TIDMCCH
RNS Number : 7141I
Coca-Cola HBC AG
09 August 2023
Strong execution underpins growth for 2023 and beyond
Coca-Cola HBC AG, a growth-focused Consumer Packaged Goods
business and strategic bottling partner of The Coca-Cola Company,
reports its financial results for the six months ended 30 June
2023.
Half-year highlights
-- Focused execution of strategic priorities and revenue growth
management drives strong organic growth (1)
o Organic revenue up 17.8%, driven by organic revenue per case
growth of 19.0%, led by the effective delivery of price and mix
improvements across all categories and segments
o Organic volume growth across our strategic priorities, with
Sparkling +1.6%, Energy +20.9% and Coffee +21.9%; while Stills
declined 11.2%, led by Water; overall organic volumes - 1.0%
o Reported revenue up 19.3%, reflecting strong organic growth
and the consolidation of Multon, which more than offset FX
headwinds in Nigeria and Egypt
o Value share gains of 60bps in Non-Alcoholic Ready-To-Drink
(NARTD); maintained value share in Sparkling
-- Organic EBIT up 17.7%, with margin unchanged on an organic basis at 11.2%
o Stronger than expected operating leverage from double-digit
top-line growth
o Comparable gross profit margin grew 90 basis points despite
comparable Cost of Goods Sold (COGS) per unit case up 13.1%
o Disciplined management of operating costs while increasing
resources to further enhance execution in the market with our
customers
o Comparable EBIT margin grew 20 basis points
-- Segmental highlights: Strong double-digit organic revenue and
EBIT growth across all segments
o Established : Organic revenue increased by 16.9%, led by
revenue-per-case expansion and a resilient volume performance in
key markets; organic EBIT grew 20.8%
o Developing : Organic revenue up 23.6%, driven by
revenue-per-case expansion; organic EBIT up 27.2%
o Emerging : Organic revenue up 16.0%, despite pressure on
consumer spending from macro headwinds in several markets; organic
EBIT grew 13.9%
-- Strong EPS growth and robust balance sheet
o Comparable EPS up 22.3%, led by EBIT growth and lower net
finance costs
o Strong balance sheet and liquidity; dividend of EUR0.78 paid
in June
-- Investor Day 2023: Strategic priorities and medium-term financial targets
o At our Investor Day in May, we reaffirmed our commitment to
our five strategic growth pillars and the investments we are making
in our prioritised capabilities, positioning the company for higher
levels of growth over the medium term
o Financial targets were updated to cover the period beyond
2023:
-- Average annual organic revenue growth of 6-7% (previously
5-6%)
-- Average annual organic EBIT margin expansion of 20-40 basis
points per annum
-- Continued focus on growing ROIC
-- Continued investment behind our 24/7 portfolio and strategic priorities
o Further investment in Sparkling brands across flavours and
variants, including the further roll-out of Coke Zero Zero,
underpinning our low/no sugar strategy
o Successful launch of Jack Daniel's & Coca-Cola in Poland,
Ireland and Hungary in Q2
o Development of the Energy category in Egypt, adding the
Monster brand in Q2
o Announced an agreement to acquire Finlandia Vodka from
Brown-Forman for $220 million (2) ; a unique opportunity with
significant geographic overlap in CCH territories, enhancing our
premium spirits credentials and driving mixability opportunities
with our NARTD portfolio; completion expected in Q4 2023
(1) For details on APMs refer to 'Alternative Performance
Measures' and 'Definitions and reconciliations of APMs'
sections.
(2) Purchase price is subject to customary closing price
adjustments and completion is subject to regulatory clearances.
Zoran Bogdanovic, Chief Executive Officer of Coca-Cola HBC AG,
commented:
"It has been a very good first half of the year with progress
across our strategic pillars. Our priority categories of Sparkling,
Energy and Coffee, together with a strong performance across all
segments, have driven organic revenues and EBIT growth ahead of
expectations.
"While some markets continue to face a challenging consumer
environment, revenue per case has been improved through careful
price and mix management enhanced by data, insights and analytics.
At the same time, volumes have remained resilient which is
testament to the quality of our execution.
"We continue to invest in the activation of our 24/7 portfolio
and targeted expansion, underpinned by our leading position in and
focus on Sparkling. In the first half of the year we reached an
agreement to acquire Finlandia Vodka, successfully launched new
innovations including Jack Daniel's and Coca-Cola in three of our
markets, further developed the energy category in Egypt, and added
2,200 new distribution points for our Coffee business.
"Our second quarter performance enabled us to upgrade our
earnings expectations for 2023 in July, creating a stronger
platform for the future growth ambitions we set out in our Investor
Day in May. I am grateful to our customers, suppliers and partners,
particularly The Coca-Cola Company, for their collaboration as we
drive growth together . I especially want to thank all our people
for their drive and dedication to make our business stronger every
day. "
Half-Year
% Change
% Change Organic
2023 2022 Reported (3)
Volume (m unit cases) 1,383.1 1,330.2 4.0% -1.0%
Net sales revenue (EUR
m) 5,021.5 4,209.9 19.3% 17.8%
Net sales revenue per
unit case (EUR) 3.63 3.16 14.7% 19.0%
Operating profit (EBIT)
(4) (EUR m) 557.3 275.7 >100%
Comparable EBIT (3)
(EUR m) 560.7 462.5 21.2% 17.7%
EBIT margin (%) 11.1 6.5 450bps
Comparable EBIT margin
(3) (%) 11.2 11.0 20bps -
Net profit (5) (EUR
m) 385.7 152.9 >100%
Comparable net profit
(3,5) (EUR m) 388.9 316.9 22.7%
Basic earnings per share
(EPS) (EUR) 1.050 0.418 >100%
Comparable EPS (3) (EUR) 1.058 0.865 22.3%
Free cash flow (3) (EUR
m) 256.6 332.9 -22.9%
-------------------------- ----------- ----------- --------------- -------------
(3) For details on APMs refer to 'Alternative Performance
Measures' and 'Definitions and reconciliations of APMs'
sections.
(4) Refer to the condensed consolidated income statement.
(5) Net Profit and comparable net profit refer to net profit and
comparable net profit respectively after tax attributable to owners
of the parent.
Business Outlook
We delivered a better-than-expected financial performance in the
first half of 2023, led by price and mix improvements, despite
headwinds to our business. While we remain attentive to
macroeconomic and geopolitical risks, we have high confidence in
our broad 24/7 portfolio, the opportunities in our diverse markets,
enhanced by our focus on execution and prioritised capabilities,
and above all, the abilities of our talented people.
-- Following the strong start to the year, we expect mid-teens
full-year organic revenue growth (previously above 5-6%)
-- We now assume COGS/case increases by high-single digits in
2023 (previously low teens), as inflationary pressures begin to
moderate
-- We expect organic EBIT growth in the range of 9% to 12% in 2023 (unchanged)
Technical guidance
FX: We expect the impact of translational FX on our Group
comparable EBIT to remain a EUR50-60 million headwind.
Restructuring: We do not expect significant restructuring
initiatives to take place in 2023.
Tax: We now expect our comparable effective tax rate to be at
the top end of our 25% to 27% range.
Finance costs: We now expect net finance costs for 2023 to be
between the range of EUR65-75 million (previously similar to 2022:
EUR82.7m).
Scope: In 2023 we expect around a EUR45 million Scope benefit to
EBIT, reflecting the consolidation of Multon (from 11 August 2022)
and the acquisition of Three Cents (from 21 October 2022).
Group Operational Review
Leveraging our unique 24/7 portfolio
We delivered half-year organic revenue growth of 17.8%, driven
by price and mix and resilient volumes. Reported net sales revenue
increased by 19.3%, benefitting from the consolidation of Multon,
partly offset by negative foreign currency impact due to the
depreciation of the Nigerian Naira, Egyptian Pound and Russian
Rouble.
Organic volume fell by 1.0% in the half-year, with growth in our
strategic priority categories of Sparkling, Energy and Coffee
offset by declines in Stills.
Our focus on the best growth opportunities in our 24/7 portfolio
is helping drive a high-quality revenue performance.
-- Sparkling volumes grew by 1.6% overall, with low-single digit
growth across all three segments. Growth was particularly good in
the Established segment, where Coke Zero, Flavours and Adult
Sparkling maintained good momentum.
-- Energy volumes grew by 20.9%, with strong momentum in most
markets. In Established and Developing markets, growth was driven
by Monster, while in Emerging we saw strong growth of Predator and
Burn.
-- Coffee volumes grew 21.9%, with noteworthy performances in
the Established and Developing segments. We continued to make good
progress on out-of-home customer recruitment, reaching 10,200
outlets, up from 8,000 at the end of 2022.
-- Still volumes fell by 11.2%, with declines led by Water, as
we focused on the most profitable revenue growth in the category,
with a marked improvement in net sales revenue per unit case as a
result. In Sports Drinks we delivered good growth in Established
and Developing markets.
Winning in the marketplace
Organic net sales revenue per case expanded by 19.0%. Revenue
growth management initiatives, powered by data, insights and
analytics, have allowed us to drive pricing and mix and enhance
revenue per case across our markets, while addressing both
affordability and premiumisation.
Pricing taken in 2022 and the first half of 2023 remained the
most important tool to drive value and mitigate cost inflation.
Effective in-market execution, including joint value creation plans
with customers, pre-summer activations and improving returns on
promotions, enabled the implementation of clear pricing plans
whilst delivering better than expected volume and EBIT growth in
priority categories.
Mix remained a critical value contributor in driving growth
across all our markets. We delivered positive category and package
mix in the period.
-- Single-serve mix improved by 1.2 percentage points
organically. We achieved strong gains in both the Established and
Developing segments, driven by further activations of single-serve
multipacks, as well as glass activation in the out-of-home
channel.
-- Category mix was favourable, driven by Sparkling and Energy
as well as a lower contribution from Water.
-- The focused application of our data, insights and analytics
tools has allowed us to continue to improve the effectiveness of
our promotions, enhancing our ability to achieve better
returns.
We grew 60 basis points of value share in NARTD in the first
half of 2023. In Sparkling, value share was in line with the
previous year, as we consciously drove price/mix expansion.
Cost control, operating profit and margins
Comparable gross profit grew by 22.6%, leading to a comparable
gross profit margin of 35.0%, an improvement of 90 basis points.
This was despite inflationary pressures from input costs, energy
and production overheads, as well as an adverse foreign currency
impact, which pushed comparable COGS per case higher by 13.1%.
Comparable operating expenses as a percent of revenue increased
by 30 basis points to 24.0%, reflecting a disciplined approach to
operating expenditure, which was more than offset by continued
investment to further enhance executi on in the market with our
customers.
C omparable EBIT increased by 17.7% on an organic basis, and the
comparable EBIT margin was up 20 basis points to 11.2%, unchanged
on an organic basis, as we saw strong operating leverage from
double-digit top-line growth, which more than offset increased
input costs . Comparable EBIT increased by 21.2% on a reported
basis to EUR560.7 million, benefitting from organic growth and the
consolidation of Multon, only partly offset by negative foreign
currency movements.
We faced a negative translational and transactional foreign
currency impact in the first half of the year, mainly due to the
depreciation of the Nigerian Naira, Egyptian Pound and the Russian
Rouble.
Net profit and free cash flow
Comparable net profit of EUR388.9 million and comparable basic
earnings per share of EUR1.058 were 22.7% and 22.3% higher than in
the prior year period, respectively. Reported net profit and
reported basic earnings per share of EUR385.7 million and EUR1.050
respectively more than doubled versus the prior year period, as we
cycled the impairment charges relating to our operations in Russia
taken in 2022.
Comparable taxes amounted to EUR142.7 million, representing a
comparable tax rate of 27%, at the top end of our 2023 guidance
range of 25% to 27%.
Net financing costs were EUR11.3 million lower than the prior
year period, at EUR31.4 million, driven mainly by higher interest
income as a result of increased interest rates.
Capital expenditure increased by EUR39.1 million to EUR238.8
million as we continued investment in our production facilities,
cooler placements, as well as towards our sustainability
commitments.
Free cash flow was EUR256.6 million, EUR76.3 million lower
compared to the prior year period, as adverse working capital and
higher capital expenditure more than offset increased
profitability.
Earning our licence to operate
Throughout the period we remained focused on delivering our
Mission 2025 and NetZeroby40 goals, and reconfirmed our 'AAA' MSCI
rating for the ninth consecutive year.
Investments in sustainable packaging and energy-efficient
coolers are important steps in supporting our ambition to achieve
net zero emissions across our value chain. In Austria, we invested
EUR12 million in a new energy and water-efficient returnable glass
bottle line for our 1 litre bottle, and introduced a new 400ml
resealable bottle. On coolers, we exceeded our target of 50%
energy-efficient coolers by 2025, excluding Egypt, at the end of
the half year.
Water usage remains one of our key strategic priorities. By
using innovative technologies, we've improved water consumption.
For example, we installed water-free cleaners for our new can lines
in Greece and Poland. All our countries are continuing to make
improvements as we aim to reduce water consumption by 20% by 2025,
compared to 2017, in water-risk areas.
Together with The Coca-Cola Company and seven other bottling
partners, Coca-Cola HBC committed $15 million to a new venture
capital fund, the Greycroft Coca-Cola System Sustainability Fund.
This $137.7 million fund will focus on innovative solutions to
drive carbon footprint reduction, helping accelerate our journey
towards NetZeroby40 goal.
Operational Review by Reporting Segment
Established markets
Half-Year
% Change % Change
2023 2022 Reported Organic
Volume (m unit cases) 306.4 305.7 0.2% 0.2%
Net sales revenue (EUR
m) 1,628.0 1,384.2 17.6% 16.9%
Net sales revenue per
unit case (EUR) 5.31 4.53 17.3% 16.7%
Operating profit (EBIT)
(EUR m) 170.8 147.4 15.9%
Comparable EBIT (EUR
m) 171.3 140.2 22.2% 20.8%
EBIT margin (%) 10.5 10.6 -20bps
Comparable EBIT margin
(%) 10.5 10.1 40bps 30bps
------------------------- -------------- ------------- ---------- ---------
Net sales revenue grew by 16.9% and 17.6% on an organic and
reported basis respectively, as we benefitted from positive foreign
currency movements from the Swiss Franc.
Organic growth in net sales revenue per case was 16.7%. We
benefitted from price increases in all markets through the period,
as well as positive category and package mix. A focus on
single-serve activation, both in at-home and out-of-home channels,
delivered a 3.8 percentage point improvement in single-serve
mix.
Volume in Established markets was broadly in line with last
year. We saw good growth in our strategic priority categories.
Sparkling grew low single digits, with Coke Zero up high-single
digits and Adult Sparkling up low-single digits, despite tough
comparatives. Energy saw continued strong momentum, with volumes
growing high-double digits in the period. This growth was offset by
declines in Stills, primarily Water and RTD tea where volumes were
down low-double digits and high-single digits respectively.
-- Volumes in Greece were up by high-single digits, driven by
our strong execution and an earlier start to seasonal activations.
We saw mid-single digit growth in Sparkling, led by Coke Zero as
well as low single-digit growth in Adult Sparkling, and Energy grew
high-teens despite tough comparatives. Stills were up by
high-single digits driven by low-double digit growth in Water.
-- In Ireland, volumes grew by high-single digits, with good
results in all strategic priority categories. Sparkling grew by
mid-single digits driven by low-double digit growth in Coke Zero
and solid growth from Sprite and Fanta, while Energy delivered
volume growth above 30% in the period. Stills were up mid-single
digit driven by continued growth of our premium launches in
Hydration.
-- In Italy, volumes declined by mid-single digits, due
primarily to Water, as we deliberately focused on profitable
revenue growth, at the expense of volume. We saw growth in our
strategic priority categories in the half year, with low-single
digit growth in Sparkling and Energy, despite an impact from worse
weather in Q2 and tough comparatives. Coke Zero volumes grew
mid-single digits and Adult Sparkling grew low-double digits, with
both Kinley and Lurisia performing well. Stills declined overall,
but we drove slight growth excluding Water.
-- In Switzerland, volumes grew by mid-single digits, with
high-single digit growth in Sparkling reflecting good performance
across the board. Stills declined by low-single digits driven by
Water.
Comparable EBIT in the Established segment increased by 20.8% to
EUR171.3 million, an organic growth rate of 22.2%. Comparable EBIT
margin was 10.5%, up 30 basis points on an organic basis, as higher
price and mix more than offset higher COGS.
Developing markets
Half-Year
% Change % Change
2023 2022 Reported Organic
Volume (m unit cases) 227.3 230.4 -1.3% -1.3%
Net sales revenue (EUR
m) 985.2 791.6 24.5% 23.6%
Net sales revenue per
unit case (EUR) 4.33 3.44 26.2% 25.2%
Operating profit (EBIT)
(EUR m) 67.2 56.9 18.1%
Comparable EBIT (EUR
m) 67.3 51.6 30.4% 27.2%
EBIT margin (%) 6.8 7.2 -40bps
Comparable EBIT margin
(%) 6.8 6.5 30bps 20bps
------------------------- -------------- ------------- ---------- ---------
Net sales revenue grew by 23.6% and 24.5% on an organic and
reported basis respectively, with the difference due to slightly
positive foreign currency movements.
Organic net sales revenue per case increased by 25.2%. The
segment benefitted from pricing initiatives and favourable category
and package mix.
Developing markets volume declined by 1.3%. Sparkling volumes
grew by low-single digits, driven by Coke Zero, while Energy
delivered low-double digit growth. This was offset by a mid-teens
volume decline in Stills, driven by Water and Juice.
-- Poland volumes increased by mid-single digits, with growth
led by our strategic priority categories. Sparkling volumes were up
by high-single digits, driven by Coke Zero and Sprite. Energy
continued to grow by strong-double digits, despite tough
comparatives. Coffee grew above 40%, as we continued to expand
outlet distribution. Stills volumes declined, driven by Water and
Juice.
-- In Hungary, volumes decreased by high-single digits,
reflecting weakness in Stills, with a notable decline in the
overall Juice category, against a tough inflationary backdrop and
challenging comparatives. Sparkling volumes grew slightly in the
period, driven by Trademark Coke.
-- Volume in Czech decreased by mid-teens, with declines in both
Sparkling and Stills. We continued to actively drive robust price
mix to manage cost inflation and despite volume declines, we
delivered strong revenue growth. Energy and Coffee were the best
performing categories.
Comparable EBIT in the Developing segment increased by 30.4% to
EUR67.3 million, an organic growth rate of 27.2%. Comparable EBIT
margin was 6.8%, up 20 basis points on an organic basis,
benefitting from price and mix improvements which offset higher
COGS.
Emerging markets
Half-Year
% Change % Change
2023 2022 Reported Organic
Volume (m unit cases) 849.4 794.1 7.0% -1.4%
Net sales revenue (EUR
m) 2,408.3 2,034.1 18.4% 16.0%
Net sales revenue per
unit case (EUR) 2.84 2.56 10.7% 17.7%
Operating profit (EBIT)
(EUR m) 319.3 71.4 >100%
Comparable EBIT (EUR
m) 322.1 270.7 19.0% 13.9%
EBIT margin (%) 13.3 3.5 970bps
Comparable EBIT margin
(%) 13.4 13.3 10bps -20bps
------------------------- -------------- ------------- ---------- ---------
Net sales revenue grew by 16.0% on an organic basis, or by 18.4%
on a reported basis, with the difference due to the consolidation
of Multon, which was partly offset by the devaluation of the
Nigerian Naira, Egyptian Pound and Russian Rouble.
Net sales revenue per case grew 17.7% organically, benefitting
from pricing actions taken throughout the period to mitigate cost
inflation, as well as proactively managing the currency
devaluation.
Emerging markets' volume fell by 1.4% organically and grew 7.0%
on a reported basis, which includes the consolidation of Multon and
Egypt. Sparkling volumes increased by low-single digits and Still
volumes were down low-double digits. Energy delivered growth of
almost 30%, continuing the momentum from Q1.
-- Volume in Nigeria declined by low-single digits, reflecting
good execution in the market despite the temporary lack of
availability of local currency. This normalised through the period,
such that Q2 returned to growth. Sparkling volumes declined
low-single digits in the half-year. Energy delivered strong
double-digit growth, while Stills declined double-digits. We
continued driving strong price mix to manage the cost inflation and
currency devaluation.
-- Ukraine volume grew over 50%, a good rebound on soft
comparatives due to the outbreak of war. Growth was led by
recoveries in Sparkling and Energy, despite ongoing operational
challenges. Water volumes rebounded in Q2 leading to a mid-single
digit growth for the half-year.
-- Volume in Romania declined by low-double digits, due to a
double-digit decline in Stills and high-single digit decline in
Sparkling. The consumer environment remained challenging, impacted
by the VAT increase in January. Energy continued its strong
momentum with volumes up close to 30%.
-- Volumes in Serbia grew mid-single digits, driven by
Sparkling. Trademark Coke and Fanta volumes grew high-single
digits, and Energy delivered low-double digit growth in the period.
Water volumes were up low-double digits.
-- Volumes in Egypt declined by high-single digits on an organic
basis driven by Water. In Sparkling, we saw low-single digit
growth, with Trademark Coke volumes up high-single digits, driven
by Coke Zero. In Water, we consciously focused on improving net
sales revenue per unit case, which meant that volumes fell
double-digits . Following our launch into the Energy category with
Fury, we also introduced the Monster brand in May, and are very
encouraged by early progress. Across all categories we continued to
proactively implement revenue growth management actions to manage
the inflation and currency devaluation.
-- Russia volumes declined by high-single digits on an organic
basis. This largely reflects comparisons to the prior period,
following the decision of The Coca-Cola Company in March 2022 to
suspend sales of their brands.
Comparable EBIT in the Emerging segment increased by 13.9% on an
organic basis and grew 19.0% on a reported basis, to EUR322.1
million. Comparable EBIT margin was 13.4%, down 20 basis points on
an organic basis, impacted by adverse transactional FX, which
offset price & mix benefits. Operating profit increased more
than 100%, as we are cycling the impairment charges in Russia.
Conference call
Coca-Cola HBC's management will host a conference call for
investors and analysts on Wednesday, 9 August 2023 at 9:00 am BST.
To join the call in listen-only mode, please join via the webcast .
If you anticipate asking a question, please click here to register
and find dial-in details.
Next event
31 October 2023 2023 Third quarter trading update
Enquiries
Coca--Cola HBC Group
Investors and Analysts:
John Dawson Tel: +44 7552 619509
Investor Relations Director john.dawson@cchellenic.com
(Interim)
Jemima Benstead Tel: + 44 7740 535130
Investor Relations Manager jemima.benstead@cchellenic.com
Marios Matar Tel: +30 697 444 3335
Investor Relations Manager marios.matar@cchellenic.com
Virginia Philips Tel: + 44 7864 686582
Investor Relations Manager virginia.philips@cchellenic.com
Media:
Sonia Bastian Tel: +41 7946 88054
Head of Communications sonia.bastian@cchellenic.com
Greek media contact:
V+O Communications Tel: +30 693 742 0246
Manos Iatrelis mi@vando.gr
Coca-Cola HBC Group
Coca-Cola HBC is a growth-focused consumer packaged goods
business and strategic bottling partner of The Coca-Cola Company.
We open up moments that refresh us all, by creating value for our
stakeholders and supporting the socio-economic development of the
communities in which we operate. With a vision to be the leading
24/7 beverage partner, we offer drinks for all occasions around the
clock and work together with our customers to serve 740 million
consumers across a broad geographic footprint of 29 countries. Our
portfolio is one of the strongest, broadest and most flexible in
the beverage industry, with consumer-leading beverage brands in the
sparkling, adult sparkling, juice, water, sport, energy,
ready-to-drink tea, coffee, and premium spirits categories. These
include Coca-Cola, Coca-Cola Zero Sugar, Fanta, Sprite, Schweppes,
Kinley, Costa Coffee, Caffè Vergnano, Valser, FuzeTea, Powerade,
Cappy, Monster Energy, The Macallan, Jack Daniel's and Grey Goose.
We foster an open and inclusive work environment amongst our 33,000
employees and believe that building a more positive environmental
impact is integral to our future growth. We rank among the top
sustainability performers in ESG benchmarks such as the Dow Jones
Sustainability Indices, CDP, MSCI ESG, FTSE4Good and ISS ESG.
Coca-Cola HBC has a premium listing on the London Stock Exchange
(LSE: CCH) and is listed on the Athens
Exchange (ATHEX: EEE). For more information, please visit
https://www.coca-colahellenic.com/
Financial information in this announcement is presented on the
basis of
International Financial Reporting Standards ('IFRS').
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 2023 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 2022 Integrated Annual Report for Coca-Cola HBC AG
and its subsidiaries .
Although we believe that, as of the date of this document, the
expectations reflected in the forward-looking statements are
reasonable, we cannot assure you that our future results, level of
activity, performance or achievements will meet these expectations.
Moreover, neither we, nor our directors, employees, advisors nor
any other person assumes responsibility for the accuracy and
completeness of the forward-looking statements. After the date of
the condensed consolidated interim financial statements included in
this document, unless we are required by law or the rules of the UK
Financial Conduct Authority to update these forward-looking
statements, we will not necessarily update any of these
forward-looking statements to conform them either to actual results
or to changes in our expectations .
Alternative Performance Measures
The Group uses certain Alternative Performance Measures ('APMs')
in making financial, operating and planning decisions as well as in
evaluating and reporting its performance. These APMs provide
additional insights and understanding to the Group's underlying
operating and financial performance, financial condition and cash
flow. The APMs should be read in conjunction with and do not
replace by any means the directly reconcilable IFRS line items. For
more details on APMs please refer to 'Definitions and
reconciliations of APMs' section.
Group Financial Review
Income statement Half-Year
---------------------------- ---------- ----------
% Change
2023 2022 % Change Organic
EUR million EUR million Reported (6)
------------- ------------- ---------- ----------
Volume (m unit cases) 1,383.1 1,330.2 4.0% -1.0%
Net sales revenue 5,021.5 4,209.9 19.3% 17.8%
Net sales revenue per unit case (EUR) 3.63 3.16 14.7% 19.0%
Cost of goods sold (3,259.9) (2,759.7) 18.1%
Comparable cost of goods sold (6) (3,261.5) (2,774.1) 17.6%
Gross profit 1,761.6 1,450.2 21.5%
Comparable gross profit (6) 1,760.0 1,435.8 22.6%
Operating expenses (excluding exceptional
items related to (1,208.4) (1,015.3) 19.0%
Russia -Ukraine conflict)
Exceptional items related to Russia-Ukraine
conflict - (183.6) -100.0%
Operating expenses (1,208.4) (1,198.9) 0.8%
Comparable operating expenses (6) (1,203.4) (997.7) 20.6%
Share of results of integral equity
method investments (7) 4.1 24.4 -83.2%
Operating profit (EBIT) (7) 557.3 275.7 >100%
Comparable operating profit (EBIT)
(6) 560.7 462.5 21.2% 17.7%
Adjusted EBITDA (6) 765.6 663.8 15.3%
Comparable adjusted EBITDA (6) 769.0 666.9 15.3%
Finance costs, net (31.4) (42.7) -26.5%
Share of results of non-integral equity
method investments (7) 1.7 1.4 21.4%
Tax (142.5) (82.0) 73.8%
Comparable tax (6) (142.7) (104.8) 36.2%
Net profit (8) 385.7 152.9 >100%
Comparable net profit (6,8) 388.9 316.9 22.7%
Basic earnings per share (EUR) 1.050 0.418 >100%
Comparable basic earnings per share
(EUR) (6) 1.058 0.865 22.3%
------------- ------------- ---------- ----------
(6) Refer to the ' Alternative Performance Measures' and '
Definitions and reconciliations of APMs' sections.
(7) Refer to the condensed consolidated interim income
statement.
(8) Net Profit and comparable net profit refer to net profit and
comparable net profit respectively after tax attributable to owners
of the parent.
Net sales revenue grew by 19.3% during the first half of 2023,
compared to the prior-year period, primarily driven by pricing
initiatives and the consolidation of Multon, further supported by
favourable category and package mix, which were only partially
offset by unfavourable foreign currency movements. On an organic
basis, net sales revenue grew by 17.8% during the first half of
2023, compared to the prior-year period, primarily driven by
pricing initiatives and mix improvements.
Cost of goods sold increased by 18.1% in the first half of 2023,
on a reported basis, driven by inflationary pressures on input
costs, as well as the consolidation of Multon and adverse foreign
currency impact; while comparable cost of goods sold increased by
17.6%, further benefitting by the cycling of unrealised commodity
hedging gains in the prior-year period.
Operating expenses increased by 0.8% in the first half of 2023
compared to the prior-year period, driven by higher sales and
administration expenses and the consolidation of Multon, which were
largely offset by the cycling of impairment charges in the
prior-year period related to the Group's Russian operations.
Comparable operating expenses increased by 20.6% in the first half
of the year, driven by higher sales and administration expenses and
the consolidation of Multon.
Operating profit more than doubled compared to the prior-year
period, mainly reflecting the benefits from top-line growth, the
consolidation of Multon and the cycling of impairment charges in
the prior-year period related to the Group's Russian operations ,
which were only partially offset by elevated input costs and
operating expenses and unfavourable foreign currency movements.
Comparable operating profit grew by 21.2% on a reported basis in
the first half of 2023 versus the prior-year period, reflecting the
benefits from top-line growth and the consolidation of Multon,
which were only partially offset by elevated input costs and
operating expenses and unfavourable foreign currency movements;
while excluding the impact from changes in the consolidation
perimeter and foreign exchange rates, comparable operating profit
increased by 17.7% on an organic basis.
Net finance costs decreased by EUR11.3 million during the first
half of 2023 compared to the prior-year period, mainly driven by
higher interest income earned on the Group's cash and cash
equivalents and financial assets, partially offset by the increased
hedging cost of borrowings in Nigeria and the interest expense from
the Green bond issued in September 2022.
On a reported basis, the effective tax rate was 27.0% for the
first half of 2023, down from 35.0% in the prior-year period,
mainly due to the cycling of impairment charges in the prior-year
period related to the Group's Russian operations . On a comparable
basis, the effective tax rate was 26.9% for the first half of 2023
and 24.9% for the first half of 2022. 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.
Net profit more than doubled, driven by the higher operating
profitability, net of tax including the cycling of impairment
charges related to the Group's Russian operations in the prior-year
period and lower finance costs. Comparable net profit grew by 22.7%
compared to the prior-year period driven by higher operating
profitability, net of tax and lower finance costs.
Balance Sheet
------------ ------------ ------------
As at
----------------------------------------
30 June 31 December
2023 2022 Change
Assets EUR million EUR million EUR million
------------ ------------ ------------
Total non-current assets 5,785.8 6,139.5 -353.7
Total current assets 4,190.4 3,716.2 474.2
Total assets 9,976.2 9,855.7 120.5
Liabilities
Total current liabilities 3,454.8 3,006.7 448.1
Total non-current liabilities 3,420.5 3,463.4 -42.9
Total liabilities 6,875.3 6,470.1 405.2
Equity
Owners to the parent 3,005.0 3,282.3 -277.3
Non-controlling interests 95.9 103.3 -7.4
Total equity 3,100.9 3,385.6 -284.7
Total equity and liabilities 9,976.2 9,855.7 120.5
Net current assets 735.6 709.5 26.1
------------ ------------ ------------
Total non-current assets decreased by EUR353.7 million during
the first half of 2023, primarily driven by foreign currency
translation. Net current assets increased by EUR26.1 million in the
first half of 2023 , mainly driven by higher trade receivables,
largely reflecting top-line growth in the period, and cash and cash
equivalents, which were partially offset by lower investments in
financial assets and higher trade and other payables. Total
non-current liabilities decreased by EUR42.9 million during the
first half of 2023, driven primarily by foreign currency
translation on the back of the Nigerian Naira and Egyptian Pound
devaluation .
Cash flow
------------- ------------- --------
Half-Year
--------------------------------------
2023 2022 %
EUR million EUR million Change
------------- -------------
Net cash from operating activities
(9) 495.4 532.6 -7.0%
Capital expenditure (9) (238.8) (199.7) -19.6%
Free cash flow (9) 256.6 332.9 -22.9%
------------- ------------- --------
(9) Refer to the 'Definitions and reconciliations of APMs'
section.
Net cash from operating activities decreased by 7.0% or EUR37.2
million during the first half of 2023, compared to the prior-year
period, due to cash consumed from working capital movements and
higher taxes paid, which were only partially offset by increased
operating profitability.
Capital expenditure increased by 19.6% in the first half of
2023, compared to the prior-year period. In the first half of 2023,
capital expenditure amounted to EUR238.8 million of which 54% was
related to investment in production equipment and facilities and
16% to the acquisition of marketing equipment. In the first half of
2022, capital expenditure amounted to EUR199.7 million of which 55%
was related to investment in production equipment and facilities
and 20% to the acquisition of marketing equipment.
In the first half of 2023, free cash flow decreased by 22.9% or
EUR76.3 million, compared to the prior-year period, impacted by the
decreased cash from operating activities and higher capital
expenditure.
Definitions and reconciliations of Alternative Performance
Measures ('APMs')
1. Comparable APMs (10)
In discussing the performance of the Group, 'comparable'
measures are used. Comparable measures are calculated by deducting
from the directly reconcilable IFRS measures the impact of the
Group's restructuring costs, the mark-to-market valuation of the
commodity hedging activity, the acquisition, integration and
divestment-related costs, the Russia-Ukraine conflict impact and
certain other tax items, which are collectively considered as items
impacting comparability, due to their nature. More specifically the
following items are considered as items that impact
comparability:
1) Restructuring costs
Restructuring costs comprise costs arising from significant
changes in the way the Group conducts business, such as significant
supply chain infrastructure changes, outsourcing of activities and
centralisation of processes. These costs are included within the
income statement line 'Operating expenses'; however, they are
excluded from the comparable results so that the users can obtain a
better understanding of the Group's operating and financial
performance achieved from underlying activity. Restructuring costs
resulting from initiatives driven by the Russia-Ukraine conflict
are presented under the 'Russia-Ukraine conflict impact' item, to
provide users complete information on the financial implications of
the conflict.
2) Commodity hedging
The Group has entered into certain commodity derivative
transactions in order to hedge its exposure to commodity price
risk. Although these transactions are economic hedging activities
that aim to manage our exposure to sugar, aluminium, gas oil and
plastics price volatility, hedge accounting has not been applied in
all cases. In addition, the Group recognises certain derivatives
embedded within commodity purchase contracts that have been
accounted for as stand-alone derivatives and do not qualify for
hedge accounting. The fair value gains or losses on the derivatives
and embedded derivatives are immediately recognised in the income
statement in the cost of goods sold and operating expenses line
items. The Group's comparable results exclude the gains or losses
resulting from the mark-to-market valuation of these derivatives to
which hedge accounting has not been applied (primarily plastics)
and embedded derivatives. These gains or losses are reflected in
the comparable results in the period when the underlying
transactions occur, to match the profit or loss to that of the
corresponding underlying transactions. We believe this adjustment
provides useful information related to the impact of our economic
risk management activities.
3) Acquisition, integration and divestment-related costs or gains
Acquisition costs comprise costs incurred to effect a business
combination such as finder's fees, advisory, legal, accounting,
valuation and other professional or consulting fees as well as
changes in the fair value of contingent consideration recognised in
the income statement. They also include any gain from bargain
purchase arising on business combinations, as well as any gain or
loss recognised in the income statement from the remeasurement to
fair value of previously held interests and from the
reclassification to the income statement of items of other
comprehensive income resulting from step acquisitions. Integration
costs comprise direct incremental costs necessary for the acquiree
to operate within the Group. Divestment-related costs comprise
transaction expenses, including advisory, consulting, and other
professional fees to effect the disposal of a subsidiary or equity
method investment, any impairment losses or write-downs to fair
value less costs to sell recognised in the income statement upon
classification as held for sale and any relevant disposal gains or
losses or reversals of impairment recognised in the income
statement upon disposal. These costs or gains are included within
the income statement line 'Operating expenses', however to the
extent that they relate to business combinations or divestments
that have been completed or are expected to be completed, they are
excluded from the comparable results so that the users can obtain a
better understanding of the Group's operating and financial
performance achieved from underlying activity.
4) Russia-Ukraine conflict impact
As a result of the conflict between Russia and Ukraine, the
Group has recognised net impairment losses for property, plant and
equipment, intangible assets and equity method investments, as well
as restructuring costs, in connection with the new business model
in Russia and adverse changes to the economic environment. The
Group has also recognised incremental allowance for expected credit
losses and write-offs of inventory and property, plant and
equipment resulting from the Russia-Ukraine conflict. The
aforementioned net impairment losses are included within the income
statement line 'Exceptional items related to Russia-Ukraine
conflict' so as to provide users with enhanced visibility over
these items considering their materiality, while remaining costs
are included within 'Operating expenses' and 'Cost of goods sold'
lines of the income statement accordingly. Net impairment losses
and other costs directly attributable to the Russia-Ukraine
conflict are excluded from the comparable results so that the users
can obtain a better understanding of the Group's operating and
financial performance from underlying activity.
5) Other tax items
Other tax items represent the tax impact of (a) changes in
income tax rates affecting the opening balance of deferred tax
arising during the year and (b) certain tax related matters
selected based on their nature. Both (a) and (b) are excluded from
comparable after-tax results so that the users can obtain a better
understanding of the Group's underlying financial performance.
The Group discloses comparable performance measures to enable
users to focus on the underlying performance of the business on a
basis which is common to both periods for which these measures are
presented.
(10) Comparable APMs refer to comparable cost of goods sold,
comparable gross profit, comparable operating expenses, comparable
EBIT, comparable EBIT margin, comparable Adjusted EBITDA,
comparable tax, comparable net profit and comparable EPS.
The reconciliation of comparable measures to the directly
related measures calculated in accordance with IFRS is as
follows:
Reconciliation of comparable financial indicators (numbers in
EUR million except per share data)
Half-year 2023
----------------------------------------------------------------------------------
Net
Gross Operating Adjusted Profit EPS
COGS Profit expenses EBIT EBITDA Tax (11) (EUR)
As reported (3,259.9) 1,761.6 (1,208.4) 557.3 765.6 (142.5) 385.7 1.050
Restructuring
costs - - 1.3 1.3 1.3 (0.3) 1.0 0.003
Commodity hedging (1.6) (1.6) - (1.6) (1.6) 0.2 (1.4) (0.004)
Acquisition costs - - 3.3 3.3 3.3 - 3.3 0.009
Russia-Ukraine
conflict impact - - 0.4 0.4 0.4 (0.1) 0.3 -
Comparable (3,261.5) 1,760.0 (1,203.4) 560.7 769.0 (142.7) 388.9 1.058
---------- -------- ---------- ------- --------- -------- -------- --------
Half-year 2022
----------------------------------------------------------------------------------
Net
Gross Operating Adjusted Profit EPS
COGS Profit expenses EBIT EBITDA Tax (11) (EUR)
As reported (2,759.7) 1,450.2 (1,198.9) 275.7 663.8 (82.0) 152.9 0.418
Restructuring
costs - - 3.8 3.8 3.7 (0.8) 3.0 0.008
Commodity hedging (15.5) (15.5) - (15.5) (15.5) 2.8 (12.7) (0.035)
Integration costs - - 8.5 8.5 8.5 - 8.5 0.023
Russia-Ukraine
conflict impact 1.1 1.1 188.9 190.0 6.4 (24.6) 165.4 0.452
Other tax items - - - - - (0.2) (0.2) (0.001)
---------- -------- ---------- ------- --------- -------- -------- --------
Comparable (2,774.1) 1,435.8 (997.7) 462.5 666.9 (104.8) 316.9 0.865
---------- -------- ---------- ------- --------- -------- -------- --------
(11) Net Profit and comparable net profit refer to net profit
and comparable net profit respectively after tax attributable to
owners of the parent.
Reconciliation of comparable EBIT per reportable segment (numbers
in EUR million)
Half-year 2023
---------------------------------------------------
Established Developing Emerging Consolidated
EBIT 170.8 67.2 319.3 557.3
Restructuring costs - - 1.3 1.3
Commodity hedging (0.3) (0.4) (0.9) (1.6)
Acquisition costs 0.8 0.5 2.0 3.3
Russia-Ukraine conflict impact - - 0.4 0.4
------------ ----------- --------- -------------
Comparable EBIT 171.3 67.3 322.1 560.7
------------ ----------- --------- -------------
Half-year 2022
---------------------------------------------------
Established Developing Emerging Consolidated
EBIT 147.4 56.9 71.4 275.7
Restructuring costs (5.0) - 8.8 3.8
Commodity hedging (2.2) (5.3) (8.0) (15.5)
Integration costs - - 8.5 8.5
Russia-Ukraine conflict impact - - 190.0 190.0
------------ ----------- --------- -------------
Comparable EBIT 140.2 51.6 270.7 462.5
------------ ----------- --------- -------------
2. Organic APMs
Organic growth
Organic growth enables users to focus on the operating
performance of the business on a basis which is not affected by
changes in foreign currency exchange rates from period to period or
changes in the Group's scope of consolidation ('consolidation
perimeter') i.e., acquisitions, divestments and reorganisations
resulting in equity method accounting. Thus, organic growth is
designed to assist users in better understanding the Group's
underlying performance.
More specifically, the following items are adjusted from the
Group's volume, net sales revenue and comparable EBIT in order to
derive organic growth metrics:
(a) Foreign currency impact
Foreign currency impact in the organic growth calculation
reflects the adjustment of prior-period net sales revenue and
comparable EBIT metrics for the impact of changes in exchange rates
applicable to the current period.
(b) Consolidation perimeter impact
Current period volume, net sales revenue and comparable EBIT
metrics, are each adjusted for the impact of changes in the
consolidation perimeter. More specifically adjustments are
performed as follows:
i. Acquisitions:
For current year acquisitions, the results generated in the
current period by the acquired entities are not included in the
organic growth calculation. For prior year acquisitions, the
results generated in the current year over the period during which
the acquired entities were not consolidated in the prior year, are
not included in the organic growth calculation.
For current year step acquisitions where the Group obtains
control of a) entities over which it previously held either joint
control or significant influence and which were accounted for under
the equity method, or b) entities which were carried at fair value
either through profit or loss or other comprehensive income, the
results generated in the current year by the relevant entities over
the period during which these entities are consolidated, are not
included in the organic growth calculation. For such step
acquisitions of entities previously accounted for under the equity
method the share of results for the respective period described
above, is included in the organic growth calculation of the current
year. For such step acquisitions of entities previously accounted
for at fair value through profit or loss any fair value gains or
losses for the respective period described above, are included in
the organic growth calculation. For such step acquisitions in the
prior year, the results generated in the current year by the
relevant entities over the period during which these entities were
not consolidated in the prior year, are not included in the organic
growth calculation. However, the share of results or gains or
losses from fair value changes of the respective entities, based on
their accounting treatment prior to the step acquisition, for the
current-year period during which these entities were not
consolidated in the prior year are included in the organic growth
calculation.
ii. Divestments:
For current year divestments, the results generated in the prior
year by the divested entities over the period during which the
divested entities are no longer consolidated in the current year,
are included in the current year's results for the purpose of the
organic growth calculation. For prior-year divestments, the results
generated in the prior year by the divested entities over the
period during which the divested entities were consolidated, are
included in the current year's results for the purpose of the
organic growth calculation.
iii. Reorganisations resulting in equity method accounting:
For current year reorganisations where the Group maintains
either joint control or significant influence over the relevant
entities so that they are reclassified from subsidiaries or joint
operations to joint ventures or associates and accounted for under
the equity method, the results generated in the current year by the
relevant entities over the period during which these entities are
no longer consolidated, are included in the current year's results
for the purpose of the organic growth calculation. For such
reorganisations in the prior year, the results generated in the
current year by the relevant entities over the period during which
these entities were consolidated in the prior year, are included in
the current year's results for the purpose of the organic growth
calculation. In addition, the share of results in the current year
of the relevant entities, for the respective period as described
above, is excluded from the organic growth calculation for such
reorganisations.
The calculations of the organic growth and the reconciliation to
the most directly related measures calculated in accordance with
IFRS are presented in the below tables. Organic growth (%) is
calculated by dividing the amount in the row titled 'Organic
movement' by the amount in the associated row titled '2022
reported' or, where presented, '2022 adjusted'. Organic growth for
comparable EBIT margin is the organic movement expressed in basis
points.
Reconciliation of organic measures
Half Year 2023
----------------------------------------------
Volume (m unit cases) Established Developing Emerging Group
2022 reported 305.7 230.4 794.1 1,330.2
Consolidation perimeter
impact 0.2 - 66.6 66.8
Organic movement 0.5 -3.1 -11.3 -13.9
------------ ----------- --------- --------
2023 reported 306.4 227.3 849.4 1,383.1
------------ ----------- --------- --------
Organic growth (%) 0.2% -1.3% -1.4% -1.0%
------------ ----------- --------- --------
Half Year 2023
----------------------------------------------
Net sales revenue (EUR Established Developing Emerging Group
m)
2022 reported 1,384.2 791.6 2,034.1 4,209.9
Foreign currency impact 6.5 5.8 -190.6 -178.3
2022 adjusted 1,390.7 797.4 1,843.5 4,031.6
Consolidation perimeter
impact 2.3 - 269.9 272.2
Organic movement 235.0 187.8 294.9 717.7
------------ ----------- --------- --------
2023 reported 1,628.0 985.2 2,408.3 5,021.5
------------ ----------- --------- --------
Organic growth (%) 16.9% 23.6% 16.0% 17.8%
------------ ----------- --------- --------
Half Year 2023
--------------------------------------------
Net sales revenue per Established Developing Emerging Group
unit case (EUR) (12)
2022 reported 4.53 3.44 2.56 3.16
Foreign currency impact 0.02 0.03 -0.24 -0.13
2022 adjusted 4.55 3.46 2.32 3.03
Consolidation perimeter
impact - - 0.10 0.02
Organic movement 0.76 0.87 0.41 0.58
------------ ----------- --------- ------
2023 reported 5.31 4.33 2.84 3.63
------------ ----------- --------- ------
Organic growth (%) 16.7% 25.2% 17.7% 19.0%
------------ ----------- --------- ------
Half Year 2023
--------------------------------------------
Comparable EBIT (EUR m) Established Developing Emerging Group
2022 reported 140.2 51.6 270.7 462.5
Foreign currency impact 1.3 1.3 -20.5 -17.9
2022 adjusted 141.5 52.9 250.2 444.6
Consolidation perimeter
impact 0.4 - 37.1 37.5
Organic movement 29.4 14.4 34.8 78.6
------------ ----------- --------- ------
2023 reported 171.3 67.3 322.1 560.7
------------ ----------- --------- ------
Organic growth (%) 20.8% 27.2% 13.9% 17.7%
------------ ----------- --------- ------
Half Year 2023
--------------------------------------------
Comparable EBIT Margin Established Developing Emerging Group
(%) (12)
2022 reported 10.1% 6.5% 13.3% 11.0%
Foreign currency impact - 0.1% 0.3% -
2022 adjusted 10.2% 6.6% 13.6% 11.0%
Consolidation perimeter
impact - - - 0.1%
Organic movement 0.3% 0.2% -0.2% -
------------ ----------- --------- ------
2023 reported 10.5% 6.8% 13.4% 11.2%
------------ ----------- --------- ------
Organic growth (%) 30bps 20bps -20bps -
------------ ----------- --------- ------
(12) Certain differences in calculations are due to
rounding.
3. Other APMs
Adjusted EBITDA
Adjusted EBITDA is calculated by adding back to operating profit
the depreciation and net impairment of property, plant and
equipment, the amortisation and net impairment of intangible
assets, the net impairment of equity method investments, the
employee share option and performance share costs and items, if
any, reported in line 'Other non-cash items' of the condensed
consolidated interim cash flow statement. Adjusted EBITDA is
intended to provide useful information to analyse the Group's
operating performance excluding the impact of operating non-cash
items as defined above. The Group also uses comparable Adjusted
EBITDA, which is calculated by deducting from Adjusted EBITDA the
impact of: the Group's restructuring costs, the acquisition,
integration and divestment-related costs, the mark-to-market
valuation of the commodity hedging activity and the impact from the
Russia-Ukraine conflict. Comparable Adjusted EBITDA is intended to
measure the level of financial leverage of the Group by comparing
comparable Adjusted EBITDA to Net debt.
Adjusted EBITDA and comparable Adjusted EBITDA are not measures
of profitability and liquidity under IFRS and have limitations,
some of which are as follows: Adjusted EBITDA and comparable
Adjusted EBITDA do not reflect our cash expenditures, or future
requirements, for capital expenditures or contractual commitments;
Adjusted EBITDA and comparable Adjusted EBITDA do not reflect
changes in, or cash requirements for, our working capital needs;
although depreciation and amortisation are non-cash charges, the
assets being depreciated and amortised will often have to be
replaced in the future, and Adjusted EBITDA and comparable Adjusted
EBITDA do not reflect any cash requirements for such replacements.
Because of these limitations, Adjusted EBITDA and comparable
Adjusted EBITDA should not be considered as measures of
discretionary cash available to us and should be used only as
supplementary APMs.
Free cash flow
Free cash flow is an APM used by the Group and defined as cash
generated by operating activities after payments for purchases of
property, plant and equipment net of proceeds from sales of
property, plant and equipment and including principal repayments of
lease obligations. Free cash flow is intended to measure the cash
generation from the Group's business, based on operating
activities, including the efficient use of working capital and
taking into account its net payments for purchases of property,
plant and equipment. The Group considers the purchase and disposal
of property, plant and equipment as ultimately non--discretionary
since ongoing investment in plant, machinery, technology and
marketing equipment, including coolers, is required to support the
day-to-day operations and the Group's growth prospects. The Group
presents free cash flow because it believes the measure assists
users of the financial statements in understanding the Group's cash
generating performance as well as availability for interest
payment, dividend distribution and own retention. The free cash
flow measure is used by management for its own planning and
reporting purposes since it provides information on operating cash
flows, working capital changes and net capital expenditure that
local managers are most directly able to influence.
Free cash flow is not a measure of cash generation under IFRS
and has limitations, some of which are as follows: free cash flow
does not represent the Group's residual cash flow available for
discretionary expenditures since the Group has debt payment
obligations that are not deducted from the measure; free cash flow
does not deduct cash flows used by the Group in other investing and
financing activities; and free cash flow does not deduct certain
items settled in cash. Other companies in the industry in which the
Group operates may calculate free cash flow differently, limiting
its usefulness as a comparative measure.
Capital expenditure
Capital expenditure is defined as payments for purchases of
property, plant and equipment plus principal repayments of lease
obligations less proceeds from sale of property, plant and
equipment. The Group uses capital expenditure as an APM to ensure
that the cash spending is in line with its overall strategy for the
use of cash.
The following table illustrates how Adjusted EBITDA, free cash
flow and capital expenditure are calculated:
Half-year Half-year
2023 2022
EUR million EUR million
------------ ------------
Operating profit (EBIT) 557.3 275.7
Depreciation and impairment of property, plant
and equipment, including right-of-use assets 197.8 317.2
Amortisation and impairment of intangible assets 0.7 14.4
Employee performance shares 9.8 3.7
Impairment of equity method investments - 52.8
------------ ------------
Adjusted EBITDA 765.6 663.8
Share of results of integral equity method
investments (4.1) (24.4)
(Gain) / Loss on disposals of non-current assets (2.3) 2.2
Cash consumed from working capital movements (169.1) (45.6)
Tax paid (94.7) (63.4)
------------ ------------
Net cash from operating activities 495.4 532.6
------------ ------------
Payments for purchases of property, plant and
equipment (13) (213.8) (172.1)
Principal repayments of lease obligations (28.6) (29.5)
Proceeds from sales of property, plant and
equipment 3.6 1.9
------------ ------------
Capital expenditure (238.8) (199.7)
------------ ------------
Free cash flow 256.6 332.9
------------ ------------
(13) Payments for purchases of property, plant and equipment for
the first half of 2023 include EUR6.6 million (first half of 2022:
EUR3.5 million) relating to repayment of borrowings undertaken to
finance the purchase of production equipment by the Group's
subsidiary in Nigeria, classified as 'Repayments of borrowings' in
the condensed consolidated interim cash flow statement.
Net debt
Net debt is an APM used by management to evaluate the Group's
capital structure and leverage. Net debt is defined as current
borrowings plus non-current borrowings less cash and cash
equivalents and financial assets (time deposits, treasury bills and
money market funds), as illustrated below:
As at
31 December
30 June 2023 2022
EUR million EUR million
------------- ------------
Current borrowings 289.1 337.0
Non-current borrowings 3,069.4 3,082.9
Other financial assets (514.2) (1,026.7)
Cash and cash equivalents (1,064.9) (719.9)
------------- ------------
Net debt 1,779.4 1,673.3
------------- ------------
Principal risks and uncertainties
The Company faces a number of risks and uncertainties that may
have an adverse effect on its operations, performance and future
prospects and has a robust risk management programme to assess
these and evaluate strategies to manage them.
General macroeconomic conditions particularly continuing high
inflation and higher interest rates provided a difficult operating
environment in the first half of 2023, although the more
pessimistic conditions that many analysts were predicting did not
eventuate. We saw some easing in projected increases in input costs
including some key ingredients. We remain cautiously optimistic
although we predict ongoing volatility in the shorter term. Foreign
exchange rates and currency availability, particularly relating to
Nigeria and Egypt remain problematic and are expected to continue
to have an impact on our business although we do see encouraging
signs from announced changes in economic policies of those
governments.
The conflict between Russia and Ukraine continues to affect our
business in those countries with some continuing impact on our
supply chain. There does not appear to be any real prospect for
resolution in the short term and our focus remains the health and
safety of our people and the long-term viability of our business .
The geopolitical environment in which we operate will remain
challenging in the medium term .
Sustainability related risks particularly related to water,
packaging and managing our carbon footprint, remain significant
long-term risks with the business involved in a number of
initiatives to enhance even further our sustainability standings.
We took additional steps to strengthen our assessment of the
long-term impact of climate change on our revenue, operating costs
and capital investment requirements to respond effectively.
In the first half of 2023, we added the impact of artificial
intelligence ('AI') to our list of emerging risks and
opportunities. We conducted an analysis of the benefits of AI but
also made progress on the important governance and policy aspects
of reducing the potential risks associated with rapid adoption of
AI technology.
In addition to the risks and uncertainties referred to above,
the principal risks and uncertainties that the Company expects to
be exposed to in the second half of 2023 and the management plans
to mitigate those risks are substantially the same as those
outlined in our 2022 Integrated Annual Report for the year ended 31
December 2022, pages 63 to 81, a summary of which is set out below.
Further information can also be found on our website .
The principal risks will be closely monitored during the second
half of the year to identify material changes to the risk
environment.
Our principal risks
Commodity costs
-- In 2022 we saw a great deal of volatility in many of key
commodities. We saw some stability returning to the markets in 2023
and, in some cases price reductions, although we saw continuing
high prices of sugar.
-- We expect to see some instability continue in the short to
medium term. We expect climate change, and the response of
suppliers of key commodities to climate change, to have an impact
on commodity costs over the medium to long term.
Foreign exchange fluctuations
-- We expect continuing short- to medium-term volatility in
foreign exchange in key markets, particularly Nigeria and
Egypt.
-- Recent government economic policy announcements have given us
reason to be more optimistic although it will take time for changes
to have a significant impact.
Marketplace economic conditions
-- We expect continuing high inflation and interest rates across
our markets over the short term which may affect consumers
purchasing decisions.
Geopolitical and security environment
-- While the situation remains unpredictable, we do not expect a
resolution of the Russia/Ukraine crisis in the short term.
-- Continuing tough economic conditions in the short term will
increase the risk of social discontent and political
instability.
-- We expect the geopolitical environment to remain volatile in the short to medium term.
Product relevance and acceptability
-- There is an increasing risk of additional sugar/beverage taxes in the short term.
-- Heightening concerns particularly around sustainability and
the impact of climate change into the medium to longer term.
-- The EU regulatory environment will increasingly focus on
health and sustainability issues and new directives and regulations
are likely.
Strategic stakeholder relationships
-- We continue to maintain strong relationships with our key
business partners and continue to focus on maintaining alignment of
our strategic objectives over the long term recognising the
changing global environment may impact our independent businesses
differently.
Competing in the digital marketplace
-- The digital marketplace continues to evolve and remains
highly competitive with new and existing companies seeking to take
advantage of e-commerce growth.
-- We expect the continued strong growth of B2B and B2C
e-commerce sales over the medium to long term.
Health and safety of our people
-- We will continue to monitor and reduce health and safety risks across our markets.
-- We remain optimistic that COVID -- 19 and influenza cases
will remain manageable over the short term but we remain vigilant
and ready to reintroduce pandemic protocols if required.
Suppliers and sustainable sourcing
-- We expect continuing volatility in the short-to-medium term
as a result of macroeconomic and geopolitical conditions and
continuing supply-demand imbalances.
-- Over the longer term we expect climate change and our
suppliers' response to climate change to affect the cost of
ingredients.
Cyber incidents
-- The number and sophistication of cyber incidents is expected
to increase in the short to medium term. Stakeholder concerns about
data privacy and expectations to protect privacy will continue to
increase.
-- Government agencies will continue to improve their
capabilities to investigate and respond to cybercrime. We continue
to enhance our cyber security infrastructure and processes.
People retention
-- We continue to see challenges in the attractiveness of
consumer-packaged goods companies as an employer of choice.
-- Talent retention will be an ongoing challenge over the short
to medium term as adjustments are made to new ways of working. We
maintain high levels of retention and engagement.
Ethics and compliance
-- Continuing and new economic and other sanctions imposed by
many countries against Russia and Belarus increased the risk of
inadvertent non-compliance. We have strengthened awareness and
compliance programmes to mitigate this risk.
-- We continue to focus on reducing the risk of fraud against
the Company, and non-compliance with anti-bribery and corruption
standards with an emphasis on training and awareness as well as
maintaining a strong compliance framework.
Cost and availability of sustainable packaging
-- We continue to see heightened stakeholder concerns around
packaging and increased regulation across the EU.
-- Significant changes to our packaging mix could have a major
impact on our business strategy, longer-term capital investment in
production and distribution, and our ability to meet our
NetZeroby40 commitments.
Water availability and usage
-- We expect that water stress in our water priority locations
will continue to increase over the medium to long term as a result
of climate change. The extent of that increase will depend both on
our actions and on the global response to climate change.
-- We expect that regulatory pressure will increase over the
medium term and that will flow through to additional operating
costs associated with water. These additional costs have been
estimated in our water risk assessment that is updated
annually.
Managing our carbon footprint
-- We will continue to see heightened stakeholder concerns and
increased regulation to drive reductions in carbon emissions and
expect to see the price of carbon increase significantly over the
next 20 years, as pressure is applied to all companies to reduce
their carbon footprint.
-- We have committed to NetZeroby40 and currently undertaking a
range of initiatives to meet that commitment, including ongoing
capital expenditure on carbon reduction initiatives.
Related party transactions
Related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial positions or the performance of Coca-Cola
HBC during the period, as well as any changes in the related party
transactions as described in the 2022 Integrated Annual Report that
could have a material effect on the financial positions or
performance of the Group in the first six months of the current
financial year, are described in section 'Condensed consolidated
interim financial statements for the six months ended 30 June
2023', note 14 'Related party transactions'.
Going concern statement
As part of the consideration of whether to adopt the going
concern basis in preparing the interim report and financial
statements, management has considered the Group's financial
performance in the period, the expected renewal of the bottlers'
agreements with The Coca-Cola Company beyond 31 December 2023, as
well as its 2022 quantitative viability exercise, including the
performance of various stress tests, which confirms the Group's
ability to generate cash in the year ending 31 December 2023 and
beyond. Management has also considered the events involving Ukraine
and Russia and no impact has been identified on the Group's ability
to continue as a going concern.
Management has also considered the Group's strong balance sheet
and liquidity position, its leading market shares and largely
variable cost base, together with the unique portfolio of brands
and resilient and talented people, which it believes will allow the
Group to fully overcome the challenges posed by the volatile
geopolitical and macroeconomic environment.
Accordingly, and having also considered the principal risks, the
Directors continue to adopt the going concern basis of accounting
in preparing these condensed consolidated interim financial
statements and have not identified any material uncertainties to
the Group's ability to continue trading as a going concern over a
period of at least twelve months from the date of approval of these
condensed consolidated interim financial statements.
Responsibility statement
The Directors of the Company, whose names are set out below,
confirm that to the best of their knowledge:
(a) the condensed consolidated interim financial statements are
prepared in accordance with International Accounting Standard (IAS)
34, 'Interim Financial Reporting', as issued by the International
Accounting Standards Board (IASB) and IAS 34, 'Interim Financial
Reporting', as issued by the International Accounting Standards
Board (IASB) and adopted by the European Union (EU) and give a true
and fair view of the assets, liabilities, financial position and
profit or loss of the undertakings included in the consolidation as
a whole for the period ended 30 June 2023 as required by the
Disclosure Guidance and Transparency Rules sourcebook of the UK FCA
("DTR") 4.2.4R; and
(b) the interim management report includes a fair review of the
information required by:
-- DTR 4.2.7R of the DTRs, being an indication of important
events that have occurred during the first six months of the
current financial year and their impact on the condensed
consolidated interim financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the financial year; and
-- DTR 4.2.8 R of the DTRs, being related party transactions
that have taken place in the first six months of the current
financial year and that have materially affected the financial
position or performance of the Group during that period, and any
changes in the related party transactions described in the 2022
Integrated Annual Report for Coca-Cola HBC AG and its subsidiaries
for the year ended 31 December 2022, that could have a material
effect on the financial position or performance of the Group in the
first six months of the current financial year.
Name Title
Anastassis G. David Non-Executive Chairman
Zoran Bogdanovic Chief Executive Officer
Anastasios I. Leventis Non-Executive Director
Henrique Braun Non-Executive Director
Christo Leventis Non-Executive Director
Evguenia Stoichkova Non-Executive Director
George Leventis Non-Executive Director
Reto Francioni Senior Independent Non-Executive
Director
Charlotte J. Boyle Independent Non-Executive Director
Anna Diamantopoulou Independent Non-Executive Director
William W. (Bill) Douglas Independent Non-Executive Director
III
Olusola (Sola) David-Borha Independent Non-Executive Director
Alexandra Papalexopoulou Independent Non-Executive Director
Signed on behalf of the Board
Zoran Bogdanovic
Chief Executive Officer
9 August 2023
Independent review report to Coca-Cola HBC AG
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed the condensed consolidated interim financial
statements (the "interim financial statements") in the Half-yearly
financial report of Coca-Cola HBC AG (the "Company") for the six
months ended 30 June 2023 (the "Half-yearly financial report").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with
International Accounting Standard 34, 'Interim Financial Reporting'
as adopted by the European Union and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
The interim financial statements comprise:
-- the condensed consolidated interim balance sheet as at 30 June 2023;
-- the condensed consolidated interim income statement for the six month period then ended;
-- the condensed consolidated interim statement of comprehensive
income for the six month period then ended;
-- the condensed consolidated interim statement of changes in
equity for the six month period then ended;
-- the condensed consolidated interim cash flow statement for
the six month period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the Half-yearly
financial report have been prepared in accordanc e with IAS 34,
'Interim Financial Reporting', as adopted by the European Union and
the Disclosure Guidance and Transparency Rules sourcebook of the
United Kingdom's Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410, 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity'
issued by the International Auditing and Assurance Standards Board.
A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the Half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis for
conclusion section of this report, nothing has come to our
attention to suggest that the directors have inappropriately
adopted the going concern basis of accounting or that the directors
have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on
the review procedures performed. However, future events or
conditions may cause the group to cease to continue as a going
concern.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The Half-yearly financial report, including the interim
financial statements, is the responsibility of, and has been
approved by the directors. The directors are responsible for
preparing the Half-yearly financial report in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority. In preparing the Half-yearly
financial report, including the interim financial statements, the
directors are responsible for assessing the group's ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the
group or to cease operations, or have no realistic alternative but
to do so.
Our responsibility is to express a conclusion on the interim
financial statements in the Half-yearly financial report based on
our review. Our conclusion, including our Conclusions relating to
going concern, is based on procedures that are less extensive than
audit procedures, as described in the Basis for conclusion
paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of
complying with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority and
for no other purpose. We do not, in giving this conclusion, accept
or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
____________________________________________
Fotis Smyrnis
Certified Accountant Auditor (SOEL Reg. No. 52861)
For and on behalf of PricewaterhouseCoopers S.A.
Certified Auditors (SOEL Reg. No. 113)
9 August 2023
Athens, Greece
Notes:
(a) The maintenance and integrity of the Company's website is
the responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the interim financial statements since
they were initially presented on the website.
(b) Legislation in the United Kingdom, Greece 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
30 June 2023
Condensed consolidated interim income statement
Six months ended
30 June 1 July
2023 2022
--------------------------------------------- -----
Note EUR million EUR million
--------------------------------------------- ----- ------------- ------------
Net sales revenue 3 5,021.5 4,209.9
Cost of goods sold (3,259.9) (2,759.7)
--------------------------------------------- ----- ------------- ------------
Gross profit 1,761.6 1,450.2
Operating expenses (excluding exceptional
items related
to Russia-Ukraine conflict) (1,208.4) (1,015.3)
Exceptional items related to Russia-Ukraine
conflict - (183.6)
Operating expenses (1,208.4) (1,198.9)
Share of results of integral equity method
investments 4.1 24.4
--------------------------------------------- ----- ------------- ------------
Operating profit 3 557.3 275.7
Finance costs, net 5 (31.4) (42.7)
Share of results of non-integral equity
method investments 1.7 1.4
--------------------------------------------- ----- ------------- ------------
Profit before tax 527.6 234.4
Tax 6 (142.5) (82.0)
--------------------------------------------- ----- ------------- ------------
Profit after tax 385.1 152.4
--------------------------------------------- ----- ------------- ------------
Attributable to:
Owners of the parent 385.7 152.9
Non-controlling interests (0.6) (0.5)
--------------------------------------------- ----- ------------- ------------
385.1 152.4
--------------------------------------------- ----- ------------- ------------
Basic and diluted earnings per share (EUR) 7 1.05 0.42
The accompanying notes form an integral part of these condensed
consolidated interim financial statements
Condensed consolidated interim statement of comprehensive
income
Six months ended
30 June
2023 1 July 2022
---------------------------------------------------------
EUR million EUR million
--------------------------------------------------------- ------------- ------------
Profit after tax 385.1 152.4
Other comprehensive income:
Items that may be subsequently reclassified
to income statement:
Cost of hedging (2.7) (0.3)
Net gain on cash flow hedges 18.4 24.5
Foreign currency translation (393.0) 135.9
Share of other comprehensive income of equity
method
investments (7.8) 44.3
Income tax relating to items that may be subsequently
reclassified
to income statement (2.5) (3.9)
--------------------------------------------------------- ------------- ------------
(387.6) 200.5
Items that will not be subsequently reclassified
to income statement:
Valuation gain / (loss) on equity investments
at fair value through other
comprehensive income 0.4 (0.1)
Actuarial gains 3.3 39.2
Income tax relating to items that will not
be subsequently
reclassified to income statement (0.8) (1.1)
--------------------------------------------------------- ------------- ------------
2.9 38.0
--------------------------------------------------------- ------------- ------------
Other comprehensive (loss) / income for the
period, net of tax (384.7) 238.5
--------------------------------------------------------- ------------- ------------
Total comprehensive income for the period 0.4 390.9
--------------------------------------------------------- ------------- ------------
Total comprehensive income attributable to:
Owners of the parent 5.1 393.6
Non-controlling interests (4.7) (2.7)
--------------------------------------------------------- ------------- ------------
0.4 390.9
--------------------------------------------------------- ------------- ------------
Condensed consolidated interim balance sheet
As at
30 June 2023 31 December 2022
-------------------------------------
Note EUR million EUR million
------------------------------------- ----- ------------- -----------------
Assets
Intangible assets 8 2,462.4 2,542.5
Property, plant and equipment 8 2,976.6 3,266.3
Other non-current assets 346.8 330.7
------------------------------------- ----- ------------- -----------------
Total non-current assets 5,785.8 6,139.5
------------------------------------- ----- ------------- -----------------
Inventories 953.4 770.0
Trade, other receivables and assets 1,528.5 1,162.4
Other financial assets 10 643.5 1,063.8
Cash and cash equivalents 10 1,064.9 719.9
------------------------------------- ----- ------------- -----------------
4,190.3 3,716.1
Assets classified as held for sale 0.1 0.1
------------------------------------- ----- ------------- -----------------
Total current assets 4,190.4 3,716.2
------------------------------------- ----- ------------- -----------------
Total assets 9,976.2 9,855.7
------------------------------------- ----- ------------- -----------------
Liabilities
Borrowings 10 289.1 337.0
Other current liabilities 3,165.7 2,669.7
------------------------------------- ----- ------------- -----------------
Total current liabilities 3,454.8 3,006.7
------------------------------------- ----- ------------- -----------------
Borrowings 10 3,069.4 3,082.9
Other non-current liabilities 351.1 380.5
------------------------------------- ----- ------------- -----------------
Total non-current liabilities 3,420.5 3,463.4
------------------------------------- ----- ------------- -----------------
Total liabilities 6,875.3 6,470.1
------------------------------------- ----- ------------- -----------------
Equity
Owners of the parent 3,005.0 3,282.3
Non-controlling interests 95.9 103.3
------------------------------------- ----- ------------- -----------------
Total equity 3,100.9 3,385.6
------------------------------------- ----- ------------- -----------------
Total equity and liabilities 9,976.2 9,855.7
------------------------------------- ----- ------------- -----------------
Condensed consolidated interim statement of changes in
equity
Attributable to owners of the parent
Share Share Group Treasury Exchange Other Retained Total
capital premium reorganisation shares equalisation reserves earnings Total Non-controlling equity
EUR EUR reserve EUR reserve EUR EUR EUR interests EUR
million million EUR million million EUR million million million million EUR million million
------------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Balance as at 1
January 2022 2,022.3 3,097.3 (6,472.1) (146.6) (1,154.0) 310.2 5,457.4 3,114.5 2.6 3,117.1
Shares issued to
employees
exercising stock
options (note
11) 0.1 0.1 - - - - - 0.2 - 0.2
Share-based
compensation:
Performance
shares - - - - - 3.9 - 3.9 - 3.9
Appropriation of
reserves - - - 15.4 - (22.4) 7.0 - - -
Non-controlling
interests on
business
combinations - - - - - - - - 170.7 170.7
Purchase of shares
held by
non-controlling
interests - - - - - - 42.6 42.6 (151.5) (108.9)
Dividends (note
13) - (262.6) - - - - 2.4 (260.2) (0.1) (260.3)
Transfer of cash
flow hedge
reserve,
including
cost of hedging,
to inventories,
net of tax (14) - - - - - (18.9) - (18.9) - (18.9)
------------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
2,022.4 2,834.8 (6,472.1) (131.2) (1,154.0) 272.8 5,509.4 2,882.1 21.7 2,903.8
Profit for the
period,
net of tax - - - - - - 152.9 152.9 (0.5) 152.4
Other
comprehensive
income
for the period,
net of tax - - - - 181.0 21.6 38.1 240.7 (2.2) 238.5
------------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Total
comprehensive
income
for the period,
net of tax (15) - - - - 181.0 21.6 191.0 393.6 (2.7) 390.9
------------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Balance as at 1
July 2022 2,022.4 2,834.8 (6,472.1) (131.2) (973.0) 294.4 5,700.4 3,275.7 19.0 3,294.7
------------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Shares issued to
employees
exercising stock
options (note
11) 1.9 2.6 - - - - - 4.5 - 4.5
Share-based
compensation:
Performance
shares - - - - - 12.7 - 12.7 - 12.7
Movement in shares
held for equity
compensation plan - - - - - 1.2 - 1.2 - 1.2
Appropriation of
reserves - - - - - 1.3 (1.3) - - -
Non-controlling
interests on
business
combinations - - - - - - - - 88.9 88.9
Purchase of shares
held by
non-controlling
interests - - - - - - (1.7) (1.7) 1.7 -
Dividends (note
13) - - - - - - - - (0.2) (0.2)
Transfer of cash
flow hedge
reserve, including
cost of hedging,
to inventories,
net of tax - - - - - (22.6) - (22.6) - (22.6)
------------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
2,024.3 2,837.4 (6,472.1) (131.2) (973.0) 287.0 5,697.4 3,269.8 109.4 3,379.2
Profit for the
period,
net of tax - - - - - - 262.5 262.5 0.7 263.2
Other
comprehensive
loss
for the period,
net of tax - - - - (245.2) 5.5 (10.3) (250.0) (6.8) (256.8)
------------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Total
comprehensive
income
for the period,
net of tax - - - - (245.2) 5.5 252.2 12.5 (6.1) 6.4
------------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Balance as at 31
December 2022 2,024.3 2,837.4 (6,472.1) (131.2) (1,218.2) 292.5 5,949.6 3,282.3 103.3 3,385.6
------------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
(14) The amount included in other reserves of EUR18.9 million
gain for the first half of 2022 represents the cash flow hedge
reserve, including cost of hedging, transferred to inventories of
EUR23.6 million gain, and the deferred tax expense thereof
amounting to EUR4.7 million.
(15) The amount included in the exchange equalisation reserve of
EUR181.0 million gain for the first half of 2022 represents the
exchange gain attributed to the owners of the parent, primarily
related to the Russian Rouble and the Nigerian Naira, partially
offset by the loss related to the Egyptian Pound, including EUR42.9
million gain relating to the share of other comprehensive income of
equity method investments.
The amount of other comprehensive income net of tax included in
other reserves of EUR21.6 million gain for the first half of 2022
consists of cash flow hedges gain of EUR24.2 million, share of
other comprehensive income of equity method investments of EUR1.4
million gain, valuation losses of EUR0.1 million on equity
investments at fair value through other comprehensive income, and
the deferred tax expense thereof amounting to EUR3.9 million.
The amount of EUR191.0 million gain attributable to owners of
the parent comprises profit for the period, net of tax of EUR152.9
million, actuarial gains of EUR39.2 million and the deferred tax
expense thereof amounting to EUR1.1 million.
The amount of EUR2.7 million losses included in non-controlling
interests for the first half of 2022, represents the exchange loss
attributed to the non-controlling interests of EUR2.2 million, and
the share of non-controlling interests in profit for the year, net
of tax of EUR0.5 million loss.
Attributable to owners of the parent
Share Share Group Treasury Exchange Other Retained Total
capital premium reorganisation shares equalisation reserves earnings Total Non-controlling equity
EUR EUR reserve EUR reserve EUR EUR EUR interests EUR
million million EUR million million EUR million million million million EUR million million
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Balance as at 1
January
2023 2,024.3 2,837.4 (6,472.1) (131.2) (1,218.2) 292.5 5,949.6 3,282.3 103.3 3,385.6
Shares issued to
employees
exercising
stock
options (note
11) 4.2 5.8 - - - - - 10.0 - 10.0
Share based
compensation:
Performance
shares - - - - - 9.8 - 9.8 - 9.8
Appropriation of
reserves - - - 29.7 - (29.0) (0.7) - - -
Purchase of
share
held by
non-controlling
interests - - - - - - (9.9) (9.9) (2.7) (12.6)
Dividends (note
13) - (289.9) - - - - 2.7 (287.2) - (287.2)
Transfer of cash
flow
hedge reserve,
including cost
of
hedging, to
inventories,
net
of tax (16) - - - - - (5.1) - (5.1) - (5.1)
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
2,028.5 2,553.3 (6,472.1) (101.5) (1,218.2) 268.2 5,941.7 2,999.9 100.6 3,100.5
Profit for the
period
net of tax - - - - - - 385.7 385.7 (0.6) 385.1
Other
comprehensive
income
for the period,
net
of tax - - - - (396.8) 13.6 2.6 (380.6) (4.1) (384.7)
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Total
comprehensive
income
for the
period, net
of tax (17) - - - - (396.8) 13.6 388.3 5.1 (4.7) 0.4
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
Balance as at 30
June 2023 2,028.5 2,553.3 (6,472.1) (101.5) (1,615.0) 281.8 6,330.0 3,005.0 95.9 3,100.9
----------------- -------- -------- --------------- --------- ------------- --------- --------- --------- ---------------- --------
(16) The amount included in other reserves of EUR5.1 million
gain for the first half of 2023 represents the cash flow hedge
reserve, including cost of hedging, transferred to inventories of
EUR5.7 million gain, and the deferred tax expense thereof amounting
to EUR0.6 million.
(17) The amount included in the exchange equalisation reserve of
EUR396.8 million loss for the first half of 2023 represents the
exchange loss attributed to the owners of the parent, primarily
related to the Nigerian Naira, the Russian Rouble and the Egyptian
Pound, including EUR7.9 million loss relating to the share of other
comprehensive income of equity method investments.
The amount of other comprehensive income net of tax included in
other reserves of EUR13.6 million gain for the first half of 2023
consists of cash flow hedges gain of EUR15.7 million, share of
other comprehensive income of equity method investments of EUR0.1
million gain, valuation gain of EUR0.4 million on equity
investments at fair value through other comprehensive income, and
the deferred tax expense thereof amounting to EUR2.6 million.
The amount of EUR388.3 million gain attributable to owners of
the parent comprises profit for the period, net of tax of EUR385.7
million, actuarial gains of EUR3.3 million and the deferred tax
expense thereof amounting to EUR0.7 million.
The amount of EUR4.7 million losses included in non-controlling
interests for the first half of 2023, represents the exchange loss
attributed to the non-controlling interests of EUR4.1 million, and
the share of non-controlling interests in profit for the period,
net of tax of EUR0.6 million loss.
Condensed consolidated interim cash flow statement
Six months ended
Note 30 June 1 July
2023 2022
------------------------------------------------------ -----
EUR million EUR million
------------------------------------------------------ ----- ------------- -------------
Operating activities
Profit after tax for the period 385.1 152.4
Finance costs, net 5 31.4 42.7
Share of results of non-integral equity method
investments (1.7) (1.4)
Tax charged to the income statement 142.5 82.0
Depreciation and impairment of property, plant
and equipment, including
right-of-use assets 8 197.8 317.2
Employee performance shares 9.8 3.7
Amortisation and impairment of intangible
assets 8 0.7 14.4
Impairment of equity method investments - 52.8
------------------------------------------------------ ----- ------------- -------------
765.6 663.8
Share of results of integral equity method
investments (4.1) (24.4)
(Gain) / Loss on disposals of non-current
assets (2.3) 2.2
Increase in inventories (272.5) (244.7)
Increase in trade and other receivables (543.9) (349.6)
Increase in trade and other payables 647.3 548.7
Tax paid (94.7) (63.4)
------------------------------------------------------ ----- ------------- -------------
Net cash inflow from operating activities 495.4 532.6
------------------------------------------------------ ----- ------------- -------------
Investing activities
Payments for purchases of property, plant
and equipment (207.2) (168.6)
Proceeds from sales of property, plant and
equipment 3.6 1.9
Payments related to acquisition of non-integral
equity method investments - (6.5)
Payments for investments in financial assets
at fair value through other
comprehensive income (4.8) -
Net proceeds from / (payments for) investments
in financial assets at amortised cost 517.7 (249.0)
Net proceeds from investments in financial
assets at fair value through profit or loss - 638.4
Net receipts from integral equity method investments 14 1.5 2.0
Net receipts from non-integral equity method
investments 14 7.0 0.6
Loans to related parties (1.0) (0.4)
Repayments of loans to related parties 0.5 -
Interest received 13.8 1.3
Payments for business combinations, net of
cash acquired - (249.0)
------------------------------------------------------ ----- ------------- -------------
Net cash inflow / (outflow) from investing
activities 331.1 (29.3)
------------------------------------------------------ ----- ------------- -------------
Financing activities
Proceeds from shares issued to employees,
exercising stock options 11 10.0 0.2
Payments for shares held by non-controlling
interests (12.6) (108.9)
Proceeds from borrowings 39.6 346.9
Repayments of borrowings (47.2) (202.9)
Principal repayments of lease obligations (28.6) (29.5)
Payments for settlement of derivatives regarding
financing activities (3.1) (1.4)
Interest paid (31.1) (27.5)
Dividends paid to non-controlling interests - (0.1)
Dividends paid to owners of the parent (287.2) -
------------------------------------------------------ ----- ------------- -------------
Net cash outflow from financing activities (360.2) (23.2)
------------------------------------------------------ ----- ------------- -------------
Net increase in cash and cash equivalents 466.3 480.1
------------------------------------------------------ ----- ------------- -------------
Movement in cash and cash equivalents
Cash and cash equivalents at 1 January 719.9 782.8
Net increase in cash and cash equivalents 466.3 480.1
Effect of changes in exchange rates (121.3) 65.4
------------------------------------------------------ ----- ------------- -------------
Cash and cash equivalents at the end of the
period 1,064.9 1,328.3
------------------------------------------------------ ----- ------------- -------------
Selected explanatory notes to the condensed consolidated interim
financial statements
1. Basis of preparation and accounting policies
Basis of preparation
These condensed consolidated interim financial statements are
prepared in accordance with International Accounting Standard
('IAS') 34, 'Interim Financial Reporting', as adopted by the
European Union ('EU'), and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority. These condensed consolidated interim financial
statements do not include all the information and disclosures
required in the annual financial statements and should be read in
conjunction with the Group's annual consolidated financial
statements for the year ended 31 December 2022. These condensed
consolidated interim financial statements are unaudited, but have
been reviewed by the auditors and their review opinion is included
before these condensed consolidated interim financial
statements.
As part of the consideration of whether to adopt the going
concern basis in preparing the interim report and financial
statements, management has considered the Group's financial
performance in the period, the expected renewal of the bottlers'
agreements with The Coca-Cola Company beyond 31 December 2023, as
well as its 2022 quantitative viability exercise, including the
performance of various stress tests, which confirms the Group's
ability to generate cash in 12 months from the date of approval of
the condensed consolidated interim financial statements and beyond.
Management has also considered the events involving Ukraine and
Russia and no impact has been identified on the Group's ability to
continue as a going concern. Therefore, it is deemed appropriate
that the Group continues to adopt the going concern basis of
accounting for the preparation of the condensed consolidated
interim financial statements.
Accounting policies
The accounting policies used in the preparation of the condensed
consolidated interim financial statements of Coca-Cola HBC AG
('Coca-Cola HBC', the 'Company' or the 'Group') are consistent with
those used in the 2022 annual financial statements, except for the
adoption of applicable amendments to accounting standards effective
as of 1 January 2023. The Group has not early adopted any standard,
interpretation or amendment that has been issued but is not yet
effective.
Amended standards adopted by the Group
The below standards and amendments to the standards became
applicable as of 1 January 2023 and were adopted by the Group. The
adoption of these amendments did not have a significant impact on
the Group's condensed consolidated interim financial
statements.
Amendments to IAS 1 and IFRS Practice Statement 2 - Disclosure
of Accounting policies: These amendments provide guidance and
examples to help entities apply materiality judgements to
accounting policy disclosures. The amendments aim to help entities
provide accounting policy disclosures that are more useful by
replacing the requirement for entities to disclose their
'significant' accounting policies with a requirement to disclose
their 'material' accounting policies and adding guidance on how
entities apply the concept of materiality in making decisions about
accounting policy disclosures.
Amendments to IAS 8 - Definition of Accounting Estimates: These
amendments clarify the distinction between changes in accounting
estimates and changes in accounting policies and the correction of
errors. Also, they clarify how entities use measurement techniques
and inputs to develop accounting estimates.
Amendments to IAS 12 - Deferred Tax related to Assets and
Liabilities arising from a Single Transaction: These amendments
narrow the scope of the initial recognition exception, so that it
no longer applies to transactions that give rise to equal taxable
and deductible temporary differences such as leases and
decommissioning liabilities.
IFRS 17 - Insurance Contracts: In May 2017, the IASB issued IFRS
17 'Insurance Contracts', a comprehensive new accounting standard
for insurance contracts covering recognition and measurement,
presentation and disclosure. IFRS 17 replaces IFRS 4 'Insurance
Contracts' that was issued in 2005. IFRS 17 applies to all types of
insurance contracts, regardless of the type of entities that issue
them, as well as to certain guarantees and financial instruments
with discretionary participation features, while a few scope
exceptions apply. Targeted amendments made in July 2020 aimed to
ease the implementation of the standard and deferred the
application date of IFRS 17 to 1 January 2023, while further
amendments made in December 2021 added a transition option that
permits an entity to apply an optional classification overlay in
the comparative period(s) presented on initial application of IFRS
17.
2. Foreign currency and translation
The Group's reporting currency is the Euro (EUR). Coca-Cola HBC
translates the income statements of foreign operations to the Euro
at average exchange rates and the balance sheets at the closing
exchange rates at each balance sheet date. The principal exchange
rates used for translation purposes in respect of one Euro are:
Average rate for the six
months ended Closing rate as at
30 June 2023 1 July 2022 30 June 31 December
2023 2022
--------------------- ------------- ------------- --------- --------------
US Dollar 1.08 1.09 1.09 1.06
UK Sterling 0.88 0.84 0.86 0.88
Polish Zloty 4.63 4.63 4.48 4.69
Nigerian Naira 522.47 456.20 820.86 493.61
Hungarian Forint 380.72 374.20 371.18 401.54
Swiss Franc 0.99 1.03 0.98 0.99
Russian Rouble 83.44 85.44 97.12 79.23
Romanian Leu 4.93 4.94 4.96 4.94
Ukrainian Hryvnia 39.53 31.72 40.00 38.94
Czech Koruna 23.68 24.63 23.68 24.21
Serbian Dinar 117.31 117.60 117.26 117.30
Egyptian Pound 32.87 18.87 33.70 26.35
--------------------- ------------- ------------- --------- --------------
In mid-June 2023, the Nigerian Central Bank stopped intervening
heavily in the interbank foreign exchange market, allowing the
Nigerian Naira to float more freely. The Group monitors the
situation in Nigeria in order to ensure that timely actions and
initiatives are undertaken to mitigate any potential adverse
impact.
3. Segmental analysis
The Group has essentially one business, being the production,
sale and distribution of ready-to-drink, primarily non-alcoholic,
beverages. The Group operates in 29 countries which are aggregated
in reportable segments as follows:
Established markets: Austria, Cyprus, Greece, Italy, Northern Ireland, the Republic of Ireland and Switzerland.
Developing markets: Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia.
Emerging markets: Armenia, Belarus, Bosnia and Herzegovina, Bulgaria, Egypt, Moldova, Montenegro, Nigeria, North
Macedonia, Romania, the Russian Federation, Serbia (including the Republic of Kosovo) and
Ukraine.
a) Volume and net sales revenue
The Group sales volume in million unit cases (18) was as
follows:
Six months ended
30 June 2023 1 July 2022
Established 306.4 305.7
Developing 227.3 230.4
Emerging 849.4 794.1
Total volume 1,383.1 1,330.2
Net sales revenue per reportable segment for the six months
ended 30 June 2023 and 1 July 2022 is presented below:
Six months ended
30 June 2023 1 July 2022
EUR million EUR million
Established 1,628.0 1,384.2
Developing 985.2 791.6
Emerging 2,408.3 2,034.1
Total net sales revenue 5,021.5 4,209.9
In addition to non-alcoholic ready-to-drink beverages as well as
coffee ("NARTD"), the Group sells and distributes Premium Spirits.
An analysis of volume and net sales revenue per product type for
the six months ended 30 June 2023 and 1 July 2022 is presented
below :
Six months ended
30 June 2023 1 July 2022
EUR million EUR million
Volume in million unit cases (18)
NARTD 1,381.4 1,328.8
Premium spirits 1.7 1.4
Total volume 1,383.1 1,330.2
Net sales revenue (EUR million)
NARTD 4,893.5 4,109.6
Premium spirits 128.0 100.3
Total net sales revenue 5,021.5 4,209.9
(18) One unit case corresponds to approximately 5.678 litres or
24 servings, being a typically used measure of volume. For Premium
Spirits volume, one unit case also corresponds to 5.678 litres. For
biscuits volume, one unit case corresponds to 1 kilogram. For
coffee one unit case corresponds to 0.5 kilograms or 5.678 litres.
Volume data is derived from unaudited operational data.
b) Other income statement items
Six months ended
30 June 2023 1 July 2022
EUR million EUR million
Operating profit
Established 170.8 147.4
Developing 67.2 56.9
Emerging 319.3 71.4
Total operating profit 557.3 275.7
Reconciling items
Finance costs, net (31.4) (42.7)
Tax (142.5) (82.0)
Share of results of non-integral equity method
investments 1.7 1.4
Non-controlling interests 0.6 0.5
Profit after tax attributable to owners of
the parent 385.7 152.9
4. Restructuring costs
As part of the effort to optimise its cost base and sustain
competitiveness in the marketplace, the Company undertakes
restructuring initiatives. Restructuring mainly concerns employees'
termination benefits, which are included within operating expenses.
Restructuring costs per reportable segment for the six months ended
30 June 2023 and 1 July 2022 are presented below:
Six months ended
30 June 2023 1 July 2022
EUR million EUR million
Established - (5.0)
Emerging 1.8 11.0
Total restructuring costs 1.8 6.0
Restructuring costs incurred in connection with the Group's
restructuring of its Russian operations amounted to EUR0.5 million
for the first half of 2023 (EUR2.2 million for the respective prior
year period).
5. Finance costs, net
Six months ended
30 June 2023 1 July 2022
EUR million EUR million
Finance income (20.0) (3.9)
Finance costs 42.8 41.0
Net foreign exchange losses 8.6 5.6
Finance costs, net 31.4 42.7
6. Tax
Six months ended
30 June 2023 1 July 2022
EUR million EUR million
Profit before tax 527.6 234.4
Tax (142.5) (82.0)
Effective tax rate 27.0% 35.0%
The Group's effective tax rate for 2023 may differ from the
theoretical amount that would arise using the weighted average tax
rate applicable to profits of the consolidated entities. This
difference can be a consequence of a number of factors, the most
significant of which are the application of statutory tax rates of
the countries in which the Group operates, the non-deductibility of
certain expenses, the non-taxable income and one-off tax items.
7. Earnings per share
Basic earnings per share is calculated by dividing the net
profit attributable to the owners of the parent by the weighted
average number of shares outstanding during the period (first half
of 2023: 367,509,476, first half of 2022: 366,162,423). Diluted
earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all
dilutive ordinary shares arising from exercising employee stock
options.
8. Intangible assets and property, plant and equipment
Intangible Property,
plant
assets and equipment
EUR million EUR million
Net book value as at 1 January 2023 excluding
right-of-use assets 2,542.5 3,062.4
Additions - 249.4
Disposals - (2.0)
Depreciation, impairment and amortisation (0.7) (168.0)
Foreign currency translation (79.4) (358.6)
Net book value as at 30 June 2023 excluding
right-of-use assets 2,462.4 2,783.2
Net book value as at 1 January 2023 of right-of-use
assets 203.9
Net book value as at 30 June 2023 of right-of-use
assets (note 12) 193.4
Net book value as at 30 June 2023 2,976.6
Impairment testing for goodwill and other indefinite-lived
intangible assets
The Group performed its annual impairment testing in 2022 where
the recoverable amount was higher than the carrying amount of all
cash-generating units and therefore no impairment was identified.
We disclosed in our 2022 integrated annual report that in the
cash-generating unit of Egypt, reasonably possible changes in key
assumptions of the 2022 impairment test would remove the remaining
headroom. During the first half of 2023, macroeconomic factors
indicated a material deterioration of the discount rate used to
determine the recoverable amount of the Group's Egyptian
cash-generating unit. As a result, the Group proceeded with an
interim impairment test of the Egyptian cash-generating unit's
recoverable amount, including goodwill. The recoverable amount was
determined based on value-in-use calculations consistent with those
performed in 2022, updated to consider management's revised best
estimates of expected cash flow projections and a higher discount
rate, reflective of the macroeconomic uncertainty in Egypt. No
impairment was identified as a
result of this interim impairment test.
The following table sets out the key assumptions used in the
impairment assessment of the Egyptian cash-generating unit:
June 2023 December 2022
Growth rate in perpetuity 5.0% 5.0%
Post-tax discount rate 18.2% 15.2%
Pre-tax discount rate 21.5% 17.8%
The recoverable amount of the Egyptian cash-generating unit
calculated based on value-in-use exceeded its carrying value by
EUR21.0 million as at 30 June 2023. Reasonably possible changes in
key assumptions that would remove the remaining headroom are as
follows: decrease of 80bps in growth rate in perpetuity or increase
of 50bps in post-tax discount rate. The Group continues to closely
monitor its Egyptian cash-generating unit in order to ensure that
timely actions and initiatives are undertaken to minimise potential
adverse impacts on its expected performance.
9. Financial risk management and financial instruments
The Group's activities expose it to a variety of financial
risks: market risk (including currency risk, interest rate risk and
commodity price risk), credit risk, liquidity risk and capital
risk. There have been no material changes in the risk management
policies since the previous year end.
As described in the 2022 Integrated Annual Report, the Group
actively manages its liquidity risk. The Group maintains a healthy
liquidity position and is able to meet its liabilities as they fall
due. As at 30 June 2023, the Group has net debt of EUR1.8 billion
(note 10). In addition, as at 30 June 2023, the Group has cash and
cash equivalents and other financial assets of EUR1.6 billion (note
10), an undrawn Revolving Credit Facility of EUR0.8 billion, an
uncommitted Money Market Loan agreement of EUR0.2 billion, as well
as EUR0.85 billion available out of the EUR1.0 billion Commercial
Paper Programme. None of the Group's debt facilities are subject to
any financial covenants that would impact its liquidity or access
to capital. The Group's Standard & Poor's and Moody's credit
ratings as disclosed in the 2022 Integrated Annual Report were
reaffirmed in May 2023, however Standard and Poor's changed the
outlook from negative to stable.
The Group's financial instruments recorded at fair value are
included in Level 1, Level 2 and Level 3 within the fair value
hierarchy as described in the 2022 Integrated Annual Report.
The fair value of bonds and notes payable applying the clean
market price, as at 30 June 2023, was EUR2,626.8 million compared
to their book value of EUR2,885.3 million, as at the same date. The
money market funds recorded at fair value are included in Level 1
within the fair value hierarchy. As at 30 June 2023, the fair value
of the money market funds amounted to EUR504.2 million (EUR497.2
million as at 31 December 2022).
As at 30 June 2023, the total derivatives included in Level 2
were financial assets of EUR37.5 million and financial liabilities
of EUR35.1 million. The Group recognises embedded derivatives whose
risks and economic characteristics were not considered to be
closely related to the commodity contract in which they were
embedded. The valuation techniques used to determine their fair
value maximised the use of observable market data. The fair value
of the embedded derivatives as at 30 June 2023 amounted to a
financial liability of EUR0.9 million and are classified within
Level 2.
The Group uses derivatives to mitigate the commodity price risk
related to plastics. As the valuation of these derivatives uses
prices that are not observable in the market, it is classified
within Level 3. The fair value of the derivatives related to
plastics as at 30 June 2023 amounted to a financial asset of EUR0.6
million and financial liability of EUR4.5 million.
The Group uses foreign currency derivatives to mitigate the
currency risk related to Nigerian Naira. As the valuation technique
of these derivatives incorporates greater use of unobservable
inputs, their fair value is classified within Level 3. The fair
value of these derivatives as at 30 June 2023 were financial assets
of EUR96.0 million and financial liabilities of EUR41.8
million.
There were no transfers between Levels 1, 2 and 3 during the six
months ended 30 June 2023.
10. Net debt
As at
30 June 2023 31 December 2022
EUR million EUR million
Current borrowings 289.1 337.0
Non-current borrowings 3,069.4 3,082.9
Less: Cash and cash equivalents (1,064.9) (719.9)
- Financial assets at amortised cost (10.0) (529.5)
- Financial assets at fair value through
profit or loss (504.2) (497.2)
Less: Other financial assets (514.2) (1,026.7)
Net debt 1,779.4 1,673.3
In September 2022 the Group completed the issue of a EUR500
million Euro-denominated fixed rate Green bond maturing in
September 2025 with a coupon rate of 2.75%.
In December 2019 the Group established a loan facility of US
Dollar 85.0 million to finance the purchase of production equipment
by the Group's subsidiary in Nigeria. The facility has been drawn
down by Nigerian Bottling Company Ltd ('NBC') over the course of
2020 and 2021 maturing in 2027, as disclosed in the 2022 Integrated
Annual Report. The obligations under this facility are guaranteed
by Coca-Cola HBC AG. As at 30 June 2023, the outstanding liability
amounted to EUR51.9 million (EUR59.3 million as at 31 December
2022).
Cash and cash equivalents include an amount of EUR92.0 million
equivalent in Nigerian Naira as at 30 June 2023. This includes an
amount of EUR6.4 million equivalent in Nigerian Naira, which
relates to the outstanding balance held for the repayment of NBC's
former minority shareholders, following the 2011 acquisition of
non-controlling interests.
As a result of sanctions and other regulations implemented in
2022, there have been changes in required regulatory approvals,
potentially impacting the transfer and usage of cash outside of
Russia. Cash and cash equivalents held by the Group's operations in
Russia (including Multon) amounted to EUR249.8 million equivalent
in Russian Rouble, US Dollar and Euro as at 30 June 2023. The
aforementioned changes restrict the usage of cash held in Russia
outside the country, however they are not expected to have a
material impact on the Group's liquidity, as the cash and cash
equivalents held in Russia are expected to be used in the
forthcoming financial periods primarily for working capital
purposes by the Russian operations.
The financial assets at amortised cost comprise of time deposits
amounting to EUR10.0 million (31 December 2022: EUR529.5 million).
The financial assets at fair value through profit or loss are
related to money market funds. Included in 'Other financial assets'
of the condensed consolidated interim balance sheet are derivative
financial instruments of EUR127.5 million (31 December 2022:
EUR35.3 million) and related party loans receivable of EUR1.8
million (31 December 2022: EUR1.8 million).
11. Share capital, share premium and treasury shares
Number of Share Share
shares
(authorised capital premium
and issued) EUR million EUR million
Balance as at 1 January 2022 371,795,418 2,022.3 3,097.3
Shares issued to employees exercising
stock options 290,677 2.0 2.7
Dividends (note 13) - - (262.6)
Balance as at 31 December 2022 372,086,095 2,024.3 2,837.4
Shares issued to employees exercising
stock options 630,514 4.2 5.8
Dividends (note 13) - - (289.9)
Balance as at 30 June 2023 372,716,609 2,028.5 2,553.3
In 2022, the share capital of Coca-Cola HBC was increased by the
issuance of 290,677 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 EUR4.7 million.
For the six months ended 30 June 2023, the share capital of
Coca-Cola HBC was increased by the issuance of 630,514 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 EUR10.0 million.
An amount of EUR29.7 million in the first half of 2023 (first
half of 2022: EUR15.4 million) relates to treasury shares provided
to employees in connection with vested performance share awards
under the Company's employee incentive scheme, which was reflected
as an appropriation of reserves between 'Treasury shares' and
'Other reserves' in the condensed consolidated interim statement of
changes in equity.
Following the above changes, on 30 June 2023 the share capital
of the Group amounted to EUR2,028.5 million and comprised
372,716,609 shares with a nominal value of CHF 6.70 each.
12. Leases
The leases which are recorded on the consolidated interim
balance sheet are principally in respect of vehicles and buildings.
T he Group's right-of-use assets and lease liability are presented
below:
31 December
30 June 2023 2022
EUR million EUR million
Land and buildings 97.9 82.7
Plant and equipment 95.5 121.2
Total right-of-use assets (note 8) 193.4 203.9
Current lease liabilities 52.1 53.9
Non-current lease liabilities 143.8 152.1
Total lease liabilities 195.9 206.0
13. Dividends
On 21 June 2022, the shareholders of Coca-Cola HBC AG at the
Annual General Meeting approved a dividend distribution of 0.71
euro per share. The total dividend amounted to EUR262.6 million and
was paid on 2 August 2022. Of this an amount of EUR2.4 million
related to shares held by the Group.
The shareholders of Coca-Cola HBC AG approved a dividend
distribution of 0.78 euro per share at the Annual General Meeting
held on 17 May 2023. The total dividend amounted to 289.9 million
and was paid on 19 June 2023. Of this an amount of EUR2.7 million
related to shares held by the Group.
14. Related party transactions
a) The Coca-Cola Company
As at 30 June 2023 , TCCC and its subsidiaries indirectly owned
21.0% (31 December 2022: 21.0%) of the issued share capital of
Coca-Cola HBC. The below table summarises transactions with TCCC
and its subsidiaries:
Six months ended
30 June 2023 1 July 2022
EUR million EUR million
Purchases of concentrate, finished products
and other items 978.5 963.2
Net contributions received for marketing and
promotional incentives 57.3 52.6
Sales of finished goods and raw materials 2.6 2.0
Other income 1.9 2.0
Other expenses 1.8 2.2
As at 30 June 2023, the Group was owed EUR58.5 million (EUR45.3
million as at 31 December 2022) by TCCC and owed EUR362.1 million
(EUR226.9 million as at 31 December 2022) to TCCC.
b) Frigoglass S.A. ("Frigoglass"), Kar-Tess Holding and AG Leventis (Nigeria) Ltd.
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 99.3% (31
December 2022: 99.3%) of AG Leventis (Nigeria) Ltd and also
indirectly controls Kar-Tess Holding, which holds approximately
22.9% (31 December 2022: 23.0%) of Coca-Cola HBC's total issued
capital. As at 31 December 2022, Truad Verwaltungs AG also
indirectly owned 48.4% of Frigoglass. In April 2023, Frigoglass
restructured its debt which resulted in changes to its ownership
structure. The restructured Frigoglass Group no longer meets the
definition of related party as per IAS 24 'Related party
disclosures' for Coca-Cola HBC AG. Accordingly, transactions with
Frigoglass and its subsidiaries (19) up to April 2023 and the six
months ended 1 July 2022 are presented below:
Four months Six months
ended ended
28 April 2023 1 July 2022
EUR million EUR million
Purchases of coolers and other equipment,
raw and other materials 24.4 71.7
Maintenance, rent and other expenses 10.0 15.6
During the six months ended 30 June 2023, the Group incurred
other expenses of EUR7.1 million (EUR1.9 million of other purchases
in the respective prior-year period) from AG Leventis (Nigeria)
Ltd. As at 30 June 2023, Coca-Cola HBC owed EUR 2.0 million (EUR
2.7 million as at 31 December 2022) and had a lease liability of
EUR2.0 million to AG Leventis (Nigeria) Ltd. (EUR4.2million as at
31 December 2022).
(19) Transactions and balances with Frigoglass Industries
(Nigeria) Limited, an associate of the Group, for the six months
ended 30 June 2023 and as at 30 June 2023 respectively, are
included under 'Other related parties' section.
c) Other related parties
During the six months ended 30 June 2023, the Group incurred
other expenses of EUR 9.9 million (EUR7.6 million in the respective
prior-year period) mainly related to maintenance services for cold
drink equipment and installations of coolers, fountains, vending
and merchandising equipment, as well as subsequent expenditure for
fixed assets of EUR1.5 million (EUR1.2 million in the respective
prior-year period) from other related parties. In addition, during
the six months ended 30 June 2023, the Group purchased coolers and
other equipment, as well as inventory of EUR25.4 million (EUR1.3
million of inventory in the respective prior year period) from
other related parties.
We disclosed in our 2022 Integrated Annual Report that
Frigoglass Industries (Nigeria) Limited, an associate in which the
Group holds an effective interest of 23.9% through its subsidiary
Nigerian Bottling Company Ltd, was guarantor under the amended
banking facilities and notes issued by the Frigoglass Group. This
guarantee expired in April 2023 as part of the restructuring of
Frigoglass Group. However, Frigoglass Industries (Nigeria) Limited
is a guarantor for the new senior secured notes issued in 2023 by
the restructured Frigoglass Group. The Group has no direct exposure
arising from this guarantee arrangement, but the Group's investment
in this associate, which stood at EUR12.8 million as at 30 June
2023 (31 December 2022: EUR21.1 million), would be at potential
risk if there was a default under the terms of the senior secured
notes and the restructured Frigoglass Group (including the
guarantor) were unable to meet their obligations thereunder.
Capital commitments to Frigoglass Industries (Nigeria) Limited
amounted to EUR0.2 million as at 30 June 2023 (EUR4.5 million as at
31 December 2022).
During the six months ended 30 June 2023, the Group received
dividends of EUR7.0 million from other related parties (EUR0.6
million in the respective prior year period), which are included in
line `Receipts from non-integral equity method investments' of the
condensed consolidated interim cash flow statement .
As at 30 June 2023, the Group owed EUR 12.9 million (EUR3.7
million as at 31 December 2022) to and was owed EUR1.1 million,
including loans receivable of EUR1.0 million (EUR1.5 million
dividends receivable as at 31 December 2022) from other related
parties .
d) Joint ventures
The below table summarises transactions with joint ventures:
Six months ended
30 June 2023 1 July 2022
EUR million EUR million
Purchases of inventories 11.6 6.5
Sales of finished goods and raw materials 3.8 6.2
Other income 5.6 7.5
Other expenses 4.3 10.3
During the six months ended 30 June 2023, the Group received
dividends of EUR1.5 million from integral joint ventures (EUR2.0
million in the respective prior year period), which are included in
line `Receipts from integral equity method investments' of the
condensed consolidated interim cash flow statement .
As at 30 June 2023, the Group owed EUR 9.3 million including
loans payable of EUR 2.6 million (EUR4.4 million as at 31 December
2022 including loans payable of EURnil) to and was owed EUR 18.6
million including loans receivable of EUR3.8 million and dividend
receivable of EUR7.8 million (EUR9.6 million as at 31 December 2022
including loans receivable of EUR4.3 million and dividend
receivable of EURnil) from joint ventures.
e) Directors
Evguenia Stoichkova and George Leventis have been elected to the
Board of Coca-Cola HBC, following a proposal made by The Coca-Cola
Company and Kar-Tess Holding respectively. There have been no
transactions between Coca-Cola HBC and the Directors and senior
management except for remuneration for the six months ended 30 June
2023.
There were no other significant transactions with other related
parties for the period ended 30 June 2023.
15. Contingencies
In relation to the Greek Competition Authority's decision of 25
January 2002, one of Coca-Cola Hellenic Bottling Company S.A.'s
competitors had filed a lawsuit against Coca-Cola Hellenic Bottling
Company S.A. claiming damages in an amount of EUR7.7 million. The
court of first instance heard the case on 21 January 2009 and
subsequently rejected the lawsuit. The plaintiff appealed the
judgement and on 9 December 2013 the Athens Court of Appeals
rejected the plaintiff's appeal. On 19 April 2014, the same
plaintiff filed a new lawsuit against Coca-Cola Hellenic Bottling
Company S.A. (following the spin-off, Coca-Cola HBC Greece
S.A.I.C.) claiming payment of EUR7.5 million as compensation for
losses and moral damages for alleged anti-competitive commercial
practices of Coca-Cola Hellenic Bottling Company S.A. between 1994
and 2013. On 21 December 2018, the plaintiff served their
withdrawal from the lawsuit. However, on 20 June 2019, the same
plaintiff filed a new lawsuit against Coca-Cola HBC Greece S.A.I.C.
claiming payment of EUR10.1 million as compensation for losses and
moral damages again for alleged anti-competitive commercial
practices of Coca-Cola Hellenic Bottling Company
S.A. for the same period between 1994 and 2013. On 16 July 2021,
the Athens Multimember Court of First Instance issued its judgement
number 1929/2021 (hereinafter the "Judgment"), which adjudicates
that Coca-Cola HBC Greece S.A.I.C. is obliged to pay to the
plaintiff an amount of circa EUR0.9 million plus interest as of 31
December 2003. Both Coca-Cola HBC Greece S.A.I.C and the plaintiff
have appealed against this decision to the court of appeals. Both
appeals were heard on 19 January 2023. The decision is pending to
be issued. Management believes that any liability to the Group that
may arise as a result of these pending legal proceedings will not
have a material adverse effect on the results of operations, cash
flows, or the financial position of the Group taken as a whole.
With respect to the investigation of the Greek Competition
Commission initiated on 6 September 2016, regarding Coca-Cola HBC
Greece S.A.I.C.'s operations in certain commercial practices in the
non-alcoholic beverages market, the Rapporteur of the Greek
Competition Commission appointed for this case issued her Statement
of Objections on 5 July 2021, alleging that Coca -- Cola HBC Greece
S.A.I.C. undertook a series of anti-competitive practices in the
market of instant consumption for cola and non-cola carbonated soft
drinks, thereby excluding competitors and limiting their growth
potential. Coca -- Cola HBC Greece S.A.I.C. has vigorously defended
its commercial practices, in rebuttal of the allegations set out in
the Statement of Objections. The hearing of the case, before the
plenary session of the Greek Competition Commission, was concluded
on 29 November 2021 and the supplementary briefs of the parties
were submitted on 16 December 2021. On 3 November 2022, the
Hellenic Competition Commission notified Coca -- Cola HBC Greece
S.A.I.C. of its ruling on the case, according to which Coca -- Cola
HBC Greece S.A.I.C. allegedly abused its dominant position in the
Greek immediate consumption market segment for cola and non -- cola
carbonated soft drinks. The Hellenic Competition Commission ruling
imposed on Coca -- Cola HBC Greece S.A.I.C. a fine of EUR10.3
million, as well as a behavioural remedy in relation to beverage
coolers valid until end of 2024. Coca -- Cola HBC Greece S.A.I.C.
paid the fine in May 2023. Coca -- Cola HBC Greece S.A.I.C.
strongly disagrees with this ruling and has challenged it before
the competent Court of Appeal. The hearing date of the case is not
yet set.
In 1992, our subsidiary NBC acquired a manufacturing facility in
Nigeria from Vacunak, a Nigerian company. In 1994, Vacunak filed a
lawsuit against NBC, alleging that a representative of NBC had
orally agreed to rescind the sale agreement and instead enter into
a lease agreement with Vacunak. As part of its lawsuit, Vacunak
sought compensation for rent and loss of business opportunities.
NBC discontinued all use of the facility in 1995. On 19 August
2013, NBC received the written judgement of the Nigerian court of
first instance issued on 28 June 2012 providing for damages of
approximately EUR10.1 million. The Appeal Court dismissed NBC's
appeal and Vacunak's cross -- appeal and affirmed the judgement of
the first instance court in 2023. Both NBC and Vacunak have filed
an appeal against the judgement before the Supreme Court. Based on
advice from NBC's outside legal counsel, we believe that it is
unlikely that NBC will suffer material financial losses from this
case. We have consequently not provided for any losses in relation
to this case.
The tax filings of the Group and its subsidiaries are routinely
subjected to audit by tax authorities in most of the jurisdictions
in which the Group conducts business. These audits may result in
assessments of additional taxes. The Group provides for additional
tax in relation to the outcome of such tax assessments, to the
extent that a liability is probable and estimable.
The Group is also involved in various other legal proceedings.
Management believes that any liability to the Group that may arise
as a result of these pending legal proceedings will not have a
material adverse effect on the results of operations, cash flows,
or the financial position of the Group taken as a whole.
Considering the above, there have been no significant adverse
changes in contingencies since 31 December 2022 (as described in
our 2022 Integrated Annual Report available on the Coca-Cola HBC's
web site: www.coca-colahellenic.com ).
16. Commitments
As at 30 June 2023 the Group had capital commitments including
commitments for leases and the share of its joint ventures' capital
commitments amounting to EUR182.4 million (31 December 2022:
EUR210.5 million), which mainly relate to plant and machinery
equipment.
17. Number of employees
The average number of full-time equivalent employees in the
first half of 2023 was 32,561 ( 2022: 33,393).
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