the specific categories of production equipment was extended by five years. The change was driven by the reassessment of the expected
period of usage and has resulted in an approximately €33 million decrease in the depreciation expense in the current year. This is primarily
reflected in the ‘Cost of goods sold’ line of the consolidated income statement.
159INTEGRATED ANNUAL REPORT 2021
Notes to the consolidated financial statements continued
2. Basis of preparation and consolidation continued
Basis of consolidation
Subsidiary undertakings are those companies over which the Group, directly or indirectly, has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
power over the entity. Subsidiary undertakings are consolidated from the date on which control is transferred to the Group and cease to be
consolidated from the date on which control is transferred out of the Group.
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions
with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired
ofthe carrying value of net assets of the subsidiary is recorded in equity.
Inter-company transactions and balances between Group companies are eliminated. The subsidiaries’ accounting policies are consistent
with policies adopted by the Group.
When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when such control
islost,with the change in carrying amount recognised in the income statement. The fair value is the initial carrying amount for the purposes
ofsubsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously
recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets
or liabilities. This means that amounts previously recognised in other comprehensive income, if any, are reclassified to the incomestatement.
3. Foreign currency and translation
The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the
entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each
entity are expressed in Euro, which is the presentation currency for the consolidated financial statements.
The assets and liabilities of foreign subsidiaries are translated into Euro at the exchange rate prevailing at the balance sheet date. The results
of foreign subsidiaries are translated into Euro using the average monthly exchange rate (being a reasonable approximation of the rates
prevailing on the transaction dates). The exchange differences arising on translation are recognised in other comprehensive income.
On disposal of a foreign entity, accumulated exchange differences are recognised as a component of the gain or loss on disposal.
Transactions in foreign currencies are recorded at the rate ruling at the date of transaction. Monetary assets and liabilities denominated in
foreign currencies are remeasured at the rate of exchange ruling at the balance sheet date. All gains and losses arising on remeasurement are
included in the income statement, except for exchange differences arising on assets and liabilities classified as cash flow hedges, whichare
deferred in equity until the occurrence of the hedged transaction, at which time they are recognised in the income statement. Sharecapital
denominated in a currency other than the functional currency is initially stated at the spot rate on the date of issue but is not retranslated.
The principal exchange rates used for translation purposes in respect of one Euro are:
Average
2021
Average
2020
Closing
2021
Closing
2020
US Dollar1.181.141.131.22
UK Sterling0.860.890.840.91
Polish Zloty4.564.444.604.54
Nigerian Naira484.31435.06481.32480.68
Hungarian Forint358.49350.65370.08364.83
Swiss Franc1.081.071.041.08
Russian Rouble87.2382.2383.8790.55
Romanian Leu4.924.844.954.88
Ukrainian Hryvnia32.3030.6630.7834.64
Czech Koruna25.6426.4524.9526.21
Serbian Dinar117.57117.58117.56117.57
160
4. Accounting pronouncements
The Group has adopted the following amendments which were endorsed by the EU that are relevant to its operations and effective for
accounting periods beginning 1 January 2021:
• Interest Rate Benchmark Reform – Phase 2 – Amendments to IFRS 9, IAS 39, IFRS 7 and IFRS 16; and
• COVID-19 – Related Rent Concessions – Amendments to IFRS 16.
The adoption of these amendments did not have a significant impact on the consolidated financial statements of the Group.
At the date of approval of these consolidated financial statements, the following amendments relevant to the Group’s operations were
issued but not yet effective and not early‑adopted:
• Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16;
• Onerous Contracts – Cost of Fulfilling a Contract – Amendments to IAS 37;
• Reference to the Conceptual Framework – Amendments to IFRS 3;
• Annual Improvements to IFRS Standards 2018‑2020;
• COVID‑19‑Related Rent Concessions beyond 30 June 2021 – Amendments to IFRS 16;
• Classification of Liabilities as Current or Non‑current – Amendments to IAS 1 (not endorsed by the EU);
• Disclosure of Accounting Policies – Amendments to IAS 1 (not endorsed by the EU);
• Definition of Accounting Estimates – Amendments to IAS 8 (not endorsed by the EU); and
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12 (not endorsed by the EU).
The above amendments are not expected to have a material impact on the consolidated financial statements of the Group.
5. Critical accounting estimates and judgements
In conformity with IFRS, the preparation of the consolidated financial statements for Coca‑Cola HBC requires management to make
estimates and judgements that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent
assets and liabilities in the consolidated financial statements and accompanying notes. Although these estimates and judgements are
basedon management’s knowledge of current events and actions that may be undertaken in the future, actual results may ultimately differ
fromestimates.
Estimates
The key items concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk
ofcausing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below:
• Income taxes (refer to Note 10);
• Impairment of goodwill and indefinite‑lived intangible assets (refer to Note 13); and
• Employee benefits – defined benefit pension plans (refer to Note 21).
Judgements
In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving
estimations as described above, which have the most significant effect on the amounts recognised in the consolidated financial statements:
• Joint arrangements (refer to Note 15).
161INTEGRATED ANNUAL REPORT 2021
Notes to the consolidated financial statements continued
6. Segmental analysis
The Group has essentially one business, being the production, sale and distribution of ready-to-drink, primarily non-alcoholic, beverages.
The Group operates in 28 countries, which are aggregated into reportable segments as follows:
The Group’s operations in each of the three reportable segments have been aggregated on the basis of their similar economic characteristics,
assessed by reference to their net sales revenue per unit case as well as disposable income per capita, exposure to political and economic
volatility, regulatory environments, customers and distribution infrastructures. The accounting policies of the reportable segments are
thesame as those adopted by the Group. The Group’s chief operating decision‑maker is its Executive Leadership Team, which evaluates
performance and allocates resources based on volume, net sales revenue and operating profit.
The Group sales volume in million unit cases
1
for the years ended 31 December was as follows:
20212020
Established589.9536.9
Developing415.5412.1
Emerging1,407.31,186.6
Total volume2,412.72,135.6
1. One unit case corresponds to approximately 5.678 litres or 24 servings, being a typically used measure of volume. For biscuits volume, one unit case corresponds to 1 kilogram.
Volume data is derived from unaudited operational data.
Net sales revenue per reportable segment for the years ended 31 December is presented in the graphs below:
Established marketsAustria, Cyprus, Greece, Italy, Northern Ireland,
Emerging marketsArmenia, Belarus, Bosnia and Herzegovina,
Bulgaria, Moldova, Montenegro, Nigeria, North
Macedonia, Romania, the Russian Federation,
Serbia (including the Republic of Kosovo)
andUkraine.
Sales or transfers between the Group’s segments are not material, nor are there any customers who represent more than 10% of net sales
revenue for the Group.
€2,174.6m
€1,170.9m
€2,786.3m
Established
Developing
Emerging
€2,479.0m
€1,365.6m
€3,323.8m
Established
Developing
Emerging
2021
€7,168.4 million
2020
€6,131.8 million
162
In addition to non-alcoholic, ready-to-drink beverages (‘NARTD’), the Group sells and distributes premium spirits. An analysis of volume
andnet sales revenue per product type for the years ended 31 December is presented below:
Volume in million unit cases
1
:20212020
NARTD
2
2,409.32,133.2
Premium spirits3.42.4
Total volume2,412.72,135.6
Net sales revenue in € million:
NARTD6,944.55,974.4
Premium spirits223.9157.4
Total net sales revenue7,168.46,131.8
1. One unit case corresponds to approximately 5.678 litres or 24 servings, being a typically used measure of volume. For premium spirits volume, one unit case also corresponds
to5.678 litres. For biscuits volume, one unit case corresponds to 1 kilogram. Volume data is derived from unaudited operational data.
Net sales revenue from external customers attributed to Switzerland (the Group’s country of domicile), Russia, Italy and Nigeria was as follows
for the years ended 31 December:
2021
€ million
2020
€ million
Switzerland354.3368.0
Russia953.3773.3
Italy901.6751.5
Nigeria702.0509.0
All countries other than Switzerland, Russia, Italy and Nigeria4,257.23,730.0
Total net sales revenue from external customers7,168.46,131.8
Year ended 31 December Note
2021
€ million
2020
€ million
Operating profit:
Established285.6203.3
Developing104.797.0
Emerging409.0360.4
Total operating profit799.3660.7
Finance costs:
Established(17.7)(21.5)
Developing(7.9)(5.7)
Emerging(15.0)(13.2)
Corporate³(120.1)(138.0)
Inter-segment finance cost87.8104.5
Total finance costs9(72.9)(73.9)
Finance income:
Established1.21.1
Developing0.50.7
Emerging9.710.1
Corporate³81.796.4
Inter-segment finance income(87.8)(104.5)
Total finance income95.33.8
Income tax expense:
Established(57.6)(41.8)
Developing(10.6)(28.7)
Emerging(91.1)(89.0)
Corporate
3
(28.1)(19.4)
Total income tax expense10(187.4)(178.9)
Reconciling items:
Share of results of non-integral equity method investments153.23.3
Profit after tax547.5415.0
3. Corporate refers to holding, finance and other non-operating subsidiaries of the Group.
163INTEGRATED ANNUAL REPORT 2021
Notes to the consolidated financial statements continued
6. Segmental analysis continued
Depreciation and impairment of property, plant and equipment and amortisation of intangible assets included in the measure of operating
profit are as follows:
Year ended 31 December Note
2021
€ million
2020
€ million
Depreciation and impairment of property, plant and equipment:
Established(92.1)(109.6)
Developing(54.1)(66.4)
Emerging(190.1)(212.1)
Total depreciation and impairment of property, plant and equipment14(336.3)(388.1)
Amortisation of intangible assets:
Developing(0.3)(0.2)
Emerging(0.7)(0.7)
Total amortisation of intangible assets13(1.0)(0.9)
The balance of non-current assets
4
attributed to Switzerland (the Group’s country of domicile), Russia, Italy and Nigeria was as follows for the
years ended 31 December:
2021
€ million
2020
€ million
Switzerland557.5540.0
Russia
5
330.2307.4
Italy1,082.31,108.8
Nigeria642.1553.3
All countries other than Switzerland, Russia, Italy and Nigeria 2,654.62,465.0
Total non-current assets⁴5,266.74,974.5
4. Excluding other financial assets, deferred tax assets, pension plan assets and trade and loans receivable.
5. Excluding the investment in Multon, the Group’s Russian juice business (refer to Note 15).
Expenditure on property, plant and equipment per reportable segment was as follows for the years ended 31 December:
2021
€ million
2020
€ million
Established104.7108.2
Developing89.569.3
Emerging
6
319.4241.7
Total expenditure on property, plant and equipment513.6419.2
6. Expenditure on property, plant and equipment for 2021 includes €7.1 million (2020: €nil) relating to repayment of borrowings undertaken to finance the purchase of production
equipment by the Group’s subsidiary in Nigeria, classified as ‘Repayment of borrowings’ in the consolidated cash flow statement.
7. Net sales revenue
Accounting policy
The Group essentially produces, sells and distributes ready-to-drink, primarily non-alcoholic, beverages. Under IFRS 15 ‘Revenue from
contracts with customers’ the Group recognises revenue when control of the products is transferred, being when the products are
delivered to the customer.
Net sales revenue is measured at the fair value of the consideration received or receivable and is stated net of sales discounts and
consideration paid to customers. These mainly take the form of promotional incentives and are amortised over the terms of the related
contracts as a deduction in revenue.
The Group provides volume rebates to customers once the quantity of goods purchased during the period exceeds a threshold specified
in the contract. To estimate the variable consideration for the expected future rebates, the Group uses the most likely amount method
and the amount is recognised in sales revenue only to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the Group
transfers the related goods. Contract liabilities are recognised as revenue when the Group performs under the contract (i.e. transfers
control of the related goods to the customer).
Net sales revenue includes excise and other duties where the Group acts as a principal but excludes amounts collected by third parties
such as value-added taxes as these are not included in the transaction price. The Group assesses these taxes and duties on a jurisdiction-
by-jurisdiction basis to decide on the appropriate accounting treatment.
Coca‑Cola HBC receives contributions from The Coca‑Cola Company in order to promote sales of its brands. Contributions for price
support, marketing and promotional campaigns in respect of specific customers are recognised as an offset to promotional incentives
provided to those customers to which the contributions contractually relate. These contributions are accrued and matched to the
expenditure to which they relate (refer to Note 27).
Revenue recognised in 2021 that was included in the contract liability balance at the beginning of the year amounted to €10.4 million
(2020:€6.9 million). Refer to Note 20 for contract liabilities as at 31 December 2021 and 2020.
Refer to Note 6 for an analysis of net sales revenue per reportable segment.
164
8. Operating expenses
Operating expenses for the year ended 31 December comprised:
2021
€ million
2020
€ million
Selling expenses879.1799.7
Delivery expenses533.0484.3
Administrative expenses385.7388.4
Restructuring expenses21.29.8
Acquisition and integration costs (refer to Note 23)14.3–
Operating expenses1,833.31,682.2
In 2021, operating expenses included net gain on disposals of non‑current assets of €28.4 million (2020: €1.4 million net gain).
Accounting policy
Restructuring expenses are recorded in a separate line item within operating expenses and comprise costs arising from significant
changes in the way the Group conducts its business such as significant supply chain infrastructure changes, outsourcing of activities and
centralisation of processes. Restructuring provisions are recognised only when the Group has a present constructive obligation, which
iswhen a detailed formal plan identifies the business or part of the business concerned, the location, function and number of employees
affected, a detailed estimate of the associated costs, as well as an appropriate timeline and the employees affected have been notified
ofthe plan’s main features.
As part of the effort to optimise its cost base and sustain competitiveness in the marketplace, the Company undertakes restructuring
initiatives. The restructuring concerns mainly employees’ termination benefits. Restructuring expenses per reportable segment for the years
ended 31 December are presented below:
€5.5m
€4.0m
€0.3m
Established
Developing
Emerging
€14.7m
€3.4m
€3.1m
Established
Developing
Emerging
2021
€21.2 million
2020
€9.8 million
Employee costs for the years ended 31 December comprised:
2021
€ million
2020
€ million
Wages and salaries724.7681.8
Social security costs138.3137.9
Pension and other employee benefits132.3116.8
Termination benefits19.919.3
Total employee costs1,015.2955.8
The average number of full‑time equivalent employees in 2021 was 26,787 (2020: 27,722).
Employee costs for 2021 included in operating expenses and cost of goods sold amounted to €766.7 million and €248.5 million respectively
(2020: €720.5 million and €235.3 million respectively).
The total remuneration paid or accrued for Directors and the senior management team for the years ended 31 December comprised:
2021
€ million
2020
€ million
Salaries and other short-term benefits16.315.9
Performance share awards6.44.9
Pension and post-employment benefits0.90.8
Total remuneration23.621.6
165INTEGRATED ANNUAL REPORT 2021
Notes to the consolidated financial statements continued
8. Operating expenses continued
Audit and other fees charged in the income statement concerning the auditor of the consolidated financial statements,
PricewaterhouseCoopers S.A. and affiliates, were as follows, for the years ended 31 December:
2021
€ million
2020
€ million
Audit fees4.84.5
Audit-related fees0.70.6
Total audit and audit-related fees5.55.1
9. Finance costs, net
Accounting policy
Interest income and interest expense are recognised using the effective interest rate method, and are recorded in the income statement
within ‘Finance income’ and ‘Finance cost’ respectively. Interest expense includes finance charges with respect to leases. Interest expense
also includes amortisation of the loss on the forward starting swaps and the net impact from swaptions recorded in other comprehensive
income (refer to Note 24).
Finance costs, net, for the years ended 31 December comprised:
2021
€ million
2020
€ million
Interest income5.33.8
Interest expense(67.1)(71.8)
Other finance costs(1.7)(1.8)
Net foreign exchange remeasurement losses(4.1)(0.3)
Finance costs(72.9)(73.9)
Finance costs, net(67.6)(70.1)
Other finance costs include commitment fees on loan facilities (for the part not yet drawn down) and other similar fees.
For the interest expense incurred with respect to leases, refer to Note 16.
10. Taxation
Accounting policy
Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income
orinequity. In this case, the tax is recognised in other comprehensive income or directly in equity.
The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in
the countries where the Group operates and generates taxable income. Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate,
onthe basis of amounts expected to be paid to the tax authorities.
Deferred tax is provided using the liability method for all temporary differences arising between the tax bases of assets and liabilities and
their carrying values for financial reporting purposes. However, the deferred tax liabilities are not recognised if they arise from the initial
recognition of goodwill. Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other
thana business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Tax rates enacted
orsubstantively enacted at the balance sheet date are those that are expected to apply when the deferred tax asset is realised or
deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilised. Deferred tax assets are recognised for tax losses carried forward to the extent that realisation of the related
tax benefit through the reduction of future taxes is probable.
Deferred tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where
thetiming of the reversal of the temporary difference can be controlled by the Group, and it is probable that the temporary difference will
notreverse in the foreseeable future. This includes taxation in respect of the retained earnings of overseas subsidiaries only to the extent
that, at the balance sheet date, dividends have been accrued as receivable or a binding agreement to distribute past earnings in future
periods has been entered into by the subsidiary.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to offset current tax assets against current
income tax liabilities and the deferred taxes relate to the same taxation authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a net basis.
Critical accounting estimates
The Group is subject to income taxes in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax
determination cannot be assessed with certainty in the ordinary course of business. The Group recognises a provision for potential cases
that might arise in the foreseeable future, based on assessment of the probabilities as to whether additional taxes will be due. Where the
final tax outcome on these matters is different from the amounts that were initially recorded, such differences will impact the income tax
provision in the period in which such determination is made. The income tax provision amounted to €52.6 million as at 31 December 2021
(2020: €37.2 million) and is included in the line ‘Current tax liabilities’ of the consolidated balance sheet.
166
The income tax charge for the years ended 31 December was as follows:
2021
€ million
2020
€ million
Current tax expense183.5111.5
Deferred tax expense3.967.4
Income tax expense 187.4178.9
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable
to profits of the consolidated entities as follows:
2021
€ million
2020
€ million
Profit before tax734.9593.9
Tax calculated at domestic tax rates applicable to profits in the respective countries155.7119.8
Additional local taxes in foreign jurisdictions13.010.3
Tax holidays in foreign jurisdictions(5.8)(6.1)
Expenses non-deductible for tax purposes17.514.5
Income not subject to tax(2.5)(6.9)
Changes in tax laws and rates3.1(0.4)
Movement of accumulated tax losses3.23.3
Movement of deferred tax asset not recognised(0.6)(0.2)
Nigeria tax audit settlement–16.5
Other3.828.1
Income tax expense187.4178.9
Non-deductible expenses for tax purposes include marketing and advertising expenses, service fees, bad debt provisions, entertainment
expenses, certain employee benefits and other items that, partially or in full, are not deductible for tax purposes in certain of our jurisdictions.
In August 2020, Nigerian Bottling Company Ltd (’NBC’), the Group’s subsidiary in Nigeria, settled the additional tax assessed by the Nigerian
tax authorities (‘FIRS’) following the completion of their income tax audit for the years 2005-2019 and their transfer pricing (’TP’) audit for the
years 2011-2019. The net impact to the income tax expense, following the utilisation of provisions for uncertain tax positions, was €16.5 million,
out of which €7.2 million was attributable to the results of the TP audit. As a result of the TP audit, the FIRS adjusted NBC’s profitability,
increasing its taxable base accordingly. This increase of NBC’s taxable base resulted in the elimination of accumulated capital allowances
andto the extent these were not sufficient to offset the full impact of the tax adjustment in a certain year, a tax payment was required to be
made. Following the settlement, the total tax assessed by the FIRS amounted to €62.7 million, of which €7.6 million was settled in cash and
the remaining €55.1 million was settled through the elimination of the deferred tax asset relating to the available capital allowances in NBC.
Deferred tax assets and liabilities presented in the consolidated balance sheet as at 31 December can be further analysed as follows:
Deferred tax assets:
2021
€ million
2020
€ million
To be recovered after 12 months32.934.4
To be recovered within 12 months71.567.8
Gross deferred tax assets104.4102.2
Offset of deferred tax(73.4)(67.1)
Net deferred tax assets31.035.1
Deferred tax liabilities:
To be recovered after 12 months(255.0)(237.6)
To be recovered within 12 months(16.1)(12.0)
Gross deferred tax liabilities(271.1)(249.6)
Offset of deferred tax73.467.1
Net deferred tax liabilities(197.7)(182.5)
A reconciliation of net deferred tax is presented below:
2021
€ million
2020
€ million
As at 1 January(147.4)(95.0)
Taken to the income statement(3.9)(67.4)
Joint arrangement reclassification–3.7
Taken to other comprehensive income(15.6)(0.4)
Taken directly to equity4.1(0.3)
Foreign currency translation(3.9)12.0
As at 31 December(166.7)(147.4)
167INTEGRATED ANNUAL REPORT 2021
Notes to the consolidated financial statements continued
10. Taxation continued
The movements in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same
tax jurisdiction where applicable, are as follows:
Net book value as at 31 December 20211,041.01,455.7176.8157.42,830.9
1. Disposals line for 2020 includes €29.8 million on a net book value basis regarding the impact of the reorganisation of Multon (refer to Note 15).
2. Additions line for 2021 includes €13.8 million on a net book value basis regarding the impact of the demerger of the Group’s mineral water and adult sparking beverages integral joint
venture in Italy (refer to Note 15).
173INTEGRATED ANNUAL REPORT 2021
Notes to the consolidated financial statements continued
14. Property, plant and equipment continued
Assets under construction at 31 December 2021 include advances for equipment purchases of €41.8 million (2020: 32.6 million).
Thedepreciation charge for the year, including that for right‑of‑use assets (refer to Note 16), recognised in operating expenses and cost
ofgoods sold amounted to €181.4 million (2020: €194.0 million) and €148.9 million (2020: €178.5 million) respectively.
Impairment of property, plant and equipment
In 2020, the Group recorded impairment losses of €6.0 million, €2.5 million and €9.9 million and reversals of impairment of €0.3 million,
€0.1million and €2.4 million relating to property, plant and equipment in the Established, Developing and Emerging segments respectively.
The impaired assets, being mainly buildings and production equipment, were written down based mainly on value-in-use calculations.
In 2021, the Group recorded impairment losses of €3.7 million, €0.9 million and €3.8 million and reversals of impairment of €0.2 million,
€0.3million and €1.9 million relating to property, plant and equipment in the Established, Developing and Emerging segments respectively.
The impaired assets, being mainly buildings and production equipment, were written down based mainly on value-in-use calculations.
15. Interests in other entities
List of principal subsidiaries
The following are the principal subsidiaries of the Group as at 31 December:
Country of registration
% of voting rights% ownership
2021202020212020
AS Coca‑Cola HBC Eesti Estonia100.0%100.0%100.0%100.0%
The acquisition method of accounting is used to account for business combinations. The consideration transferred is the fair value of any
asset transferred, shares issued and liabilities assumed. The consideration transferred includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed are measured
initially at their fair values at the acquisition date. The excess of the consideration transferred and the fair value of non-controlling interest
over the net assets acquired and liabilities assumed is recorded as goodwill. Acquisition costs comprise costs incurred to effect a business
combination, such as finder’s, advisory, legal, accounting, valuation and other professional or consulting fees. Integration costs comprise
direct incremental costs necessary for the acquiree to operate within the Group. Allacquisition and integration‑related costs are
expensed as incurred.
For each business combination, the Group elects to measure the non-controlling interest in the acquiree either at fair value or at the
proportionate share of the acquiree’s identifiable net assets.
Refer also to Note 2 for accounting policy regarding basis of consolidation.
On 31 October 2021, the Group acquired a self‑serve coffee vending business in Poland (the ‘Costa Express Business’). The acquisition
wasof a group of assets that constituted a business, which have been integrated into the Group’s operations in Poland. Consideration paid
for the acquisition amounted to €5.6 million and is included in the line ‘Payments for business combinations’ of the consolidated cash
flowstatement. As a result of the above acquisition, other intangible assets of €3.1 million, goodwill of €1.0 million and property, plant and
equipment of €1.3million were recorded in the Group’s Developing segment (refer to Note 13 and Note 14 respectively). Acquisition‑related
costs of €0.4 million were included in the 2021 operating expenses, as a result of the above acquisition (refer to Note 8).
In addition, acquisition and integration costs of €13.9 million incurred in 2021 regarding the acquisition of Coca‑Cola Bottling Company
ofEgypt S.A.E. (refer to Note 8 and Note 31) were included in operating expenses.
24. Financial risk management and financial instruments
Accounting policies
Financial assets
On initial recognition, financial assets are recorded at fair value plus, in the case of financial assets not at fair value through profit or loss
(FVTPL), any directly attributable transaction costs. Transaction costs of financial assets at FVTPL are expensed.
Financial assets are classified into three categories:
a) Financial assets at amortised cost (debt instruments)
The classification of debt instruments at amortised cost depends on two criteria: a) the Group’s business model for managing assets and
b) whether the instruments’ contractual cash flows represent solely payments for principal and interest on the principal amount outstanding
(the ‘SPPI criterion‘). If both criteria are met, the financial assets of the Group are subsequently measured at amortised cost whereby any
interest income is recognised using the effective interest method. This category includes trade receivables, treasury bills and time
deposits. The accounting policy for trade receivables is described in Note 18.
b) Financial assets through other comprehensive income (FVOCI)
The Group also has investments in financial assets at FVOCI. These include equity investments that are not of a trading nature and which
are subsequently recorded at fair value. The Group intends to hold these equity instruments for the foreseeable future and has irrevocably
elected to classify them as FVOCI upon initial recognition. Subsequently, there is no recycling of gains or losses to profit or loss
onderecognition.
c) Financial assets through profit or loss (FVTPL)
The Group also has investments in financial assets at FVTPL which are subsequently measured at fair value and where changes in fair value
are recognised in the income statement. Financial assets at FVTPL mainly comprise money market funds.
For those financial assets that are not subsequently held at fair value, the Group assesses whether there is evidence of impairment at each
balance sheet date.
Derivative financial instruments
The Group uses derivative financial instruments, including currency, commodity and interest rate derivatives, to manage currency,
commodity price and interest rate risk associated with the Group’s underlying business activities. The Group does not enter into
derivative financial instruments for trading activity purposes.
All derivative financial instruments are initially recognised on the balance sheet at fair value and are subsequently remeasured at their fair
value. Changes in the fair value of derivative financial instruments are recognised at each reporting date either in the income statement
orin equity, depending on whether the derivative financial instrument qualifies for hedge accounting as a cash flow hedge.
Embedded derivatives in financial host contracts are recorded at fair value through profit or loss together with the host contracts.
All derivative financial instruments that are not part of an effective hedging relationship (undesignated hedges) are classified as assets
orliabilities at fair value through profit or loss.
189INTEGRATED ANNUAL REPORT 2021
Notes to the consolidated financial statements continued
24. Financial risk management and financial instruments continued
Accounting policies continued
Derivative financial instruments continued
At the inception of a hedge transaction, the Group documents the relationship between the hedging instrument and the hedged item,
aswell as its risk management objective and strategy for undertaking the hedge transaction. This process includes linking the derivative
financial instrument designated as a hedging instrument to the specific asset, liability, firm commitment or forecast transaction.
TheGroup has established a hedge ratio of 1:1 for the hedging relationships as the underlying risks of the hedging instruments are
identical to the hedged risks component. The economic relationship between the hedged item and the hedging instrument is assessed
on an ongoing basis. Ineffectiveness may arise if the timing or the notional value of the forecast transaction changes or if the credit risk
changes, impacting the fair value movements of the hedging instruments.
Changes in the fair value of derivative financial instruments (both the intrinsic value and the aligned time value) that are designated and
effective as hedges of future cash flows are recognised directly in other comprehensive income and the ineffective portion is recognised
immediately in the income statement. Amounts accumulated in equity are recycled to the income statement as the related hedged asset
acquired or liability assumed affects the income statement.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised, or no longer qualifies for hedge
accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecast
transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred
to the income statement.
Derivatives embedded in non‑financial host contracts are accounted for as separate derivatives and recorded at fair value if:
• their economic characteristics and risks are not closely related to those of the host contracts;
• the host contracts are not designated as at fair value through profit or loss; and
• a separate instrument with the same terms as the embedded derivative meets the definition of a derivative.
These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only
occursifthere is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required,
orareclassification of a financial asset out of the fair value through profit or loss.
Regular purchases and sales of investments are recognised on the trade date, which is the day the Group commits to purchase or sell.
The investments are recognised initially at fair value plus transaction costs, except in the case of FVTPL. For investments traded in active
markets, fair value is determined by reference to stock exchange quoted bid prices. For other investments, fair value is estimated by
reference to the current market value of similar instruments or by reference to the discounted cash flows of the underlying net assets.
Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, commodity price risk and interest rate
risk), credit risk, liquidity risk and capital risk. The Group’s overall risk management programme focuses on the volatility of financial markets
and seeks to minimise potential adverse effects on the Group’s cash flows. The Group uses derivative financial instruments to hedge certain
risk exposures. Risk management is carried out by Group Treasury in a controlled manner, consistent with the Board of Directors’ approved
policies. Group Treasury identifies, evaluates and hedges financial risks in close co‑operation with the Group’s subsidiaries. The Board
ofDirectors has approved the Treasury Policy which provides the control framework for all treasury and treasury‑related transactions.
Market 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. Foreign currency
forward, option and futures contracts are used to hedge a portion of the Group’s foreign currency risk. The majority of the foreign currency
forward, option and futures contracts have maturities of less than one year after the balance sheet date.
Management has set up a policy that requires Group companies to manage their foreign exchange risk against their functional currency.
Tomanage their foreign exchange risk arising from future transactions and recognised monetary assets and liabilities, entities in the Group
use foreign currency forward, option and future contracts transacted by Group Treasury. Group Treasury’s risk management policy is to
hedge, on an average coverage ratio basis, between 25% and 80% of anticipated cash flows for the next 12 months by using a layer strategy,
and 100% of balance sheet remeasurement risk in each major foreign currency for which hedging is applicable. Each subsidiary designates
contracts with Group Treasury as fair value hedges or cash flow hedges, as appropriate. External foreign exchange contracts are designated
at Group level as hedges of foreign exchange risk on specific monetary assets, monetary liabilities or future transactions on a gross basis.
The impact of COVID-19 has been considered, in relation to the Group’s cash flow hedges, in determining that the hedged forecast cash
flows remain highly probable for the next 12 months.
The following tables present details of the Group’s sensitivity to reasonably possible increases and decreases in the Euro and US Dollar
against the relevant foreign currencies. 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.
190
2021 exchange risk sensitivity to reasonably possible changes in the Euro against relevant other currencies
Euro strengthens against
local currency
Euro weakens against
local currency
% historical
volatility over a
12-month period
Loss/(gain)
in income
statement
€ million
(Gain)/loss
in equity
€ million
(Gain)/loss
in income
statement
€ million
Loss/(gain)
in equity
€ million
Nigerian Naira 16.03%6.2–(8.5)–
Russian Rouble 9.90%(0.7)(0.2)0.90.3
UK Sterling5.23%0.9–(1.0)–
Ukrainian Hryvnia 6.80%0.3–(0.2)–
Other–(0.2)(1.5)(0.2)1.7
Total6.5(1.7)(9.0)2.0
2021 exchange risk sensitivity to reasonably possible changes in the US Dollar against relevant other currencies
US Dollar strengthens against
local currency
US Dollar weakens against
local currency
% historical
volatility over a
12-month period
(Gain)/loss
in income
statement
€ million
(Gain)/loss
in equity
€ million
Loss/(gain)
in income
statement
€ million
Loss/(gain)
in equity
€ million
Euro5.72%(1.8)–2.0–
Nigerian Naira5.89%0.6–(0.5)–
Russian Rouble 9.86%0.1(3.2)(0.1)3.9
Other–(0.4)–0.4–
Total (1.5)(3.2)1.83.9
2020 exchange risk sensitivity to reasonably possible changes in the Euro against relevant other currencies
Euro strengthens against
local currency
Euro weakens against
local currency
% historical
volatility over a
12-month period
Loss/(gain)
in income
statement
€ million
(Gain)/loss
in equity
€ million
(Gain)/loss
in income
statement
€ million
Loss/(gain)
in equity
€ million
Nigerian Naira 12.39%0.6–(0.8)–
Russian Rouble 21.02%1.0(0.7)(1.4)1.1
UK Sterling8.91%(0.2)0.70.4(0.9)
Ukrainian Hryvnia 10.48%0.6–(0.7)–
Other–(1.2)(3.2)1.43.6
Total0.8(3.2)(1.1)3.8
2020 exchange risk sensitivity to reasonably possible changes in the US Dollar against relevant other currencies
US Dollar strengthens against
local currency
US Dollar weakens against
local currency
% historical
volatility over a
12-month period
Loss/(gain)
in income
statement
€ million
(Gain)/loss
in equity
€ million
(Gain)/loss
in income
statement
€ million
Loss/(gain)
in equity
€ million
Euro7.57%2.0–(2.3)–
Nigerian Naira13.23%5.0–(6.6)–
Russian Rouble 19.48%–(3.9)(0.1)5.7
Other–(0.2)–0.3–
Total 6.8(3.9)(8.7)5.7
The Group is affected by the volatility of certain commodity prices (being mainly sugar, aluminium, aluminium premium, plastic and gas oil)
inrelation to certain raw materials necessary for the production of the Group’s products.
Due to the significantly increased volatility of commodity prices, the Group’s Board of Directors has developed and enacted a risk
management strategy regarding commodity price risk and its mitigation. Although the Group continues to contract prices with suppliers in
advance, to reduce its exposure to the effect of short-term changes in the price of sugar, aluminium, aluminium premium, gas oil and plastic,
the Group hedges the market price of sugar, aluminium, aluminium premium, plastic and gas oil using commodity swap contracts based on
arolling forecast for a period up to 36 months. Group Treasury’s risk management policy is to hedge a minimum of 25% and a maximum
of80% of commodity exposure for the next 12 months, with the exception of certain types of plastic for which lower compliance ratios apply.
The following table presents details of the Group’s income statement and equity sensitivity to increases and decreases in sugar, aluminium,
aluminium premium, plastic and gas oil prices. The table does not show the sensitivity to the Group’s total underlying commodity exposure
orthe impact of changes in volumes that may arise from an increase or decrease in the respective commodity prices. The sensitivity analysis
determines the potential effect on profit or loss and equity arising from the Group’s commodity swap contract positions as a result of the
reasonably possible increases or decreases of the respective commodity prices.
191INTEGRATED ANNUAL REPORT 2021
Notes to the consolidated financial statements continued
24. Financial risk management and financial instruments continued
2021 commodity price risk sensitivity to reasonably possible changes in the price of relevant commodities
Commodity price increases with
all other variables held constant
Commodity price decreases with
all other variables held constant
% historical
volatility over a
12-month period per
contract maturity
(Gain)/loss
in income
statement
€ million
(Gain)/loss
in equity
€ million
Loss/(gain)
in income
statement
€ million
Loss/(gain)
in equity
€ million
Sugar20.8%(0.4)(22.6)0.422.6
Aluminium24.1%(0.8)(19.8)0.819.8
Aluminium premium46.1%(0.2)(3.0)0.23.0
Gas oil31.3%–(5.6)–5.6
Plastic27.0%(25.7)–25.7–
Total (27.1)(51.0)27.151.0
2020 commodity price risk sensitivity to reasonably possible changes in the price of relevant commodities
Commodity price increases with
all other variables held constant
Commodity price decreases with
all other variables held constant
% historical
volatility over a
12-month period per
contract maturity
(Gain)/loss
in income
statement
€ million
(Gain)/loss
in equity
€ million
Loss/(gain)
in income
statement
€ million
Loss/(gain)
in equity
€ million
Sugar20.1%(0.2)(13.1)0.213.1
Aluminium16.6%(0.4)(6.7)0.46.7
Aluminium premium43.4%–(0.7)–0.7
Gas oil59.8%–(5.6)–5.6
Plastic26.3%(8.9)–8.9–
Total (9.5)(26.1)9.526.1
The sensitivity analysis in the following table has been determined based on exposure to interest rates of both derivative and non-derivative
instruments existing at the balance sheet date and assuming constant foreign exchange rates. For floating rate liabilities, the analysis is
prepared assuming the amount of liability outstanding at the balance sheet date was outstanding for the whole year. A 50 basis point increase
ordecrease for 2021 (2020: 50 basis point) represents management’s assessment of a reasonably possible change in interest rates.
Interest rate risk sensitivity to reasonably possible changes in interest rates
Loss/(gain) in income statement
2021
€ million
2020
€ million
Increase in basis points0.20.4
Decrease in basis points(0.2)(0.4)
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its obligations under
thecontract or arrangement. The Group has limited concentration of credit risk across trade and financial counterparties. Credit policies
arein place and the exposure to credit risk is monitored on an ongoing basis.
The Group’s maximum exposure to credit risk in the event that counterparties fail to meet their obligations at 31 December 2021 in relation
to each class of recognised financial assets is the carrying amount of those assets as indicated on the balance sheet.
Under the credit policies, before accepting any new credit customers the Group investigates the potential customer’s credit quality,
usingeither external agencies, in some cases bank references and/or historic experience, and defines credit limits for each customer.
Customers that fail to meet the Group’s benchmark credit quality may transact with the Group only on a prepayment or cash basis.
Customers are reviewed on an ongoing basis and credit limits are adjusted accordingly. There is no significant concentration of credit risk
with regard to loans, trade and other receivables as the Group has a large number of customers who are geographically dispersed.
The Group has policies that limit the amount of credit exposure to any single financial institution. The Group only undertakes investment
andderivative transactions with banks and financial institutions that have a minimum credit rating of ‘BBB‑’ from Standard & Poor’s and ‘Baa3’
from Moody’s, unless the investment is in a country where the sovereign credit rating is below BBB‑/Baa3. The Group also uses credit default
swaps of a counterparty in order to measure in a timelier way the creditworthiness of a counterparty and set up its counterparties in tiers in
order to assign maximum exposure and tenor per tier. If the credit default swaps of a certain counterparty exceed 400 basis points the Group
will stop trading derivatives with that counterparty and will try to cancel any deposits on a best-effort basis. In addition, the Group regularly
makes use of time deposits, treasury bills and money market funds to invest excess cash balances and to diversify its counterparty risk.
Asat31 December 2021, an amount of €423.9 million (2020: €795.5 million) is invested in time deposits, €6.2 million in treasury bills (2020: €nil)
and €638.8 million (2020: €nil) in money market funds.
192
Liquidity risk
The Group actively manages liquidity risk to ensure there are sufficient funds available for any short-term and long-term commitments.
Bankoverdrafts and bank facilities, both committed and uncommitted, are used to manage this risk.
The Group manages liquidity risk by maintaining adequate cash reserves and committed banking facilities, access to the debt and equity
capital markets, and by continuously monitoring forecast and actual cash flows. In Note 25, the undrawn facilities that the Group has at its
disposal to manage liquidity risk are discussed under the headings ‘Commercial paper programme’ and ‘Committed credit facilities’.
This has been an area of focus during the COVID‑19 pandemic; however, the Group maintains a healthy liquidity position and is able to meet
its obligations as they fall due. As at 31 December 2021, the Group has net debt of €1.3 billion (refer to Note 25). There are no bond
maturities until November 2024. In addition, the Group has an undrawn revolving credit facility of €800 million available, as well as €0.8 billion
available of the €1.0 billion commercial paper facility.
The following tables detail the remaining contractual maturities for financial liabilities. The tables include both interest and principal undiscounted
cash flows, assuming that interest rates remain constant from 31 December 2021.
Up to
oneyear
€ million
One to
two years
€ million
Two to
five years
€ million
Over
five years
€ million
Total
€ million
Borrowings 365.248.4707.31,875.22,996.1
Derivative liabilities 11.63.0––14.6
Trade and other payables (excluding other tax & social
security and contract liabilities)1,748.00.41.14.11,753.6
Leases58.943.262.929.6194.6
As at 31 December 20212,183.795.0771.31,908.94,958.9
Up to
oneyear
€ million
One to
two years
€ million
Two to
five years
€ million
Over
five years
€ million
Total
€ million
Borrowings 283.398.2714.41,889.82,985.7
Derivative liabilities 10.01.3––11.3
Trade and other payables (excluding other tax & social
security and contract liabilities)1,447.40.31.04.91,453.6
Leases63.450.771.035.5220.6
As at 31 December 20201,804.1150.5786.41,930.24,671.2
Capital risk
The Group monitors its financial capacity and credit ratings by reference to a number of key financial ratios, including net debt to comparable
adjusted EBITDA which provides a framework within which the Group‘s capital base is managed. This ratio is calculated as net debt divided
by comparable adjusted EBITDA.
Adjusted EBITDA is calculated by adding back to operating profit the depreciation and impairment of property, plant and equipment, the
amortisation and impairment of intangible assets, the employee performance share costs and other non-cash items, if any. Comparable
adjusted EBITDA refers to adjusted EBITDA excluding restructuring expenses, acquisition and integration costs and the unrealised gains
or losses resulting from the mark-to-market valuation of derivatives and embedded derivatives related to commodity hedging.
Refer to Note 25 for the definition of net debt.
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal
capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may increase or decrease debt, issue or buy back shares, adjust the amount
ofdividends paid to shareholders, or return capital to shareholders.
The Group’s goal is to maintain a conservative financial profile. This is evidenced by the credit ratings maintained with Standard & Poor’s
Long‑term interest‑bearing liabilities comprise loans from Coca‑Cola HBC Finance B.V. received in 2019, 2020 and 2021 for CHF 184,637
thousand (2020: CHF 207,577 thousand) maturing on 8 November 2024; and CHF 19,845 thousand (2020: CHF 16,091 thousand) maturing
21 November 2029.
2.5 Provisions
As at 31 December
CHF thousands
20212020
Long-term Incentive Plan330171
Provision for acquiring treasury shares to satisfy subsidiaries’ Performance Share Plan rights (refer to Note 2.3)8,5755,859
Performance Share Plan Coca‑Cola HBC AG employees (refer to Note 2.3)6,5884,176
Provision for social security costs of Performance Share Plan494313
Provisions15,98710,519
2.6 Share capital
Number of sharesNominal valueTotal
CHFCHF thousands
Share capital as at 1 January 2020369,930,1576,702,478,532
Shares issued to employees exercising stock options582,4406,703,902
Share capital as at 31 December 2020370,512,5976,702,482,434
Number of sharesNominal valueTotal
CHFCHF thousands
Share capital as at 1 January 2021370,512,5976,702,482,434
Shares issued to employees exercising stock options1,282,8216,708,595
Share capital as at 31 December 2021371,795,4186,702,491,029
224
2. Information relating to the balance sheet and statement of income continued
2.7 Treasury shares
The number of treasury shares held by Coca‑Cola HBC AG and its subsidiaries qualifying under article 659b of the Swiss Code of Obligations
and their movements are as follows:
Treasury shares (held by subsidiaries)Number of shares
Acquisition cost
per shareTotal
CHFCHF thousands
Total treasury shares as at 31 December 20203,430,135 24,8673 85,298
Total treasury shares as at 31 December 20213,430,135 24,8673 85,298
Treasury shares held by the CompanyNumber of shares
Acquisition cost
per shareTotal
CHFCHF thousands
Treasury shares held by the Company as at 1 January 20203,228,098 35,3599 (114,145)
Vested PSP shares
1
(468,818)35,0561 16,435
Treasury shares held by the Company as at 31 December 20202,759,28035,4115 (97,710)
Treasury shares held by the Company as at 1 January 20212,759,28035,4115 (97,710)
Vested PSP shares
2
(294,832)34,6160 10,206
Treasury shares held by the Company as at 31 December 20212,464,44835,5066 (87,504)
1. In March 2020, following the vesting of the 2017 PSP plan, 468,818 treasury shares were transferred to relevant participants.
2. In April 2021, following the vesting of the 2018 PSP plan, 294,832 treasury shares were transferred to relevant participants.
2.8 Shareholders’ equity
Share capitalLegal capital reserves
Retained earnings/
(accumulated
losses)Treasury sharesTotal
Reserves
from capital
contributions
Reserves for
treasury
shares
1
CHF thousands
Balance as at 1 January 20202,478,5324,470,09785,29842,803(114,145)6,962,585
Shares issued to employees exercising
stock options3,9024,260–––8,162
Dividends–(244,737)–––(244,737)
Vested PSP shares––––16,43516,435
Loss for the year–––(24,543)–(24,543)
Balance as at 31 December 20202,482,4344,229,62085,29818,260(97,710)6,717,902
Balance as at 1 January 20212,482,4344,229,62085,29818,260(97,710)6,717,902
Shares issued to employees exercising
stock options8,59512,708–––21,303
Dividends
2
–(260,250)–––(260,250)
Vested PSP shares––––10,20610,206
Loss for the year–––(33,852)–(33,852)
Balance as at 31 December 20212,491,0293,982,07885,298(15,592)(87,504)6,455,309
1. Represents the book value of treasury shares held by subsidiaries.
2. On 22 June 2021 the shareholders of the Company at the Annual General Meeting approved the distribution of a gross dividend of €0.64 (2020: €0.62) on each ordinary registered
share. The dividend was paid on 3 August 2021 and amounted to CHF 260,250 thousand (2020: CHF 244,737 thousand paid 28 July 2020).
225INTEGRATED ANNUAL REPORT 2021
Swiss statutory reporting continued
2.9 Other operating income
20212020
CHF thousands
Management fees35,48820,971
Guarantee fee2,8322,967
Total other operating income38,32023,938
Management fees relate to service income earned from services provided to the Company’s direct and indirect participations, where
ofCHF3,431 thousand is true‑up from prior year.
Guarantee fee is the income the Company receives for the services provided as guarantor to Coca‑Cola HBC Finance B.V. and Nigerian
Bottling Company Ltd.
2.10 Employee costs
20212020
CHF thousands
Wages and salaries21,42212,858
Social security costs3,1722,853
Pensions and employee benefits23,68411,717
Total employee costs48,27827,428
Pension and employee benefits mainly include Performance Share Plan expenses for CCHBC AG employees in the amount of CHF 18,999
thousand (2020: CHF 6,458 thousand). Refer to Note 2.3 for more information.
2.11 Other operating expenses
Other operating expenses amounting to CHF 16,585 thousand for 2021 (2020: CHF 13,114 thousand) mainly include CHF 14,352 thousand
(2020: CHF 11,323 thousand) for management fees to CCB Management Services GmbH, whereof CHF 1,121 thousand is true‑up from
prior year.
3. Other information
3.1 Net release of hidden reserves
No hidden reserves were released for the years ended 31 December 2021 or 31 December 2020.
3.2 Number of employees
In 2021 and 2020, on an annual average basis, the number of full-time-equivalent employees did not exceed 50.
3.3 Contingent liabilities
Euro medium‑term note programmes
In June 2013, the Group established a new €3.0bn Euro medium-term note programme (the ‘EMTN programme’). The EMTN programme
was updated in September 2014, September 2015 and April 2019, when it was increased to €5.0bn. The EMTN programme was further
updated in April 2020 and September 2021. Notes are issued under the EMTN programme through the Company’s wholly owned subsidiary
Coca‑Cola HBC Finance B.V., a private limited liability company established under the laws of the Netherlands, and are fully, unconditionally
and irrevocably guaranteed by the Company.
In March 2016, Coca‑Cola HBC Finance B.V. issued €600m, 1.875%, Euro‑denominated notes due in November 2024, which are guaranteed
by the Company.
In May 2019, Coca‑Cola HBC Finance B.V. issued €700m, 1%, Euro‑denominated notes due in May 2027 and also issued €600m, 1.625%,
Euro-denominated notes due in May 2031, both of which are guaranteed by the Company.
In November 2019, Coca‑Cola HBC Finance B.V. completed the issue of a €500m Euro‑denominated fixed rate bond maturing in November
2029 with a coupon rate of 0.625%, which is guaranteed by the Company.
As at 31 December 2021, a total of €2.4bn (2020: €2.4bn) in notes issued under the EMTN programme were outstanding.
226
3. Other information continued
Committed credit facilities
In April 2019, the Group updated its then-existing €500.0m syndicated revolving credit facility (the ‘RCF’), which was set to expire in June
2021. The updated RCF was increased to €800.0m and extended to April 2024 with the option to be further extended for up to two years until
April 2026. Coca‑Cola HBC Finance B.V. exercised its extension option and the RCF has been extended to April 2026. The RCF can be used
for general corporate purposes and carries floating interest rates. No amounts have been drawn under the RCF since its inception. The
borrower under the RCF is the Company’s wholly owned subsidiary Coca‑Cola HBC Finance B.V. and any amounts drawn under the RCF are
fully, unconditionally and irrevocably guaranteed by the Company.
Commercial paper programme
In October 2013 the Group established a new €1.0bn Euro commercial paper programme (the ‘ECP Programme’). The ECP Programme was
updated in September 2014, May 2017 and May 2020. Notes are issued under the ECP Programme by Coca‑Cola HBC Finance B.V. and
guaranteed by the Company. The outstanding amount under the ECP Programme was €235m as at 31 December 2021 (2020: €200m).
Nigerian Bottling Company Ltd
In December 2019 the Group established an amortising loan facility of US dollar 85m with maturity in December 2027. The purpose of the
facility is to finance the purchase of production equipment by Nigerian Bottling Company Ltd., the Group’s subsidiary in Nigeria. Over the
course of 2020 and 2021, the facility has been drawn down for approximately US dollar 78m. The obligations under this facility are guaranteed
by the Company.
Credit support provider
On 18 July 2013, the Company signed as credit support provider to J.P. Morgan Securities plc, Credit Suisse International, Credit Suisse AG,
ING Bank N.V., Societe Generale, Merrill Lynch International and The Royal Bank of Scotland plc in favour of Coca‑Cola HBC Finance B.V. for
the obligations as defined in the ISDA Master Agreements.
1
On 24 July 2013, the Company signed as credit support provider to the Governor and Company of the Bank of Ireland, in favour of Coca‑Cola
HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement.
1
On 8 August 2013, the Company signed as credit support provider to Citibank N.A. in favour of CCHBC Bulgaria AD for the obligations as
defined in the ISDA Master Agreement.
1
On 8 August 2013, the Company signed as credit support provider to Citibank N.A. in favour of Coca‑Cola HBC Finance B.V. for the
obligations as defined in the ISDA Master Agreement.
1
On 24 June 2014, the Company signed as credit support provider to Intesa Sanpaolo S.pA. in favour of Coca‑Cola HBC Finance B.V. for the
obligations as defined in the ISDA Master Agreement.
1
On 5 October 2015, the Company signed as credit support provider to Macquarie Bank International Limited in favour of Coca‑Cola HBC
Finance B.V. for the obligations as defined in the ISDA Master Agreement.
1
On 22 June 2016, the Company signed as credit support provider to UniCredit Bank AG in favour of Coca‑Cola HBC Finance B.V. for the
obligations as defined in the ISDA Master Agreement.
1
On 31 August 2016, the Company signed as credit support provider to BNP Paribas in favour of Coca‑Cola HBC Finance B.V. for the
obligations as defined in the ISDA Master Agreement.
1
On 1 November 2017, the Company signed as credit support provider to Goldman Sachs Global International in favour of Coca‑Cola HBC
Finance B.V. for the obligations as defined in the ISDA Master Agreement.
1
On 22 December 2017, the Company signed as credit support provider to Citigroup Global Markets Limited in favour of Coca‑Cola HBC
Finance B.V. for the obligations as defined in the ISDA Master Agreement.
1
On 14 February 2018, the Company signed as credit support provider to Morgan Stanley & Co. International PLC in favour of Coca‑Cola HBC
Finance B.V. for the obligations as defined in the ISDA Master Agreement.
1
On 25 March 2019, the Company signed as credit support provider to Citigroup Global Markets Europe AG in favour of Coca‑Cola HBC
Finance B.V. for the obligations as defined in the ISDA Master Agreement.
1
On 1 July 2019, the Company signed as credit support provider to Credit Suisse Securities, Sociedad de Valores, S.A. in favour of Coca-Cola
HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement.
1
On 10 July 2019, the Company signed as credit support provider to Macquarie Bank Limited (London Branch) in favour of Coca‑Cola HBC
Finance B.V. for the obligations as defined in the ISDA Master Agreement.
1
On 12 November 2019, the Company signed as credit support provider to UBS AG in favour of Coca‑Cola HBC Finance B.V. for the
obligations as defined in the ISDA Master Agreement.
1
On 2 November 2020, the Company signed as credit support provider to J.P. Morgan AG in favour of Coca‑Cola HBC Finance B.V. for the
obligations as defined in the ISDA Master Agreement.
1
On 13 November 2020, the Company signed as credit support provider to Goldman Sachs Bank Europe SE in favour of Coca‑Cola HBC
Finance B.V. for the obligations as defined in the ISDA Master Agreement.
1
1. The ISDA (International Swap Dealers Association) Master Agreement is a standardised form issued by the International Swap Dealers Association Inc. to be used for credit
supporttransactions.
227INTEGRATED ANNUAL REPORT 2021
Swiss statutory reporting continued
3.4 Significant shareholders
As at 31 December 2021 and 2020, there were two shareholders exceeding the threshold of 5% voting rights in the Company’s share capital.
DateNumber of shares
Percentage of
issued share
capital
1
Percentage of
outstanding share
capital
2
Total Kar‑Tess Holding31.12.2020 85,355,01923.0%23.4%
Total Kar‑Tess Holding31.12.2021 85,355,01923.0%23.3%
Total shareholdings related to The Coca-Cola Company31.12.2020 85,112,07823.0%23.4%
Total shareholdings related to The Coca-Cola Company31.12.2021 78,252,73121.0%21.4%
1. Basis: total issued share capital including treasury shares. Share basis 371,795,418 as at 31 December 2021 (2020: 370,512,597).
2. Basis: total issued share capital excluding treasury shares. Share basis 365,900,835 as at 31 December 2021 (2020: 364,323,182).
3.5 Shareholdings, conversion and option rights
The table below sets out a comparison of the interests in the Company’s total issued share capital that the members of the Board of Directors
(‘Directors’) and Executive Leadership Team hold (all of which, unless otherwise stated, are beneficial interests or are interests of a person
connected with a Director or a member of the Executive Leadership Team) and the interests in the Company’s share capital.
The following table sets out information regarding the stock options and performance shares held by members of the Executive Leadership
Team as at 31 December 2021:
Stock options (ESOP)Performance shares (PSP)
Number of
stock optionsAlready vested
Vesting at the
end of 2021Granted in 2021
Unvested and subject
to performance
conditionsVested
Zoran Bogdanovic
14
162,477162,477–97,206327,43048,829
Minas Agelidis–––19,09363,4276,046
Mourad Ajarti –––13,92836,329–
Ben Almanzar
10
–––45,19245,192–
Jan Gustavsson 302,658302,658–25,16985,48312,790
Michael Imellos
10
–––28,00981,56414,239
Nikos Kalaitzidakis11,68011,680–19,13964,9956,825
Naya Kalogeraki47,78447,784–37,72892,09910,494
Martin Marcel 38,15138,151–21,72273,79111,046
Spyros Mello
12
–––11,00637,3005,541
Vitaliy Novikov15,92715,927–18,90253,9667,100
Sean O’Neill –––12,47343,945–
Sanda Parezanovic30,79430,794–20,03268,0349,897
Barbara Tönz
13
––––––
1. Basis: total issued share capital including treasury shares. Share basis 371,795,418 as at 31 December 2021 (2020: 370,512,597).
2. Basis: total issued share capital excluding treasury shares. Share basis 365,900,835 as at 31 December 2021 (2020: 364,323,182).
3. Anastassis G. David is a beneficiary of:
(a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect
to 85,355,019 shares held by Kar‑Tess Holding and
(b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest
withrespect to 832,268 shares held by Ari Holdings Limited.
4. Mr. Henrique Braun was appointed to the Board of Directors on 22 June 2021.
5. Anastasios I. Leventis is a beneficiary of:
(a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect
to 85,355,019 shares held by Kar‑Tess Holding and
(b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest
withrespect to 286,880 shares held by its trustee, Selene Treuhand AG and
(c) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Avgie Leventis, that has an indirect interest with respect
to2,138,277 shares held by Carlcan Holding Limited.
6. Christo Leventis is a beneficiary of:
(a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect
to 85,355,019 shares held by Kar‑Tess Holding and
(b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest
withrespect to 482,228 shares held by its trustee, Selene Treuhand AG and
(c) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Avgie Leventis, that has an indirect interest with respect
to2,138,277 shares held by Carlcan Holding Limited.
7. Mr. Bruno Pietracci was appointed to the Board of Directors on 22 June 2021.
8. Mr. Jose Octavio Reyes retired from the Board of Directors on 22 June 2021.
9. Mr. Alfredo Riveria retired from the Borad of Directors on 22 June 2021.
10. Mr. Ben Almanzar joined the Executive Leadership Team on 1 February 2021.
11. Mr. Michael Imellos’ employment ceased on 30 June 2021.
12. Mr. Spyros Mello joined the Executive Leadership Team on 1 November 2021.
13. Mrs. Barbara Tönz joined the Executive Leadership Team on 1 May 2021.
14. The Remuneration Committee determined at its meeting in 15 March 2022 that, in line with the terms of the PSP, PSP awards granted to Zoran Bogdanovic in 2019 vested over
inaggregate 69,759 shares (including the dividend equivalent shares paid on PSP shares that vested in 2022).
229INTEGRATED ANNUAL REPORT 2021
Swiss statutory reporting continued
3.6 Fees paid to the auditor
The audit and other fees paid to the auditor are disclosed in Note 8 to the consolidated financial statements.
3.7 Conditional capital
On 25 April 2013, the shareholders’ meeting agreed to the creation of conditional capital in the maximum amount of CHF 245,601 thousand,
through issuance of a maximum of 36,657 thousand fully paid‑in registered shares with a par value of CHF 6.70 each upon exercise of options
issued to members of the Board of Directors, members of the management, employees or advisers of the Company, its subsidiaries and
other affiliated companies. The share capital of CHF 2,491,029 thousand as disclosed in the balance sheet differs from the share capital in
the commercial register of CHF 2,482,434 thousand as per 31 December 2021 due to the exercise of management options in the course
offinancial year 2021.
Conditional capitalNumber of shares
Book value per
share CHF
Total CHF
thousand
Agreed conditional capital as per shareholders’ meeting on 25 April 201336,656,8436.70 245,601
Shares issued to employees exercising stock options up until 31 December 2016(3,149,493)6.70 (21,102)
Shares issued to employees exercising stock options in 2017(4,122,401)6.70 (27,620)
Shares issued to employees exercising stock options in 2018(1,064,190)6.70 (7,130)
Shares issued to employees exercising stock options in 2019(1,352,731)6.70 (9,063)
Shares issued to employees exercising stock options in 2020(582,440)6.70 (3,902)
Remaining conditional capital as at 31 December 202026,385,5886.70176,784
Shares issued to employees exercising stock options in 2021(1,282,821)6.70 (8,595)
Remaining conditional capital as at 31 December 202125,102,7676.70168,189
4. Subsequent events
The subsequent events in relation to financial year ended 31 December 2021 are disclosed in Note 31 to the consolidated financial statements.
230
Proposed appropriation of reserves/declaration of dividend
1. Total available reserves
Available reservesCHF thousands
Balance brought forward from previous years18,260
Net loss for the year(33,852)
Total accumulated losses to be carried forward(15,592)
Reserves from capital contributions before distribution3,982,078
Total available reserves3,966,486
2. Proposed declaration of dividend from reserves
The Board of Directors proposes to declare a gross dividend of €0.71 on each ordinary registered share with a par value of CHF 6.70 from
thegeneral capital contribution reserve. Own shares held directly by the Company are not entitled to dividends. The total aggregate amount
of the dividends shall be capped at an amount of CHF 300,000 thousand (the ‘Cap’), and thus will reduce the general capital contribution
reserve of CHF 3,982,078 thousand, as shown in the financial statements as at 31 December 2021, by a maximum of CHF 300,000 thousand.
To the extent that the dividend calculated on €0.71 per share would exceed the Cap on the day of the Annual General Meeting, due to the
exchange rate determined by the Board of Directors in its reasonable opinion, the Euro per share amount of the dividend shall be reduced
ona pro‑rata basis so that the aggregate amount of all dividends paid does not exceed the Cap. Payment of the dividend shall be made
atsuch time and with such record date as shall be determined by the Annual General Meeting and the Board of Directors.
3. Proposed appropriation of reserves/declaration of dividend
Reserves from capital contributions before distribution3,982,078
Proposed dividend of €0.71
1
(280,581)
Reserves from capital contributions after distribution3,701,497
Variant 2: Dividend if Cap is triggered
As of 31 December 2021CHF thousands
Reserves from capital contributions before distribution3,982,078
(Maximum) dividend if cap is triggered
2
(300,000)
(Minimum) reserves from capital contributions after distribution3,682,078
1. Illustrative at an exchange rate of CHF 1.07 per EUR. Assumes that the shares entitled to a dividend amount to 369,330,970.
2. Dividend is capped at a total aggregate amount of CHF 300,000 thousand.
231INTEGRATED ANNUAL REPORT 2021
Swiss statutory reporting continued
Report of the statutory auditor
to the General Meeting of
Coca-Cola HBC AG
Steinhausen (Zug)
Report of the statutory auditor to the General Meeting
on the remuneration report 2021
We have audited the remuneration report of Coca-Cola HBC AG for the year ended 31 December 2021. The audit was limited to the information
according to articles 14–16 of the Ordinance against Excessive Compensation in Stock Exchange Listed Companies (Ordinance) on pages
233 to 236 of the remuneration report.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration report in accordance with Swiss
law and the Ordinance against Excessive Compensation in Stock Exchange Listed Companies (Ordinance). The Board of Directors is also
responsible for designing the remuneration system and defining individual remuneration packages.
Auditor’s responsibility
Our responsibility is to express an opinion on the remuneration report. We conducted our audit in accordance with Swiss Auditing Standards.
Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the remuneration report complies with Swiss law and articles 14–16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration report with regard to
compensation, loans and credits in accordance with articles 14–16 of the Ordinance. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatements in the remuneration report, whether due to fraud or error.
Thisaudit also includes evaluating the reasonableness of the methods applied to value components of remuneration, as well as assessing
theoverall presentation of the remuneration report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Opinion
In our opinion, the remuneration report of Coca-Cola HBC AG for the year ended 31 December 2021 complies with Swiss law and articles
14–16 of the Ordinance.
PricewaterhouseCoopers AG
Sandra Boehm Uglow
Audit Expert
Auditor In Charge
Zurich, 23 March 2022
Mei Ling Ow
Audit Expert
232COCA-COLA HBC
Statutory Remuneration Report
Additional disclosures regarding the Statutory Remuneration Report
The section below is in line with the Ordinance against Excessive Compensation in Listed Stock Companies, which requires disclosure
oftheelements of compensation paid to the Company’s Board of Directors and the Executive Leadership Team (formerly known as the
Operating Committee). The amounts relate to the calendar years of 2021 and 2020. In the information presented below, the exchange rate
used for conversion of 2021 remuneration data from Euro to CHF is 1/1.0833 and the exchange rate used for conversion of 2020
remuneration data from Euro to CHF is 1/1.0689.
As the Company is headquartered in Switzerland, it is required for statutory purposes to present compensation data for two consecutive
years, 2021 and 2020. The applicable methodology used to calculate the value of stock option and performance shares follows Swiss Standards.
In 2021 and 2020, the fair value of performance shares from the 2021 and 2020 grants is calculated based on the performance share awards
that are expected to vest. Below is the relevant information for Swiss statutory purposes.
The Statutory Remuneration Report should be read in conjunction with the Directors’ remuneration report presented in the Integrated
Annual Report as the qualitative aspects of remuneration policy are described therein.
Remuneration for acting members of governing bodies
The Company’s Directors believe that the level of remuneration offered to Directors and the members of the Executive Leadership Team
should reflect their experience and responsibility as determined by, among other factors, a comparison with similar multinational companies
and should be sufficient to attract and retain high-calibre Directors who will lead the Group successfully. In line with the Group’s commitment
to maximise shareholder value, its policy is to link a significant proportion of remuneration for its Executive Leadership Team to the performance
of the business through short- and long-term incentives. Therefore, the Executive Leadership Team members’ financial interests are closely
aligned with those of the Company’s shareholders through the equity-related long-term compensation plan.
The total remuneration of the Directors and members of the Executive Leadership Team of the Company, including performance share
grants, during 2021 amounted to CHF 27.6m (2020: CHF 22.4m). Out of this, the amount relating to the expected value of performance
share awards granted in relation to 2021 was CHF 5.5m (2020: CHF 4.5m). Pension and post‑employment benefits for Directors and the
Executive Leadership Team of the Company during 2021 amounted to CHF 1.0m (2020: CHF 0.9m).
233INTEGRATED ANNUAL REPORT 2021
Swiss statutory reporting continued
Remuneration of the Board of Directors
2021 CHF
Fees
Cash and
non-cash
benefits
1
Cash
performance
incentives
Pension and
post-employment
benefits
Total fair value of
stock options at
thedate granted
Total
compensation
Anastassis G. David79,623––––79,623
Zoran Bogdanovic
2
––––––
Charlotte J. Boyle98,472––––98,472
Henrique Braun
3
39,811––––39,811
Olusola (Sola) David‑Borha
4
95,330––––95,330
Anna Diamantopoulou
5
98,472––––98,472
William W. (Bill) Douglas III110,930––––110,930
Reto Francioni
6
115,588––––115,588
Anastasios I. Leventis92,189––––92,189
Christo Leventis79,623––––79,623
Alexandra Papalexopoulou 95,330––––95,330
Bruno Pietracci
7
42,953––––42,953
José Octavio Reyes
8
42,953––––42,953
Alfredo Rivera
9
39,811––––39,811
Ryan Rudolph
10
79,623––––79,623
Total Board of Directors1,110,708––––1,110,708
1. Cash and non‑cash benefits consist of cost‑of‑living allowance, housing support, Employee Stock Purchase Plan, Private Medical Insurance Relocation Expenses, Home Trip Allowance,
lump sum expenses and similar allowances.
2. Zoran Bogdanovic’s compensation was based on his role as CEO, member of the Executive Leadership Team, and his employment agreement. Zoran Bogdanovic was not entitled
and did not receive additional compensation as a Director.
3. Henrique Braun was appointed to the Board of Directors on 22 June 2021. The Group has applied a half‑year period fee of CHF 39,811. On top of his fees, the Group paid CHF 3,237
in social security contributions as required by Swiss legislation
4. For Olusola (Sola) David‑Borha, on top of her fees, the Group paid CHF 7,752 in social security contributions as required by Swiss legislation.
5. For Anna Diamantopoulou, on top of her fees, the Group paid CHF 8,008 in social security contributions as required by Swiss legislation.
6. For Reto Francioni, on top of his fees, the Group paid CHF 6,932 in social security contributions as required by Swiss legislation.
7. Bruno Pietracci was appointed to the Board of Directors on 22 June 2021. The Group has applied a half‑year period fee of CHF 42,953. On top of his fees, the Group paid CHF 3,493
in social security contributions as required by Swiss legislation.
8. José Octavio Reyes retired from the Board of Directors on 22 June 2021. The Group has applied a half‑year period base fee of CHF 42,953. On top of his fees, the Group paid
CHF2,436 in social security contributions as required by Swiss legislation.
9. Alfredo Rivera retired from the Board of Directors on 22 June 2021. The Group has applied a half‑year period base fee of CHF 39,811.
10. For Ryan Rudolph, on top of his fees, the Group paid CHF 6,475 in social security contributions as required by Swiss legislation.
Non-Executive Directors do not participate in any of the Group’s incentive plans, nor do they receive any retirement benefits.
234
Remuneration of the Board of Directors
2020 CHF
Fees
Cash and
non-cash
benefits
1
Cash
performance
incentives
Pension and
post-employment
benefits
Total fair value of
performance shares
at the dategranted
Total
compensation
Anastassis G. David78,564––––78,564
Zoran Bogdanovic
2
––––––
Charlotte J. Boyle94,063––––94,063
Olusola (Sola) David‑Borha
3
94,063––––94,063
Anna Diamantopoulou
4
48,582––––48,582
William W. (Bill) Douglas III109,455––––109,455
Reto Francioni
5
114,052––––114,052
Anastasios I. Leventis90,963––––90,963
Christo Leventis78,564––––78,564
Alexandra Papalexopoulou
6
98,713––––98,713
José Octavio Reyes
7
84,764––––84,764
Alfredo Rivera78,564––––78,564
Ryan Rudolph
8
78,564––––78,564
John P. Sechi
9
47,032––––47,032
Total Board of Directors1,095,943––––1,095,943
1. Allowances consist of cost of living allowance, housing support, employee share purchase plan, private medical insurance, relocation expenses, home trip allowance, lump sum
expenses and similar allowances.
2. Zoran Bogdanovic’s compensation was based on his role as CEO, member of the Executive Leadership Team, and his employment agreement. Zoran Bogdanovic was not entitled
anddidnot receive additional compensation as a Director.
3. For Olusola (Sola) David‑Borha, on top of her fees, the Group paid CHF 7,625 in social security contributions as required by Swiss legislation.
4. Anna Diamantopoulou was appointed to the Board of Directors on 16 June 2020. The Group has applied a half‑year period fee of CHF 48,582. On top of her fees, the Group paid
CHF3,939 in social security contributions as required by Swiss legislation.
5. For Reto Francioni, on top of his fees, the Group paid CHF 8,230 in social security contributions as required by Swiss legislation.
6. For Alexandra Papalexopoulou, on top of her fees, the Group paid CHF 3,488 in social security contributions as required by Swiss legislation.
7. For José Octavio Reyes, on top of his fees, the Group paid CHF 4,763 in social security contributions as required by Swiss legislation.
8. For Ryan Rudolph, on top of his fees, the Group paid CHF 6,369 in social security contributions as required by Swiss legislation.
9. John P. Sechi retired from the Board of Directors on 16 June 2020. The Group has applied a half‑year period base fee of CHF 47,032.
Non-Executive Directors do not participate in any of the Group’s incentive plans, nor do they receive any retirement benefits.
235INTEGRATED ANNUAL REPORT 2021
Swiss statutory reporting continued
Remuneration of the Executive Leadership Team
The total remuneration paid to or accrued for the Executive Leadership Team for 2021 amounted to CHF 26.4m.
Total Executive Leadership Team6,200,3598,119,4405,580,4841,016,9635,526,52126,443,767
1. Base salary includes non‑compete payments in 2021 to former members of the Executive Leadership Team.
2. Cash and non-cash benefits consist of cost-of-living allowance, housing support, schooling, employee share purchase plan, private medical insurance, relocation expenses, home
trip allowance, employer social security contributions, lump sum expenses, all paid and unpaid sign-on bonus, equalisation amounts and similar allowances.
3. The annual bonus accrual for 2021 includes the accrued Management Incentive Plan (MIP) payout, receivable early in 2022 for the 2021 business performance, including amount
deferred in shares, employer social security contribution and gross‑up for the tax benefit, of CHF 5,580,484. The monetary value that was paid in 2021 under the MIP reflecting the
2020 business performance is approx. CHF 2,139,756.
4. Members of the Executive Leadership Team participate in the pension plan of their employing entity, as appropriate.
5. Values under long-term incentives represent the fair value of performance shares that are expected to vest for the 2021 grant in order to comply with Swiss reporting guidelines.
6. Ben Almanzar was appointed to the role of Chief Financial Officer on 1 February 2021. Barbara Tönz was appointed to the role of Chief Customer and Commercial Officer on 1 May
2021. Spyros Mello was appointed to the role of Strategy and Transformation Director on 1 November 2021.
7. Michalis Imellos’ s employment ceased on 30 June 2021.
The total remuneration paid to or accrued for the Executive Leadership Team for 2020 amounted to CHF 21.3m.
Total Executive Leadership Team6,060,7506,656,4513,160,318902,4794,504,72221,284,720
1. Cash and non-cash benefits consist of cost-of-living allowance, housing support, schooling, employee share purchase plan, private medical insurance, relocation expenses, home
trip allowance, employer social security contributions, lump sum expenses and similar allowances.
2. The cash performance incentives represent the monetary value that was paid under MIP in 2020 reflecting the 2019 business performance.
3. Members of the Executive Leadership Team participate in the pension plan of their employing entity, as appropriate.
4. Values under long-term incentives represent the fair value of performance shares that are expected to vest for the 2020 grant in order to comply with Swiss reporting guidelines.
5. Naya Kalogeraki was appointed to the role of Chief Operating Officer on 1 September 2020. Vitaliy Novikov was appointed to the role of Group Commercial & Customer Director
on1September 2020. Alain Brouhard’s employment ceased on 30 June 2020.
Credits and loans granted to governing bodies
In 2021, similar to 2020, there were no credits or loans granted to active or former members of the Company’s Board of Directors, members
of the Executive Leadership Team or to any related persons. There are no outstanding credits or loans.
236
Definitions and reconciliations of
Alternative Performance Measures (APMs)
1. Comparable APMs
1
In discussing the performance of the Group, ‘comparable’ measures are used, which are calculated by deducting from the directly reconcilable
IFRS measures the impact of the Group’s restructuring costs, the mark-to-market valuation of the commodity hedging activity, acquisition
and integration costs and certain other tax items, which are collectively considered as items impacting comparability, due to their nature.
More specifically, the following items are considered as items that impact comparability:
1. Restructuring costs
Restructuring costs comprise costs arising from significant changes in the way the Group conducts business, such as significant supply chain
infrastructure changes, outsourcing of activities and centralisation of processes. These costs are included within the income statement line
‘Operating expenses’. However, they are excluded from the comparable results so that the users can obtain a better understanding of the
Group’s operating and financial performance achieved from underlying activity.
2. Commodity hedging
The Group has entered into certain commodity derivative transactions in order to hedge its exposure to commodity price risk. Although
these transactions are economic hedging activities that aim to manage our exposure to sugar, aluminium, gas oil and plastics price volatility,
hedge accounting has not been applied in all cases. In addition, the Group recognises certain derivatives embedded within commodity
purchase contracts that have been accounted for as stand-alone derivatives and do not qualify for hedge accounting. The fair value gains
and losses on the derivatives and embedded derivatives are immediately recognised in the income statement in the cost of goods sold and
operating expenses line items. The Group’s comparable results exclude the gains or losses resulting from the mark-to-market valuation
ofthose derivatives to which hedge accounting has not been applied (primarily plastics) and embedded derivatives. These gains or losses
arereflected in the comparable results in the period when the underlying transactions occur, to match the profit or loss to that of the
corresponding underlying transactions. We believe this adjustment provides useful information related to the impact of our economic risk
management activities.
3. Acquisition and integration costs
Acquisition costs comprise costs incurred to effect a business combination such as finder’s, advisory, legal, accounting, valuation andother
professional or consulting fees as well as changes in the fair value of contingent consideration recorded in the income statement. Integration
costs comprise direct incremental costs necessary for the acquiree to operate within the Group. These costs are included within the income
statement line ‘Operating expenses’. However, to the extent that they relate to business combinations that have completed orare expected
to be completed, they are excluded from the comparable results so that users can obtain a better understanding oftheGroup’s operating
and financial performance achieved from underlying activity.
4. Other tax items
Other tax items represent the tax impact of (a) changes in income tax rates affecting the opening balance of deferred tax arising during
theyear and (b) certain tax‑related matters selected based on their nature. Both (a) and (b) are excluded from comparable after‑tax results
so that users can obtain a better understanding of the Group’s underlying financial performance.
1. Net profit and comparable net profit refer to net profit and comparable net profit respectively after tax attributable to owners of the parent.
2. EBIT for 2020 includes €0.2 million from restructuring within share of results of integral equity method investments.
3. Other tax items for 2020 include €7.2 million regarding net impact from the settlement of the transfer pricing audit for years 2011-2019 in Nigeria (detailed in the ‘Other supplementary
information’ section).
Reconciliation of comparable EBIT per reportable segment (numbers in € million)
2021
EstablishedDevelopingEmergingConsolidated
EBIT286105409799
Restructuring costs153321
Commodity hedging(3)(4)3(4)
Acquisition costs33814
Comparable EBIT301107424831
2020
EstablishedDevelopingEmergingConsolidated
EBIT
4
20397360661
Restructuring costs64110
Commodity hedging–1–2
Comparable EBIT209102361672
Figures are rounded.
4. EBIT for 2020 includes €0.2 million from restructuring within share of results of integral equity method investments.
2. FX‑neutral APMs
The Group also evaluates its operating and financial performance on an FX-neutral basis (i.e. without giving effect to the impact of variation
of foreign currency exchange rates from year to year). FX-neutral APMs are calculated by adjusting prior year amounts for the impact of
exchange rates applicable to the current year. FX-neutral measures enable users to focus on the performance of the business on a basis
which is not affected by changes in foreign currency exchange rates applicable to the Group’s operating activities from year to year.
Themost common FX‑neutral measures used by the Group are:
1. FX-neutral net sales revenue and FX-neutral net sales revenue per unit case
FX-neutral net sales revenue and FX-neutral net sales revenue per unit case are calculated by adjusting prior year net sales revenue for
theimpact of changes in exchange rates applicable in the current year.
2. FX-neutral comparable input costs per unit case
FX-neutral comparable input costs per unit case is calculated by adjusting prior year commodity costs, and more specifically sugar, resin,
aluminium and fuel commodity costs, excluding commodity hedging as described above; and other raw materials costs for the impact
ofchanges in exchange rates applicable in the current year.
238
The calculations of the FX-neutral APMs and their reconciliation to the most directly related measures calculated in accordance with IFRS
isasfollows:
Reconciliation of FX-neutral net sales revenue per unit case (numbers in € million unless otherwise stated)
2021
EstablishedDevelopingEmergingConsolidated
Net sales revenue2,4791,3663,3247,168
Currency impact––––
FX-neutral net sales revenue2,4791,3663,3247,168
Volume (m unit cases)5904161,4072,413
FX-neutral net sales revenue per unit case (€)4.203.292.362.97
2020
EstablishedDevelopingEmergingConsolidated
Net sales revenue2,1751,1712,7866,132
Currency impact1(14)(124)(137)
FX-neutral net sales revenue2,1761,1572,6625,995
Volume (m unit cases)5374121,1872,136
FX-neutral net sales revenue per unit case (€)4.052.812.242.81
Figures are rounded.
Reconciliation of FX-neutral input costs per unit case (numbers in € million unless otherwise stated)
20212020
Input costs1,9551,554
Commodity hedging4(2)
Comparable input costs1,9591,553
Currency impact–10
FX-neutral comparable input costs (€)1,9591,562
Volume (m unit cases)2,4132,136
FX-neutral comparable input costs per unit case (€)0.810.73
Figures are rounded.
3. Other APMs
Adjusted EBITDA
Adjusted EBITDA is calculated by adding back to operating profit the depreciation and impairment of property, plant and equipment, the
amortisation and impairment of intangible assets, the employee share option and performance share costs, and items, if any, reported in the
line ‘Other non‑cash items’ of the consolidated cash flow statement. Adjusted EBITDA is intended to provide useful information to analyse
the Group’s operating performance excluding the impact of operating non-cash items as defined above. The Group also uses comparable
Adjusted EBITDA, which iscalculated by deducting from Adjusted EBITDA the impact of the Group’s restructuring costs, acquisition and
integration costs and the mark‑to‑market valuation of the commodity hedging activity. Comparable Adjusted EBITDA is intended to measure
the level of financial leverage of the Group by comparing comparable Adjusted EBITDA to Net debt.
Adjusted EBITDA and comparable Adjusted EBITDA are not measures of profitability and liquidity under IFRS and have limitations, some
ofwhich are as follows: Adjusted EBITDA and comparable Adjusted EBITDA do not reflect our cash expenditures, or future requirements,
forcapital 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
andamortised 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 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 the availability for interest payments, 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.
239INTEGRATED ANNUAL REPORT 2021
Alternative performance measures continued
3. Other APMs continued
Capital expenditure
The Group uses capital expenditure as an APM to ensure that its 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:
2021
€ million
2020
€ million
Operating profit (EBIT)799661
Depreciation and impairment of property, plant and equipment, including right-of-use assets336388
Amortisation of intangible assets11
Employee performance shares1510
Adjusted EBITDA1,1521,059
Share of results of integral equity method investments(34)(21)
Gain on disposals of non-current assets(28)(1)
Cash generated from working capital movements196108
Tax paid(142)(183)
Net cash from operating activities1,142962
Payments for purchases of property, plant and equipment
1
(514)(419)
Principal repayments of lease obligations(63)(59)
Proceeds from sales of property, plant and equipment3613
Capital expenditure(541)(465)
Net cash from operating activities1,142962
Capital expenditure(541)(465)
Free cash flow601497
Figures are rounded.
1. Payments for purchases of property, plant and equipment for 2021 include €7.1 million (2020: €nil) relating to repayment of borrowings undertaken to finance the purchase
ofproduction equipment by the Group’s subsidiary in Nigeria, classified as ‘Repayments of borrowings’ in the condensed consolidated cash flow statement.
Net debt
Net debt is an APM used by management to evaluate the Group’s capital structure and leverage. Net debt is defined as current borrowings
plus non-current borrowings less cash and cash equivalents and financial assets (time deposits, treasury bills and money market funds),
asillustrated below:
As at 31 December
2021
€ million
2020
€ million
Current borrowings382315
Non-current borrowings2,5562,610
Other financial assets(835)(93)
Cash and cash equivalents(783)(1,216)
Net debt1,3201,617
Figures are rounded.
240
Other supplementary information
Effective May 2020, following a re-organisation of Multon‘s structure, the joint arrangement was reclassified from a joint operation to a joint
venture. The table below depicts the Group’s growth including the relevant performance of Multon as a joint operation in the current year
(‘like‑for‑like’), compared to the prior year:
Net sales revenue per unit case
2021 vs 2020VolumeFX-neutralReported
Growth (%)Total CCH
Total CCH
like-for-likeTotal CCH
Total CCH
like-for-likeTotal CCH
Total CCH
like-for-like
Established9.99.93.73.73.83.8
Developing0.80.817.017.015.715.7
Emerging18.620.45.35.60.60.9
Total Group13.014.05.85.83.53.4
Net sales revenue
2021 vs 2020FX-neutralReported
Growth (%)Total CCH
Total CCH
like-for-likeTotal CCH
Total CCH
like-for-like
Established13.913.914.014.0
Developing18.018.016.616.6
Emerging24.927.119.321.5
Total Group19.620.616.917.9
In August 2020, Nigerian Bottling Company Ltd (’NBC’), the Group’s subsidiary in Nigeria, settled the additional tax assessed by the Nigerian
tax authorities (’FIRS’) following the completion of their income tax audit for the years 2005-2019 and transfer pricing (’TP’) audit for the years
2011-2019. The net impact to the Tax line item in the income statement, following the utilisation of provisions for uncertain tax positions,
was €16.5 million, out of which €7.2 million was attributable to the results of the TP audit. This additional tax charge of €16.5 million resulted
ina 2.8pp increase of the Group‘s effective tax rate on a reported basis, for 2020.
NBC was audited by the FIRS with respect to TP for the first time since the inception of the TP rules and principles in the country. The TP
audit focused on the transactions between NBC and The Coca‑Cola Company Group entities (’TCCC’) over a 9‑year period (2011‑2019).
The FIRS challenged the prices of concentrate purchased from and the charges for services provided by TCCC to NBC. As a result, the FIRS
adjusted NBC’s profitability, increasing its taxable base accordingly. The TP audit concluded with a settlement between FIRS and NBC.
This increase of NBC’s taxable base over this 9‑year period amounted to €195 million and resulted in the elimination of accumulated capital
allowances of €183 million. In addition, to the extent that the available capital allowances were not sufficient to offset the full impact of the tax
adjustment in a certain year, a tax payment was required to be made. Following the settlement, the total tax assessed by the FIRS amounted
to €62.7 million, of which €7.6 million was settled in cash and €55.1 million was settled through the elimination of the deferred tax asset
relating to the available capital allowances.
The FIRS applied Nigerian TP rules and principles to assess tax on a portion of the income earned by TCCC from its transactions with NBC
which, the FIRS determined, should have been subject to taxation in Nigeria. The outcome of the TP audit and the additional related tax that
was assessed by the FIRS was therefore not associated with the operations of NBC. Consequently, we consider that the income statement
impact of this TP audit (net income statement charge of €7.2 million after the utilisation of provisions for uncertain tax positions) distorted
users’ understanding of the Group’s underlying financial performance for 2020 and we therefore excluded it from the comparable after-tax
results, by reporting it under ‘Other tax matters’ for comparability purposes. Having adjusted for this TP audit charge, the Group’s effective
tax rate on a comparable basis was 28.7% for 2020.
241INTEGRATED ANNUAL REPORT 2021
Assurance statement
Independent assurance statement for the 2021 Integrated Annual Report
To the management and stakeholders of Coca‑Cola HBC AG:
denkstatt GmbH was commissioned by Coca‑Cola HBC AG (hereinafter referred to as “the Company”) to provide independent third‑party
assurance for the printed and downloadable pdf versions of the Company’s 2021 Integrated Annual Report (hereinafter referred to as
“theReport”) in accordance with the AA1000 Assurance Standard. We have reviewed sustainability‑related data and content in the Report.
Financial data were not reviewed as part of this engagement. The assurance engagement covered the nature and extent of the Company’s
application of the principles of inclusivity, materiality, responsiveness and impact, as described in the AA1000 Series of Standards
(AA1000AP, 2018). The application level of the Global Reporting Initiative (GRI) Standards (2016, core option) was verified.
denkstatt is an independent professional services company. Our team of experts has extensive professional experience of assurance
engagements related to non-financial information and sustainability management, meaning it is qualified to conduct this independent
assurance engagement. denkstatt has implemented a certified quality and environmental management system which complies with the
requirements of ISO 9001:2015 and ISO 14001:2015, and accordingly maintains a comprehensive quality control system.
Management responsibilities
The Company’s management (Management) is responsible for preparing the Report, statements within it and related online content.
Management is also responsible for identifying stakeholders and material issues, defining commitments with respect to sustainability
performance, and establishing and maintaining appropriate performance management and internal control systems, from which reported
information is derived.
Additionally, Management is responsible for establishing data collection and internal control systems to ensure reliable reporting, for
specifying acceptable reporting criteria and for selecting data to be collected for the purposes of the Report. Management responsibilities
also extend to preparing the Report in accordance with the GRI Standards.
Assurance provider’s responsibilities
Our responsibilities are to:
• express our conclusions and make recommendations regarding the nature and extent of the Company’s adherence to the AA1000
Accountability Principles (2018), and
• express our conclusions on the reliability of the information in the Report, and whether it is in accordance with the criteria in the GRI
Universal Standards (2016).
We did not perform any tasks or services for the Company or other clients in 2021 which would lead to a conflict of interest. We were not
responsible for the preparation of any part of the Report.
Scope of assurance, standards and criteria used
We have fulfilled our responsibilities to provide appropriate assurance that the information in the Report is free from material misstatements.
We planned and carried out our work based on the GRI Standards and the AA1000 Series of Standards. We used the criteria in AA1000AS
(AA1000 Assurance Standard v3) to perform a Type 2 engagement and to provide high level of assurance regarding the nature and extent
ofthe Company’s adherence to the principles of impact, inclusivity, materiality, and responsiveness. The core option was selected as the
application level for the GRI Universal Standards (2016) and verified accordingly.
Methodology, approach, limitations and scope of work
We planned and carried out our work in order to obtain all evidence, information and explanations that we considered necessary to fulfil
ourresponsibilities. We completed a wide range of activities in order to gather necessary evidence, including:
• Gathering information regarding the Company’s adherence to the principles of impact, inclusivity, materiality, sustainability context,
completeness and responsiveness as required by GRI and AA1000, and conducting interviews with members of the executive
management, staff from the People and Culture Department, the Legal Affairs Department, the Commercial Department, the Supply
Chain Department (including the Procurement team, the Product Quality, Safety and Environment team, the Fleet team and the Cold
Drink Equipment team) and the Corporate Affairs and Sustainability Department as well as managers from other Group functions.
Inparticular, we verified the management commitment to the above‑mentioned principles, and whether they are embedded at market
level, as well as whether systems and procedures are in place to support compliance with these principles.
• Key topics in the interviews conducted at Group level related to the materiality analysis, i.e. health and nutrition, responsible marketing,
employee wellbeing and engagement, vehicle fleets, corporate governance, business ethics and anti-corruption, sourcing, energy and
climate change, cold drink equipment (coolers), TCFD & climate risk assessment, packaging, recycling and waste management, water
stewardship, the World Without Waste initiative, #YouthEmpowered and other community programmes, human rights and diversity,
business risks and opportunities, and social impact.
• Conducting interviews at country headquarters in Belarus, Croatia, Cyprus, Greece, Italy, Nigeria and Russia in order to assure that the
information required for the engagement was complete.
• Performing audits in nine bottling plants, the majority of which were located in emerging markets: Minsk (Belarus), Zagreb (Croatia),