TIDMCCH
RNS Number : 9095V
Coca-Cola HBC AG
13 August 2015
STRONG RESULTS WITH VOLUME GROWTH AND MARGIN EXPANSION
Coca-Cola HBC AG, a leading bottler of The Coca-Cola Company,
reports its financial results for the six-month period ended 3 July
2015.
Half-year highlights
-- Underlying volume growth gained momentum in the second
quarter, resulting in a 3.8% increase in reported half-year volume;
excluding the 2.5% contribution from the four extra selling days in
Q1, volumes grew by 1.3%
- Volume in the Established markets was broadly unchanged from the prior-year period
- Developing segment turnaround continued, with all markets
contributing to the 6.2% volume growth
- Very good performance in Nigeria, Romania and Ukraine more
than offset weakness in Russia, lifting Emerging market volume by
5.4%
-- FX-neutral revenue per case was stable, with pricing actions
in Emerging markets offsetting our affordability measures and
deflation in certain Established and Developing markets
-- Net sales revenue declined by 1.0% as a 4.6% adverse impact
from currencies more than offset volume gains
-- Comparable EBIT was EUR219.0 million - up 31.2%, leading to a
170 basis point improvement in EBIT margin as favourable input
costs, increased volume, benefits from our revenue growth
management initiatives and cost efficiencies were partly offset by
significant adverse movements in currencies; reported EBIT was
EUR199.1 million
-- Free cash flow was EUR219.2 million - up EUR124.4 million,
driven by further improvements in working capital as well as
operational profitability
-- Comparable earnings per share was EUR0.389 - a 43.5% increase
on the prior-year period; reported basic earnings per share was
EUR0.344
Half-year Change
2015 2014
Volume (m unit cases) 1,006.6 970.2 3.8%
Net sales revenue (EUR m) 3,150.9 3,183.1 -1.0%
Net sales revenue per unit
case (EUR) 3.13 3.28 -4.6%
FX-neutral net sales revenue
per unit case (EUR) 3.13 3.13 -
Operating profit (EBIT) (EUR
m) 199.1 164.1 21.3%
Comparable EBIT (EUR m) 219.0 166.9 31.2%
EBIT margin (%) 6.3 5.2 120bps
Comparable EBIT margin (%) 7.0 5.2 170bps
Net profit* (EUR m) 125.2 95.1 31.7%
Comparable net profit* (EUR
m) 141.7 98.8 43.4%
Basic earnings per share
(EPS) (EUR) 0.344 0.261 31.8%
Comparable EPS (EUR) 0.389 0.271 43.5%
------------------------------ -------- -------- ------------
*Net Profit and Comparable Net Profit refer to net profit and
comparable net profit respectively after tax attributable to owners
of the parent.
Dimitris Lois, Chief Executive Officer of Coca-Cola HBC AG,
commented:
"We are pleased to have achieved strong results, with good
volume growth and a significant improvement in margins. Our
strategic initiatives are delivering, both through our commercial
strategy designed to drive growth and ongoing efficiency
improvements.
"Difficult conditions remain in many of our markets,
particularly in Russia, although we have proven to be adaptable and
resilient in such markets. Conditions are more favourable in
Eastern Europe and Nigeria, where we are confident of further
growth. We have become more optimistic as the year has progressed
and remain confident that 2015 will be a year of volume growth and
progress on margins."
SPECIAL NOTE REGARDING THE INFORMATION SET OUT HEREIN
Unless otherwise indicated, the condensed consolidated interim
financial statements and the financial and operating data or other
information included herein relate to Coca-Cola HBC AG and its
subsidiaries ("Coca-Cola HBC" or the "Company" or "we" or the
"Group").
FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements that involve
risks and uncertainties. These statements may generally, but not
always, be identified by the use of words such as "believe",
"outlook", "guidance", "intend", "expect", "anticipate", "plan",
"target" and similar expressions to identify forward-looking
statements. All statements other than statements of historical
facts, including, among others, statements regarding our future
financial position and results, our outlook for 2015 and future
years, business strategy and the effects of the global economic
slowdown, the impact of the sovereign debt crisis, currency
volatility, our recent acquisitions, and restructuring initiatives
on our business and financial condition, our future dealings with
The Coca-Cola Company, budgets, projected levels of consumption and
production, projected raw material and other costs, estimates of
capital expenditure, free cash flow, effective tax rates and plans
and objectives of management for future operations, are
forward-looking statements. By their nature, forward-looking
statements involve risk and uncertainty because they reflect our
current expectations and assumptions as to future events and
circumstances that may not prove accurate. Our actual results and
events could differ materially from those anticipated in the
forward-looking statements for many reasons, including the risks
described in the 2014 Integrated Annual Report for Coca-Cola HBC AG
and its subsidiaries.
Although we believe that, as of the date of this document, the
expectations reflected in the forward-looking statements are
reasonable, we cannot assure you that our future results, level of
activity, performance or achievements will meet these expectations.
Moreover, neither we, nor our directors, employees, advisors nor
any other person assumes responsibility for the accuracy and
completeness of the forward-looking statements. After the date of
the condensed consolidated interim financial statements included in
this document, unless we are required by law or the rules of the UK
Financial Conduct Authority to update these forward-looking
statements, we will not necessarily update any of these
forward-looking statements to conform them either to actual results
or to changes in our expectations.
Reconciliation of Reported to Comparable Financial
Indicators (numbers in EUR million except per share
data)
Group Financial Half-year 2015
Results
---------------------- -------------------------------------------------------------------------
COGS(1) Gross EBIT(3) Adjusted Net EPS(6)
Profit(2) EBITDA(4) Profit(5)
(EUR)
Reported (1,999.0) 1,151.9 199.1 369.5 125.2 0.344
Restructuring
costs(7,8) - - 22.4 15.3 18.7 0.051
Commodity hedging(9) (2.5) (2.5) (2.5) (2.5) (2.2) (0.006)
Comparable (2,001.5) 1,149.4 219.0 382.3 141.7 0.389
---------------------- ---------- ------------ --------- ------------ ------------ --------
Group Financial Half-year 2014
Results
---------------------- -------------------------------------------------------------------------
COGS(1) Gross EBIT(3) Adjusted Net EPS(6)
Profit(2) EBITDA(4) Profit(5)
(EUR)
Reported (2,033.4) 1,149.7 164.1 347.7 95.1 0.261
Restructuring
costs(8) - - 11.9 11.7 10.2 0.028
Commodity hedging(9) (9.1) (9.1) (9.1) (9.1) (6.5) (0.018)
Comparable (2,042.5) 1,140.6 166.9 350.3 98.8 0.271
---------------------- ---------- ------------ --------- ------------ ------------ --------
(1) Reported COGS refers to cost of goods sold.
(2) Reported Gross Profit refers to gross profit.
(3) Reported EBIT refers to operating profit.
(4) Adjusted EBITDA refers to operating profit before deductions
for depreciation and impairment of property, plant and equipment
(included both in cost of goods sold and in operating expenses),
amortisation and impairment of intangible assets, employee share
options and other non-cash items, if any (refer to 'Supplementary
information' section).
(5) Reported Net Profit refers to profit after tax attributable to owners of the parent.
(6) Reported EPS refers to basic earnings per share.
(7) Net profit includes EUR1.1 million from restructuring within
joint ventures.
(8) Restructuring costs comprise costs arising from significant
changes in the way we conduct business, such as significant supply
chain infrastructure changes and centralisation of processes. These
are included within the income statement line "restructuring
costs". However, they are excluded from the comparable results in
order for the user to obtain a proper understanding of the Group's
financial performance.
(9) The Group has entered into certain commodity derivative
transactions in order to mitigate its exposure to commodity price
risk. Although these transactions are economic hedging activities
that aim to manage our exposure to sugar and aluminium price
volatility, they do not qualify for hedge accounting. In addition
the Group recognised certain derivatives embedded within commodity
purchase contracts that have been accounted for as stand-alone
derivatives and which 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 line item. The Group's comparable results exclude the
unrealised gains or losses resulting from the mark-to-market
valuation of this hedging activity. These gains or losses will be
reflected in the comparable results in the period when the
underlying transactions will occur, to match the profit or loss
impact of the underlying transactions.
Group Operational Review
Our business made very good progress in the period and achieved
results that underpin our expectations for the year. In a
challenging macroeconomic environment, the progress is largely the
result of the actions we have taken to return our business to
growth.
The combination of affordability measures in certain countries,
targeted marketing initiatives and our focus on execution ensured
improving underlying volume growth in the first half of the year,
which in turn, supported net sales revenue despite the adverse
impact of currencies. With the anticipated favourable input costs,
which benefited mainly the Established and Developing market
segments, and further improvements in our operating cost base, we
achieved a 170 basis point expansion in comparable EBIT margin in
the period.
Volume performance
Volume increased in the first half by 3.8%, cycling a 3.4%
decline in the prior-year period. Positive performance benefited
from four additional selling days in Q1, which added 2.5% to volume
across the business, and improved performances from Sparkling
beverages and Juice.
Established market volume decline moderated to 0.2%,
demonstrating that we are on track to grow volume in this segment,
which had declined by 4.2% in the prior-year period. Declines in
Sparkling beverages volume, particularly in Switzerland and
Austria, were offset by good overall volume performance in Ireland,
as well as robust growth in Water across most countries in this
segment. Developing market volume grew by 6.2%, following a 6.6%
decline in the first half of last year when our strategy to
rationalise unprofitable volume impacted the segment. All markets
and categories with the exception of RTD Tea contributed to the
growth, with notable performances in Poland, Hungary and the Czech
Republic. Emerging markets posted 5.4% growth, cycling a 1.7%
decline. With the exception of Russia and Belarus, all markets
delivered very good growth. Notably, Nigeria, Romania and Ukraine
achieved growth rates in low teens.
Category performance
Affordability measures in certain markets, our marketing
initiatives such as Share a Coke in Nigeria and the turnaround in
the organised trade in the Developing segment helped improve
Sparkling volumes by 2.9%, even though trading in Russia,
Switzerland and Austria was difficult. Within the category,
Trademark Coca-Cola increased by 4.4%, Coke Zero by 16.5% and Fanta
by 5.2%.
Juice continued its positive momentum, delivering growth of
18.5%. Russia was the main contributor to this growth as a result
of the drive behind our recently broadened juice portfolio in the
country. Our newest brand Moya Semya has now been in the portfolio
for a full year. Excluding Moya Semya, growth in the juice category
overall for the Group was 9.8%. Water grew by 3.6% in the period,
demonstrating good performance in most of our countries,
particularly Ukraine, Nigeria and Romania. Energy maintained its
growth, with volumes up 8.7% driven by Ireland, Hungary and Poland.
RTD tea was the only declining category.
Our Premium Spirits business grew volume by 2.6% and generated
revenues of EUR74.4 million - down 2.4% as a result of the currency
impact in the period.
Single-serve packs increased by 4.9%, while multi-serves
increased by 3.0%, leading to a 0.4 percentage point improvement in
package mix. All segments improved their mix in equal measure.
Sparkling mix improved by 1.2 percentage points while Water mix
deteriorated slightly in the first half.
Key financials
FX-neutral net sales revenue per unit case was stable in the
period. Although the revenue growth management initiatives we put
in place in a number of Emerging markets delivered, our
affordability measures and deflationary pressures in a number of
markets in the first half led to an interruption in the steady
improvement we have achieved in recent years in FX-neutral net
sales revenue per case.
We delivered EUR3.2 billion of net sales revenue in the first
half, down 1.0% compared to the prior-year period. The 4.6%
headwind from adverse movements in currencies was only partly
offset by the improved volume and the revenue growth initiatives,
including pricing, taken during the period.
Input costs developed as anticipated in the period, with
FX-neutral input cost per unit case declining by high single
digits. The lower cost of EU sugar and PET resin benefited the
Established and Developing segments in particular.
Our restructuring efforts in recent years and tight cost
management have better positioned the business to benefit from
operating leverage, leading to a 110 basis point reduction in
operating expenses as a percentage of net sales revenue.
Comparable EBIT was EUR219.0 million, translating to a 170 basis
point expansion in EBIT margin to 7.0%. Favourable input costs,
increased volume, the benefits from our revenue growth management
initiatives and cost efficiencies more than offset the adverse
impact of currency movements. EBIT and margin increases were
evident in all three segments. On a reported basis, we delivered
EUR199.1 million of EBIT in the first half - a EUR35.0 million
improvement on the prior-year period.
We incurred EUR22.4 million in pre-tax restructuring charges in
the first half, the majority of which was due to planned actions in
the Established and Emerging segments. We continue to execute on
our restructuring plans ultimately creating a more agile and
efficient organisation.
In the half year, we recorded free cash inflow of EUR219.2
million - a EUR124.4 million improvement compared to the same
period in the prior year. Key drivers of the improvement were
working capital reduction and improved operational profitability.
Both the balance sheet working capital position and the working
capital days improved in the first half.
Comparable net profit of EUR141.7 million and comparable
earnings per share of 0.389 Euros were 43.5% higher than in the
prior-year period. Reported net profit and reported basic earnings
per share were EUR125.2 million and EUR0.344, respectively in the
period.
Share buy-back
We have engaged Credit Suisse Securities (Europe) Limited to
manage the repurchase on our behalf of up to 3,000,000 ordinary
shares (representing 0.8% of share capital) of the Company in
accordance with the proposal adopted for a share repurchase
programme at the Company's Annual General Meeting on 23 June 2015.
The purpose of the programme is to neutralise the dilution
resulting from past and future issuances of shares under Coca-Cola
HBC's equity compensation plans. The shares purchased will be
cancelled. This authority, which has not yet been utilised as at
the date of this half-yearly report, expires on the conclusion of
the 2016 Annual General Meeting or 30 June 2016, whichever is
earlier.
Operational Review by Reporting Segment
Established markets
Half-year Change
2015 2014
Volume (m unit cases) 305.3 305.9 -0.2%
Net sales revenue (EUR
m) 1,237.0 1,228.0 0.7%
Net sales revenue per unit
case (EUR) 4.05 4.01 1.0%
FX-neutral net sales revenue
per unit case (EUR) 4.05 4.15 -2.4%
Operating profit (EBIT)
(EUR m) 73.2 58.9 24.3%
Comparable EBIT (EUR m) 84.1 64.3 30.8%
EBIT margin (%) 5.9 4.8 110bps
Comparable EBIT margin
(%) 6.8 5.2 160bps
------------------------------- -------- -------- -------
-- Unit case volume decline in our Established markets segment
was 0.2% in the first half. This follows a 4.2% decline in the
prior-year period. Volume grew in Ireland and Greece, supported by
good performance in Water, although this was outweighed by declines
in Switzerland and Austria.
-- Net sales revenue grew by 0.7% in the first half. The volume
shortfall and negative category and price mix were more than offset
by the benefits of favourable package mix, as well as the positive
currency impact, mainly from the strong Swiss Franc. FX-neutral net
sales revenue per case declined by 2.4% in the half-year
period.
-- Volume stabilised in Italy in the half year, supported by
four additional selling days, cycling a high single-digit decline
in the prior-year period. The underlying trading environment
remains challenging with unemployment still at very high levels of
c. 13% and disposable income remaining under pressure. Amidst these
conditions, our focus on our OBPPC (Occasion-based Brand Price Pack
Channel) strategy led to a broadly stable performance in Sparkling,
with Coke Zero, Sprite and Energy registering positive
performances. Single-serve contribution increased in the period,
driven by our single-serve focus on Sparkling in the immediate
consumption channel.
-- Volume in Greece maintained positive momentum and increased
marginally in the first half, cycling a similar rate of increase in
the prior-year period. Performance in the still drinks category was
the key growth driver, with both Water and Juice growing by 5%.
Coke Zero grew by 9%, while Energy continues to build its base,
growing by double digits. We are pleased with the performance of
the business so far, amidst challenging trading conditions. However
looking ahead, we remain cautious as the macroeconomic environment
is uncertain.
-- Volume in Switzerland declined by low single digits in the
first half, cycling a similar rate of decline in the prior-year
period. Water grew by mid single digits in the period, helped by
increased distribution, although this was not enough to offset the
Sparkling volume decline.
-- Volume increased by low single digits in Ireland, cycling a
low single-digit increase in the prior-year period. Volume grew in
all key categories, with the exception of Juice. The sparkling
beverages category was the key growth driver, with Coke Zero
growing by 11% and Fanta by 9%. Water also delivered well with
mid-teens growth. Package mix improved in the first half driven by
good performance of single-serve packs in Sparkling.
-- Comparable operating profit in the Established markets
segment improved by 30.8% to EUR84.1 million in the first half.
Favourable input costs, benefits from restructuring and lower
operating expenses, further supported by favourable currency
movements (mainly the strong Swiss Franc) more than offset the
negative impact from volume and our affordability measures. On a
reported basis, operating profit improved by 24.3% to EUR73.2
million.
Developing markets
Half-year Change
2015 2014
Volume (m unit cases) 180.8 170.3 6.2%
Net sales revenue (EUR
m) 528.6 504.7 4.7%
Net sales revenue per unit
case (EUR) 2.92 2.96 -1.4%
FX-neutral net sales revenue
per unit case (EUR) 2.92 2.98 -2.0%
Operating profit (EBIT)
(EUR m) 43.9 22.8 92.5%
Comparable EBIT (EUR m) 45.1 23.4 92.7%
EBIT margin (%) 8.3 4.5 380bps
Comparable EBIT margin
(%) 8.5 4.6 390bps
------------------------------- ------ ------ -------
-- Unit case volume in our Developing market segment grew by
6.2% in the first half, with good performances in all of our
countries. The sparkling beverages category was the main growth
driver, supported by Water in Poland and Hungary.
-- Net sales revenue grew by 4.7% in the period. Benefits of
improved volume and category mix as well as the positive currency
impact more than offset unfavourable channel and price mix. On an
FX-neutral basis, net sales revenue per unit case declined by 2.0%
in the first half.
-- In Poland, volume increased by high single digits in the
period. This follows a high single-digit decline in the prior-year
period when we rationalised unprofitable volume by removing certain
SKU's. Volume in the period increased across most categories, with
Sparkling beverages growing by high single digits, driven by good
results in the organised trade. Still beverages posted a low
single-digit increase driven by Water performance. Package mix
deteriorated by 0.7 percentage points in the period, driven by the
strong performance of Sparkling multi-serve packages in the
discounters channel.
-- Volume in Hungary increased by high single digits in the
first half, cycling a low single-digit increase. Sparkling
beverages increased by low teens, with positive performance across
all categories and continued strong double-digit growth in
Coca-Cola Zero. Volume in Energy maintained the positive trend and
grew by double digits, cycling very strong growth in the prior-year
period and reflecting the solid performance of our new product and
flavour launches. Juice volumes increased by low single digits,
helped by the growth of Cappy including Pulpy. Our focus on
increasing single-serve contribution delivered results, with
package mix improving by 1.9 percentage points in the first half,
mainly driven by increased volume of single-serve packages in the
sparkling beverages category.
-- In the Czech Republic volume grew by high single digits in
the first half, with good performance across most key categories.
This performance follows a year shaped by our strategic decision to
focus on value-accretive volume, and provides evidence of a return
to healthy growth. Sparkling was the main contributor increasing by
10% with strong performance of Trademark Coca-Cola and Fanta in the
organised trade, while Water returned to growth.
-- Developing markets posted a EUR21.7 million increase in
comparable operating profit to EUR45.1 million in the first half.
Favourable input costs and improved volume more than offset the
impact of adverse channel mix as well as increased marketing and
promotional activity. Comparable operating margin for the segment
recorded a significant improvement - up 390 basis points. Reported
operating profit improved by EUR21.1 million to EUR43.9
million.
Emerging markets
Half-year Change
2015 2014
Volume (m unit cases) 520.5 494.0 5.4%
Net sales revenue (EUR
m) 1,385.3 1,450.4 -4.5%
Net sales revenue per unit
case (EUR) 2.66 2.94 -9.5%
FX-neutral net sales revenue
per unit case (EUR) 2.66 2.55 4.3%
Operating profit (EBIT)
(EUR m) 82.0 82.4 -
Comparable EBIT (EUR m) 89.8 79.2 13.4%
EBIT margin (%) 5.9 5.7 20bps
Comparable EBIT margin
(%) 6.5 5.5 100bps
------------------------------- -------- -------- -------
-- Unit case volume in our Emerging markets segment grew by 5.4%
over the half year, following a 1.7% decline in the prior-year
period. Strong performances in Nigeria, Romania and Ukraine across
all categories and an exceptional performance in Juice more than
offset the weakness in Russia's Sparkling performance amidst
challenging macroeconomic conditions.
-- Net sales revenue declined by 4.5% in the half year. Benefits
of improved volume, positive pricing and category mix in the period
only partly compensated for the substantial negative impact from
currency movements. FX-neutral net sales revenue per case grew by
4.3% in the period, in line with our strategy to implement pricing
initiatives in territories facing currency headwinds.
-- Volume in Russia declined by low single digits in the first
half, following a low single-digit growth in the prior-year period.
Amid difficult market conditions Trademark Coca-Cola products
declined by merely 0.7% in the first half supported by our
strategic actions including the launch of Coke Zero in May and
increased promotional activity in the organised trade. An excellent
performance in Juice, in part supported by the inclusion of Moya
Semya in our portfolio, was not enough to offset significant
declines in the flavoured brands of our Sparkling portfolio.
-- Volume in Nigeria continues to demonstrate robust growth
momentum, delivering mid-teens volume growth, helped in part by
easier comparatives in the prior-year period due to the temporary
supply and promotion disruptions related to the roll-out of SAP in
2014. With a successful 'Share a Coke' campaign, additional PET
bottle production capacity and improved product availability, the
business delivered a very good performance across all categories.
Nigeria remains a key growth driver for the Group.
-- Volume in Romania increased by high single digits in the half
year, with good performances across our portfolio. This follows a
high single-digit decline in the prior-year period. Sparkling
performance was supported by the launch of our new 1.25 L Sparkling
pack for the organised trade. Water has returned to good growth
following a prolonged period of SKU rationalisation and competitive
pressure. Cappy Pulpy continues to drive good results in Juice.
Package mix continued to improve driven by good growth in the
Sparkling and Water single-serve packages.
-- Ukraine delivered an excellent result with mid-teens growth
in the half year, following a 10% decline in the prior-year period.
The overall environment remains fragile, severely impacting
consumer demand, and in some cases, product distribution. Against
this backdrop, we have continued executing our strategy of
intensifying our promotional activities in the organised trade
channel, while adjusting our route-to-market. This has led to
double-digit growth in all key categories.
-- Our Emerging markets segment posted a EUR10.6 million
improvement in comparable operating profit to EUR89.8 million,
leading to a 100 basis point improvement in the segment's
comparable operating margin to 6.5%. Higher currency-driven pricing
and revenue growth management initiatives, improved volume and
favorable input costs were partly offset by the significant
currency headwinds and higher operating and overhead costs. On a
reported basis, operating profit remained broadly stable at EUR82.0
million.
Business Outlook
Our business has made good progress in the first half of the
year. We are particularly encouraged by the underlying sequential
improvement we have achieved in volumes. In the remainder of the
year, we will be working to deliver volume growth in all three
segments, and we expect the Developing and Emerging market segments
to grow faster than the Established markets segment.
FX-neutral net sales revenue per unit case was stable in the
first half as progress in the Emerging markets segment was offset
by deflationary pressures in Established and Developing markets.
Looking ahead we envisage further progress in Emerging markets
where we will continue to take pricing actions in markets impacted
by foreign currency depreciation and maintain our OBPPC initiatives
to achieve better mix. In addition, we are focused on making
improvements in Established and Developing market segments,
although this will be contingent on deflationary pressures in these
markets. Overall, we reiterate our expectation for an improvement
in FX-neutral net sales revenue per case in the full year, while
recognising that the increase may be modest.
Currencies in a number of our markets remain volatile, impacting
our business negatively. Taking into account our hedged positions
and current spot rates, we expect an adverse impact on EBIT from
foreign currency to amount to EUR155 million for the full year.
As we anticipated the input cost environment is benign, mainly
due to lower EU sugar and PET resin costs. We continue to expect a
high single-digit percentage decrease in full-year currency-neutral
input cost per case year on year.
Operating expense management will continue to be a key element
of our plans for the year. Our actions are expected to result in an
absolute reduction in operating expenses and a reduction in
operating expenses as a percentage of net sales revenue, supporting
EBIT margin growth.
We remain on track to deliver volume growth this year and are
pleased that conditions in some of our markets are beginning to
show signs of improvement although challenges remain. We are
confident that our proven strategy, leading market positions and
broad geographic exposure position us well in the medium to long
term.
Technical guidance
Our initiatives to further improve operational efficiencies
remain unchanged. For 2015, we have identified restructuring
initiatives of approximately EUR45 million. We expect these
initiatives to yield EUR30 million in annualised benefits from 2016
onwards, while the initiatives already taken in 2014 and those that
we will take in 2015 are expected to yield EUR44 million of total
benefits in 2015.
Considering the dynamics of the evolving mix of profitability in
our country portfolio, we continue to expect our comparable
effective tax rate to range between 24% and 26%.
Our target for free cash flow remains EUR1.1-1.2 billion for the
three-year period between 1 January 2013 and 31 December 2015.
Annual capital expenditure over the medium term is still
expected to range between 5.5% and 6.5% of net sales revenue.
Group Financial Review
Selected income statement
and other items Half-year
---------------------------------------
2014
2015 EUR
EUR million million % Change
------------- ---------- ------------
Volume (m unit cases) 1,006.6 970.2 3.8%
Net sales revenue 3,150.9 3,183.1 -1.0%
Net sales revenue per unit
case (EUR) 3.13 3.28 -4.6%
FX-neutral net sales revenue
per unit case (EUR)(1) 3.13 3.13 -
Cost of goods sold (1,999.0) (2,033.4) -1.7%
Comparable cost of goods sold(2) (2,001.5) (2,042.5) -2.0%
Gross profit 1,151.9 1,149.7 0.2%
Comparable gross profit(2) 1,149.4 1,140.6 0.8%
Operating expenses (930.4) (973.7) -4.4%
Operating profit (EBIT) 199.1 164.1 21.3%
Comparable operating profit
(EBIT)(2) 219.0 166.9 31.2%
Adjusted EBITDA(3) 369.5 347.7 6.3%
Comparable adjusted EBITDA(2) 382.3 350.3 9.1%
Total net finance costs (37.2) (38.9) -4.4%
Tax (39.2) (34.1) 15.0%
Profit after tax attributable
to owners of the parent 125.2 95.1 31.7%
Comparable profit after tax
attributable to owners of
the parent(2) 141.7 98.8 43.4%
Basic earnings per share (EUR) 0.344 0.261 31.8%
Comparable basic earnings
per share (EUR)(2) 0.389 0.271 43.5%
Net cash from operating activities(3) 336.4 234.9 43.2%
Capital expenditure(3) (117.2) (140.1) -16.3%
Free cash flow(3) 219.2 94.8 >100%
------------- ---------- ------------
(1) FX-neutral net sales revenue per unit case refers to net
sales revenue translated using 2015 exchange rates divided by
volume (unit cases).
(2) Refer to the 'Reconciliation of Reported to Comparable
Financial Indicators' section.
(3) Refer to 'Supplementary Information' section.
Net sales revenue
Net sales revenue decreased by 1.0% during the first half of
2015, compared to the respective prior-year period, as strong
volume performance supported partly by the contribution from the
four extra selling days in Q1 2015 and the positive result from our
revenue growth initiatives were more than offset by adverse
currency headwinds. On an FX-neutral basis, net sales revenue per
unit case was stable during the first half of 2015 compared to the
respective prior-year period.
Cost of goods sold
Cost of goods sold decreased by 1.7% and comparable cost of
goods sold decreased by 2.0% in the first half of 2015, compared to
the respective prior-year period, as the input cost environment and
in particular, EU sugar and PET resin prices, continued to be
favourable.
Gross profit
Gross profit remained stable during the first half of 2015
increasing slightly from EUR1,149.7 million in the first half of
2014 to EUR1,151.9 million in the first half of 2015. Comparable
gross profit margin increased from 35.8% in the first half of 2014
to 36.5% in the first half of 2015 mainly reflecting the benefits
of favourable input costs.
Operating expenses
Operating expenses decreased by 4.4% during the first half of
2015 compared to the respective prior-year period, mainly
reflecting the benefits of our restructuring initiatives and tight
cost management, as well as positive currency impact.
Operating profit
Comparable operating profit increased by 31.2% in the first half
of 2015 compared to the respective prior-year period, reflecting
the increased sales volume, the benefits from our revenue growth
initiatives, favourable input costs and cost efficiencies, which
were only partially offset by the significant adverse foreign
currency impact. In line with comparable operating profit,
operating profit increased by 21.3% in the first half of 2015,
compared to the prior-year period, as it was further impacted
mainly by the increased restructuring costs.
Total net finance costs
Total net finance costs decreased by EUR1.7 million during the
first half of 2015, compared to the prior-year period mainly due to
the cessation of hyperinflation accounting in Belarus.
Tax
On a comparable basis, the effective tax rate was approximately
24% for the first half of 2015 compared to 25% for the respective
prior-year period. On a reported basis Coca-Cola HBC's effective
tax rate was approximately 24% for the first half of 2015 compared
to 26% for the prior-year period. The Group's effective tax rate
varies depending on the mix of taxable profits by territory, the
non-deductibility of certain expenses, non-taxable income and other
one-off tax items across its territories.
Profit after tax attributable to owners of the parent
Comparable profit after tax attributed to owners of the parent
increased by 43.4% while operating profit after tax attributed to
owners of the parent increased by 31.7%, for the first half of 2015
compared to the respective prior-year period, mainly driven by the
higher operating profitability.
Net cash from operating activities
Net cash from operating activities increased by 43.2% in the
first half of 2015 compared to the respective prior-year period,
mainly reflecting the increased operating profitability, the
improvement in working capital and the reduced capital expenditure
that is mainly the result of positive phasing, compared to the
respective prior-year period.
For the half year of 2015, free cash flow increased by more than
100% compared to the respective prior-year period, reflecting
mainly the increased cash from operating activities and decreased
capital expenditure.
Capital expenditure
Capital expenditure, net of receipts from the disposal of assets
and including principal repayments of finance lease obligations,
decreased by 16.3% in the first half of 2015 compared with the
respective prior-year period. In the first half of 2015, capital
expenditure amounted to EUR117.2 million of which 61% was related
to investment in production equipment and facilities and 17% to the
acquisition of marketing equipment. In the first half of 2014,
capital expenditure amounted to EUR140.1 million of which 54% was
related to investment in production equipment and facilities and
22% to the acquisition of marketing equipment.
Supplementary Information
The financial measures Adjusted EBITDA, Capital Expenditure and
Free Cash Flow consist of the following reported amounts in the
condensed consolidated interim financial statements:
Half-year
2015 2014
EUR million EUR million
Profit after tax 125.5 95.1
Tax charged to the income statement 39.2 34.1
Total finance costs, net 37.2 38.9
Share of results of equity method
investments (2.8) (4.0)
Operating profit (EBIT) 199.1 164.1
Depreciation and impairment of property,
plant and equipment 165.6 176.7
Amortisation of intangible assets 0.2 0.2
Employee share options 5.1 6.7
Other non-cash items (0.5) -
Adjusted EBITDA 369.5 347.7
Losses / (gains) on disposal of non-current
assets 1.8 (2.6)
Increase in working capital (11.9) (88.6)
Tax paid (23.0) (21.6)
------------- -------------
Net cash from operating activities 336.4 234.9
------------- -------------
Payments for purchases of property,
plant and equipment (113.3) (137.3)
Principal repayments of finance lease
obligations (5.0) (6.6)
Proceeds from sale of property, plant
and equipment 1.1 3.8
------------- -------------
Capital expenditure (117.2) (140.1)
------------- -------------
Net cash from operating activities 336.4 234.9
Capital expenditure (117.2) (140.1)
------------- -------------
Free cash flow 219.2 94.8
------------- -------------
The volume, net sales revenue and net sales revenues per unit
case on a reported and FX-neutral base, are provided for NARTD and
premium spirits, as set out below:
Half-year %
NARTD 2015 2014 Change
Volume (m unit cases) (1) 1,005.6 969.2 3.8%
Net sales revenue (EUR m) 3,076.5 3,106.9 -1.0%
Net sales revenue per Unit Case
(EUR) 3.06 3.21 -4.7%
FX-neutral net sales revenue per
unit case (EUR) 3.06 3.07 -0.3%
Half-year %
Premium Spirits 2015 2014 Change
Volume (m unit cases)(1) 1.001 0.976 2.6%
Net sales revenues (EUR m) 74.4 76.2 -2.4%
Net sales revenue per unit case
(EUR) 74.33 78.07 -4.8%
FX-neutral net sales revenue per
unit case (EUR) 74.33 66.58 11.6%
Half-year %
Total 2015 2014 Change
Volume (m unit cases)(1) 1,006.6 970.2 3.8%
Net sales revenue (EUR m) 3,150.9 3,183.1 -1.0%
Net sales revenue per unit case
(EUR) 3.13 3.28 -4.6%
FX-neutral net sales revenue per
unit case (EUR) 3.13 3.13 -
(1) For NARTD volume, one unit case corresponds to approximately
5.678 litres or 24 servings, being a typically used measure of
volume. For premium spirits volume, one unit case also corresponds
to 5.678 litres.
Coca-Cola HBC Group
Coca-Cola HBC is a leading bottler of The Coca-Cola Company with
a sales volume of more than 2 billion unit cases. It has a broad
geographic footprint with operations in 28 countries serving a
population of approximately 590 million people. Coca-Cola HBC
offers a diverse range of non-alcoholic ready to drink beverages in
the sparkling, juice, water, sport, energy, tea and coffee
categories. Coca-Cola HBC is committed to promoting sustainable
development in order to create value for its business and for
society. This includes providing products that meet the beverage
needs of consumers, fostering an open and inclusive work
environment, conducting its business in ways that protect and
preserve the environment and contribute to the socio-economic
development of the local communities.
Coca-Cola HBC has a premium listing on the London Stock Exchange
(LSE: CCH) and its shares are listed on the Athens Exchange (ATHEX:
EEE). Coca-Cola HBC is included in the Dow Jones Sustainability and
FTSE4Good Indexes. For more information, please visit
http://www.coca-colahellenic.com.
Financial information in this announcement is presented on the
basis of
International Financial Reporting Standards ('IFRS').
Conference call
Coca-Cola HBC will host a conference call for financial analysts
and investors to discuss the 2015 half-year financial results on 13
August 2015 at 10:00 am, Swiss time (9:00 am London, 11:00 am
Athens, and 4:00 am New York time). Interested parties can access
the live, audio webcast of the call through Coca-Cola HBC's website
(www.coca-colahellenic.com/investorrelations/webcasts).
Enquiries
Coca--Cola HBC Group
Basak Kotler
Investor Relations Tel: +41 41 726 0143
Director email: basak.kotler@cchellenic.com
Eri Tziveli
Investor Relations Tel: +30 210 618 3133
Manager email: eri.tziveli@cchellenic.com
Nikos Efstathopoulos
Investor Relations Tel: +30 210 618 3260
Manager email: nikos.efstathopoulos@cchellenic.com
International media
contact:
StockWell Communications Tel: +44 20 7240 2486
Rob Morgan robert.morgan@stockwellgroup.com
Ben Ullmann ben.ullmann@stockwellgroup.com
Anushka Mathew anushka.mathew@stockwellgroup.com
Greek media contact:
V+O Communications Tel: +30 211 7501219
Argyro Oikonomou email: ao@vando.gr
Principal risks and uncertainties
The principal risks and uncertainties to which the Company will
be exposed in the second half of 2015 are substantially the same as
those outlined in the 2014 Integrated Annual Report for the year
ending 31 December 2014, pages 52 to 53.
We have adopted a strategic Enterprise Wide Risk Management
approach that provides a common, integrated framework to manage
risks and leverage opportunities across the Group. Through a
continuous process of identifying, assessing, managing and
escalating risks and opportunities, we seek to minimize our
exposure to unforeseen events and identified risks, and create a
stable environment for delivering on our strategic objectives.
Defining our principal risks
Our strategic priorities provide the context for guiding us in
the management of the risks faced by our business. The most
important risk categories are macroeconomic and operational.
Macroeconomic risks relate to the external environment and the
markets in which we operate. We have less control over these risks
than we do over operational risks, such as product quality.
The overview of our most important risks does not include all
the risks that may ultimately affect our Company. Some risks not
yet known to us, or currently believed to be immaterial, could
ultimately have an impact on our business or financial performance.
We remain constantly alert to changes to our economic and
regulatory operating environments, to ensure that new risks are
identified and assessed in a timely way.
Our principal risks
Principal risks Specific risk that we face Mitigation Link to strategy
------------------------------- ------------------------------ ------------------------------- --------------------
Beverage Category Consumer Health We maintain a focus on Consumer Relevance
Acceptability Consumer tastes and innovation in the products we
behaviours are constantly offer, including expanding our
evolving at an increasingly range
rapid rate. Ensuring of reduced and zero-calorie
effective responses, beverages and reducing the
including addressing any calorie content of many
significant misperceptions of products in
the health impact our portfolio. We promote
of soft drinks, is important active lifestyles and clearer
to our business. labelling on packaging,
supported
by broader community
engagement programmes focused
on health and wellness. In
these ways we
actively counteract
misperceptions.
------------------------------- ------------------------------ ------------------------------- --------------------
Political and Security Declining Consumer Demand Our OBPPC approach seeks Customer Preference
Instability Challenging market conditions opportunities by identifying
continue to impact consumer and aligning the right brands,
confidence and disposable at the
income. right price, in the right
Our long-term sustainable package and through the right
growth depends on managing channel. This enables us to
challenging and volatile expand
macroeconomic our product offering in the
conditions, such as the marketplace and to win or
political and security maintain market share. Robust
instability experienced in security
Russia, Ukraine, management, crisis response
and Nigeria. and business continuity
strategies support our ability
to remain
resilient in areas with
heightened security risk.
------------------------------- ------------------------------ ------------------------------- --------------------
Employee engagement & People and Talent Our focus on developing our Community Trust
Retention It is essential that we leadership talent ensures the
develop and maintain right people are in the right
management capability across positions
our markets. Our across the business. Our
growth depends on our ability ongoing focus on employee
to attract and retain engagement supports our values
sufficient numbers of and promotes
qualified and experienced operational excellence. By
employees. focusing on managing our
business in ways that are
responsible
and creating shared value with
communities in which we work,
we also seek to ensure that we
are an attractive employer.
------------------------------- ------------------------------ ------------------------------- --------------------
Product Quality & Food Safety Quality We have stringent processes in Consumer Relevant
Quality issues, or place to minimise the
contamination of our occurrence of quality issues.
products, could result in However,
reputational damage and when issues arise, we have
a reduction in volume and net robust processes and systems
sales revenue. in place that enable us to
deal with
them quickly and efficiently,
thus ensuring that our
customers and consumers retain
confidence
in our products.
------------------------------- ------------------------------ ------------------------------- --------------------
Commercial & Competition Channel Mix We continued to increase our Customer Preference
The increasing concentration presence in the discounter
of retailers and independent channel during 2014 and are
wholesalers, on whom we working
depend to closely with our customers to
distribute our products, identify opportunities for
could lower our joint value creation. Our
profitability. The immediate Right Execution
consumption channel Daily (RED) strategy continues
remains under pressure as to support our commitment to
consumers increasingly switch operational excellence, which
to at-home consumption. enables us to respond to
changing customer needs and
channels.
------------------------------- ------------------------------ ------------------------------- --------------------
Tax & Treasury Foreign Exchange To reduce currency risk and Cost Leadership
Our foreign exchange exposure limit volatility, our treasury
arises from changes in policy requires the hedging of
exchange rates between the 25% to 80% of rolling 12-month
Euro, the forecasted transactional
US dollar, and other exposures. Hedging beyond a
currencies used in the 12-month
markets we serve. During period may occur if forecast
2014, this exposure was transactions are highly
particularly notable against probable. Where available, we
currencies in Russia, use derivative
Ukraine, and Nigeria. financial instruments to
reduce our net exposure to
currency fluctuations. These
contracts
normally mature within one
year.
------------------------------- ------------------------------ ------------------------------- --------------------
Tax & Treasury Taxation We continue to proactively Cost Leadership
Regulations around consumer work with regulators to ensure
health and the risk of that the facts are understood
taxation on our products, and
could impact our products are not singled
demand and affect our out unfairly.
profitability. In 2014, a
number of governments
continued to contemplate
taxes targeting our products
and packaging waste recovery.
This is a trend we expect to
continue.
------------------------------- ------------------------------ ------------------------------- --------------------
Stakeholder Relationships Strategic Stakeholder Our management across the Community Trust
Relationships business focuses on effective
The Group relies on our day-to-day interaction with
strategic relationships and our strategic
agreements with The Coca-Cola partners to ensure that we
Company, work together as effective
Monster Energy and our partners for growth. We engage
premium spirits partners. Any in joint
termination of agreements, or projects and business
renewal planning, focus on strategic
at terms less favourable than issues, and participate in
currently experienced, could 'Top to Top'
adversely impact our senior management forums.
business.
------------------------------- ------------------------------ ------------------------------- --------------------
Related party transactions
Related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or the performance of CCHBC during
the period, as well as any changes in the related party
transactions as described in the 2014 Integrated Annual Report that
could have a material effect on the financial position or
performance of CCHBC in the first six months of current financial
year, are described in section "Condensed consolidated interim
financial statements for the six months ended 3 July 2015", note 17
"Related party transactions".
Going concern statement
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. Accordingly, and having reassessed the
principal risks, they continue to adopt the going concern basis of
accounting in preparing these condensed consolidated interim
financial statements.
Responsibility statement
The Directors of the Company, whose names are set out below,
confirm that to the best of their knowledge:
(a) the condensed consolidated interim financial statements have
been prepared in accordance with IAS 34, Interim Financial
Reporting as issued by the IASB and give a true and fair view of
the assets, liabilities, financial position and profit or loss of
the undertakings included in the consolidation as a whole for the
period ended 3 July 2015 as required by the Disclosure and
Transparency Rules of the UK Financial Conduct Authority ("DTR")
4.2.4; and
(b) the interim management report includes a fair review of the
information required by:
-- DTR 4.2.7R of the DTRs, being an indication of important
events that have occurred during the first six months of the
current financial year and their impact on the condensed
consolidated interim financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
-- DTR 4.2.8 R of the DTRs, being related party transactions
that have taken place in the first six months of the current
financial year and that have materially affected the financial
position or performance of the Group during that period, and any
changes in the related party transactions described in the 2014
Integrated Annual Report for Coca-Cola HBC AG and its subsidiaries
for the year ended 31 December 2014, that could have a material
effect on the financial position or performance of the Group in the
first six months of the current financial year.
Name Title
George A. David Chairman and Non-Executive
Director
Dimitris Lois Executive Director
Anastassis G. Vice-Chairman
David
Anastasios I. Non-Executive Director
Leventis
Christo Leventis Non-Executive Director
José Octavio Non-Executive Director
Reyes
Irial Finan Non-Executive Director
Sir Michael Llewellyn-Smith Senior Independent Non-Executive
Director
Nigel Macdonald Independent Non-Executive
Director
Antonio D'Amato Independent Non-Executive
Director
John P.Sechi Independent Non-Executive
Director
Alexandra Papalexopoulou Independent Non-Executive
Director
Olusola (Sola) Independent Non-Executive
David-Borha Director
Signed on behalf of the Board
Dimitris Lois
Chief Executive
Officer
12 August 2015
Independent review report to Coca-Cola HBC AG
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed the condensed consolidated interim financial
statements, defined below, in the 'half-yearly financial report' of
Coca-Cola HBC AG for the six months ended 3 July 2015. Based on our
review, nothing has come to our attention that causes us to believe
that the condensed consolidated interim financial statements are
not prepared, in all material respects, in accordance with
International Accounting Standard 34 and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
This conclusion is to be read in the context of what we say in
the remainder of this report.
What we have reviewed
The condensed consolidated interim financial statements, which
are prepared by Coca-Cola HBC AG, comprise:
-- the condensed consolidated interim balance sheet as at 3 July 2015;
-- the condensed consolidated interim income statement for the six month period then ended;
-- the condensed consolidated interim statement of comprehensive
income for the six month period then ended;
-- the condensed consolidated interim statement of changes in
equity for the six month period then ended;
-- the condensed consolidated interim cash flow statement for
the six month period then ended; and
-- the explanatory notes to the condensed consolidated interim financial statements.
As disclosed in note 1, the financial reporting framework that
has been applied in the preparation of the full annual financial
statements of the group is applicable law and International
Financial Reporting Standards (IFRSs) as issued by the
International Accounting Standards Board.
The condensed consolidated interim financial statements included
in the half-yearly financial report have been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting' and the Disclosure and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
What a review of condensed consolidated financial statements
involves
We conducted our review in accordance with International
Standard on Review Engagements 2410, 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity'
issued by the International Auditing and Assurance Standards Board.
A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed consolidated interim financial statements.
Responsibilities for the condensed consolidated interim
financial statements and the review
Our responsibilities and those of the directors
The half-yearly financial report, including the condensed
consolidated interim financial statements, is the responsibility
of, and has been approved by, the directors. The directors are
responsible for preparing the half-yearly financial report in
accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express to the company a conclusion on
the condensed consolidated interim financial statements in the
half-yearly financial report based on our review. This report,
including the conclusion, has been prepared for and only for the
company for the purpose of complying with the Disclosure and
Transparency Rules of the Financial Conduct Authority and for no
other purpose. We do not, in giving this conclusion, accept or
assume responsibility for any other purpose or to any other person
to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Marios Psaltis
the Certified Auditor, Reg. No. 38081
for and on behalf of PricewaterhouseCoopers S.A.
Certified Auditors, Reg. No. 113
13 August 2015
Athens, Greece
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 United Kingdom and Switzerland governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Condensed consolidated interim financial statements for the six
months ended 3 July 2015
Condensed consolidated interim balance sheet (unaudited)
As at
As at 31 December
3 July 2015 2014
Note EUR million EUR million
------------------------------ ------ ------------ ------------
Assets
Intangible assets 4 1,952.8 1,884.8
Property, plant and equipment 4 2,656.2 2,624.1
Other non-current assets 208.4 308.0
------------------------------ ------ ------------ ------------
Total non-current assets 4,817.4 4,816.9
------------------------------ ------ ------------ ------------
Inventories 538.3 414.2
Trade and other receivables 1,119.1 1,011.6
Cash and cash equivalents 5 830.0 636.3
------------------------------ ------ ------------ ------------
Total current assets 2,487.4 2,062.1
------------------------------ ------ ------------ ------------
Total assets 7,304.8 6,879.0
------------------------------ ------ ------------ ------------
Liabilities
Short-term borrowings 5 506.6 548.6
Other current liabilities 2,061.4 1,647.3
------------------------------ ------ ------------ ------------
Total current liabilities 2,568.0 2,195.9
------------------------------ ------ ------------ ------------
Long-term borrowings 5 1,524.8 1,556.3
Other non-current liabilities 308.3 335.7
------------------------------ ------ ------------ ------------
Total non-current liabilities 1,833.1 1,892.0
------------------------------ ------ ------------ ------------
Total liabilities 4,401.1 4,087.9
Equity
Owners of the parent 2,899.4 2,787.0
Non-controlling interests 4.3 4.1
------------------------------ ------ ------------ ------------
Total equity 2,903.7 2,791.1
------------------------------ ------ ------------ ------------
Total equity and liabilities 7,304.8 6,879.0
------------------------------ ------ ------------ ------------
The accompanying notes form an integral part of these condensed
consolidated interim financial statements
Condensed consolidated interim income statement
(unaudited)
Six months Six months
ended ended
3 July 2015 27 June 2014
Note EUR million EUR million
---------------------------- ---- ------------ -------------
Net sales revenue 3 3,150.9 3,183.1
Cost of goods sold (1,999.0) (2,033.4)
---------------------------- ---- ------------ -------------
Gross profit 1,151.9 1,149.7
Operating expenses (930.4) (973.7)
Restructuring costs 7 (22.4) (11.9)
Operating profit 3 199.1 164.1
Total finance costs, net 8 (37.2) (38.9)
Share of results of equity
method investments 2.8 4.0
---------------------------- ---- ------------ -------------
Profit before tax 164.7 129.2
Tax 9 (39.2) (34.1)
Profit after tax 125.5 95.1
---------------------------- ---- ------------ -------------
Attributable to:
Owners of the parent 125.2 95.1
Non-controlling interests 0.3 -
---------------------------- ---- ------------ -------------
125.5 95.1
---------------------------- ---- ------------ -------------
Basic and diluted earnings
per share (EUR) 10 0.34 0.26
Condensed consolidated interim statement of comprehensive
income (unaudited)
Six months
ended Six months
3 July ended
2015 27 June 2014
EUR million EUR million
------------------------------------------------ -------------- ---------------
Profit after tax for the period 125.5 95.1
Other comprehensive income:
Items that may be subsequently
reclassified to income statement:
Valuation (loss) / gain on available-for-sale
assets (0.1) 0.1
Cash flow hedges:
Net losses during the period (3.0) (6.7)
Net losses reclassified to
profit and loss for the period 3.2 3.8
Transfers to inventory for the
period (12.3) (12.1) (2.2) (5.1)
------ -------
Foreign currency translation 112.5 (46.3)
Share of other comprehensive
income of
equity method investments 0.9 0.1
Income tax relating to items
that may be subsequently reclassified
to income statement 7.1 1.2
------------------------------------------------ -------------- ---------------
108.3 (50.0)
Items that will not be subsequently
reclassified to income statement:
Actuarial gains / (losses) 5.1 (22.0)
Income tax relating to components
of
other comprehensive income (0.4) 4.3
------------------------------------------------ -------------- ---------------
4.7 (17.7)
------------------------------------------------ -------------- ---------------
Other comprehensive income for
the period, net of tax 113.0 (67.7)
------------------------------------------------ -------------- ---------------
Total comprehensive income for
the period 238.5 27.4
------------------------------------------------ -------------- ---------------
Total comprehensive income attributable
to:
Owners of the parent 238.2 27.4
Non-controlling interests 0.3 -
------------------------------------------------ -------------- ---------------
238.5 27.4
------------------------------------------------ -------------- ---------------
Condensed consolidated interim statement of changes in equity
(unaudited)
Attributable to owners of the parent
Exchange Non-
Share Share Group Treasury equalisation Other Retained controlling Total
capital Premium Reorganization shares reserve reserves earnings Total interests equity
EUR EUR reserve EUR EUR EUR EUR EUR EUR EUR
million million EUR million million million million million million million million
--------------- ------- -------- -------------- -------- ------------ -------- -------- -------- ----------- ---------
Balance as at 1
January
2014 1,997.4 5,287.1 (6,472.1) (70.7) (293.3) 388.7 2,125.1 2,962.2 5.1 2,967.3
Shares issued
to employees
exercising
stock options 0.3 0.3 - - - - - 0.6 - 0.6
Share-based
compensation:
Options - - - - - 6.7 - 6.7 - 6.7
Movement in
treasury
shares - - - - - (1.9) - (1.9) - (1.9)
Hyperinflation
impact - - - - - - 2.1 2.1 - 2.1
Appropriation
of reserves - - - - - (134.3) 134.3 - - -
Dividends (note
13) - (130.2) - - - - 1.2 (129.0) - (129.0)
--------------- ------- -------- -------------- -------- ------------ -------- -------- -------- ----------- ---------
1,997.7 5,157.2 (6,472.1) (70.7) (293.3) 259.2 2,262.7 2,840.7 5.1 2,845.8
Profit for the
period
net of tax - - - - - - 95.1 95.1 - 95.1
Other
comprehensive
income
for the
period, net of
tax - - - - (46.2) (3.8) (17.7) (67.7) - (67.7)
--------------- ------- -------- -------------- -------- ------------ -------- -------- -------- ----------- ---------
Total
comprehensive
income
for the
period, net of
tax(1) - - - - (46.2) (3.8) 77.4 27.4 - 27.4
Balance as at
27 June
2014 1,997.7 5,157.2 (6,472.1) (70.7) (339.5) 255.4 2,340.1 2,868.1 5.1 2,873.2
Shares issued
to employees
exercising
stock options 0.4 0.4 - - - - - 0.8 - 0.8
Share-based
compensation:
Options - - - - - 5.4 - 5.4 - 5.4
Movement in
treasury
shares - - - - - (0.4) - (0.4) - (0.4)
Hyperinflation
impact - - - - - - 1.1 1.1 - 1.1
Share of other
changes
in equity of
equity method
investments (0.5) (0.5) - (0.5)
Appropriation
of reserves - - - - - (3.7) 3.7 - - -
Dividends - - - - - - - - (0.4) (0.4)
--------------- ------- -------- -------------- -------- ------------ -------- -------- -------- ----------- ---------
1,998.1 5,157.6 (6,472.1) (70.7) (339.5) 256.7 2,344.4 2,874.5 4.7 2,879.2
Profit for the
period
net of tax - - - - - - 199.7 199.7 (0.6) 199.1
Other
comprehensive
income
for the
period, net of
tax - - - - (275.8) 3.0 (14.4) (287.2) - (287.2)
Total
comprehensive
income
for the
period, net of
tax - - - - (275.8) 3.0 185.3 (87.5) (0.6) (88.1)
--------------- ------- -------- -------------- -------- ------------ -------- -------- -------- ----------- ---------
Balance as at
31 December
2014 1,998.1 5,157.6 (6,472.1) (70.7) (615.3) 259.7 2,529.7 2,787.0 4.1 2,791.1
--------------- ------- -------- -------------- -------- ------------ -------- -------- -------- ----------- ---------
(1) The amount included in the exchange equalisation reserve of
EUR46.2 million loss for the first half of 2014 represents the
exchange loss attributed to the owners of the parent of EUR46.3
million plus the share of equity method investments of EUR0.1
million gain.
The amount included in other reserves of EUR3.8 million loss for
the first half 2014 consists of gains on valuation of
available-for-sale financial assets of EUR0.1 million, cash flow
hedges losses of EUR5.1 million (of which EUR6.7 million represents
revaluation loss for the period, EUR3.8 million represents
revaluation loss reclassified to profit and loss for the period and
EUR2.2 million represents revaluation gain reclassified to
inventory for the period) and the deferred income tax credit of
EUR1.2 million.
The amount of EUR77.4 million gain comprises a gain for the
period of EUR95.1 million plus actuarial loss of EUR22.0 million
less deferred income tax credit of EUR4.3 million.
Condensed consolidated interim statement of changes in equity
(unaudited)
Attributable to owners of the parent
Exchange Non-
Share Share Group Treasury equalisation Other Retained controlling
Capital Premium Reorganization shares reserve reserves earnings Total interests Total
EUR EUR reserve EUR EUR EUR EUR EUR EUR equity
million million EUR million million million million million million million EURmillion
----------------------- ------- ------- -------------- -------- ------------ -------- -------- -------- ----------- -----------
Balance as at 1 January
2015 1,998.1 5,157.6 (6,472.1) (70.7) (615.3) 259.7 2,529.7 2,787.0 4.1 2,791.1
Shares issued to
employees
exercising stock
options 0.1 0.2 - - - - - 0.3 - 0.3
Share-based
compensation:
Options - - - - - 5.1 - 5.1 - 5.1
Appropriation/transfer
of reserves - - - - - 0.7 (0.7) - - -
Dividends (note 13) - (132.4) - - - - 1.2 (131.2) (0.1) (131.3)
----------------------- ------- ------- -------------- -------- ------------ -------- -------- -------- ----------- -----------
1,998.2 5,025.4 (6,472.1) (70.7) (615.3) 265.5 2,530.2 2,661.2 4.0 2,665.2
Profit for the period
net of tax - - - - - - 125.2 125.2 0.3 125.5
Other comprehensive
income
for the period, net of
tax(2) - - - - 113.3 (5.0) 4.7 113.0 - 113.0
----------------------- ------- ------- -------------- -------- ------------ -------- -------- -------- ----------- -----------
Total comprehensive
income
for the period net of
tax - - - - 113.3 (5.0) 129.9 238.2 0.3 238.5
----------------------- ------- ------- -------------- -------- ------------ -------- -------- -------- ----------- -----------
Balance as at 3 July
2015 1,998.2 5,025.4 (6,472.1) (70.7) (502.0) 260.5 2,660.1 2,899.4 4.3 2,903.7
----------------------- ------- ------- -------------- -------- ------------ -------- -------- -------- ----------- -----------
(2) The amount included in the exchange equalisation reserve of
EUR113.3 million gain for the first half of 2015 represents the
exchange gain attributed to the owners of the parent of EUR113.3
million.
The amount included in other reserves of EUR5.0 million loss for
the first half of 2015 consists of loss on valuation of
available-for-sale financial assets of EUR0.1 million, cash flow
hedges losses of EUR12.1 million (of which EUR3.0 million
represents revaluation loss for the period, EUR3.2 million
represents revaluation loss reclassified to profit and loss for the
period and EUR12.3 million represents revaluation gain reclassified
to inventory for the period), EUR0.1 million gain relating to share
of other comprehensive income of equity method investments and the
deferred income tax credit of EUR7.1 million.
The amount of EUR129.9 million gain comprises a gain for the
period of EUR125.2 million plus actuarial gains of EUR5.1 million
less deferred income tax charge of EUR0.4 million.
The amount of EUR0.3 million gain included in non-controlling
interests for the first half of 2015 represents the share of
non-controlling interests in retained earnings.
Condensed consolidated interim cash flow statement
(unaudited)
Six months Six months
ended ended
3 July 27 June
2015 2014
Note EUR million EUR million
--------------------------------------- ----- ------------ ------------
Operating activities
Profit after tax for the period 125.5 95.1
Total finance costs, net 8 37.2 38.9
Share of results of equity method
investments (2.8) (4.0)
Tax charged to the income statement 39.2 34.1
Depreciation and impairment
of property, plant and equipment 4 165.6 176.7
Employee share options 5.1 6.7
Amortisation of intangible assets 4 0.2 0.2
Other non- cash items (0.5) -
369.5 347.7
Loss /(gain) on disposal of
non-current assets 1.8 (2.6)
Increase in inventories (108.1) (135.8)
Increase in trade and other
receivables (150.3) (194.6)
Increase in trade and other
payables 246.5 241.8
Tax paid (23.0) (21.6)
--------------------------------------- ----- ------------ ------------
Net cash from operating activities 336.4 234.9
--------------------------------------- ----- ------------ ------------
Investing activities
Payments for purchases of property,
plant and equipment (113.3) (137.3)
Payments for purchase of intangible
assets 17 - (14.1)
Proceeds from sales of property,
plant and equipment 1.1 3.8
Net receipts from investments 113.3 1.2
Interest received 5.0 4.5
Net cash from / (used in) investing
activities 6.1 (141.9)
--------------------------------------- ----- ------------ ------------
Financing activities
Proceeds from shares issued
to employees exercising stock
options 0.3 0.6
Payments for shares held by
non-controlling interests 12 (0.9) -
Proceeds from borrowings 272.4 647.0
Repayments of borrowings (381.8) (858.8)
Principal repayments of finance
lease obligations (5.0) (6.6)
Interest paid (30.3) (54.8)
Net cash used in financing
activities (145.3) (272.6)
--------------------------------------- ----- ------------ ------------
Increase / (decrease) in cash
and cash equivalents 197.2 (179.6)
--------------------------------------- ----- ------------ ------------
Movement in cash and cash equivalents
Cash and cash equivalents at
1 January 636.3 737.5
Increase / (decrease) in cash
and cash equivalents 197.2 (179.6)
Effect of changes in exchange
rates (3.5) (1.3)
Hyperinflation impact on cash - 0.5
--------------------------------------- ----- ------------ ------------
Cash and cash equivalents at
the end of the period 830.0 557.1
--------------------------------------- ----- ------------ ------------
Selected explanatory notes to the condensed consolidated interim
financial statements (unaudited)
1. Accounting policies
The accounting policies used in the preparation of the condensed
consolidated interim financial statements of Coca-Cola HBC AG
('Coca-Cola HBC', the 'Company' or the 'Group') are consistent with
those used in the 2014 annual financial statements.
Amendmends to IFRSs effective for the financial year ending 31
December 2015 are not expected to have a material impact on the
consolidated financial statements but may affect disclosures.
Basis of preparation
Operating results for the first half of 2015 are not indicative
of the results that may be expected for the year ending 31 December
2015 because of business seasonality. Business seasonality results
from higher unit sales of the Group's products in the warmer months
of the year. The Group's methods of accounting for fixed costs such
as depreciation and interest expense are not significantly affected
by business seasonality.
Costs that are incurred unevenly during the financial year are
anticipated or deferred in the interim report only if it would also
be appropriate to anticipate or defer such costs at the end of the
financial year.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual profit or
loss.
These condensed consolidated interim financial statements are
prepared in accordance with International Financial Reporting
Standards ("IFRS") as issued by the International Accounting
Standards Board ("IASB") applicable to Interim Financial Reporting
("IAS 34"). These condensed consolidated interim financial
statements should be read in conjunction with the 2014 annual
financial statements, which include a full description of the
Group's accounting policies and have been prepared in accordance
with IFRS as issued by the IASB.
Comparative figures have been reclassified and adjusted where
necessary to conform with changes in presentation in the current
year. More specifically in Note 17 Related party transactions, an
amount of EUR17.0 million for the first half of 2014, referring to
purchases of finished goods from The Coca-Cola Company (TCCC) and
its subsidiaries from joint ventures with The Coca-Cola Company,
was reclassified to purchases of finished goods from Joint
Ventures. As a result, transactions with joint ventures undertaken
with The Coca-Cola Company are reported under Joint Ventures.
2. Exchange rates
The Group's reporting currency is the euro (EUR). Coca-Cola HBC
translates the income statements of subsidiary operations to the
euro at average exchange rates and the balance sheet at the closing
exchange rate for the period.
The principal exchange rates used for transaction and
translation purposes in respect of one euro were:
Average for the six Closing as at
months period ended
3 July 2015 27 June 2014 3 July 2015 31 December
2014
------------- ----------- ------------ ----------- -----------
US dollar 1.11 1.37 1.11 1.22
UK sterling 0.73 0.82 0.71 0.78
Polish zloty 4.12 4.17 4.19 4.31
Nigerian
naira 213.85 213.57 218.71 204.99
Hungarian
forint 305.94 307.53 313.95 315.45
Swiss franc 1.05 1.22 1.05 1.20
Russian
Rouble 64.10 47.74 61.72 68.34
Romanian
leu 4.44 4.47 4.48 4.47
Serbian
dinar 120.90 115.69 120.34 120.41
Czech koruna 27.50 27.45 27.27 27.69
Ukrainian
hryvnia 24.42 14.25 23.32 19.23
------------- ----------- ------------ ----------- -----------
3. Segmental analysis
The Group has one business, being the production, sale and
distribution of ready -to- drink primarily non-alcoholic,
beverages. The Group operates in 28 countries and its financial
results are reported in the following three reportable
segments:
Established Austria, Cyprus, Greece, Italy, Northern
markets: Ireland, the Republic of Ireland and
Switzerland,
Developing Croatia, Czech Republic, Estonia, Hungary,
markets: Latvia, Lithuania, Poland, Slovakia
and Slovenia,
Emerging markets: Armenia, Belarus, Bosnia and Herzegovina,
Bulgaria, FYROM, Moldova, Montenegro,
Nigeria, Romania, the Russian Federation,
Serbia (including the Republic of Kosovo)
and Ukraine.
Information on the Group's segments is as follows:
Six months ended
3 July 2015 27 June 2014
-------------------------------- ------------ --------------
Volume in unit cases(1)
(million)
Established countries 305.3 305.9
Developing countries 180.8 170.3
Emerging countries 520.5 494.0
-------------------------------- ------------ --------------
Total volume 1,006.6 970.2
-------------------------------- ------------ --------------
Net sales revenue (EUR million)
Established countries 1,237.0 1,228.0
Developing countries 528.6 504.7
Emerging countries 1,385.3 1,450.4
-------------------------------- ------------ --------------
Total net sales revenue 3,150.9 3,183.1
-------------------------------- ------------ --------------
Operating profit (EUR million)
Established countries 73.2 58.9
Developing countries 43.9 22.8
Emerging countries 82.0 82.4
-------------------------------- ------------ --------------
Total operating profit 199.1 164.1
-------------------------------- ------------ --------------
Reconciling items (EUR million)
Finance costs, net (37.2) (38.9)
Tax (39.2) (34.1)
Share of results of equity
method investments 2.8 4.0
Non-controlling interests (0.3) -
-------------------------------- ------------ --------------
Profit after tax attributable
to owners of the parent 125.2 95.1
-------------------------------- ------------ --------------
Additional information by product type:
Six months ended
3 July 2015 27 June 2014
-------------------------------- ---------------- ----------------
Volume in unit cases(1)
(million)
NARTD(2) 1,005.6 969.2
Premium spirits 1.0 1.0
Total volume 1,006.6 970.2
-------------------------------- ---------------- ----------------
Net sales revenue (EUR million)
NARTD(2) 3,076.5 3,106.9
Premium spirits 74.4 76.2
Total net sales revenue 3,150.9 3,183.1
-------------------------------- ---------------- ----------------
(1) For NARTD volume, one unit case corresponds to approximately
5.678 litres or 24 servings, being a typically used measure of
volume. For premium spirits volume, one unit case corresponds also
to 5.678 litres. Volume data is derived from unaudited operational
data.
(2) Non alcoholic, ready-to-drink beverages.
4. Tangible and intangible assets
Property,
plant Intangible
and equipment assets
EUR million EUR million
------------------------------ -------------- ------------
Opening net book value as
at 1 January 2015 2,624.1 1,884.8
Additions 166.3 -
Reclassified from assets held
for sale 0.9 -
Disposals (7.6) -
Depreciation, impairment and
amortisation (165.6) (0.2)
Foreign exchange differences 38.1 68.2
Closing net book value as
at 3 July 2015 2,656.2 1,952.8
------------------------------- -------------- ------------
5. Net debt
As at
31 December
3 July 2015 2014
EUR million EUR million
-------------------------- ------------ ------------
Long-term borrowings 1,524.8 1,556.3
Short-term borrowings 506.6 548.6
Cash and cash equivalents (830.0) (636.3)
--------------------------- ------------ ------------
Net debt 1,201.4 1,468.6
--------------------------- ------------ ------------
The outstanding bond of $400 million issued in 2003 (EUR357.1
million) and maturing in September 2015 will be repaid using the
cash generation and the existing cash and cash equivalents of the
Group.
6. Financial risk management and financial instruments
The Group's activities expose it to a variety of financial
risks: market risk (including currency risk, interest rate risk,
and commodity price risk), credit risk, liquidity risk and capital
risk. There have been no changes in the risk management policies
since the year end.
The Group's financial instruments recorded at fair value are
included in Level 2 within the fair value hierarchy. The financial
instruments include derivatives for which there have been no
changes in valuation techniques and inputs used to determine their
fair value since 31 December 2014 (as described in the 2014
Integrated Annual Report available on the Coca-Cola HBC's web site:
www.coca-colahellenic.com). As at 3 July 2015, the total
derivatives included in Level 2 were financial assets of EUR20.1
million and financial liabilities of EUR45.3 million.
During the first half of 2015 the Group recognized embedded
derivatives whose risks and economic characteristics were not
considered to be closely related to the commodity contract in which
they were embedded. The valuation techniques used to determine
their fair value maximized the use of observable market data. The
fair value of the embedded derivatives as at 3 July 2015 amounted
to a financial asset of EUR6.4 million and are classified within
Level 2.
There were no transfers between Level 1, 2 and 3 during 2015.
The fair value of bonds and notes payable as at 3 July 2015,
including the current portion, is EUR1,829.6 million, compared to
their book value of EUR1,757.6 million, including the current
portion.
7. Restructuring costs
Restructuring costs amounted to EUR22.4 million before tax in
the first half of 2015. The Group recorded EUR10.2 million, EUR0.8
million and EUR11.4 million of restructuring charges in its
established, developing and emerging countries respectively. For
the first half of 2014, restructuring costs amounted to EUR11.9
million. The Group recorded EUR5.8 million, EUR1.1 million and
EUR5.0 million of restructuring charges in its established,
developing and emerging countries respectively. The restructuring
costs mainly concern redundancy costs and impairment of property,
plant and equipment.
8. Total finance costs, net
Six months ended
3 July 2015 27 June 2014
EUR million EUR million
------------------------------ ------------ ------------
Interest income (5.0) (4.7)
Finance costs 36.8 34.4
Net foreign exchange losses 5.4 6.7
Loss on net monetary position - 2.5
Total finance costs, net 37.2 38.9
------------------------------- ------------ ------------
Hyperinflation
Belarus was considered to be a hyperinflationary economy from
the fourth quarter of 2011 and up until 31 December 2014. During
this period hyperinflation accounting was applied in accordance
with IAS 29. However, since 1 January 2015 hyperinflation
accounting has been discontinued, as Belarus ceased to meet the
criteria of a hyperinflationary economy as defined by IAS 29. All
amounts expressed in the measuring unit at 31 December 2014 were
treated as the basis for the carrying amounts as at January 1
2015.
9. Tax
The Group's effective tax rate for 2015 may differ from the
theoretical amount that would arise using the weighted average tax
rate applicable to profits of the consolidated entities, as a
consequence of a number of factors, the most significant of which
are the application of statutory tax rates of the countries in
which the Group operates, the non-deductibility of certain
expenses, the non-taxable income and one off tax items.
10. Earnings per share
Basic earnings per share is calculated by dividing the net
profit attributable to the owners of the parent by the weighted
average number of shares outstanding during the period (first half
of 2015: 364,383,002, first half of 2014: 364,287,740). Diluted
earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all
dilutive ordinary shares arising from exercising employee stock
options.
11. Share capital
In 2014, the share capital of Coca-Cola HBC increased by the
issue of 129,022 new ordinary shares following the exercise of
stock options pursuant to the Coca-Cola HBC AG's employees' stock
option plan. Total proceeds from the issuance of the shares under
the stock option plan amounted to EUR1.4 million.
In 2015, the share capital of Coca-Cola HBC increased by the
issue of 19,000 new ordinary shares following the exercise of stock
options pursuant to the Coca-Cola HBC AG's employees' stock option
plan. Total proceeds from the issuance of the shares under the
stock option plan amounted to EUR0.3 million.
Following the above changes, and including 3,445,060 ordinary
shares held as treasury shares, out of which 14,925 shares
represent the initial ordinary shares of Coca-Cola HBC, on 3 July
2015 the share capital of the Group amounted to EUR1,998.2 million
and comprised 367,838,247 shares with a nominal value of CHF 6.70
each.
12. Non-controlling interests
On 8 June 2011, the Board of Directors of the Coca-Cola HBC's
subsidiary Nigerian Bottling Company plc ("NBC") resolved to
propose a scheme of arrangement between NBC and its minority
shareholders, involving the cancellation of part of the share
capital of NBC. The transaction was approved by the Board of
Directors and General Assembly of NBC on 8 June 2011 and 22 July
2011 respectively and resulted in the acquisition of the remaining
33.6% of the voting shares of NBC bringing the Group's interest in
the subsidiary to 100%. The transaction was completed in September
2011 and NBC was de-listed from the Nigerian Stock Exchange. The
consideration for the acquisition of non-controlling interests was
EUR100.2 million, including transaction costs of EUR1.8 million,
out of which EUR73.5 million was paid as of 3 July 2015 (as of 31
December 2014: EUR72.6 million). The difference between the
consideration and the carrying value of the interest acquired
(EUR60.1 million) has been recognised in retained earnings while
the accumulated components recognised in other comprehensive income
have been reallocated within the equity of the Group.
13. Dividends
The shareholders of Coca-Cola HBC AG approved the dividend
distribution of 0.360 euro cents per share at the Annual General
Meeting held on 23 June 2015. The total dividend amounted to
EUR132.4 million and was paid on 28 July 2015. Of this an amount of
EUR1.2 million relates to shares held by the Group. Dividends
declared by the Group to non-controlling interests in the emerging
markets amounted to EUR0.1 million.
On 25 June 2014 the shareholders of Coca-Cola HBC AG at the
Annual General Meeting approved the dividend distribution of 0.354
euro cents per share. The total dividend amounted to EUR130.2
million and was paid on 29 July 2014. Of this an amount of EUR1.2
million related to shares held by the Group.
14. Contingencies
There have been no significant adverse changes in contingencies
since 31 December 2014 (as described in our 2014 Integrated Annual
Report available on the Coca-Cola Hellenic's web site:
www.coca-colahellenic.com). On 7 July 2015, the Supreme
Administrative Court of Greece rejected our appeal against the
decision of the Court of Appeals that upheld the decision but
reduced the fine imposed by the Greek Competition Authority. The
Supreme Administrative Court also rejected the counter-appeals by
the Competition Authority and one of our competitors. Following
this development, the case is closed.
15. Commitments
As of 3 July 2015 the Group has capital commitments of EUR97.9
million (31 December 2014: EUR81.0 million), which mainly relate to
plant and machinery equipment.
16. Number of employees
The average number of full-time equivalent employees in the
first half of 2015 was 33,670 (36,857 for the first half of
2014).
17. Related party transactions
a) The Coca-Cola Company
As at 3 July 2015, The Coca-Cola Company and its subsidiaries
(collectively, "TCCC") indirectly owned 23.1% (2014: 23.1%) of the
issued share capital of Coca-Cola HBC.
Total purchases of concentrate, finished products and other
materials from TCCC and its subsidiaries during the first half of
2015 amounted to EUR712.1 million (EUR729.7 million in the
respective prior-year period). Total net contributions received
from TCCC for marketing and promotional incentives during the same
period amounted to EUR33.2 million (EUR30.6 million in the
respective prior-year period).
During the first half of 2015, the Group sold EUR9.1 million of
finished goods and raw materials to TCCC (EUR11.9 million in the
respective prior-year period), while other income from TCCC was
EUR3.8 million (EUR8.6 million in the respective prior-year
period). Other expenses from TCCC amounted to EUR0.1 million for
the first half of 2015 (EUR0.1 million in the respective prior-year
period).
As at 3 July 2015, the Group had a total amount of EUR99.5
million due from TCCC (EUR88.2 million as at 31 December 2014), and
had a total amount of EUR308.1 million due to TCCC including loans
payable of EUR8.1 million (EUR222.3 million including loans payable
of EUR7.3 million as at 31 December 2014).
An amount of EUR14.1 million was paid to TCCC in the second
quarter of 2014 in relation to the acquisition of certain
intangible assets.
b) Frigoglass S.A. ('Frigoglass') and Kar-Tess Holding
Frigoglass, a company listed on the Athens Exchange, is a
manufacturer of coolers, cooler parts, glass bottles, crowns and
plastics. Truad Verwaltungs AG, currently indirectly owns 44.4% of
Frigoglass and also indirectly controls Kar Tess Holding, which
holds approximately 23.2% (2014: 23.2%) of Coca Cola HBC's total
issued capital. Frigoglass has a controlling interest in Frigoglass
Industries Limited, a company in which Coca-Cola HBC has a 23.9%
effective interest, through its investment in NBC.
During the first half of 2015, the Group made purchases of
EUR49.9 million (EUR41.9 million in the respective prior-year
period) of coolers, raw materials and containers from Frigoglass
and its subsidiaries and incurred maintenance and other expenses of
EUR6.3 million (EUR6.5 million in the respective prior-year
period). The Group recorded other income of EUR0.2 million from
Frigoglass during the first half of 2015 (the Group did not record
any other income from Frigoglass for the respective prior-year
period). As at 3 July 2015, Coca-Cola HBC owed EUR33.2 million
(EUR12.1 million as at 31 December 2014) to, and was owed EUR0.3
million (EUR0.4 million as at 31 December 2014) by Frigoglass.
c) Beverage Partners Worldwide ("BPW")
BPW is a 50/50 joint venture between TCCC and Nestlé. The Group
purchased inventory from BPW of EUR51.3 million during the first
half of 2015 (EUR51.2 million in the respective prior-year period).
As at 3 July 2015, the Group owed EUR19.9 million (EUR3.6 million
as at 31 December 2014) to, and was owed EUR0.4 million (EUR0.9
million as at 31 December 2014) by BPW.
d) Other related parties
During the first half of 2015, the Group purchased EUR10.4
million of raw materials and finished goods (EUR9.7 million in the
respective prior-year period) from other related parties and
recorded sales of finished goods of EUR0.2 million (nil in the
respective prior-year period) to other related parties. In
addition, the Group received reimbursement for direct marketing
expenses of EUR0.4 million for the first half of 2015 (nil for the
respective prior-year period) from other related parties.
Furthermore the Group acquired EUR0.8 million in tangible fixed
assets from other related parties during the first half of 2015
(EUR1.0 million for the respective prior-year period). During the
first half of 2015 the Group incurred other expenses of EUR14.7
million (EUR17.8 million in the respective prior-year period) and
recorded income of EUR0.2 million (EUR0.3 million in the respective
prior-year period). As at 3 July 2015, the Group owed EUR6.6
million (EUR8.9 million as at 31 December 2014) to, and was owed
EUR3.7 million including loans receivable of EUR0.2 million (EUR2.3
million as at 31 December 2014 with loans receivable of EUR0.2
million) by other related parties.
e) Joint Ventures
During the first half of 2015, the Group purchased EUR25.5
million of finished goods (EUR27.8 million in the respective
prior-year period) from joint ventures while the Group recorded
sales of finished goods to joint ventures of EUR0.6 million for the
first half of 2015 (EUR0.3 million for the respective prior-year
period). In addition, the Group received reimbursement for direct
marketing expenses EUR0.1 million for the first half of 2015 (nil
in the respective prior-year period). Furthermore, during the first
half of 2015, the Group incurred expenses of EUR0.3 million (EUR0.4
million for the respective prior-year period) and recorded other
income of EUR0.5 million from joint ventures for the first half of
2015 (EUR0.5 million in the respective prior-year period). As at 3
July 2015, the Group owed EUR47.5 million including loans payable
of EUR31.6 (EUR163.7 million as at 31 December 2014 including loans
payable of EUR150.2) to, and was owed EUR16.6 million including
loans receivable of EUR5.1 (EUR17.4 million as at 31 December 2014
including loans receivable of EUR5.1m) by joint ventures. In March
2015 the Group received dividend of EUR113.8 million from
Brewinvest S.A., parent company of Brewinvest S.A. Group of
companies.
There were no transactions between Coca-Cola HBC and the
directors and senior management except for remuneration for both
the six months ended 3 July 2015 and the prior-year period.
There were no other significant transactions with related
parties for the first half of 2015.
18. Recent developments in Ukraine, the Russian Federation and Greece
We disclosed in our 2014 Integrated Annual Report that the
ongoing situation in Ukraine and the Russian Federation has
adversely impacted the economies of these countries, and among
other things, resulted in increased volatility in currency markets,
causing the Russian rouble and the Ukrainian hryvnia to depreciate
significantly against some major currencies. Although there have
been no significant developments following the publication of our
Integrated Annual Report, we continually monitor and assess the
situation in order to ensure that timely actions and initiatives
are undertaken to minimize potential adverse impact on the
Company's performance.
In addition, we disclosed in our 2014 Integrated Annual Report
that the macroeconomic and financial environment in Greece remained
fragile. The recent developments relating to the instability of the
Greek banking sector, the resulting imposition of capital controls
restricting the movement of funds out of Greece, and the expected
GDP decline for 2015, are anticipated to further impact consumer's
disposable income which may adversely affect the Group's operations
in Greece for the second half of 2015. Our 2015 first half year
revenues for Greece amounted to 6% of consolidated net sales
revenues and 3% of the consolidated non-current assets. We are
continuously monitoring developments in Greece. Cash and cash
equivalents of EUR4.5 million were subject to capital controls as
at 3 July 2015.
19. Subsequent events
Based on new tax legislation published on 16 July 2015, the
income tax rate of legal entities in Greece increased from 26% to
29% effective from 1 January 2015. The effect of the tax rate
change will be to increase the net deferred tax asset resulting in
an income tax credit of an estimated EUR2.4 million, which will be
recognised in the second half of 2015.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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