Integrated Annual Report 2021

Boldly embracing
the future

70 years of Coca-Cola HBC
The early years
1951-1980

European consolidation
1981-1999

1981: Hellenic joins
the family
1951: Nigeria, where it all began
Coca-Cola HBC’s early beginnings werein Nigeria, where A.G. Leventis establishedthe Nigerian Bottling Company in Lagos.

Our company started the 1980s
with a statement of ambition,acquiring the Hellenic BottlingCompany (HBC) of Greece.

1991: A defining period
We reached an historic milestone
as the Coca-Cola HBC groupwent public on the Athens
stock exchange.

1953: Coca-Colaproduction begins
Production of Coca-Colabegan at a bottling facility in
Ebute-Metta, Lagos, Nigeria,
in 1953, with our first bottlingplant opening in Apapa thatsame year.

1956: Honoured
by royalty
An early honour for the new
business came in 1956 when theyoung Queen Elizabeth II visited
the Nigerian Bottling Company
as part of her tour of Nigeria.

1990s: Eastern Europe
The dramatic collapse of the Soviet Union in1991 saw a wave of change and new hope sweep
across Eastern Europe and the former Soviet
republics, presenting exciting new opportunities
for Coca-Cola HBC across the region’s
fledgling democracies.

1977: From Africa to Ireland
In 1977 the company expanded outsideof Africa, acquiring the Coca-Cola franchises
in Ireland.

1999: Arriving in Russia
These heady days of the 1990s also saw Coca-Cola
HBC take its first steps in Russia. It was a significant
move for our business, which was completed in 2001.

European expansion
2000-2012

The Coca-Cola HBC we know today
2013 to the present day

2013: A listing in London,a proud moment
2000: New markets, new cultures
The start of the new millennium saw themerger of the Hellenic Bottling Company with
Coca-Cola Beverages – forming Coca-Cola
Hellenic Bottling Company S.A. This brought
new territories, more cultures, and more
opportunities to grow.

2016: Serving up
an aperitivo icon

Coca-Cola HBC reached alandmark as it made its debuton the premium segment of the
London Stock Exchange. It wasalso the year that the company
was registered in Switzerlandwith new headquarters.

Adult Sparkling is a high-value,high-growth category. We areproud to have activatedsocialising away from homewith our portfolio of mixers andstraight-drinking flavours foralmost two decades.

2001: Dreams reallydo come true
We acquired the remaining plants
in Russia from The Coca-Cola
Company, as well as the bottlingrights that we didn’t already own.
We quickly invested in our
Russia business, creating more
2005: Pioneering
jobs and opportunities for
local communities.
sustainable technology
We took a big step on oursustainability journey by
opening our first energyefficient Combined Heatand Power plant in Hungary.

2020: Smell the coffee!
We made one of our biggest moves to expand our
24/7 portfolio in 2020 when we introduced COSTA
Coffee, recently purchased by The Coca-Cola
Company, to our first markets. In 2021 we
strengthened our coffee offering with a 30%
shareholding in Caffè Vergnano.

2005: Great Coke taste,
zero sugar
As consumer preferenceschanged, The Coca-Cola
Company introduced
Coca‑Cola Zero. It was a movethat would go on to drive theSparkling category to this day.

29 markets, one family
In 2021 we announced theacquisition of Coca-Cola
Bottling Company of Egypt,
our second market in Africa andthe 29th in the Coca-Cola HBC
family. The deal was completed
in early 2022.

2021 highlights
Volume (m unit cases)

Net sales revenue (€m)

2020: 2,135.6

2020: 6,131.8

2,412.7

7,168.4

Comparable EBIT1 (€m)

Comparable EBIT1 margin (%)

2020: 672.3

2020: 11.0

831.0

11.6

Profit before tax (€m)

Net profit2 (€m)

2020: 593.9

2020: 414.9

734.9

547.2

Comparable EPS1 (€)

Basic EPS (€)

2020: 1.185

2020: 1.140

1.584

1.499

Primary packaging collected
for recycling (equivalent)

Energy-efficient coolers

42%

46%

2020: 36%2020: 44%

1. For details on APMs, refer to ‘Alternative performancemeasures’ section.
2. Net profit refers to net profit after tax attributableto owners of the parent.

Contents
Strategic Report

Corporate Governance

Swiss Statutory Reporting

2
4
6
8
10
14
16
18
24
30

84

212 Report of the statutory auditor
on Coca‑Cola HBC AG’s
consolidated financial statements
216 Report of the statutory auditor
on Coca‑Cola HBC AG’s financial
statements
219 Coca‑Cola HBC AG’s financial
statements
232 Report of the statutory auditor
on the remuneration report
233 Statutory Remuneration Report

32
38
44
52
54
56
72
74
78
80

Chairman’s letter
Chief Executive Officer’s letter
Our business at a glance
Our business model
Stakeholder engagement
Market trends
Our purpose and strategy
Leverage our unique 24/7 portfolio
Win in the marketplace
Digitalisation acrossCoca‑Cola HBC
Fuel growth throughcompetitiveness and investment
Cultivate the potentialof our people
Earn our licence to operate
Key performance indicators
Sustainability performance
Managing risk and materiality
Viability statement
Financial review
Segment highlights
Non-financial reporting directive

Chairman’s introduction
to corporate governance
88 Board of Directors
92 Corporate Governance Report
118 Directors’ Remuneration Report
141 Statement of Directors’
responsibilities
142 2021 SASB index
Financial Statements
146 Independent auditor’s report
154 Financial statements
159 Notes to the consolidated
financial statements

Supplementary Information
237 Alternative performance measures
241 Other supplementary information
242 Assurance statement
246 Glossary

INTEGRATED ANNUAL REPORT 2021

Boldly embracing
the future
Future-focused

Through the decisions that wehave made over time and aremaking today, we are ensuringthat our business is ready forwhat the future may holdportfolio
page 23

Future-focusedroute to market
page 29

Future-focusedinvestment
page 37

Future-focused

teams
page 43

1

Future-focusedpackaging
page 51

2

COCA-COLA HBC

Chairman’s letter

Embracing newopportunities“As always, we look to the long-term potentialof the business to ensure that we are making the
progress that would make those who passed its
stewardship onto us proud, and with a view tothe future generations who will take it over.”Dear Stakeholder,
Our Company celebrated the 70-year
history of the business in 2021, a milestonewhich led us to reflect on what we haveachieved even as we embrace newopportunities. The COVID-19 pandemic
tested our entire business and every oneof us. Now, at the start of 2022, in addition
to COVID-19, the conflict between Russia
and Ukraine is having a terrible impact on
millions, including our own people. I haveseen through the challenge of COVID-19
and now, through this current unimaginable
tragedy, the amazing way that the peopleof this business care for each other andour stakeholders. It makes me immensely
proud. Our resilience and adaptability are
our greatest strengths.
The recovery in our Company’s
performance in 2021 was very strong.
We finished 2021 with volumes, revenue
and profitability all greater than in 2019.
This rebound is largely due to the long-term
and thoughtful approach the company took
in the beginning of the pandemic in 2020.
The Board and Management were clear thatour people and business continuity were our
top priorities. This meant that no one losttheir job at Coca-Cola HBC as a direct resultof the pandemic, we maintained supply forour customers, continuing to engage withthem even when their businesses wereclosed, and we continued to invest in
strategic priorities for the long-term healthof the business.
From its origins as a bottling line in thebasement of the Mainland Hotel in Lagos,
Nigeria, it is incredible to reflect on thejourney which has transformed this familyrun business into a FTSE 100 company
operating across 29 markets on threecontinents. With our roots in Africa, weare extremely pleased to be welcoming
the team from another African market to
the Group 70 years later. Egypt offers
tremendous potential, with a young
population of over 100 million people.
I’ve been fortunate to meet many of themen and women of Coca-Cola BottlingCompany of Egypt, and I know that theyshare our passion for excellence.

INTEGRATED ANNUAL REPORT 2021

Our long history of geographic and portfolio
expansion, often through acquisitions, willserve us well as we integrate the Egyptianbusiness into our Group. Our Board also
benefits from several members who haveexperience of large integrations and will beavailable to offer advice and guidance.

Bold decisions support resilience
for the long term
In my time as chairman, I’ve seen how ourCompany benefits from the Board’s great
diversity of perspectives. Six of our 13
Board members were originally appointed
by our two large, long-term shareholders:
The Coca-Cola Company and Kar-Tess
Holding, which gives the Board particularly
relevant industry and partnership knowledge
as well as a uniquely long-term perspective
and sense of ownership. This is strengthened
and complemented by the other independent
directors’ range of skills and experience
ensuring a wide range of contributions andhigh-quality discussion.
In a period of upheaval and uncertainty,
the Board has made decisions carefully
and thoughtfully to ensure our Company
is positioned for success for the long term.
In 2020, and again in 2021, we ensured that
we focused on our most critical people first,
our business developers who are out in themarket every day selling our portfolio of
products. Decisions taken on remuneration,
particularly for our long-term incentive
plans, ensured awards cascaded throughout
the organisation, reinforcing focus on
strategic priorities to achieve long-term
performance and the retention of ourdedicated, high-performing people.
Our remuneration decisions consider both
the whole organisation and the long-term
health of the business. During 2021 weembarked on a wide-ranging shareholder
consultation process, which has helped us
understand the full range of views on thesedecisions and informed our thinking.

In 2021, the Board approved our mostambitious environmental target to date,committing to achieve net-zero emissions
by 2040. This commitment builds on ourlong history of integrating our social andenvironmental commitments into every
decision and action we take. Because webelieve that our environmental impact alongwith the socio-economic development ofour communities are integral to our future
growth, NetZeroby40 has been integrated
into management incentives.

Dividend
During 2021 we paid the 2020 dividend of€0.64 per share. This was a 3.2% increase
compared to the prior year and represented
an increase in our pay-out ratio to 54%,
above our usual targeted range of 35 to 45%.
We are pleased to be able to continue tomake progressive dividend payments andare proposing a dividend of €0.71 per sharefor 2021. Furthermore, we have increased
the targeted pay-out range to 40 to 50%
of comparable EPS. This decision reflects ourassessment of the ongoing risks combinedwith our confidence in business resilienceand the Company’s strong balance sheet,as well as our many growth opportunities.

Together with The Coca-Cola Company
we took the difficult but necessary decision
to suspend the production and sale ofCoca-Cola brands in Russia. We have been
operating in Russia for decades and will
support our colleagues there as we workthrough the implementation of this.
The company continues to provide support
on the ground through product donations
and in partnership with The Red Cross.
I know I speak for the Board when I say thatthe people of Ukraine and our colleagues
there are foremost in our thoughts. We hopethat peace is soon restored in Ukraine.
In early 2022, we remain focused on
supporting management as they operate
in this incredibly challenging and rapidlychanging environment as well as overseeing
the Company’s achievement of our Growth
Story 2025 objectives. As always, we look to
the long-term potential of the business toensure that we are making the progressthat would make those who passed its
stewardship onto us proud, and with a viewto the future generations who will take it over.
On behalf of the Board, I extend my thanks
to all of our people who have built theCompany into what it is today, and to all of
our stakeholders for your continued support.

Looking ahead
As we welcome Egypt into the Group, I
continue to have great confidence in our
Company’s future. In 2021 this company
achieved a remarkable recovery while
managing a volatile environment of changing
restrictions due to COVID-19, global supply
chain shocks and even geopolitical instability
in our territory. As I write we have seen
conflict bringing unimaginable suffering andhardship to millions.

3

Anastassis G. David
Chairman of the Board

Section 172 statement
Section 172 of the UK Companies Act 2006 requires directors to promote thesuccess of their company for the benefit of the members as a whole, having regard
to the interests of stakeholders in their decision-making. Engaging with stakeholders
is an indispensable part of how Coca-Cola HBC does business. The Board considers
the interests of the Group’s employees and other stakeholders in its decisionmaking as a matter of good governance, and understands the importance, andvalue, of taking into account their views, as well as considering the impact of theCompany’s activities on the community, environment and the Group’s reputation.
The Board also considers what is most likely to promote the success of theCompany for its shareholders in the long term. Although the Company is Swissincorporated and as such the UK Companies Act 2006 has no legal effect,
this approach is in accordance with the UK Corporate Governance Code 2018.
Read more about:
How we manage risks and materiality on pages 56 to 71
How we engage with key stakeholders on pages 10 to 13
Examples of how stakeholders were considered in specific decisions on pages 100-101

4COCA-COLA HBC

Chief Executive Officer’s letter

Building
partnerships“I am especially proud that even in these mostchallenging of times, we are nurturing a strong
team that genuinely cares for one another,underlined by resilience and belief in our future.
We remain focused as one connected teamon both what we are trying to achieve andhow we will deliver it.”

Dear Stakeholder,
As I write in March 2022, my thoughts arewith our friends, colleagues, and their families
in Ukraine. I speak from personal experience
when I say that there is nothing worse thanwar. It is never a solution. It brings terrible
suffering and pain, and it impacts the livesof people like nothing else. We are facing up
to that now as we do all we can to support ourpeople in Ukraine and the humanitarian relief
efforts in the region. My overriding hope is fora fast and peaceful resolution.
This report looks back to 2021, a year that
saw a very different challenge in the form of
the continued disruption of the COVID-19
pandemic to communities and businesses
across our territories.
It was also a special year for us as we
marked 70 years of building partnerships
since our early beginnings in Nigeria in 1951.
This milestone provided an opportunity tocelebrate the legacy of our business andreflect on how we define our Company fortoday and tomorrow. The spirit of partnershipthat has guided us for 70 years remains thecornerstone of our approach.
It has enabled us to adapt and evolve ourbusiness with a strong belief and commitment
in our investments that will fuel our future
growth. Our people remain the catalysts,
making our Company stronger and better
every day. We rely on their talent and diversity
to set us apart – because the real magic
happens when we work together as one
inclusive team. By harnessing the collective
talent across our markets, we are confident
that we will achieve the speed and progressthat will enable us to lead and to win forthe long-term.

Delivering a strong recovery
We delivered a very strong recovery in 2021,
with all key metrics above pre-pandemic
levels. This was the result of consistent anddisciplined focus on our strategic priorities
over the last few years. We finished the yearwith strong revenue growth, our highest
ever EBIT margin and free cash flow, while
continuing to gain share. This performance
demonstrates the strength of our 24/7
brand portfolio, revenue growth management
capabilities, route to market and execution
excellence in our markets.
It is thanks to the strong drive, creativity,
adaptability, and passion of our people, whoenabled us to navigate the volatile operating
environment while embracing change,
challenge and care, which are all central to
our culture. Our results and future plans also
reflect our partnership with The Coca-Cola
Company, which remains stronger than ever.

INTEGRATED ANNUAL REPORT 2021

Accelerating capabilities
development

Our boldest sustainability
commitment to date

A critical driver of our growth is theaccelerated development of our prioritised
capabilities, which are increasingly proving
to be our competitive advantage for building
sustainable long-term growth. Talentdevelopment, Revenue Growth Management,
Route to Market, Big Data Advanced Analytics
and Key Account Management are now also
complemented by the accelerated Digitalisationof our Company.

2021 was also a pivotal year in oursustainability journey with our commitment
to net zero emissions across our value chain
by 2040, a continuation of a journey we began
many years ago. We are confident in our trackrecord and our robust, action-based plan toachieve this commitment. But we will alsoneed the support of our partners, with 90%
of our emissions coming from suppliers
throughout our value chain. Our commitment
to net zero is now integrated into every
business decision we take.

Targeted investment behind our Digital
Commerce strategy, regarding both routeto customer and route to consumer, is a key
focus in this area. This is supported by a newly
established and capable team that is driving
an ambitious agenda. The Customer Portal,
our main B2B platform, which saw significant
development over the last 18 months, allows
our customers to order direct from us 24hours a day, 7 days a week. This now accounts
for 8% of our transactions, up from 2% justa year ago. It is convenient for customers,
and critically, it allows our business developers
to spend more time on category strategy
execution and customer relationships rather
than order taking.
We also continue to add value to ourcustomers in the broader e-marketplace.
We have increased our digital shelf space,visibility, and activations on the e-commerce
websites of our biggest customers, and weare now working extensively with newer,
digital-only customers, such as food delivery
platforms, which is driving strong growth.

New markets and brands
I am very pleased that during 2021 wecompleted two strategic transactions which
are strengthening our growth potential.
These demonstrate very well our focus on
strategic additions to our territories alongside
relevant bolt-on additions to our portfolio.
With our acquisition of Coca-Cola BottlingCompany of Egypt (CCBCE), our Company
has added a second market in Africa, 70 years
after the Company was founded in Nigeria.
This means that we now seek to refresh one
quarter of the continent’s population. Egypt’s
young and rapidly growing population of morethan 100 million people brings our consumer
base to over 715 million, while positioning
us towards high-growth markets that will
fuel our business for many years to come.
I am grateful for the trust placed in us by
The Coca-Cola Company and the previous
shareholders of CCBCE, and am very
excited about the potential of the businessand its people.
We also acquired a 30% stake in Caffè
Vergnano, a family-owned Italian coffeecompany, further strengthening ourcoffee portfolio. Caffè Vergnano is highly
complementary to our existing Costa Coffee
proposition and will allow us to address aneven wider range of consumer tastes andsegments, increasing our relevance in thisfast-growing category.

Our sustainable packaging strategy is a key
driver towards net zero. We are committed
to delivering our Mission 2025 targets andworking towards a World Without Waste with
The Coca-Cola Company, developing ways
to collect more packages and design newsustainable ways of serving our beverages.
In 2021, we transitioned to 100% rPET for all
single serve Sparkling Soft Drinks and iced-tea
in Italy and now sell five water brands in 100%rPET bottles. With targeted initiatives toincrease our in-house production capacity for
rPET, we are taking a meaningful step towards
our target of increasing the percentage ofrPET to 35% by 2025.
The Coca-Cola Company also made a global
commitment to increase the percentage ofbeverages sold in reusable packaging to 25%
by 2030. To support this goal, we have alreadystarted our journey together to increaseour ‘packageless’ offerings through newdispensed solutions and this strategy willremain a focus for the coming years.
Our successful partnership with our suppliers
saw us introduce KeelClip™ in 10 markets
by the end of 2021, a paperboard packaging
that replaces plastic shrink wrap on multipack
cans. The roll out in our EU markets will becompleted this year. We also continue toinvest in infrastructure to collect and recycle
our packaging to ensure a circular packaging
economy. We now have deposit returnschemes in place or in progress in 12 of ourmarkets, and work with governments, NGOs
and academic institutions to determine theright schemes everywhere we operate.
I am proud of the support that we continue
to provide to our communities, particularly theopportunities we give to young people to help
them develop their full potential. In 2018, we
promised to train one million young people
by 2025 via our flagship #YouthEmpowered
programme, and to date have supported
more than 548,000.

Investing in our people andnurturing our values-based culture
We also remain steadfast in our commitment
to invest in our people, their potential, andsupport personal and professional growththrough a variety of learning and developmental
programmes. Our Sales Academy, Supply
Chain Academy, Excel leadership programmeand our annual LearnFest event are some5

examples of this. Today, more than 70%
of our learning content is available online,
and this has allowed us to innovate, adapt
and accelerate to new ways of learning.
The whole team is committed to building
a more diverse workforce in an inclusive
workplace environment. It is a commitmentthat I am personally passionate about and wehave made some good progress. In 2021 56%
of all appointments were women.
2021 also saw us conduct a comprehensive
review of our business to ensure that ourorganisational structure and teams aredesigned to support our strategic big bets
for future growth. To pursue our vision of
being the leading 24/7 beverage partner,
we enhanced our resources and expertise incoffee, digital commerce, data and analytics,
and sustainability. And I was pleased tosee that 85% of appointments wereinternal candidates.
The introduction of the COO role in 2020
has enabled us to strengthen our leadershipcapacity, performance edge and coordination
as well as sharpen our focus on people
development. The structure enables me tospend more time on our strategic partnerships,
strategic agenda and targeted prioritisedareas, like culture and D&I, which I oversee
personally. I am also able to invest more timebehind our sustainability and regulatory agenda.
We also created a new role of Strategy andTransformation Director in 2021. The roleis designed to drive more efficient andbetter coordinated strategy execution bytransforming our enterprise-wide processes
and projects from the start. This will drive
better simplification, prioritisation and create
more time for customer focused initiatives.
Our 70th anniversary last year also gaveme time to reflect on my 25 years with theCompany. I am as proud today to work withmy colleagues across Coca-Cola HBC as I waswhen I first walked through the doors of theZagreb office all those years ago.
I am especially proud that even in these mostchallenging of times, we are nurturing a strong
team that genuinely cares for one another,underlined by resilience and belief in our future.
We remain focused as one connected teamon both what we are trying to achieve andhow we will deliver it. While we look back at ourachievements, we recognise there is much
more to learn and improve. I am truly grateful
to be part of a team that is driven by deep
values, continues to have ambitious bold
dreams, and is committed to creating value
in the market with our customers, while making
a visible difference to the world we care for.

Zoran Bogdanovic
Chief Executive Officer

6COCA-COLA HBC

Our business at a glance

The leading 24/7
beverage partner
Our 24/7 portfolio
Our portfolio is the strongest
and broadest in the beverageindustry. Our products caterto a growing range of tastes
with a wider choice of healthier
options, premium products
and increasingly sustainable
packaging, giving us an
undisputed ability to delight
consumers across all
consumption occasions.

Coca-Cola HBC is a growth-focused consumer
packaged goods business and strategic bottlingpartner of The Coca-Cola Company.

Sparkling

Hydration

Juice

74%

7%

4%

RTD Tea

EnergyCoffee

3%

6%

<1%

Percentage of Coca-Cola HBC revenue

Plant based

Premium spirits and flavoured
alcoholic beverages

<1%

3%

Snacks<2%

INTEGRATED ANNUAL REPORT 2021

Winning in the marketplace
We produce and sell an unparalleledportfolio of beverage brands relevant toevery customer, consumer and occasion.
Our route to market is second to noneacross our markets since it includes awide range of consumer channels – fromsupermarkets and convenience stores
to hotels, cafés and restaurants – andencompasses more customers than any
competitor. Customer service and focus iscritical for our business and we are devoted
to helping our customers grow theirbusinesses, which in turn grows ours.

+90bpsbps
value share gained in NARTD

Where we operate
In 2021 we celebrated our 70th year. Our roots date back to 1951 when A.G. Leventis
founded the Nigerian Bottling Company in Lagos. Since then the business has expanded
across Europe and Russia, and in 2022 we added Egypt. Today we seek to refresh 715 million
consumers in 29 markets, spanning three continents.

29

36,000countries across three continents

employees

Established markets

Developing markets

Emerging markets

34.6%
of Group revenue

19.0%
of Group revenue

46.4%
of Group revenue

12.1%
Comparable EBIT

7.8%
Comparable EBIT

12.7%
Comparable EBIT

marginmarginEarning our licenceto operate
We create value for all stakeholders, making
a strong contribution to the developmentof the societies in which we operate throughemployment and our wider supply chain,
as well as through community projects whichhave long been a core way of doing businessfor us. We operate in a way that preserves
our environment, integrating sustainability
into our decision making and actions.

marginEgypt
added
in 20227

8

COCA-COLA HBC

Our business model

Delivering value forour stakeholders
1. Our resources and relationships

2. How we do it

Human
Our success is dependent on the passion
and customer focus of our talented
people. We empower them to pursue
growth opportunities, both forthemselves and our Company.

Natural
To produce our products, we use raw
materials including water, energy and
PET resin. We source these using
sustainable practices and seek to usethem efficiently.

Social and relationships
Maintaining the trust of stakeholders
is essential to our business. Our mostvaluable relationships are with
The Coca‑Cola Company, our people
and the communities we operate in, ourcustomers, suppliers and governments
and regulators.

Financial
Our business activities require financial
capital and we seek to allocate it
efficiently. This capital is provided by ourequity and debt holders, as well as cash
flow earned from our operations.

1. Working with suppliers

We work with our suppliers
to procure high-quality
ingredients, sustainably
sourced raw materials andequipment and services
required to produce beverages.

2. Producing beverages
efficiently and sustainably

Using concentrate fromThe Coca-Cola Company
along with other ingredients,
we prepare, package and deliverproducts with an optimised
manufacturing infrastructure
and logistics network.

56

plants

4. Serving our consumers
and communities

Our 24/7 product portfolio
caters to a range of tastes andpreferences and we continually
innovate to remain relevant.

96

distribution centres

3. Partnering withour customers

We grow by supporting ourcustomers’ growth, leveraging
our 24/7 portfolio, focusing on
areas of high value opportunityand executing with excellence.

Intellectual
Innovation is embedded in our culture
and the intellectual property created fromthat includes new packaging, new products
and improvements in manufacturing,logistics and sales execution.

Manufacturing
Our plant and logistics assets allow
us to prepare, package and deliver
our products to meet the needsof customers and consumers.

3. What we do
We are a strategic bottling partnerof The Coca-Cola Company
We have the exclusive right to bottle
and sell the beverages of The Coca-Cola
Company in our 29 markets. We also
partner with other beverage businesses
such as Monster Energy, Brown-Forman,
Campari and Edrington to sell theirproducts in our markets.

Read more about how we leverage ourunique 24/7 portfolio and win in themarketplace on pages 18 to 29.

How our partnership works
The Coca-Cola Company owns anddevelops its brands while Coca-Cola HBC

is responsible for producing, distributing, andselling these beverages, using concentrate
we buy from The Coca-Cola Company
under an incidence-based pricing model.
We work together to ensure we have theright portfolio for our customers andconsumers in each market and to ensure
excellent, efficient execution. We also sharemarketing costs and responsibilities, with
The Coca-Cola Company marketing toconsumers while we take responsibility
for trade marketing to our customers.

INTEGRATED ANNUAL REPORT 2021

Our impact
We believe that the only way to create
long-term value for all our stakeholders
is through sustainable growth. We createsocio-economic value for the societies inwhich we operate by creating jobs, training
workers, building physical infrastructure,procuring raw materials, transferring
technology, paying taxes, expanding accessto products and services, and creating
growth opportunities for our customers,
distributors, retailers and suppliers.

4. Value created
Our people• In 2021 we provided jobs directly to 27,211
people in 28 countries• Median basic salary ratio women/men: 1.15

9

Measuring and managing these contributions
through the sustainable growth of ourbusiness is an important part of our purpose.
Since 2010 we have conducted socioeconomic impact studies in our markets
to better understand the range and extent
of the value created in our ecosystem.

5. Socio-economic contribution

796,942€1,015.2m

training hours forour people

total employee costs

Our customers• We increased the frequency of our customer
engagement, providing customers withthe best support• In the marketplace we achieved a new
total number of almost 577,000
energy‑efficient coolers

Our communities• We trained 210,422 young people throughour #YouthEmpowered programme
to boost employability• We invested €6.8 million in local
community initiatives

31,9201.7m

employees in the Coca‑Cola
System in our markets

customers served

1 =10
job in the
System

548,835

jobs in ourcommunity2017-2021 cumulative
young people trained inour communities

320,311indirect employment acrossthe value chain

Our shareholders• We continued to control costs and generatestrong growth in profit• In recognition of our business’s strength andfuture opportunities, the Board has proposeda dividend of €0.71 per share, a +10.9%
increase compared with last year

Our wider stakeholders• Our business activities generate revenue
for our customers, suppliers and contractors
as well as income for our employees€3.4bnpaid in taxes€11.5bncreated in added value acrossour value chain€541m

CapEx spend in our markets

Our consumers• We provide high-quality beverages andhealthy options, reducing calories per 100mlof sparkling soft drinks by 15% in 2021
compared to our 2015 baseline

Our suppliers• We spent over €3.5 billion with local suppliers• We are working with our suppliers to support
their sustainable practices and emission
reduction plans

16,200715*mpotential consumers refreshedsuppliers operating
across our value chain>€3.5bn
spent with local
suppliers

To read the methodology behind
our socio-economic impact
numbers, please see page 247* With the addition of Egypt.

10COCA-COLA HBC

Stakeholder engagement

Building on 70 yearsof stakeholder
engagement formutual benefit
Our people
Material issues• Employee wellbeing and engagement• Human rights, diversity and inclusion
Growth pillars

Key challenges• Building the best teams in the industry• Engagement as remote working
continues• Mental wellbeing

Our customers
Material issues• Economic impact• Nutrition• Packaging and waste management
Growth pillars

How we engage• Focused and continuous conversations• Employee Assistance Programme• Regular employee surveys to understandand act on needs and wellbeing• Offering personalised experiences andopportunities for personal andprofessional growth• Ongoing dialogue with employee
representative bodies

The strength of our stakeholder
ecosystem enabled us toensure the safety of our people,
partners and communities while
maintaining production
throughout the year.

Relevant KPIs
• Employee engagement• Percentage of managers that are women• Lost time accident rate
Principal risks• Health and safety• People retention• Geopolitical and security environment
Read more on pages 39-43.

Outcomes of engagement• Support for our people to maintainengagement levels, which remained
high in 2021
• Higher levels of satisfaction with line
manager support were reported as we
addressed needs of people working under
different conditions

Key challenges• Opportunities for growth andvalue creation• Offering a 24/7 beverage portfoliothat meets the changing preferencesof consumers• Pandemic-related trading andmovement restrictions• Supply and delivery challenges

Outcomes of engagement• We increased direct engagement
via our customers teams and via
customer surveys

How we engage• Key account managers engage with ourcustomers at a strategic level• Our business developers continued tomake regular visits to outlets• We provided targeted support toout-of-home channel customers toreopen businesses once restrictions
were lifted

Principal risks• Changing retail environment• Product quality and food safety

Relevant KPIs
• Volume and FX-neutral revenue growth• Customer feedback from surveys• High merchandising standards• Cooler coverage of high potential outlets

Read more on pages 25-29.

INTEGRATED ANNUAL REPORT 2021

Our suppliers
Material issues• Climate change• Sustainable sourcing• Water stewardship• Economic impact
Growth pillars

Key challenges• Rising costs of ingredients, labour,
packaging material, energy and water• Minimising the environmental impact
of water and energy resources,
as well as emissions
How we engage• Feedback received through our annual
Group Stakeholder Forum• Regular, ongoing interaction with the
Coca-Cola System’s Central
Procurement Group and our technology
and commodity suppliers
Outcomes of engagement• Our long-term work with partners to
reduce our water and energy use has alsobrought efficiencies. This is particularly
important given our NetZeroby40
commitment

Our communities
Material issues• Climate change• Corporate citizenship• Economic impact• Packaging and waste management• Water stewardship
Growth pillars

11• Activities related to sustainable sourcing
and certifications
Relevant KPIs
• % of key agricultural ingredientssustainably certified• % of our suppliers adopting our Supplier
Guiding Principles
Principal risks• Plastics and packaging waste• Water availability and usage• Commodity costs• Managing our carbon footprint
Read more on pages 34-36, 48.

Key challenges• Climate change• Waste from our packaging• Water conservation• Empowering youth and women• Our support of new collection schemes istranslating into increased collection rates
for packaging waste in many markets• We have committed to NetZeroby40
across the entire value chain

How we engage• We engage with customers and partners
to understand what skills and training
young adults need in specific markets• Via our #YouthEmpowered sessions weincrease the employability of young people• We participate actively to support the
set-up and implementation of new
packaging collection schemes

Relevant KPIs
• #YouthEmpowered• % absolute emissions reduction• # water stewardship projects in waterpriority locations• % primary packaging collected• # volunteering hours

Outcomes of engagement• We continued to support frontline efforts
to tackle the COVID-19 pandemic via
volunteering and product donations

Principal risks• Geopolitical and security environment• Plastics and packaging waste• Managing our carbon footprint• Water availability and usage
Read more on pages 46-50.

Emission reductions in our
supply chain
As part of our efforts to partner with our
suppliers, we held our first ever suppliersustainability event in 2021. At the event
we prompted our suppliers to establish
their own science-based emissions targets
by 2030 and collaborate with us to develop
longer-term net zero aspirations withfocus on several key packaging andingredients partners. Better partnerships
are crucial to achieve our ambitious
NetZeroby40 target.

Approximately 90% of our Company’s
carbon footprint comes from Scope 3
emissions, which occur in the value chain,linked to our operations, but are generated
from sources beyond our control. Together
with the Coca-Cola System, we have so far
initiated sustainability partnerships with
about 20 critical suppliers, representing
50% of our Scope 3 emissions.

12

COCA-COLA HBC

Stakeholder engagement continued

Our consumers

Material issues• Nutrition• Product quality• Responsible marketing
Growth pillars

Government
Material issues• Climate change• Nutrition• Packaging and waste management• Water stewardship
Growth pillars

Key challenges• Ensuring product supply and safety• Continuously evolving our products
to meet consumers’ needs for healthy
hydration, quality, taste, innovationand convenience

Outcomes of engagement• We continued to evolve our portfolio
offering to address changing consumer
moments and invested further indigital and e-commerce to meet new
shopper needs

How we engage• We understand consumers’ needs andpreferences through collecting consumer
insights. While this is also part of
The Coca‑Cola Company’s role, we gain
access to these insights• Consumers also provide feedback onsocial media and via the consumer hotlines

Relevant KPIs
• % reduction of calories per 100ml SSD• # consumer complaints

Key challenges• Industry and/or product-specific policies,
such as taxes, restrictions or regulations• COVID-19-related regulations• Environmental policies• To address health and nutrition concerns,
we continue to add low- or no-sugar drink
options in every market and provide
transparent nutritional information

How we engage• Much of our engagement withgovernments is conducted at an industry
level through trade associations• We partner with local governments
to tackle waste collection challenges
and water availability
Outcomes of engagement• In response to regulations and levies oncertain types of plastic packaging, we havelightweighted packages and used moresustainable materials

Our shareholders
Material issues• Corporate governance
Growth pillars

Key challenges• Increasing focus on ESG• Maintaining focus on long-term
potential of the Group rather thanshort-term volatility
How we engage• Communication during our Annual
General Meetings, investor roadshows,press releases and results briefings,
and ongoing dialogue with analysts
and investors
Outcomes of engagement• Stepped-up consultation efforts andstrengthened two-way dialogue between
the Company and investors, ensuring
both good understanding of long-term
Company strategy in the markets andthat investor concerns are considered
in decision-making

Principal risk
• Product quality and food safety
Read more on pages 20-22.

Relevant KPIs
• % absolute emissions reduction• % reduction of calories per 100ml SSD• % packaging collected• # water stewardship projects
Principal risks• Product-related taxes and regulatorychanges• Ethics and compliance
Read more on pages 22, 47, 49-50.

Relevant KPIs
• Management access and positive investor
perceptions of strategy
Principal risks• Plastics and packaging waste• Changing retail environment• Commodity costs• Product-related taxes andregulatory changes• Foreign exchange fluctuations• Managing our carbon footprint• Geopolitical and security environment• Suppliers and sustainable sourcing
Read more on page 101.

INTEGRATED ANNUAL REPORT 2021

The Coca-Cola
Company
Material issues• Nutrition• Responsible marketing• Sustainable sourcing• Corporate citizenship
Growth pillars

NGOs
Material issues• Climate change• Corporate citizenship• Human rights, diversity and inclusion• Packaging and waste management• Water stewardship
Growth pillar

Key challenges• Support for consumers, customers
and communities• Profitable growth opportunities• Value share in our markets• Sustainable sourcing
How we engage• Day-to-day interaction as business
partners, joint projects, joint businessplanning, functional groups on strategic
issues and ‘top-to-top’ senior
management forums• We increased implementation ofsustainable, ethical practices in our supply
chain through System-wide collaboration
Relevant KPIs
• % reduction of calories per 100ml SSD• % of key agricultural ingredientssustainably certified• Investments in community projects
Principal risks• Suppliers and sustainable sourcing• Strategic stakeholder relationships

Outcomes of engagement• Our partnership added to the strengthand depth of our 24/7 portfolio, especiallythanks to the continued roll-out
of Costa Coffee

Read more on pages 8, 22, 27, 35.

Key challenges• Climate adaptation, move toward net zero
emissions and water and energy use• Packaging waste• Sustainable sourcing• Partnerships with communities andgrassroots organisations• Diversity and human rights

Outcomes of engagement• 6% training capacity for our first-time
managers went to NGO leaders in 2021

How we engage• We include NGOs and community
partners in our leadership development
programmes, offering online training for
managing virtual teams and leading intimes of crisis• We partner with specific NGOs fortargeted projects• We engage through our annual Group
Stakeholder Forum and our annualmateriality assessment, as well as throughad hoc meetings

13

Relevant KPIs
• # partnering NGOs
Principal risks• Plastics and packaging waste• Managing our carbon footprint• Suppliers and sustainable sourcing• Water availability and usage• Ethics and compliance
Read more on pages 46-47, 50.

Delivering value forthe communities where
we operate
Across all markets, we took our commitment
to create value for wider society seriously,
continuing to focus on COVID-19 support,
disaster relief and our #YouthEmpowered
programme. For COVID-19, we again
provided a mixture of cash donations,
free products and donations of equipment.
We provided more than 300 refrigerators,
for instance, to expand capacity for
vaccine storage in Greece. In responseto earthquakes, floods and wildfires,
we contributed cash or donated products
to support victims, governments, firebrigades, and the Red Cross in Croatia,
Greece, North Macedonia and Russia.

Despite the pandemic, which has limited
in-person programmes, we remain on track
to support the employability of one million
young people across our markets by 2025.
In Italy and Greece we re-purposed#YouthEmpowered tools to address theneeds of the hard-hit hospitality sector anddelivered masterclasses for young people
aspiring to a HoReCa career. In Czech
Republic we helped young people fromvulnerable backgrounds find high-quality
jobs, while in Hungary we started training
young people with disabilities.

14

COCA-COLA HBC

Market trends

Adapting toevolving trends
Market trends
Dynamic retail environment
In 2021 we saw an improvement in private consumption, boosting performance across categories.
The out-of-home channel recovered from 2020 closures, yet restrictions on its operations
were not fully lifted in all countries and were dependent on vaccination rates and COVID-19
case evolution. Online retailers and discounters experienced strong growth again in 2021.

Consumer preferences
The COVID-19 pandemic strengthened interest in health and wellness, with people looking not
only for organic offerings, but also those with less sugar or fat and for functional products thatcan enhance immunity. Consumers are getting accustomed to socialising, working or training
at home. Many consumers are willing to spend more to replicate out-of-home experiences intheir homes, turning to iconic brands they trust.

Digital evolution
Trends toward digital channels have further accelerated throughout the pandemic, asconsumers adopt faster virtual solutions and technology. The performance of daily tasks
online, such as working, getting education or banking, has led consumers to become more
comfortable with technology and to appreciate how much it is needed. Online shopping has
seen important growth and online food orders expanded, benefiting from periods of restrictedactivity in the out-of-home channel.

Sustainability
In 2021, the COVID-19 pandemic remained the world’s biggest challenge. As the world graduallylifted lockdowns and rolled out vaccinations, employee health and safety and community support
were high priorities. Climate change mitigation and adaptation, and commitments to cut
emissions were in the spotlight of the UN Climate Change Conference in Scotland in November.
Consequently, businesses have been announcing ambitious net zero emissions targets while
investing in more sustainable packaging solutions. Equality and inclusion have been of increased
concern in 2021. As a result, consumers and customers expect governments and businesses
to take bolder action. Effective solutions to sustainability challenges, and transparent practices,help strengthen brand reputation, customer loyalty and competitive advantage.

Regulatory environment
Policy makers tried to balance the need to restart economies with fiscal gaps created by
the ongoing pandemic. The European Commission proposed a number of policies and newmechanisms to achieve its target of drastically reducing net greenhouse gas emissions.
At the same time, the Farm-to-Fork strategic framework and the new Code of Conduct for
responsible business and marketing practices focus on creating sustainable food systems.
Packaging remained on the agenda in the EU, through the transposition of the Single Use
Plastic and the revision of the Plastic Packaging and Packaging Waste Directives.

INTEGRATED ANNUAL REPORT 2021

How we are responding

Delivered through

The COVID-19 pandemic has demonstrated the value of close customer partnerships.
The flexibility of our route to market allowed us to actively support our customers so thatthey could drive more transactions and capture growth opportunities as markets began toreopen, which was particularly valuable for our out-of-home customers. The at-homechannel performed strongly during 2021, as drinking occasions at home remained strong
even as lockdowns eased. We remained a key partner to our at-home customers, ensuring
product availability and adapting our offering.

+0.9pp

We continued to leverage the trend for out-of-home experiences at home, with our adultsparkling portfolio performing well through 2021, supported by our joint activation ofPremium Spirits. Our increasingly broad portfolio of energy brands and innovations supported
strong growth. Following the 2020 launch of Costa Coffee in 14 markets, we rolled out toan additional three markets in 2021. We also acquired a stake in Caffè Vergnano, a premium
Italian coffee brand which complements our Costa Coffee offering. Our non-sparkling
portfolio recovered, boosted by the reopening of hotels, restaurants and cafés as well asa return of on-the-go consumption.

+14%

Our business-to-business Customer Portal has transformed into an engagement-driven
digital platform for businesses, allowing us to more than quadruple digital transactions
to 8% of our total transactions in 2021. We have increasingly digitised our route to market
in the e-commerce channel, partnering with e-retailers and food delivery platforms tomaximise online sales. We also expanded the use of our data, advanced analytics and artificial
intelligence capabilities, achieving coverage of advanced analytics solutions across all ourlargest markets during the year.

+87%

While unique challenges continued in 2021, protecting our people remained our top priority.
We supported both our communities and our customers with numerous relief initiatives,
including charitable and product donations. We stayed on track with our Mission 2025
sustainability commitments. We announced our most ambitious sustainability goal to date:a commitment to reduce emissions to net zero across our value chain by 2040. Moreover,
we continue to make progress on creating a diverse and inclusive workplace and wereranked 8th of over 11,000 companies assessed globally by the Refinitiv D&I index.

-24%

Our target to achieve net zero emissions across our entire value chain by 2040 is partof our commitment to create a sustainable food system. Additionally, we continued toprogress towards achieving our Mission 2025 goals to help collect the equivalent of 75%
of primary packaging, make 100% of our consumer packaging recyclable and achieve a
25% calorie reduction in our sparkling beverage portfolio. As part of the Coca-Cola System
in Europe and the European Soft Drinks Association, we are also contributing to the EU’s
voluntary code of conduct for responsible food businesses.

46%

We gained or maintained
share in the majorityof our markets in the
non-alcoholic ready-todrink (NARTD) category
and gained 0.9pp
of value share to 27%

The at-home channel
continued to grow in
2021 with volumes up
14% in comparison to2019 and 10% above2020 volumes

Revenue in the
e-commerce channel
grew by 87% in 2021
compared with 2020

Absolute carbon
emissions in operations
were lower by 24% in
2021 compared with 2017

In 2021, we recovered
46% of the primary
packaging we putin the marketplace

Growth pillar

15

16

COCA-COLA HBC

Our purpose and strategy

A year of progress towards
Growth Story 2025
In 2021 we remained clear on our
vision to be the leading 24/7 beverage
partner, as well as on the strategy
which will get us there.

This vision is grounded in our purpose to provide
growth for our customers and delight consumers
by nurturing passionate and empowered people as weenrich our communities and care for the environment.
Our purpose is directly linked to our strategy and to
the five growth pillars that guide us as we pursue ourobjectives and targets.

Our purpose

Our growth pillars

We are devoted to
growing every customer
and delighting every
consumer 24/7

1

Leverage ourunique 24/7 portfolio
Read more on pages 18-23.

2

Win in themarketplace
Read more on pages 24-29.

By nurturing passionate
and empowered teamsof people

3

Fuel growth throughcompetitiveness and investment
Read more on pages 32-37.

4

Cultivate the potentialof our people
Read more on pages 38-43.

While enriching ourcommunities and caring
for the environment

5

Earn our licenceto operate
Read more on pages 44-51.

Our growth mindset values
Winning with customers
We are the selling organisation
devoted to providing
innovative solutions to createshared value

Nurturing our people
We believe in our people,
and have a passion to develop
ourselves and othersINTEGRATED ANNUAL REPORT 2021

By remaining focused on our Growth Story 2025
strategy, we have been able to prioritise the actions
and investments that are positioning the Company forsustained success. Continued focus on this strategy
over the last two years has laid the groundwork forthe strong performance we are now seeing as markets
recover from the turbulence of the initial phasesof the pandemic.

How we are growing

Growth Story
2025 targets• Offer the best 24/7 beverage portfolio on theplanet in partnership with The Coca-Cola Company
and others partners.

5-6%
FX-neutral revenue
growth per annum,
on average• Build unrivalled teams of true partners for our customers,
executing with excellence in every channel for prioritised
drinking moments• Fast-forward critical capabilities for growth20-40 bps
Comparable EBIT
margin growth
per annum,
on average• Transform, innovate and digitalise our business to ensurethat we are fit for the future

Employeeengagement• Invest in building the best teams in the industry• Develop an inclusive growth culture around ourempowered people

score greaterthan the highperforming norm

• Be an environmental leader, engage our communities
behind water and waste initiatives, and empower youth,
together with our partners

Excellence
We strive for unparalleled
performance by amazing
customers with our
passion and speed

Integrity
We always do what is right,
not just what is easy,
and are accountable forthe results

Learning
We listen, have a natural
curiosity to learn andare empowered to takesmart risks

Accomplish
Mission 2025
sustainability
commitments

Performing as one
We collaborate with agility
to unlock the uniquestrength of diverse teams

17

18

COCA-COLA HBC

Our porfolio is stronger
than ever with a true
24/7 offering.

INTEGRATED ANNUAL REPORT 2021

1

19Growth pillar

Leverage
our unique
24/7 portfolio

Highlights in 2021

Priorities in 2022

• Strong momentum across all
segments and continued
expansion to become the leading
24/7 beverage partner, creating
shared value with our consumers• Maintained resilience in the
sparkling category by leveraging
low- and no-sugar variants, Adult
Sparkling, flavours and different
pack formats• Achieved another year of strong
double-digit revenue growthin energy drinks, with continued
new roll-outs and launches• Rolled out Costa Coffee in
additional markets, bringing the
product to 17 markets in total• Acquired a stake in Caffè
Vergnano, a premium coffee brandto complement Costa• Continue to prioritise scalable
and profitable brands as well as
products, whilst driving
disciplined innovation• Continue driving excellencein execution to capture thegrowing at-home occasion,
while maintaining focus behindthe out-of-home channels• Increase the penetration of
single-serves and affordable entry
packs helping expand our price/mix• Continue to drive growth in energy• Continue to grow organically androll out Costa Coffee and Caffè
Vergnano, building our presence
in one of the most attractive
beverage categories

KPIs• FX-neutral revenue
growth• Volume growth• FX-neutral revenue
per case growth

Stakeholders

Our consumers
Our customers
Shareholders
The Coca-Cola
Company

Principal risks• Changing retail
environment• Product related taxes
and regulatory changes• Strategic stakeholder
relationships

20

COCA-COLA HBC

Leverage our unique 24/7 portfolio continued

Percentage of Coca-Cola HBC revenue

Strong momentum acrossthe portfolio
We performed strongly, despite achallenging backdrop in 2021, with the
COVID-19 pandemic still impacting all ourmarkets through the year. Our broad andflexible 24/7 portfolio, together with ourexpertise in adjusting our pack/pricearchitecture and our continuous execution
excellence across channels, once again
proved crucial.

Sparkling
Hydration
Juice
RTD Tea
Energy

74%
7%
4%
3%
6%

<1%
Coﬀee
<1%
Plant based
Premium Spirits
and ﬂavoured
alcoholic3%
beverages<2%
SnacksOver the summer months, we saw a strong
improvement in out-of-home consumption,
as government measures eased, consumers
started travelling, vaccination rates
increased, and hotels, restaurants and cafés
gradually reopened across most of ourmarkets. While leveraging the recovery inthe out-of-home channel, we maintained
our focus on capturing at-home occasions.
The breadth and relevance of our portfolio,
brand strength and market leadershipboosted our Group market share in excess
of 2020 and 2019 levels.
With the pandemic still a significant issue
across the globe and inflationary pressures
growing, we saw consumer focus aroundboth premium occasions and affordability.
Our vast portfolio of offerings, propositions
and initiatives provided tools to address bothissues. We expect to continue to leveragethese market trends in the years to come.

Sparkling growth driven bystrategic focus areas
Our sparkling portfolio remained the key
focus across our markets in 2021. The main
growth and premiumisation drivers continued
to be Trademark Coke and Adult Sparkling,which together with our flavoured sparkling
portfolio, provided consumers with a varietyof choices across the affordable andpremium spectrum.

UN Sustainable Development Goals

We serve our consumers with a broad rangeof high-quality products. In doing so, we
create value by contributing to global goals
for good health and wellbeing, innovation,
responsible production and consumption
as well as partnerships.

Our ongoing efforts to provide healthier
options across our portfolio also helped
ensure the resilience of Sparkling, which was
one of the best performing categories
during the year. The strength of our portfolio
and the performance of well-loved brands
like Coke, supported by unrivalled execution,
allowed us to increase market share by 10
basis points in Sparkling. Our 2021 relaunchof Coke Zero, coupled with the launch of the
new Coke Icon visual identity, with strong
activations including sampling, demonstrated
our commitment to adjust products toprovide consumers with healthier options.

With a new flavour profile that is even closer
to that of Trademark Coke, Coke Zerovolumes increased by 20.0% during the yearwith low- and no-sugar Sparkling up 47.3%
overall. Fanta and Sprite were also activatedin select markets, and both delivered
double-digit volume growth.
The Coca-Cola System capitalised on thelong-awaited UEFA Euro 2020 tournament,with strong activations across our markets
that drove both consumer and customer
engagement. Towards the end of 2021 theCoca-Cola System also launched the new
Real Magic platform and campaign, to bringto life a new marketing platform aimed at
engaging with the Gen-Z audience. Real
Magic was a core part of marketing activities
in December, featuring Trademark Coke tore-connect with our consumers.
Beyond the core Coke brand products,
we continued to build our adult sparklingbusiness, providing a variety of sophisticatedflavours for straight consumption and mixing.
Socialising at home remained very relevantin 2021 and we continued to leverage thistrend with our joint activation of Premium
Spirits. As hotels, restaurants and cafés
reopened, we supported our customers’
recovery, building on the important occasionof socialising away from home.

Loosening of restrictions boosts
still portfolio
After a challenging environment in 2020,
our still portfolio rebounded significantly
in 2021 as hotels, restaurants and cafés
reopened and on-the-go consumption
occasions returned.
The performance of water significantly
improved, helped by greater sales ofsingle-serve products, particularly throughthe summer months. In 2021 we continued
to invest in a targeted way behind Aquarius
functional water, meeting the growing
demand for hydration enhanced withminerals. We continued to introduce
sustainability initiatives in water, rolling out
recycled plastic (rPET) bottles in the Czech
Republic and further investing in dedicatedmarketing campaigns.
In Juice, we repositioned Cappy,
rejuvenating the visual identity towards amore premium brand positioning and further
developed the Cappy Lemonades range todrive profitable growth in our juice business.
The strength of our portfolio, combinedwith the new visual identity and excellent
execution in store, allowed us to increasevalue share by 60 bps.

INTEGRATED ANNUAL REPORT 2021

In tea, we expanded the no-sugar portfolio
for FUZETEA and launched a new label
design across markets.
AdeZ, our plant-based, sugar-free beverageline, has continued to perform well in Italy,
an important market for our plant-based
business, delivering double-digit revenue
growth in 2021 and value share growth of
30bps. The recently launched multi-seedvariants made progress, increasing theirvolume contribution from 9% to 12%
across markets.

Products for every occasion
and demographic
Energy is one of the fastest growing
non-alcoholic, ready-to-drink (NARTD)
categories across our markets, driven byboth new demographics and higher per
capita consumption. Our broad portfolio
continues to evolve, and we have been
agile at responding to affordability andpremiumisation trends that have emerged
through the COVID-19 pandemic.
Energy was one of our best performing
categories during the year and delivereda sixth consecutive year of double-digit
volume growth. Revenue growth was 42%
for the total energy portfolio, driven by clear
strategic priorities for all markets. Our revenue
growth came from existing products, as wellas product innovations and brand launches
into new markets during the year.

The category accounted for 6.4% of ourGroup revenues in 2021, up 100 basis points.
With new packs and flavours for existing
brands, the expansion of newly introduced
brands, impactful activations and increased
product availability in the market, we
increased value share for our energy brands
by 40 basis points.
We have an increasingly broad portfolio ofbrands and our strong partnership with
Monster supports our continued growth. To
develop the category further into adjacentsegments, after a successful launch in 2019
in Ireland we launched Reign, a performanceenergy beverage with caffeine andelectrolytes, in Poland in 2021.
The coffee category is important to ourefforts to become the leading 24/7
beverage partner. We launched Costa
Coffee in three additional markets in 2021,
bringing the product to 17 markets in all, andwe continued to see market share growth.
While the initial 2020 Costa launch primarily
targeted the at-home channel, we expanded
our efforts in 2021 as restaurants, cafés andoffices reopened. Almost all the coffee
machines we placed with out-of-homecustomers were digitally enabled, allowing us
to share data and insights with customers.

21

We recruited 4,000 out-of-home customers
during the year, ahead of our plans, with astrong pipeline for 2022.
In 2021 we also acquired a 30% stake inCaffè Vergnano, a premium Italian coffee
brand, to complement our existing Costa
Coffee proposition. The combination of thetwo coffee businesses gives us a total coffee
portfolio, which addresses a broad range ofconsumer and customer needs in a
fast-growing category. We started
distributing Caffè Vergnano products inselected markets at the end of 2021 and wewill continue rolling it out during 2022.
As part of our fully integrated 24/7 strategy,
we sell premium spirits in 25 of our markets,
working closely with partners to distributeworld class brands like Jack Daniels, Aperol,
Macallan and Famous Grouse. Our focus
on mixability provides us with strong
cross-selling opportunities with our core
beverage portfolio and creates a compellingoffering for our hotel, restaurant and café
customers, positioning us as a preferred
one-stop-shopping partner.
In 2021 we enjoyed strong double-digit
growth in Premium Spirits, due to thecontinued expansion of our portfolio
offerings in the markets we operate in, ourcore focus on premium and super premium
products, and rigorous execution around theconsumer trend for cocktails. We have madesure we are well set up for the future, further
developing targeted capabilities through ourSales Academy.
In 2021, we also continued to pursue atargeted market approach with our hardseltzer proposition, Topo Chico, consistent
with our objective to invest further in thiscategory. Topo Chico was rolled out in
Switzerland, where distribution was prioritisedin out-of-home channels and online.

Growing responsibly by deliveringon our commitments
We are advancing our business strategy
to become a total beverage company bygiving people more of the drinks they want.
Consumers’ tastes and preferences continue
to evolve, and they are increasingly consciousof their calorie and sugar intake while still
wanting more choice.

22

COCA-COLA HBC

Leverage our unique 24/7 portfolio continued

An important aspect of our strategy includes
changing recipes to reduce added sugar,
promoting low- and no-calorie beverage
options and making smaller packages moreavailable to enable portion control. The
Guideline Daily Amount labels on our
packages provide at-a-glance information
on calories, as well as sugar and all key
nutrients.
We support the current recommendationsof leading health authorities, including WHO,
that individuals should not consume morethan 10% of their total calories from addedsugar. We are reducing added sugar inseveral products, including Sprite and Fanta,
using our strength in innovation to meet ourconsumers’ evolving needs. As part of ourMission 2025 sustainability targets, we havecommitted to reduce calories per 100ml of
sparkling soft drinks by 25% between 2015
and 2025 across all our markets. By the endof 2021, we had achieved a 15% reduction.
Through these efforts, we are contributing
to the European Soft Drinks Association’s(UNESDA’s) target to reduce added sugarin beverages by 10% by 2025 from a2019 baseline.
We are committed to making the healthierchoice the easy choice for consumers,
a commitment that spans across all ourbusiness activities. We seek to achieve thisby delivering on our commitments, adhering
to The Coca-Cola Company’s Global
Responsible Marketing and School Beverage
Policies and UNESDA’s pledges. We commit
to not market directly to children under 13
and we do not offer any soft drinks in primaryschools. In the EU and Switzerland, weoffer only no- and low-calorie beverages
in secondary schools. Through UNESDA
and the Coca-Cola System in Europe wecontribute to the European Commission’s
new code of conduct in support ofa sustainable food system.

Managing freshness, quality
and food waste
Throughout the COVID-19 pandemic,
we maintained supply and continued todeliver the highest quality beverages to ourcustomers and consumers. We increased
investment in the capabilities of ouremployees in more innovative ways, while
reinforcing the basics.
We worked closely with our trusted suppliersof key ingredients and packaging materials
to overcome unexpected issues, with only
two critical non-compliances in the year.
These were both related to our packaging
suppliers, resulting in a product recall in Italy
and a product withdrawn from the market
in Romania.
As the pandemic continued to disrupt
business activity, we kept product age
monitoring as a hybrid model for 2021.
Across all operations we used warehouse
age measures, which provide us with all the
relevant freshness information for products
leaving our warehouses. This was combinedwith regular product age monitoring duringstorage and transportation to ensure that
product age in the market is below theestablished shelf-life specifications.
Despite accelerated changes in consumer
behaviour and preferences, in 2021 weachieved a 22.4% reduction in consumer
complaints compared with 2020.
We will continue with our efforts to reachzero complaints.

We strive to minimise food loss and foodwaste in our operations, focusing on all partsof our value chain. Preventing food loss
helps us preserve water and other natural
resources, avoid related carbon emissions,and mitigate the related social and economic
effects in agriculture.
At our manufacturing sites we have targets
for production yield, and in our markets wehave targets for the age of finished beverage
products in order to minimise the numberof products at risk of expiration. The trendof expired products was unchanged relative
to 2020 at 0.65% in carbonated soft drinks
and 0.60% in juices, related to a shift inconsumption habits through the pandemic.
Our food loss from finished beverages was
0.14% in 2021, compared with 0.23% in2020 and 0.17% in 2019. The higher level in2020 reflected product expirations during
out-of-home channel lockdowns, while
reopenings in 2021, as well as our continuous
efforts, helped us stabilise food loss in 2021.

INTEGRATED ANNUAL REPORT 2021

23

Future-focused

portfolio

Mihaela Hoffman
Coffee & Premium Spirits BusinessDirector, Romania“The coffee category is
increasingly important inRomania. We are excited
to welcome Caffè Vergnano
this year and will continue tocreate special experiences
for our consumers.”

Positioning our portfolio
for the future
Our portfolio of brands and categories has
shifted in the last five years, and is likely toshift further in the future. We are focusedon making sure that our 24/7 beverage
portfolio is relevant to every occasion
at any time of the day – whether that’s
a morning coffee on the go, a lunchtime
sparkling beverage or an evening cocktail.
While our core sparkling category still
makes up a significant portion of ourportfolio, as we look to capture moreconsumption occasions we have increased
focus on areas such as Adult Sparkling,
Energy, Coffee, targeted Still propositions
and Premium Spirits.

Coffee is a focus area we have expanded
into in the last few years. Costa Coffee
is now in 17 markets, and our aim is toreach all our markets by 2023. Our recent
acquisition of the premium Caffè Vergnanobrand allows us to focus on higher-end
segments of the coffee category as well,complementing our Costa proposition.
We have significant ambitions to increase
our presence in coffee, supported bycontinuous investment in our capabilities,
such as connected coffee machinesand big data analytics, to better serve
our customers.

24

COCA-COLA HBC

We know that our successis dependent on the
success of our customers.

INTEGRATED ANNUAL REPORT 2021

2

25

Growth pillar

Win in themarketplace

Highlights in 2021

Priorities in 2022

• Supported the reopeningof hotels, restaurants and cafés• Strengthened our relationshipwith e-retailers and developed ourpartnerships with new channels,
achieving higher market
share online• Accelerated the use of big data,advanced analytics andnew technology• Introduced the new Sales
Academy across all our markets,
to drive our salesforce’s capability
to deliver improved customer
service, performance and execution• Deployed image recognition
technology to five new markets
and increased our connected
cooler coverage by +3pp

• Continue to execute our revenue
growth management throughboth price and mix acceleration,
while addressing consumer
needs for affordability as well as
premiumisation• Advance our big data andadvanced analytics capabilities tofurther enhance our segmented
execution model• Continue to invest to improve
our digital commerce abilities
and respond to rapid growth• Improve our coverage of dynamic
route-to-market solutions
across markets, supported by the
deployment of image recognition
in all markets and an accelerationin the increase of coveragein connected coolers

KPIs• FX-neutral revenue
growth• Volume growth• FX-neutral revenue
per case growth

Stakeholders

Our consumers
Our customers
Shareholders
The Coca-Cola
Company

Principal risks• Changing retail
environment• Quality• Geopolitical and security
environment• Cyber incidents

26

COCA-COLA HBC

Win in the marketplace continued
Excellence in execution
We know that our success is dependent on
the success of our customers. Throughout
the global pandemic, we have prioritised
safety and customer service, while avoiding
supply disruptions. We stood by out-ofhome customers as restrictions disrupted
their operations and helped them reopen as
restrictions eased. The COVID-19 pandemic
demonstrated the value of our customer
partnerships, while underlining the needto continue to further develop our corecommercial capabilities to help us to address
new and evolving consumer occasions andways of shopping.
Accelerating our critical growth capabilities
is a key driver of our Growth Story 2025
strategy. The key capabilities we are focusing
on are big data and advanced analytics,
value-led revenue growth management,
tech-enabled route to market, andcustomer-centric key account management.
Our digital transformation is accelerating
within the business and is fundamental to
all these capabilities, enabling us to better
understand the real and changing needs ofour customers and consumers, drive rapid
revenue recovery in a profitable manner andanticipate or react to new challenges fasterand smarter than our competition.

Generating value for our customers
The at-home channel performed strongly
during 2021, as drinking occasions at home
continued even as out-of-home channels
reopened. We remained a key partner toour at-home customers, ensuring productavailability and adapting our offering to focus
on capturing growth opportunities. With one
large international customer in Italy, we jointly
launched an on-shelf availability project toimprove the replenishment process, which
is now being rolled out further. We havealso been collaborating with a key retailer in
Poland to implement a Costa Coffee Cornerin their stores. This success is now being
introduced in additional markets.
Our out-of-home customers have had amore mixed year, experiencing good
recovery but not yet back to 2019 levels inall markets. There were lockdowns across
many countries in Q1, followed by a strong
rebound in the summer. In Q4, however,restrictions resumed in certain markets.
We have stood by our out-of-homecustomers’ sides throughout the crisis,
providing them with consumer insights,
targeted programmes and practical support
as markets reopened.

As the hotel, restaurant and café (HoReCa)
channel began to reopen, we introduced
our HoReCa for tomorrow (H4T) framework
to support channel acceleration. Throughthe H4T framework we focused on being afull-service partner to our customers,
increasing the frequency of sales visits andhelping to upgrade the HoReCa experiencethrough both portfolio premiumisation andinnovations. We are providing upskillingfor customers and continuing to build ourinternal capabilities to support the channel.
Our restart programmes took place throughQ2 across all our markets, helping hotels,
restaurants and cafés restart their businessgrowth by addressing their specific needs.

Big data and advanced analytics
To improve insight and decision-making, we
use data and analytics capabilities to identify
and capture value-creation opportunities,
particularly for top-line acceleration and cost
optimisation. We are now able to analyse
data at a granular level, allowing us to
implement focused initiatives that generateincremental value in targeted areas of thebusiness. We expanded the use of thesecapabilities and achieved coverage ofadvanced analytics solutions across all ourlargest markets in 2021.
There are four priority areas we have been
focusing on. The first, segmented execution,is where we use our capabilities to identify
customer needs in different locations anddifferent types of outlets to better target
product assortment and marketing activities.

Segmented execution has produced
promising results across our largest markets
in 2021, including volume increases andimproved outlet prioritisation for new
product launches. For the prioritisationof our Costa Coffee roll-out in Bulgaria,
Hungary, Poland and Russia, we analysed avast range of data, including demographics
and traffic flow. In Bulgaria, for example,
we targeted locations with proximity to cityparks and those with outdoor seating areas.
The second priority is demand forecasting.
We are driving operational excellence
through machine learning, improving ourforecasting for short- and long-term
demand in our markets. This streamlines
inventory management and prevents
out-of-stock incidents.
Thirdly, we are transforming our promotion
management with our algorithms providing
a holistic measurement of the return on
investment for each promotion, including
the negative impact of forward buying,competitor promotions and cross-brandcannibalisation. Finally, we are using our datato help improve our retention efforts forbusiness developers, as well as to understanddrivers of successful performance.
To further scale our capabilities, we are
combining a number of data sets to develop
a 360-degree view of each of our customers,
while also maintaining strong data
governance. We have introduced leading
data quality and governance tools to maintainthe quality of our priority datasets, treating
data as a strategic asset.

INTEGRATED ANNUAL REPORT 2021

Revenue growth management
With The Coca-Cola Company, we havebuilt a revenue growth management (RGM)
framework that helps us maximise boththe number and value of our transactions,
supporting profitable top-line growth.
We deliver this by improving mix acrossdifferent levers, as well as through pricing
and increasing the return on investment on
our promotions. With these efforts, we help
our customers meet consumer demand foraffordability as well as premiumisation.
In 2021 we made progress with our smaller
multi-serve entry packs, which allowed us
to compete at attractive price points for the
consumer and grow transactions in smallerbaskets in a margin-accretive way. Sales ofthe multi-serve entry pack format grew by
16% in the year, driven by ongoing strong
performance in Russia, Poland and Italy andthe introduction of smaller packs in Hungary,
Ireland and Czech Republic.
We also provide our customers withaffordable options through our promotion
strategy. Advanced analytics are helping us
to quantify the incremental benefit frompromotions at the customer and outlet level.
Premiumisation strategies have helped
us sustain the increase in at-homeconsumption we saw during the first phasesof the pandemic as consumers replicatedout-of-home experiences at home.
We drove greater sales of multi-packsingle-serves, and this helped us to improve
our single-serve mix in the at-home channel,
with single-serve volumes growing 16%
in 2021, 19% above 2019 levels.
Another driver of premiumisation is thegrowth of glass packages. We saw a good
performance of our 1L returnable glass
bottles in Austria, as well as sustained
double-digit growth of 330ml glass packs
in Romania.
Pricing is another critical lever of our RGM
strategy. In 2021, we implemented priceincreases in 95% of our markets. To support
these pricing moves and make the best
decisions, we analyse data on elasticities perbrand, pack and pack type.

27

Optimising our digitally enabledroute to market
Our route-to-market capabilities showcase
our wide beverage portfolio in every outlet,
increasingly assisted by technology. In achallenging year, our agile operating model,
built through investment over several years,
enabled us to react quickly to the changing
environment. We delivered impressive
volume growth compared with 2019, evenwith most of our markets operating underrestrictions for several months of the year
and out-of-home visits much lower.
The flexibility of our route to market allowed
us to dynamically re-allocate our sales force,maximising opportunities in a changing
marketplace. We actively supported ourcustomers so that they could drive
more transactions and capture growth
opportunities as markets began to reopen.
Improvements made to our route to market,
particularly through increased use of digitaland data capabilities, are allowing for a moregranular segmentation of our customer
base, more targeted services and stronger
execution. As explained in the digitalisation
section on page 30, we further incorporated
digital tools into our route to market,
increasing our share of digital orders throughour business-to-business platforms andincreasing coverage of our Customer Portal
across our markets.

UN Sustainable Development Goals

As we build our business by helping ourcustomers to grow and thrive, we makesubstantial contributions to the achievementof the Sustainable Development Goals related
to ending poverty, decent work, sustainablecommunities, responsible production, justiceand strong institutions, as well as partnerships.

28

COCA-COLA HBC

Win in the marketplace continued
With the reopening of our markets, we
worked to reinforce our leadership throughincreased market execution in displays andthe placement of connected coolers. On topof this we have enhanced our execution
capabilities by the expansion of image
recognition from three countries to eight.
To support our business growth andsingle-serve mix opportunities, we
continued to invest in new coolers, reaching
88% coverage of our top customer outlets,
up 3pp compared to last year. We now havea total of 1.4 million coolers on customer
premises. Approaching half of these, 44%,
have online connections, helping us drive theefficiency of our assets and enhance oursales teams’ productivity.

Driving stronger capabilities acrossour salesforce
To deliver our strategy, our people need
the right tools to address customer needs.
This was the thinking behind theestablishment of our Sales Academy in2020, to build unmatched sales teams that
constantly strive to improve our service anddrive value with and for all our customers.

After a successful pilot in 2020, we launched
the Sales Academy in all our markets in 2021.
The Sales Academy has been developed asa transformative digital learning approach tohelp build our teams’ capabilities on the job,allowing each country to have flexibility
to focus on the capabilities that are most
relevant to their market. Feedback fromour pilot markets has been strong, with ourcustomers in Russia appreciating that oursales force works collaboratively to drive
better operational performance and offer
solutions to drive sales.

Evolving our customer satisfaction
approach
A key learning from 2020 and the COVID-19
pandemic was that being close to ourcustomers is the most important way to
win in the market. We were able to makesignificant advances through 2020 with ourcustomer experience and brought inadditional improvements in 2021.
To remain competitive, we ensure that
we listen and respond to every customer.
In 2021 we made step changes to empower
our salespeople to drive customer-centricbehaviours and ‘close the loop’ to resolve
issues immediately.

When a customer raises an issue, we target
a 48-hour response, listening carefully andimproving their experience swiftly.
We launched CustomerGauge, a new digitallyenabled customer experience feedback
approach, across all our markets in 2021.
We initiated a faster and simpler way oflistening to our customers more frequently,
and we enhanced our ability to capture moredata and actionable insights to drive revenue
growth. This is a key example of the digitaltransformation Coca-Cola HBC is undergoingin every aspect of the business. We expect
CustomerGauge feedback to lead to morelearnings and further improvement in 2022.

INTEGRATED ANNUAL REPORT 2021

29

Future-focusedroute to market

Anton Salov
Business Developer, Russia“Our upgraded Customer
Portal helps me to spend
more time working on
customer and category
development. Our platform
really helps us lead the way
in digitalisation in Russia.”

Digitalisation is the focus within
our route to market
Our route to market is increasingly digitallyenabled, and the COVID-19 pandemic
provided an additional boost to this trend.
Our business-to-business Customer Portal
was relaunched in 2020 and transformed
from a functional order-taking platform toan engagement-driven digital experiencefor our customers. The improvementin the Customer Portal user experience
helps our customers to be promptly
notified on portfolio expansion, ongoingpromotions and marketing activities,
which translates to higher revenues
and customer satisfaction.
Russia is leading the way in digitalisationand e-commerce for Coca-Cola HBC andnow sees 32% of all orders come throughthe Customer Portal, the highest levelacross our markets. In the coming years
we see further opportunity to improvefunctionality, deepen our customer reach,expand to all our markets and further
increase business-to-businessdigital transactions.

30

COCA-COLA HBC

Digitalisation across Coca-Cola HBC

Enhancing connections
and accelerating growththrough data anddigitalisation
Investments in data and digital capabilities have consistently
been prioritised across the Group because we know they are
creating real opportunities for our business. We are benefitingfrom more targeted sales strategies, access to e-commercechannel growth, improved demand forecasting and even
improved understanding of what is needed to increase
employee retention.

Investing in digitalcommerce
We have been investing in and developinga suite of digital commerce platforms andsolutions to serve the growing numbersof consumers and customers choosing
to shop online, a trend that has pickedup substantially since the start of thepandemic. Throughout 2021, we continued
to refine our digital commerce strategy,
and invested capital and management
attention in this area to capture thesignificant growth opportunity.
When customers order online, it streamlines
processes, freeing up our businessdevelopers to help our customers develop
their growth opportunities in the beveragecategory. It also has the potential to open
our portfolio to large numbers of smaller
outlets which may not have been economic
for business developers to serve.

Route to customer
Our business-to-business Customer Portal
has been transformed from an order-taking
system to an engagement-driven, digital
experience for business owners whowant to maximise growth efficiently.
After introducing our customer portal to
22 of our markets in 2020, we increased
engagement through 2021, increasing thenumber of customers reached through ourplatform. This investment has helped us
achieve rapid growth in online ordering,with the Customer Portal’s share of totalorders quadrupling in 2021 to 8%.
We have also been investing behind several
other business-to-business opportunities
to better serve our customers, creating
platforms where we can really leverage ourexisting physical route to market. WABI2B,
for example, is a one-stop-shop for
traditional trade and hotels, restaurants
and cafés to buy products from us or fromother consumer products groups. In 2021
we launched WABI2B in Nigeria and Russia.

Route to consumer
While beverages are an attractive productfor consumers to buy online given theirbulk, the category is still relatively early inthis transition, particularly when comparedto other consumer categories. This createsa significant longer-term opportunity tocapture growth in this channel. We arepartnering with e-retailers and our existing
brick-and-click customers to increase ourdigital shelf space and visibility as well as
direct shopper engagement.
The emergence of food delivery platforms
has created a new growth opportunity.
These platforms, which deliver restaurantor take-away food directly to consumers’
homes, grew rapidly during the pandemic
and allowed the hotel, restaurant and café
channel to continue to operate even when
they were not able to open their doors.
We have been working to increase thepresence of our products on theseplatforms and to increase the rate at which
consumers purchase one of our beverages
in combination with their meal.
Coca-Cola HBC has operated in the
direct-to-consumer channel in Switzerland,
one of our larger markets, for many years
with Qwell. While the channel is still a smallpart of our business, we continue to learn
a lot which is allowing us to understandwhat drives success and identify potential
good ideas.

8%

Percentage of transactions throughCustomer Portal, our main B2B platform

87%

Revenue growth from e-retail in 2021

INTEGRATED ANNUAL REPORT 2021

31

Understanding ouropportunities betterwith data
Big data and advanced analytics are alreadycreating real value across a range of use
cases and have the potential to do much
more as we continue to develop thiscritical capability. We use data and analytics
to identify and capture value-creation
opportunities, particularly for top-line
acceleration and cost optimisation, and to
improve our service and operations acrossall functions.
We are now able to analyse data at a
granular level, allowing us to make decisions
and implement focused initiatives thatgenerate incremental value in targetedareas of the business. Our data capabilities
are even being used to gain insights to
support the performance and retentionof new business developers.
In 2021, we achieved our aim to expand
our use of big data, advanced analytics
and artificial intelligence across ourlargest markets.

State-of-the-art
manufacturing
and logistics
To optimise our supply chain and financefunctions, we have invested in a rangeof technologies.
In our manufacturing plants, we have
improved efficiency by investing in new,automated production lines. These reduce
idle time, thus expanding our capacity while
reducing costs. In 2021, we introduced
a new digital manufacturing platform witha monitoring system in seven markets.
This has given us better insight into energy
consumption and expanded our use ofpredictive maintenance, reducing costs

A connected culture
As thousands of our people began working
remotely for the first time in 2020, we
accelerated our investment in new digital
tools for learning and connection.
Our online Sales Academy, launched in2020 and rolled out across our markets
in 2021, offers development tools for all
layers of our sales force.

It provides a great onboarding experience
for new business developers as well as
in-depth training in specific productcategories and channels, including premium
spirits and hotels, restaurants and cafés.
Throughout the onboarding process, newbusiness developers are guided by our new
ONBOARD app. We have also introduced
an app for continuous performance
conversations, embedding continuous
feedback throughout our business.
While the COVID-19 pandemic reduced
opportunities to meet in person, newdigital tools keep our people connected
and engaged. At our virtual leadershipconference in 2021, participants sharedpersonal stories and inspiration. Digitalchannels are also helping to drive thevisibility and attractiveness of our employer
brand. Over 550 of our employees post
regularly on social media channels, and we
encourage social media conversations
around our products and specific events.

and equipment downtime. In ourwarehouses, we have introduced
augmented reality headsets to speedorder packing and reduce error rates.
Digital transformation in our supply chain
is also improving productivity and reducing
costs. In 2021, we implemented an SAP
e-procurement solution in many of ourmarkets, with further roll-out plannedfor 2022.
Our successful implementation of SAP’s
newest enterprise application suite,
S/4HANA, in 2021 is simplifying processes
and increasing productivity across ourcommercial, supply chain and financefunctions. This technology provides a solid
foundation for future technological tools by
increasing our ability to extract and use data.

32

COCA-COLA HBC

New technology is driving
dramatic improvements inaccuracy and productivity,and cost savings.

INTEGRATED ANNUAL REPORT 2021

3

33

Growth pillar

Fuel growththroughcompetitivenessand investment
Highlights in 2021

Priorities in 2022

• Supply chain costs as % of net
sales revenue decreased by
1.4 basis points in comparison
to prior year
• Further implementation ofadvanced analytics supportedroll-out of segmented execution
to all markets• Automation and digitalisationof manufacturing process• Successful implementationof SAP’s S/4HANA for
greater productivity• Continued focus and investment
in digital commerce, underpinned
by next generation digitalmarketing capabilities• Smooth integration of IT systems
for Egypt• Introduce digital solutions for
supply chain and demand planning• Reduce the use of PET,
accelerating package-less andrefillable options and eliminating
plastic from secondary packaging• Expand predictive maintenance

KPIs• OpEx as % of NSR• CapEx as % of NSR• Comparable EBIT margin• ROIC

Stakeholders

Our suppliers
Shareholders

Principal risks• Plastics and packaging
waste• Changing retail
environment• Cyber incidents• Foreign exchange
fluctuations• Water availability• Managing our carbon
footprint• Suppliers and sustainablesourcing

34

COCA-COLA HBC

Fuel growth through competitiveness and investment continued
We demonstrated ourresilience and adaptability
during the year, maintaining
production continuity
and avoiding any supply
interruptions for our customers
while continuing to make healthand safety our top priority.
This required us to embrace innovation,
data and sophisticated digital technologies,
while investing in our people to develop
new capabilities.
As trading levels rebounded, so too did
direct marketing expenses. However, withfewer physical meetings and less travel,some operational cost reductions weremaintained. New technology is driving
dramatic improvements in accuracy andproductivity, and cost savings.

Optimising infrastructure
By expanding and optimising our production
and warehouses, we support our expanded
24/7 portfolio and improve our ability toserve our customers and address changing
consumer needs and preferences.
We continued our investments to increase
the capacity of our plants by installing six
new production lines in Nigeria, Ukraine andRomania to address increasing demand andavoid out-of-stock issues. Six warehouses
were constructed or renovated in 2021,
adding capacity and increasing efficiency.
Our warehouse projects support better
customer service, cost efficiencies andvolume growth in five markets,
including Nigeria.
We also increased our investments ininnovative KeelClip™ equipment, adding
installations in Romania, Italy, Greece andHungary. KeelClip™ is a minimalist
paperboard packaging solution which
replaces plastic packaging for multi-packs,
helping us achieve our sustainability
objectives. By improving our manufacturing
efficiency with additional investment inautomated production lines, we reduced idle
time and expanded our production capacity
by nearly 3% while achieving cost savings.
To streamline maintenance in our
production facilities, we introduced a digitalmanufacturing platform in several markets in
2021. This platform allows better monitoringof production, gives higher visibility of energy
consumption and allows us to use a more
flexible, predictive maintenance approach.
Shifting to predictive maintenance hashelped us to achieve better control of ourmaintenance costs, limiting equipment
downtime. In 2022, we will expand the
new maintenance approaches to five
additional markets.
Across the business, our optimisation
efforts have resulted in a 30% reduction inplants across our territory, from 80 in 2008
to 56 at the end of 2021. At the same time,
we increased our production lines per plantby 44% which allowed us to maintain ourcapacity and create more efficient andflexible facilities. To improve our service
offering while reducing our costs, we have
optimised our logistics network by reducing
our distribution centres by 66% and ourwarehouses by 65% over the same time
period. These structural improvements
support a lean and resilient operating model.

Leveraging technology and big data
Our continued investment in technology
has supported our business resiliencethroughout the COVID-19 pandemic.
Our successful implementation of SAP’s
newest enterprise application suite,
S/4HANA, in 2021 is already increasing
productivity across our Group while providing
a solid foundation for the deployment ofadditional technological tools. The S/4HANA
implementation brought better support tobusiness needs, and provides new insights
by improving access to data in our systems.
This is helping us serve customers in a moresegmented way and streamline order taking,helping us provide better service to ourcustomers faster.
We continued to digitally transform ourroute-to-market capabilities, achieving
significant increases in sales through ourenhanced Customer Portal. See theDigitalisation section for more details

on page 30. Technology is also helping
us improve market execution. We fully
activated our in-store image recognition
technology in seven business units, morethan doubling the number of outlets covered
to 350,000. We are processing over two
million product execution images every
month with 98% accuracy, freeing up sales
people to spend more time with customers
and improving revenue per outlet.
New digital tools are improving operational
productivity and helping us serve customers
cost-effectively with better monitoringof insights and data. We introduced a rangeof solutions for digital transformation across
many different business areas during theyear, including planning, logistics andprocurement. Automation, for exampleof quality and safety, has helped us be
more flexible to meet fast-changing
customer needs.
We made progress digitising our
procurement, implementing the SAP Ariba
e-procurement tool in 12 markets in 2021,
with plans to expand this to all our markets in
2022. This supports greater standardisationof our procurement activities. We are also
piloting the integration of SAP Ariba withthird-party assessments of financial,environmental and social risk.
We are also reducing costs and streamlining
processes with new digital platforms forinternal purchases, such as our buying
platform for trade marketing activities.
Launched in 16 markets in 2021, thisimproves our marketing activities while
generating economies of scale to drive
down costs.

INTEGRATED ANNUAL REPORT 2021

As our business generates more data, weare also getting better at deriving value fromthis important asset. We are establishinga long-term data strategy and vision,
implementing a data governance process,democratising data access through a new
Azure cloud enterprise data warehouseand enhancing data insights with crossfunctional management reporting. Businessdata used with purchased data helps us
leverage artificial intelligence to improvesegmented execution, demand forecastingand product performance. By rolling out
segmented execution powered by big data
and advanced analytics to all of our markets
during 2021, we achieved incremental
revenue and business growth.

Improving our impact
In 2021, we started to track our businessperformance based on our newly validated
2030 science-based carbon emission
targets and, looking beyond 2030,
committed to achieve net zero across ourvalue chain by 2040. In support of thesegoals, we continued to increase our useof renewable and clean energy and invest
in energy reduction and decarbonisation
projects across our markets. In Nigeria,
we installed additional solar panels at fourof our bottling plants. These installations areconnected to the local electricity grid andprovided 1,500 tonnes of CO2 emissions
savings in 2021. In Cyprus and at 10 of our
production sites in Russia, we began using
100% renewable electricity. Combined with
our use of energy from clean or renewablesources in 12 additional markets, we areachieving savings of 67.5 kilo tonnes of CO2
emissions annually.
Approximately 90% of Coca-Cola HBC’s
carbon footprint comes from Scope 3
emissions in our value chain, which are linked
to our operations but generated from sources
we do not control. As we cannot achieve ourambitious sustainability objectives on ourown, our work with suppliers is ever morecritical. Our procurement team began
working in 2021 with our key packaging
partners on greenhouse gas emission
reductions. We also launched collaborations
with additional critical suppliers. Together
with The Coca-Cola Company and otherbottlers, we are now working on emissions
reduction with 20 critical suppliers who
represent over 50% of our Scope 3 emissions.
In 2021, we expanded our work with the farms
where our priority ingredients, including
natural sweeteners and fruit, are grown
to improve productivity, compliance,transparency and resiliency. We source using
the System-wide Principles for Sustainable

Agriculture (PSA). These principles arealigned with leading third-party sustainable
farming standards and assurance schemes
such as the Farm Sustainability Assessmentof the Sustainable Agriculture Initiative
Platform (SAI-FSA), Bonsucro, Fairtrade
International and Rainforest Alliance.
By working to implement practices that alignwith the PSA, such as efficient farmmanagement practices, we manage supply
and reputational risks while delivering value
for all stakeholders, including farm workers.
Along with The Coca-Cola Company, we
issued a PSA supplier guide as a reference tosupport implementation of sustainable,
ethical practices.
To ensure our principles are being upheld,
we use external third-party verification
while encouraging our suppliers to follow
sustainable practices to maximise value
and contain their costs. Our 2025 target
for ingredient sourcing is to achieve 100%
certification of our key agricultural ingredients
against the Principles for Sustainable
Agriculture. Due to accelerating demandand limited availability of sugar crops, wewere forced to turn to new suppliers in
2021. This disruption meant 80% of key
agricultural ingredients purchased in 2021
were certified, a drop from 82% in 2020.
We are working to stabilise supply andintroduce improved practices withnew suppliers.

35

Packaging and transport
Improving the sustainability of our packaging
is one of our Mission 2025 sustainability
objectives. In 2020, we installed new
in-house PET recycling and preform
manufacturing technology at our plant in
Krakow, with the objective of improving ouraccess to food grade, recycled PET (rPET).
In 2021 we commenced the installationof additional in-house recycling technology
in Italy and plan for an expansion to Romania
in 2022.
In Switzerland, we have received approval
to use green rPET for our sparkling andwater portfolio together with additional rPET
bottle lightweight activities.
This will close the Swiss recycling loop forgreen bottles sold to market, increase theavailability of rPET feedstock and support
lowering recycling costs. These bottles will
be in the market in Q1 2022.
As new single-use plastic regulations cameinto effect in the second half of 2021 in theEU, we are now supplying paper straws.
We are also investigating options to replace
plastic lids on our paper cups.
We had success piloting a new stretch film
used on pallets in Poland in 2021, reducing
plastic used on pallets by 40% while
improving product stability. We plan toimplement this on a larger scale during 2022.
We also made progress with cardboard
packaging, incorporating more than 80%
recycled content for the first time.

36

COCA-COLA HBC

Fuel growth through competitiveness and investment continued“New digital tools are
improving operational
productivity andhelping us serve
customers costeffectively with better
monitoring, insightand data.”

Beyond our green fleet achievementsfor passenger cars for our salespeople,
described on page 48, in Serbia we
introduced new heavy trucks fuelled by liquid
natural gas in 2021. These have 50%
lower emissions than conventional models.
We also increased the capacity of ourlight-weight trailers by 6%, reducing trips
needed and further contributing to emission
reduction. We imported bulk resin to Nigeria
for the first time via sea cargo, moving awayfrom containerised deliveries in vessels.
Doing so resulted in a 55Mt reduction in CO2emissions. We plan to expand our purchasesof bulk resin in 2022 to further increase
emission reductions. As sugar supply was
disrupted, we focused on the optimisationof sugar deliveries in 2020 and 2021.

Sustainable procurement
Our suppliers are important partners andcontributors to the ongoing and sustainablesuccess of our business, and we held our
first Group supplier sustainability event in
2021, with 300 participants, to support
collaboration. During the virtual event,company and external experts provided
context regarding the environmental, socialand governance (ESG) factors facing theindustry, as well as examples of bestpractices and new opportunities arisingfrom sustainability.

UN Sustainable Development Goals

Our sustained efforts to reduce our costs andimprove our impact have generated significant
results for our business, our communities,
society and the environment. These resultscorrespond to contributions to the Sustainable
Development Goals for clean water andsanitation, clean energy, economic growth,industry innovation, sustainable communities,
responsible production, climate action,
life below water and life on land.

We also made improvements torequirements for our suppliers, significantly
strengthening the human rights, ethics andcompliance practices we expect. Our buyers
were retrained during the year on thesustainability risk assessment tools available
for supplier selection and governance.
We use internal supply base assessments,
audits of compliance and the EcoVadis
platform to monitor and assess
performance of critical suppliers. EcoVadis
gives us information to monitor a rangeof risks using 21 criteria from international
standard-setters such as ISO 26000 and theInternational Labour Organization. In 2021,
over 1,100 of our critical suppliers wereassessed using EcoVadis, an increase ofabout 40% compared with 2020. Our plan is
to expand the use of these assessments forbetter, more objective supplier monitoring
going forward and leverage our EcoVadis
partnership across the Coca-Cola
System to improve information sharing
between bottlers.

INTEGRATED ANNUAL REPORT 2021

37

Future-focusedinvestment

Gerald Lewis
Head of Technology Strategy
and Operations Group Digital
and Technology Platform
Services“Our continuous investment in innovationand technology has delivered new digitalproducts that are tightly integrated
with our evolving technology platforms.
These products have achieved improved
operational productivity and help
us serve our customers cost-effectively
and in more flexible ways to meet theirfast‑changing needs.”

Fueling growth by investing in new digital tools
and sustainabilityy
Automation is key for our business. It helps us to be moreproductive, enabling better, faster results, while improving
the experience of our people, customers and partners.
Across our Company, investments in new digital tools are helping
us to capture new growth opportunities, create more value for ourcustomers and achieve our sustainability goals. As a result, ourback-office systems and processes have been streamlined, we
have achieved operating and cost efficiencies in our manufacturing
plants and we have access to more relevant data insights to better
serve our customers.

38

COCA-COLA HBC

In 2021 we continued tolisten to our people tounderstand how we could
best support them tosucceed while staying safe
through the pandemic.

INTEGRATED ANNUAL REPORT 2021

439

Growth pillar

Cultivate thepotential of
our people

Highlights in 2021

Priorities in 2022

• Protected the health and wellbeingof our people as the COVID-19
pandemic continued, while further
investing to support new ways
of working• Sought more feedback from ourpeople, through the annual
employee engagement survey
and periodic pulse surveys, andacted on their feedback• Strengthened the collaborative
spirit and growth mindset values
which underpin our culture andcontinued our efforts to makelearning available to everyone• Launched a unique development
experience for all our frontline sales
people to upgrade their criticalcapabilities and enhancecustomer support• Continued working towards a morediverse and inclusive workforce• Build unmatched sales teams bystrengthening our commercial
talent pipeline• Drive an inclusive and purposedriven culture by redefining ourculture narrative and updating ourleadership model• Continue simplifying processes andinvesting in capabilities necessary
to achieve our growth strategy• Continue efforts to build an
inclusive workplace and a diverse
workforce that reflects ourcustomer base and communities

KPIs• Employee engagement• Percentage of managers
that are women• Lost time accident rate

Stakeholders

Our people

Principal risks• Health and safety• People retention• Geopolitical and security
environment

40

COCA-COLA HBC

Cultivate the potential of our people continued
Strengthening our culture
We strive to create an irresistible place towork, where our people feel heard, valued
and supported. In 2021 we continued
applying what worked best during the earlydays of the pandemic: listening to our people
to understand how we could best support
them to succeed while staying safe in aperiod of rapid change.
Our teams have emerged from two yearsof a global pandemic even stronger. As aresult of their dedication, perseverance andinnovation, we helped our customers reopen
quickly and adapt and grow sustainably
despite the turbulent market conditions.
We continue to unite around a common
purpose, democratise learning for all ourcolleagues and build a resilient and agileorganisation.

Support and engagement during
the pandemic
Ensuring the safety of our people, as well as
our customers, partners and communities,
continued to be our top priority in 2021.
This was the focus of our Company
leadership as well as the cross-functional
teams leading our COVID-19 pandemic
response across the Group and in eachmarket. We continuously adapted ourguidelines and protocols as vaccines
were rolled out and as new COVID
variants emerged.
Due to the extraordinary circumstancesin 2020, we conducted two employee pulse
surveys in addition to our annual employee
engagement survey to better understandwhat employees needed during the pandemic.

As the fast pace of change continues, wehave made pulse surveys a permanent partof our internal communications, ensuring
employees have multiple opportunities toprovide feedback each year. This helps
ensure that management and the Board
really understand what our people needto succeed.
We once again conducted three allemployee surveys in 2021. The Company’s
Employee Engagement Index score, theoutcome of our annual engagement survey
conducted in October 2021, remained
steady at 88% with 85% of the workforce
participating. We continue to benchmark our
employee engagement against otherhigh-performing companies, partnering with
Qualtrics, our partner in measuring company
culture. Our 2021 results were three
percentage points above the Qualtrics
Global Top Decile Norm, which represents
the top 10% of more than 15 million people
from more than 350 companies.
Importantly, 96% of employees working
directly with our customers feel they have all
the necessary protective equipment theyneed and 96% of all employees are aware of
the Company’s health and safety policies.
Many of our employees enjoy being able towork from home at least part of the time, but
not everyone is the same. From survey
responses in 2020, we learned that remote
work arrangements increased the need forline manager support. In our 2021
engagement survey, 85% of our people
reported feeling supported by their line
manager. Through surveys conductedduring the year, employees expressed theirconcerns about the complexity of processes
and the resulting impact on workloads.

Improvement across all Cultural pillars (% of favourable replies by the employees)

90
88

To support new ways of working, we
conducted more meetings virtually to
optimise time spent travelling and with ourcustomers. In Poland and Austria, we
streamlined and redesigned offices,
improving the work experience for ourpeople while reducing costs.
We continued offering support to family
members through a global employee
assistance programme, providing 24/7
confidential support for our people and theirfamilies. The programme features trained
specialists through an external partner forhelp with challenges ranging from workrelated issues and relationship difficulties toisolation and trauma. Help is available byphone, online or through an app. Specialised
support is also provided to our line managers
to help them support team members facing
challenges.

Health, safety and wellbeing
We believe that a safe and healthy workplace
is a fundamental right and also a business
imperative. As the COVID-19 pandemic
impacted markets across our territory for asecond year, we continually updated our
relevant guidelines and protocols. We also
carefully monitored illness rates to monitor
possible cases of transmission on our
premises. While employees continued to
become ill with COVID, we attempted toeliminate transmission within the workplace.
As hybrid working models combining remoteand office-based work became the norm, we
focused on new approaches to wellbeing
and employee support. Our refreshedwellbeing framework addresses employees’
physical, mental, emotional, financial andsocial needs. Each of our markets offers
tools and resources in each area, tailored tomarket-specific needs. In Russia, where wehave an extremely comprehensive wellbeing
programme, our leaders act as role models,sharing their personal wellness stories.
To ensure a workplace that safeguards
mental health and supports our people whenmental wellbeing issues arise, we introduceda mental wellbeing policy and provided online
access to useful resources. This addresses
the risk of isolation some employees reportwith hybrid work arrangements. To help
leaders understand how they can assist insafeguarding the mental wellbeing of theirteam, we created a guide for all managers.

86
84
82
80
78
76
74

To address this important finding, we haveintensified our focus on simplification.

Agility

2018 score

Customer
Centricity
2021 score

GrowthMeaningful Positive Work Supportive
Opportunity & Empowering Environment Management
Work

Trust in
Leadership

For the fourth consecutive year, noemployees lost their life at work during 2021.
Regrettably however three contractors diedin road incidents.

INTEGRATED ANNUAL REPORT 2021

This compares with two contractor fatalities
in road incidents during 2020. Our fleet
safety training programmes blendclassroom and on-the-road training
elements. Safety training combined withongoing installation of collision avoidancetechnology in fleet vehicles led to an 8.2%
improvement of accidents per million
kilometres travelled in 2021. This is our ninth
consecutive year of improvement.
Overall, employee workplace-related
accidents increased by three compared to aprevious year. Our Lost Time Accident Rate
was 0.25 for 2021, compared with 0.23 in theprior year. Meanwhile, the Lost Time Incident
Frequency Rate for contractors improved by
7.05% vs 2020. Our behaviour-based safety
programme was expanded frommanufacturing plants and warehouses to
90% of our commercial function. During2021, we eliminated 82.8% of barriers tosafety identified under this programme. By
the end of 2021, we are proud to report that
7,652 employees and 865 contractors weretrained as behaviour-based safety observers
supporting the programme.
We also successfully launched the CocaCola System’s Life Saving Rules, with each of
our sites taking corrective actions to achieveerror-intolerant systems and processes by
the end of 2022.

Building a sense of belonging
and trustOur values-based culture remains a strengthand a source of resilience as our common
beliefs help us adapt with speed and agility.
Two important findings from our 2021
engagement survey were an increase in ourpeople’s understanding and belief in ouroverall purpose and vision andimprovements in engagement scores
across all of our cultural pillars. This reflects
the success of our efforts to empower ourpeople and foster the growth mindset
needed to achieve our vision.
We believe inviting people to bring their true
self to work and share their authentic stories
is the best way to foster trust andbehaviours that support our strategic goals.
Storytelling is therefore used extensively
across the business to strengthen
connections.
Our Red Talks programme shares personaltransformation stories across the Group,
inspiring our people to change and grow. At
our 2021 virtual leadership conference,stories were shared from different countries
covering management of wellbeing todealing with change.

Similar storytelling campaigns took place inall our markets, featuring personal, authentic
stories from each region. To expand
opportunities to share and connect, webuilt a community of over 100 colleagues
organised in an informal virtual community.
We have also organised virtual Coffee Corner
sessions attracting over 700 colleagues,
which feature podcast-like interviews on
topics such as how to become a bettercolleague or finding strength toface difficulties.
Through our internal #thisisme campaign,
we invite our people to bring their true self towork by sharing photos, quotes and sourcesof inspiration and motivation. Launchedinitially for Group employees, the programme
proved extremely popular, growing organicallywith posts from colleagues across all
countries, functions and layers.
To further enhance our growth mindset
values and collaborative culture, a Culture
Activation Toolkit was launched in 2021
giving our markets the ability to target local
needs. To empower people in different
settings, the toolkit includes guides on
setting up and building communities orleading from within.
In our second year of continuous
performance conversations with mutual
accountability, nearly all of our people, 95%,
completed quarterly snapshot discussions
with their managers. More than 75% of ourpeople gave feedback to their managers
during the year. Usage data for our feedback
app shows that continual feedback is
becoming well established across the Group.

Achieving greater diversity
and inclusion
As part of our Mission 2025 sustainability
goals, our Company has committed
to increase the proportion of womenin management to 50%. The proportionof management roles held by women edged
up 1pp to 39% in 2021. Despite continual
progress, to achieve our ambition of a diverse
workforce that reflects our customer baseand communities we must do even more.
In 2021, we created a new Diversity, Equity
and Inclusion (DEI) Steering Committee,
sponsored by CEO Zoran Bogdanovic, toprovide strategic direction and governanceto our DEI efforts. To help us drive the rightbehaviours, we introduced new training to
identify and act on potential instances of
discrimination. Several hundred employees
in our People & Culture and Legal, Ethics& Compliance functions participated.
Our workshops on disrupting unconscious
bias are also being rolled out to leadershipteams of business units across the Group.

41

Together with our Coca-Cola System
partners, we launched an International
Coca-Cola System-wide series of women’s
network events. Quarterly events were held,
including a panel discussion with our CEO
and Chief People & Culture Officer on how
leaders can drive inclusion. This rolemodelling was also seen in our CEO’s
continued participation as a judge in the
WeQual awards for female leaders.
Newly introduced initiatives built on our
existing Inclusive Leadership e-learning
modules, available to all leaders. Everybusiness unit has targets and action plansappropriate to their market to contribute to
our gender diversity commitment and our
DEI Community continues to ensure bestpractices to support diversity, equity andinclusion are shared across our territory.
To attract more women into our Company,
we once again ran an International Women’s
Day campaign, #NoJobHasAGender,
which was promoted through social media
channels. We continued to increase oursocial media presence with a focus on
female career experience, covering subjects
such as career growth and leadership.
Our series #WomenofCCHBC included 19
videos and was viewed by over two million
people online.
We regularly review our Human Rights Policy,
our Code of Business Conduct and otherinternal standards to ensure we adhere to
all applicable laws and regulations anddemonstrate best practice as stakeholder
expectations evolve. These documents areavailable on our website at https://www.
coca-colahellenic.com/en/about-us/
corporate-governance/policies.

Helping our people realise theirpotential and developing talent
To ensure that everyone in our Company
has the ability to contribute to our purpose,
vision and mission, we make learning
accessible to every employee. We provide
tools and encouragement for our employees
to continue growing through self-learning,coaching and mentoring to develop bothleadership and functional skills.
As we continued to strengthen our cultureof continuous learning, digital learning is
becoming more important. About 80%
of our employees are self-driven active
learners on our various digital platforms.
We have expanded our Personal Learning
Cloud, which now offers over 2,500
resources. For the second year, weorganised a virtual LearnFest. Over 6,000
attendees and more than 40 internal andexternal speakers participated.

42

COCA-COLA HBC

Cultivate the potential of our people continued

UN Sustainable Development Goals

Efforts to foster an engaging workplace andan inclusive environment, nurture and develop
the capabilities of our people, increase genderbalance in our management ranks and reducestress and support employee wellbeing allcontribute toward global goals for development.
The specific Sustainable Development Goals
supported are those for: good health andwellbeing; gender equality; decent workand economic growth; reducing inequalities;
and peace, justice and strong institutions.

In our efforts to boost the agility of ourCompany, we have completed more than 80
agile initiatives, trained over 700 people, andcertified 135 Scrum Masters and 18 Agilecoaches since 2019. As we evolve into a
truly agile organisation, we are establishingmission-based, cross-functional,
empowered and self-managed teams, which
we call dynamic pods. These allow us to
improve our speed and quality of delivery on
critical missions through dynamic staffing of
critical capabilities. To accelerate channel
and category growth, we launched dynamic
pods in eight of our business units in 2021.
Taking into account the global trends ofincreasing turnover and intensifying scarcity
of talent, development of high-performing
people is a top priority. We made notable
progress accelerating the leadershipdevelopment of more than 450 of ourcolleagues during the year. Learning fromothers continues to act as a multiplier ofleadership development, with 80 new active
internal coaches and 71 new coachingengagements. Mentoring is now
technology-enabled, with 339 active
mentors and 259 new mentoring
engagements supported online during theyear. The success of these initiatives isdemonstrated by extremely high participantsatisfaction rates. All of the leadershipcoaching participants and 97% of mentoring
participants reported satisfaction with theirlearning experience.

In 2021 we further evolved our Talent Review
Framework to accelerate development
across functions and borders. We identified
20% more potential emerging leaders within
our workforce than in 2020. We remain
focused on maintaining bench strength,
particularly in our commercial function, andbuilding a strong, diverse pipeline of leaders.
A majority of participants in many of ourleadership development programmes,
including our Fast Forward programmes, arefemale. This supports our ambition to achieve
gender balance in senior management
roles by 2025.
As employee turnover rebounded to
pre-pandemic levels in 2021 to 13.1%,
compared to 8.8% in 2020 and 12.3% in 2019,the higher rate of external hiring gave us theopportunity to recruit people with criticalnew capabilities. As 35.5% of all externalhires during the year were female, and morethan half of new hires for senior leadershiproles were women, we also succeeded instrengthening gender diversity.
As the skills needed for our organisation to
be successful in an ever-changing market
are constantly evolving, this year welaunched a skills-based talent marketplace,which enables us to better understandour employees’ skills and capabilities, while
matching them to the challenges of bothtoday and tomorrow. The programme was
successfully piloted in Austria in 2021 andwill be rolled out to additional markets in the
coming years.

Developing the critical capabilitiesof our sales teams
Following the 2020 launch of our digital Sales
Academy, we continued to roll out thiscomprehensive developmental experiencefor our sales force across all our markets inearly 2021. About 1,300 new businessdevelopers have completed our Licence toStart certification, which gives new hires astrong onboarding experience and ensuresthey are equipped to support our customers
even faster. Over 8,500 members of theexisting sales force have also benefited from
Sales Academy modules. Building on thissuccess, similar learning modules designed
for supply chain management will be rolled
out for 12,000 people in our supply chain
function in 2022.
To enhance the onboarding experiencefor business developers, we have createda fully integrated onboarding experiencethat includes pre-onboarding activities,
human resources information andcountry‑specific content.

About 90% of new business developers
report satisfaction with the onboarding
experience, including feedback fromtheir line managers about their progress
and performance.
To identify the main drivers of businessdeveloper turnover in five selected business
units, we performed an in-depth analysis
using artificial intelligence in close
collaboration with our Group Data, Insights& Analytics team. The main findings ofthis analysis, which include issues aroundcomplexity, compensation and line manager
support, are now forming the basis of aholistic review of how we attract, select,develop and compensate our frontline
sales people. As part of this effort, we aresimplifying tasks so that they can spend
more time with our customers.

An attractive and authentic
employer brandDuring 2021, we improved the visibility
and attractiveness of our employer brand.
We received 76 recognitions across 28
countries reflecting different measurementsof employer attractiveness. The perceptionof our employer brand improved in 11
of our markets during the year, and ourcompounded average rank also improved
according to Universum, an employer brandconsultancy. We are especially proud of
being recognised in the Forbes World’s
Best Employers 2021 list and, thanks to ourprogress on diversity and inclusion, we wereranked 8th in the Refinitiv D&I index.
Over 550 of our employees post regularly
on social media, and we are ranked the 39th
most active company on social media in
the food and beverage sector in Europe,
according to analysis by employee influencer
platform DMSN8. We encouraged social
media conversations through 24 campaigns
around our products or around specific
events. We also introduced monthly ‘behindthe scenes’ features on LinkedIn andFacebook. The initial features shared,
highlighting photos of unique employee
experiences, received more than 100,000
views on each platform.
Looking ahead, we will continue
strengthening our pipeline with a special
focus on our commercial function andincreasing retention through targeted
career conversations. We will also support
the development of our employees throughmore cross-functional, skills-based
development, identify and accelerate thedevelopment of emerging leaders, and build
a more inclusive and diverse workforce thatreflects the communities we serve.

INTEGRATED ANNUAL REPORT 2021

43

Future-focused

teamsMariam Oginni
Regional Sales Director,
Lagos Central, Nigeria“Be kind, take a deep breathand remember: you miss
100% of shots that you
do not take.”

It wasn’t easy to start a new job anywhere
during the pandemic, but Mariam Oginni
faced additional challenges when she
became Coca-Cola HBC’s first female
Regional Sales Director in Nigeria in 2020.
Despite working in northeast Nigeria, which
has additional security concerns, she led herteam to deliver 20% sales growth in theregion, exceeding targets.

Mariam attributes this success to working
smartly and tremendous support fromcolleagues and managers, but also thediversity of her team.
“When both genders work together,”she says, “we can accomplish more thanever before.”44

COCA-COLA HBC

We create value for all
stakeholders, making
a strong contribution to
the development of
the societies in which
we operateINTEGRATED ANNUAL REPORT 2021

545Growth pillar

Earn ourlicenceto operate

Highlights in 2021

Priorities in 2022

• Announced NetZeroby40, ourmost ambitious environmental
target to date
• Reduced our Scope 1 and 2
carbon emissions by almost
137 kilo tonnes compared with2017 baseline• Established Italy as the first
Coca-Cola HBC country to launch
100% rPET bottles for all ‘on-thego’ sparkling drinks and iced tea• Investing in on-site PET recycling
technologies in Poland, Italy,
and Romania• Achieved once again the statusof Europe’s most sustainable
beverage company in the 2021
Dow Jones Sustainability Index,
and received ‘A’ ratings from the2021 Carbon Disclosure Project(CDP) for climate change and water• Continued to support thecommunities where we operate
during the COVID-19 pandemic• Embed our net zero ambition
across the business and indecision-making processes• Continue reducing emissions fromdirect operations, and work with
our suppliers to reduce Scope 3
emissions across our value chain• Enter new partnerships in areas
such as forestry and water
replenishment to remove ourresidual emissions and meet ourscience-based targets for 2030
• Design a sustainable packaging
strategy that will help us reach net
zero, with a focus on test-andlearn for various package-lessand refillable solutions acrossour markets• Increase the share of rPET bottles
in our portfolio for selected markets• Continue to progress towards ourcollection targets by supporting
the design and set-up of collection
models with local market relevance

KPIs• Absolute greenhouse gas
emissions Scope 1, 2, 3
• Water usage in waterrisk areas• # young people trained
through#YouthEmpowered• % primary packaging
collected

Stakeholders

Our people
Our communities
Our consumers
Our suppliers
NGOs
Our shareholders
Government
The Coca-Cola
Company

Principal risks• Plastics and packaging
waste• Managing our carbon
footprint• Water availability• Suppliers and sustainablesourcing• Ethics and compliance46

COCA-COLA HBC

Earn our licence to operate continued
Delivering results for all
stakeholders
Over the 70 years that we have been inbusiness, no challenge has tested all thecommunities in which we operate at such
scale as the COVID-19 pandemic. As ourcustomers, communities and partners faced
additional disruptions in 2021 we continued
to provide support to those in need.
We created value for all stakeholders bymaking significant contributions to thedevelopment of the societies in which we
operate, while also finding ways to takecare of our environment by integrating
sustainability into our decision-making
and actions.
During 2021, we began to track our businessperformance based on our newly validated,science-based carbon emission targets for2030. We also set new and ambitious targets
for sustainability beyond 2030, announcing
our NetZeroby40 commitment to reducethe carbon emissions in all our activities
across the entire value chain and reach net
zero emissions by 2040. To achieve thisgoal, we will reduce our direct emissions toan absolute minimum over the coming
decades, building on the 50% reduction we
have already achieved over the last 10 years.
Since 90% of our carbon footprint comesfrom our value chain, it is essential that we
find new, more effective ways to collaborate
to achieve our ambition.

Contributing to the communities
where we operate
During the first half of 2021 and thedisrupting lockdowns across our territories,
we continued providing support for thosefighting COVID-19 on the front lines in all
our markets by making product, in-kind andin-cash contributions to hospitals, shelters
and NGOs, including the Red Cross and foodbanks. In Greece we also supported thevaccination efforts of the health systemand donated 301 refrigerators for vaccine
storage. We also provided disaster relief
support in Greece, Russia, Croatia andNorth Macedonia.
In 2021, we continued to provide learning
opportunities to community partners fromvarious non-governmental organisations
across the countries in which we operate.
Number of young people trained through#YouthEmpowered

Supporting our communities
Product donations

1,000,000• Focused on frontline keyworkers andfood banksc.3mCommunity investments• Long-term community initiatives• Continued COVID-19 recovery support• Disaster relief (Greece, Russia, Croatia,
and North Macedonia)c.€6.8*m* Including Bambi

548,835

Target 2017 – 20252017 – 2021

338,4132017 – 2020

203,8652017 – 2019

colleagues

2017 – 2018

c.2,042*2017• Focused on the vulnerable and ourcustomers

21,401

Volunteering

85,812

litresINTEGRATED ANNUAL REPORT 2021

Absolute Scope 1 and 2 CO2 eq emissions(‘000 tonnes)

600
500

-55%
2030 vs. 2017
-4%563
538 -14%481

Renewable and clean* electricity
in operations in the European Union
and Switzerland (%)-21%2030 vs. 2017

5,000

-1%
-6%
-11% -10%
4,000 4,079 4,051
3,845
-21%
3,623 3,683-23% -24%
432

400

Absolute Scope 3 CO2 eq emissions(‘000 tonnes)

426

3,210

3,000

300

100%
in 2025

120
100
80

87

89

2018

2019

97

99

100

2020

2021

2025
goal

78

60
256

2,000

200

40
1,000

100
0

47

2017

2018

2019

2020

2021

2030
goal

0

20

2017

2018

2019

2020

2021

2030
goal

0

2017

* Clean source means CHP using natural gas.

We invited over 100 partners to join ourinternal leadership training schemes anddevelop their skillsets by taking part in our
programmes ‘Communicating with impact’,‘Design thinking’ and ‘Influencing skills’. By
the end of the year, 6% of the participantsin Coca-Cola HBC leadership programmes
were our community partners.

#YouthEmpowered
With the COVID-19 pandemic still causing
economic disruption, we accelerated our#YouthEmpowered programme using bothin-person and online modules. The
programme reached more than 210,000
young people in 2021, bringing the total
number who have participated in thescheme since it was launched in 2017
to 548,000.
Italy has seen continuous growth in youth
employment programmes thanks to its
Ministry of Education’s teaching scheme,
which encourages high school students
to gain additional training or do internships.
There is also an increasing demand foronline education in Italy and a long-standing
partnership with several educational
platforms, and this has helped almost
100,000 participants to benefit from our#YouthEmpowered programme. We alsodelivered masterclasses for hotel school
students and continued running ‘Girls in
STEM’, a programme that encourages
female students to pursue careers inscience, technology, engineering or math.

In Ukraine, we continued to support theiLearn platform, which provides free,high-quality education to more than 25,200high school graduates. The platform was
supplemented in 2021 with new webinars
and mock exams that further enhanced
learning. We also continued working witha major online educational platform inArmenia, enabling over 8,800 students
to improve their social and business skills.
In Poland, we reached out to over 22,500
young people with an educational applicationthat boosts soft and business skills.

Climate and renewable energy
achievements
In 2021, we continued to work towards our
Mission 2025 commitments, addressing
climate change by reducing our emissions
and increasing our use of renewable energy.
We reduced absolute emissions from ourdirect operations and production by afurther 6 kilo tonnes, achieving a cumulative
24% reduction against our 2017 baseline.
We also increased the use of renewable andclean electricity in our operations in the EU
and Switzerland to 99%. At the same time,
we delivered on our 2025 renewable andclean energy goal, reaching 53% (9ppt
increase compared to 2020). In supportof this objective, we transitioned all 10 ofour production sites in Russia and ouroperations in Cyprus to 100% renewableelectricity, saving 66,000 tonnes of CO2
emissions on an annual basis.

We continued to purchase renewableelectricity to meet all of our needs in
Italy, Poland, Lithuania, Croatia, Austria,
Switzerland, Northern Ireland, Hungary,
the Czech Republic, Greece, Serbia andRomania. We also continued to installsolar panels at our Nigerian operations,generating renewable electricity for four ofour bottling plants. These installations areconnected to the local electricity grids andprovided 1,500 tonnes of CO2 emissions
savings in 2021.

48

COCA-COLA HBC

Earn our licence to operate continued
Partnerships with suppliers
to reduce emissions in our
supply chain

UN Sustainable Development Goals

Our community initiatives contribute to
the Sustainable Development Goals (SDGs).
Our initiatives to empower youth and womencontribute to the goals for quality education,
decent work and economic growth, sustainable
cities and communities, and partnerships.
Our initiatives regarding water stewardship,
CO2 emissions reduction and waste reduction
aid global progress towards the SDGs forclean water and sanitation, and climate action.
Our initiatives in communities help advance theglobal objectives of good health and wellbeing,and sustainable cities and communities.

Partnering with our suppliers is the key
to achieving our ambitious NetZeroby40
target. In 2021, we held our first Group
Supplier Sustainability event in which we
discussed with more than 300 external
experts globally how businesses canpartner to face international challenges onenvironment, social and governance (ESG)
factors. Additionally, we continued hosting
the Supplier Innovation Days, where our
key strategic partners share with us theirfreshest, smartest and most innovative ideas.
Tackling emissions in our supply chain
Managing our carbon footprint has been
identified as a Principal risk for the company,(see page 62) and has also been identified
as a key transitional risk in our climatechange risk programme, (see page 69).

About 90% of our carbon footprint is madeup of downstream emissions from our
products and upstream emissions foundin our supply chain, so we need to workwith our suppliers to reduce our overall
emissions. In 2021, we were awarded an‘A’ ranking as a Supplier Engagement Leader
for the sixth consecutive year by the Carbon
Disclosure Project (CDP), an organisationthat collects climate-related data. CDP
assesses how effectively companies areengaging their suppliers on climate change,
and issues letter grades to indicate theirlevel of success. Our results placed us in
the top 8% of companies, earning us an‘A’ rating and a place on CDP’s leader board.
This rating builds on ‘A List’ rankings forour actions in addressing climate change
and water security.
“To build a more sustainable company andfuture, we have so far initiated sustainability
partnerships with about 20 critical suppliers,
representing 50% of our upstream, scope 3
emissions,” says Marcel Martin, our Chief
Corporate Affairs and Sustainability Officer,
and former Chief Supply Chain Officer.

Green Fleet transition
To achieve our ambitious climate goals
it is essential that we make a progressive
transition towards more sustainable
technologies for both our light and heavy
fleet. To make this happen, we havelaunched our ‘Green Fleet Programme’and set clear targets across our businessterritories, with a comprehensive roadmap
to achieve our goals. We have accelerated
our transition throughout 2021 by introducing
battery and plug-in electric car models in
15 countries. In 13 of our markets, our fleet
contains hybrid electric vehicles and vehicles
powered with compressed natural gas
or liquified petroleum gas. As a result, 16%of our light fleet is now made up of moreenvironmentally friendly models, which havehelped achieve a reduction of CO2 emissions
in grams per kilometre of 7% comparedwith a 2019 baseline, and a total reduction
in CO2 emissions of 11,130 tonnes. Acrossthe heavy fleet, we have reduced our CO2
footprint by 11% compared with the same2019 baseline, equivalent to a reductionof 23,681 tonnes of CO2.

INTEGRATED ANNUAL REPORT 2021

Our Mission 2025 sustainable packaging commitments
Our commitments

2021 achievements• Recover 75% of our primary packaging
for recycling or reuse by 2025

46%

of our total primary packaging wascollected in 2021 for recycling or reuse• Make 100% of our primary packaging
fully recyclable by 2025

99.9%

of our primary packaging is recyclable• Increase the percentage of rPET in
our bottles to 35% by 2025. In our EU
countries, we plan to reach 50% rPET
by 2025

rPET:

10%

of the PET that we used across total
CCHBC markets was rPET

18%

of the PET that we used in CCHBC
EU and Switzerland markets was rPET

Progress towards sustainable
packaging
Plastics and packaging waste has beenassessed as a Principal risk for the Company,(see page 62) and a key transitional risk
under our climate change risk programme,(see page 69) given the additional costs we
expect to incur in achieving our Mission 2025
targets as well as future long-term targets.
As part of our Mission 2025 targets, we havecommitted to collect 75% of our packaging
for recycling or reuse by 2025. In addition,
we support the Coca-Cola System World
Without Waste ambition to reach 100%collection by 2030.
We believe that, wherever possible,
collection systems should be established ona national level. Where effective systems do
not exist, we participate actively to support
the set-up and implementation of new
packaging collection schemes. Delivering
this sort of meaningful change takes time.
Looking beyond the +2ppt increase weachieved for packaging collection in 2021
compared with 2020, we have madesubstantial progress in developing
sustainable national packaging collection
solutions by playing a leading role in theirdesign and set up across multiple markets.
We are actively engaged in supporting theimplementation of deposit return schemes
in seven of our markets (Austria, Cyprus,
Greece, Ireland, Latvia, Romania andSlovakia). We expect these to go live
between 2022 and 2025.

We have also played a leading role in aligningindustry peers and advocating for welldesigned collection schemes in an additional
seven markets: Bulgaria, the Czech Republic,
Hungary, Poland, Serbia, Slovenia andNorthern Ireland. In Hungary, we expect astate-owned deposit return scheme to be
implemented by 2024.
While we believe deposit return schemes
are the right solution for many countries,
especially EU markets, a first step is to set
up well-functioning packaging recovery
organisations, known as PROs, toorganise the efficient implementationof fit‑for‑purpose national collection andrecovery systems.
In several of our developing and emerging
markets we are helping to establish or
improve such packaging recovery
organisations. In 2021, we supported
successful pilots for new packaging recovery
organisations in Ukraine and Moldova. In
addition, we funded collection modellingstudies or supported advocacy efforts in six
markets, including Nigeria and Russia, while
implementing the learnings from pilot
projects and collection modelling.
We also support a circular economy for
packaging by increasing our use of recycledplastic, or rPET, and reducing or eliminating
plastic use where possible.

49

Our initiatives in packaging
On a Group level, efforts to increase thepercentage of rPET used to manufacture
our bottles led to a slight increase, up 1ppt
compared with 2020. While we had several
100% rPET launches, their impact was diluted
due to strong growth in markets which do
not currently use rPET, such as Nigeria.
Italy became the first Coca-Cola HBC
market to launch a 100% rPET bottle forsparkling brands in 2021. The 100% rPET
packaging was introduced for all on-the-gopacks of Coca-Cola, Fanta and Sprite, as well
as FuzeTea. We also introduced 100% rPET
bottles for a fifth Coca-Cola HBC waterbrand, Natura, in the Czech Republic.
We also expanded our use of KeelClipTM,
which replaces plastic film on multi-can
packs with an innovative paperboard
solution. By the end of 2021, it had beenrolled out in 10 markets. We aim to introduce
KeelClipTM in Greece and Hungary inearly 2022, and to replace plastic film on
multi‑can packs across all our EU markets
for The Coca-Cola Company portfolio
products. We expect these efforts to reduce
our use of virgin plastic by 2,000 tonnes
annually across the Group. We continue topilot further methods of lightweighting or
reducing packaging, and some of our
successes will be implemented during 2022.
Partnerships help us achieve
packaging objectives
In Austria, we are working with Reclay, apackaging recovery organisation, to fulfil our
responsibility to support the sustainabilityof product packaging. In Vienna, consumers
are rewarded through an app developed
by Reclay and the Coca-Cola System toprevent littering. By checking in via geotagging at a recycling bin and scanningthe product code, consumers are able toparticipate in a lottery with weekly andmonthly draws to win prizes.
We began working with METRO, a leadinginternational player in wholesale trade, which
has launched an international collaboration
to help clean up the world’s oceans. METRO
aims to recover millions of kilos of plastic
waste before it reaches the oceans, and to
improve the lives of vulnerable communities
in coastal regions by promoting moresustainable packaging and recycling.
This collaboration included numerous
suppliers, including Coca-Cola HBC andCoca-Cola Europacific Partners. METRO
also promoted products in recyclable orrecycled plastic across countries.

50

COCA-COLA HBC

Earn our licence to operate continued
Water stewardship
Water is the main component of ourbeverage production, which is why wehave a special responsibility to protect this
precious resource. Water availability andusage has been assessed as a Principal risk
for the Company, see page 64; and botha physical risk, see page 68, and transitionalrisk under our climate change risk programme.
We are reducing the amount of water we
use in all our activities and paying significant
attention to our impact in water-stressed
areas. To achieve our 2025 goals, we areworking to minimise water use by 20% inplants that are located in water risk zones.
Together with our stakeholders and ourcommunities in those watersheds, we also
want to make sure that people in waterrisk zones where we operate have accessto safe, clean water.
In 2021, all our bottling plants were certified
to have met the standards of the Alliancefor Water Stewardship (AWS), except for
the Lurisia plant in Italy and the Natura plantin the Czech Republic (certification now
covers 96% of our bottling plants and 99.6%
of production volume).

The certifications confirm that we meetthe global benchmark for responsible water
stewardship, with 52 bottling plants achieving
a Gold or Platinum Standard certification.
The standards require certified businesses
to use water as little as possible, as well as
to reduce water consumption where possible
across the entire value chain. Special
emphasis is placed on working together
with stakeholders and local communities
to ensure that any water challenges aretackled successfully.
In Nigeria, one of the main water risk areas,
we created a water task force to upgrade
the water facilities in our operations. By theend of 2021, all water systems at our bottlingplants in Nigeria had been upgraded withnew installations and advancements, suchas new sand and carbon filters, water tanks,
and the drilling of new boreholes. Theseadvancements will enable us to reduce our
impact on precious water resources.
In 2022 we will further engage with two water
stewardship projects. In Greece, together
with our NGO partners, GWP-Med, we aim
to make technical interventions that will turnLocations with water priority1 plants

Nigeria

Moscow
regionItaly

Bulgaria
Armenia
GreeceCyprusWater priority locations
1. Water priority locations are defined based on ourcomprehensive risk assessment (i.e. access to WASH,
water stress and other local risks).

Folegandros into a zero water loss island andsave 10M litres of water every year. And in
Russia, we will focus on modern monitoring
technologies to improve the ecological stateof the three most polluted rivers in the
Moscow region.
Water use ratio in water priority plants(litre/litre of produced beverage)-20%2025 vs. 2017

2,5

2,0

1.97

1.93

1.82

1.82

1.80

1,5

1.57

1,0

0,5

0,0

2017

2018

2019

2020

2021

2025
goal

INTEGRATED ANNUAL REPORT 2021

51

Future-focusedpackagingAnna Gronostajska
Quality, Safety andEnvironment Manager“It’s exciting to work with newtechnologies that contributeto our NetZeroby40 target.
Our efforts to increase rPET
supply at our Krakow plant
will impact emissions related
to our product packaging,which is nearly a thirdof the Company’s total
carbon emissions.”

The future of packaging towards
net zero
Our business uses various packaging
materials and delivery methods, eachwith different carbon footprints. Because
nearly a third of our carbon emissions are
attributable to our product packaging, it isessential that we innovate in this area toachieve our ambitious NetZeroby40 target.
Bottles made from rPET have a much
lower carbon footprint than PET bottles
made from virgin material, but high-quality
food-grade rPET is both scarceand expensive.

To improve our supply of rPET we haveintroduced innovative technology on-site
at our Krakow plant in Poland which allows
us to process non-food grade ‘hot washed’
PET flakes, which are readily available,
to produce high-quality food-grade rPET.
This helps get around the need for highly
segregated recycling, which is currently
rare. To further increase the use of rPET
in our portfolio, we will also introduce thisprocess in Italy in 2022 and Romania in 2023.

52

COCA-COLA HBC

Key performance indicators

Tracking ourprogress

We measure our performance against our strategic
objectives using specific key performance indicators(KPIs). These KPIs allow us, and our stakeholders,to track our progress in delivering on our targets.
These are also the financial and operational
milestones which we focus on in implementing
our Growth Story 2025 strategy.

Growth pillar

Growth pillar

1 Leverage our unique
24/7 portfolio
How we measure our progress
Volume is measured in unit cases, where one unit
case represents 5.678 litres. We grow volume as
we expand per capita consumption of our products
and expand into new market or categories.
What happened in the year
Volume grew by 13%, or 14% on a like-for-like1
basis. Volumes grew rapidly as our Established andDeveloping markets reopened and the Emerging
markets benefited from strong recovery.
Link to remuneration
Revenue growth is used to assess businessperformance for the purpose of annual
Management Incentive Plan (MIP) bonus awards,
and volume is a key component of revenue.
See p123 for a full description of the MIP.

2 Win in themarketplace
Volume growth (%)
15

Like-for-like
14.0

12

13.0

9
6
3
0

4.2
3.3
2018

Like-for-like
2.6-3
Like-for-like
-4.6

-6

2020

2019

2021
-5.7

-9

How we measure our progress
We measure revenues on a currency-neutral andlike-for-like basis to allow better focus on theunderlying performance of the business. We growcurrency-neutral revenue per case through pricing
and other RGM actions.

Currency-neutral revenue
per case growth (%)
6

What happened in the year
Currency-neutral revenue per case grew by 5.8%,
or by 3.9% excluding pricing taken to pass on the
Polish sugar tax, as positive category mix andpackage mix as well as pricing actions drove
improvement. Currency-neutral revenue grewby 19.6%, or by 20.6% on a like-for-like basis.

4

Link to remuneration
Revenue growth is used to assess businessperformance for the purpose of our MIP awards.

-2

2
0

-4

See p123 for a full description of the MIP.
-6

Currency-neutral revenue growth (%)

5.8

25
Like-for-like
20.6

20

19.6

15
1.7
2018

1.0

10

2020

2019

2021

5

6.0
4.4

0
-4,1

2018

Like-for-like
3.7 2020

2019

2021

-5
-10

Like-for-like
-8.5

-9.6

1. Performance, unless stated otherwise, is negatively impacted by the change in classification of our Russian Juice business, Multon, from a joint operation to a joint venture, following
its re-organisation in May 2020. Performance is also positively impacted by the acquisition of Bambi in June 2019, when compared to 2019. Unless stated otherwise, performancecompared to 2019 is presented on a like-for-like basis.

INTEGRATED ANNUAL REPORT 2021

53

Growth pillar

3 Fuel growth throughcompetitiveness and investment
How we measure our progress
We measure this by comparable EBIT andcomparable EBIT margin progress. We generate
positive operational leverage as we grow revenues
on our efficient cost base. Using a comparable
measure allows us to adjust for one-off items which
impact comparability of performance year on year.
What happened in the year
Comparable EBIT grew by 23.6%. Comparable
EBIT margins grew by 60bps taking EBIT margins
to 11.6% as revenue recovery generated operating
leverage in the business. 30bps of the expansion
was due to a property divestment in Cyprus.
Link to remuneration
Comparable EBIT is used to assess businessperformance for the purpose of our MIP awards.
See p123 for a full description of the MIP.

Comparable EBIT (%)

Comparable EBIT margin (%)

1000

12
11.6

800

831.0
758.7

600

680.7

10.8
10

672.3

10.2

Like-for-like
10.6

400
8
200

0

2018

2019

2020

2021

6

2018

How we measure our progress
We measure capital expenditure (CapEx) as apercentage of net sales revenue (NSR), and ROIC
(return on invested capital), to ensure prudent capital
allocation and efficient working capital management.
Disciplined investment supports our growth.

CapEx as percentage of NSR (%)

ROIC (%)

8

16

What happened in the year
CapEx as a percentage of NSR reached7.5%, within our targeted range for this metric.
We prioritised investments based on our strategy,
particularly focusing on growth markets, digitaland sustainability. ROIC increased by 370bps
to 14.8% as operating profit improved and wecontinued to carefully control net working capital.
40bps of the improvement was due to a property
divestment in Cyprus.

7

Link to remuneration
ROIC is given a 42.5% weighting in the assessmentof performance conditions used to determine
long-term Performance Share Plan (PSP) awards.

11.0

7.6

2019

2020

7.5

14.8
14

6.9

2021

14.2
13.7

6.4
6

12

5

10

11.1

4

2018

2019

2020

2021

8

2018

2019

2020

2021

See p123 for a full description of the PSP.

Growth pillar

Growth pillar

4 Cultivate the potentialof our people

5 Earn our licenceto operate

How we measure our progress
We conduct an engagement survey with anindependent third party and measure our results
against the norm for companies which perform
highly on this metric.

Employee engagement score (%)

What happened in the year
Our employee engagement is above the global
top decile norm.

80

Link to remuneration
Maintaining our high engagement score is partof the CEO’s individual performance metrics.
These are used along with business performancemeasures to determine the CEO’s annual MIP
bonus award.

60

Read more on pages 39-43.

100
85

88

What happened in the year
We made progress against most areas ofcommitments; however, we need to accelerate
our improvement in packaging. Please see detailsof our performance on the following page.
Link to remuneration
Our efforts and ambitions are long term andcumulative, therefore greenhouse gas reduction
is used to determine long-term PSP awards.
Greenhouse gas reductions have a 15% weighting
in PSP determinations. The benefit of this KPI isthat it is quantifiable, and several of our Mission
2025 commitments feed into its progress.

40

20

0

How we measure our progress
Progress on Mission 2025 as well as progress
towards our NetZeroby40 ambition.

Global Top
Decile norm

Employeeengagement

Read more on pages 54-55.

54

COCA-COLA HBC

Sustainability targets
Sustainability
areas

5

Earn ourlicence tooperateMission 2025 –our sustainability
commitments
Sustainability is integrated into
every aspect of our business.
It is fundamental to our businessstrategy, which aims to createand share value with all of
our stakeholders.
Our Mission 2025 approachis based on our stakeholder
materiality matrix and is fully alignedwith the United Nations Sustainable
Development Goals (SDGs) andtheir targets. Our six key focus
areas reflect our value chain:
reducing emissions; water use
and stewardship; packaging(World Without Waste); ingredientsourcing; nutrition; and our people
and communities.
The table provides data on the
progress of each of the six
sustainability pillars.

Note: The 17 SDGs are an urgent call for action
by all countries – developed and developing– in a global partnership. Each of the 17 goals
has very specific targets, referenced by the
numbers shown above. You can read more
about the SDGs and these targets here:
https://sustainabledevelopment.un.org/sdgs.

Material issues

Climate andrenewableenergy• Climate change• Economic impact

Water
reduction andstewardship• Water stewardship• Economic impact

World Without • Packaging and waste
management
Waste

UN’s Sustainable Development Goals(SDGs) and their targets
7.2
7.3

9.4

11.6

12.2

13.1

6.1
6.4
6.5
6.6
12.1
12.2
12.4

9.4

11.6

15.1

17.17

8.4

9.4

11.6

12.1
12.2
12.5

14.1

17.17

8.3
8.8

9.4

12.1
12.2
12.4
12.6
12.7

• Economic impact

Ingredientsourcing• Product quality• Human rights, diversity
and inclusion• Economic impact• Sustainable sourcing

13.1

Nutrition• Product quality• Nutrition• Responsible marketing

3.4

12.8

Our people
andcommunities• Human rights, diversity
and inclusion• Employee wellbeing
and engagement• Corporate citizenship• Packaging and waste
management• Economic impact

3.4
3.6

4.3
4.4

5.5

8.5
8.6
8.8

10.2
10.4

11.6

12.2
12.4

16.7

17.16
17.17

INTEGRATED ANNUAL REPORT 2021

2025 commitments1

2021
performance30%

reduction in carbon ratio
in direct operations

36%

50%

increase in energy-efficient
refrigerators to half of our coolers
in the market

42%

50%

of our total energy from renewable
and clean2 sources

53%

electricity used in the EU
100% total
and Switzerland from renewable

55

StatusOverachieved 2025 goal.

Overachieved 2025 goal.

99%

and clean2 sources

20%

water reduction in plants
located in water-risk areas(water priority locations)secure water availability for
100% help
all our communities in water-risk

8%

Further implementation of
successful practices andinnovations for those locations
is planned.

21%

Four projects out of
19 locations. Two more projects
agreed and will start in 2022.

areas (water priority locations)75%

help collect the equivalent of 75%
of our primary packaging

46%

Action plan in place to deliver
roadmap targets, see page 49.

35%

of total PET used fromrecycled PET and/or PET fromrenewable material

10%

While we had a number of 100%rPET launches, their impact was
diluted due to strong growth inmarkets such as Nigeria which
don’t currently use rPET.

consumer packaging to
100% ofbe recyclable

99.9%

our key agricultural ingredients
100% ofsourced in line with sustainable

80%

3

agricultural principles

25%
10%

reduce calories per 100mlof sparkling soft drinks(all CCH countries)415%

community participants infirst-time managers’ development
programmes

6%

Acceleration of 2021 volume
required new suppliers to be
added, who will be certified
in the near future.

Key to performance status

one million young people
1 MLN train
through #YouthEmpowered

548,835

20

engage in 20 zero-waste
partnerships (city and/or coast)

115

10%

of employees take partin volunteering initiatives

7%

zero fatalities among
ZER0 target
our workforce

ZER0

50%

reduced (lost time) accident rate
per 100 FTE

38%

50%

of managers are women

39%

Cumulative number 2017-2021;
2021-only number is 210,422.

Due to continued COVID-19
restrictions, no mass
volunteering eventswere possible.

The main causes for theaccidents were falls, slips
and trips.

Each of the Mission 2025 commitments
is broken down into a series of annual
targets that need to be met in order
to be fully on track with our 2025 goal.
The colour coding below reflects thecurrent status in relation to the desired
position at this point in time on the
trajectory towards 2025 and our agreed
action plans, i.e.:
We are fully ahead or on track
to meeting the target
We are not fully on track, but
we do not believe there is risk
to meeting the target
We are not on track, and without
corrective action there is riskthat we will miss the target

1. Baseline 2017.
2. Clean source means CHP using natural gas.
3. Technical recyclability by design.
4. Baseline 2015.
5. Supported by The Coca-Cola Foundation.

56

COCA-COLA HBCManaging risk and materiality

Material
issuesTo understand which issues matter mostto our business, our stakeholders and thecommunities where we operate, we conduct
a rigorous materiality assessment eachyear. As part of this process, we consider
a broad range of issues including external
trends in the food and beverage industry;
issues identified in international standards
and benchmarks; the UN Sustainable
Development Goals; and input
from stakeholders.
Our annual materiality assessment is carriedout in four phases: 1) identify material issues;2) assess impact on or importance tostakeholders; 3) assess impact on society
and environment; and 4) review and validate
findings. With this process we can manage
the risks and opportunities material issues
present and address the challenges
we are facing.
In line with the Global Reporting Initiative(GRI) Standards, we define material issues
as those having significant economic,
environmental and social impacts or
those which substantively influence theassessments and decisions of stakeholders.

Material issues are integrated in our strategy,
our short-, medium-, and long-term goals,
and are linked to management of ourprincipal risks and opportunities.
This ensures that our approach tosustainability is focused on achieving thegreatest impact and tackling the issues thatmatter most.
Our materiality process also informs ourdisclosure, including the content of thisreport. Our Integrated Annual Report isaligned with the principles and elementsof the International Integrated Reporting
Council’s (IIRC) framework and prepared inaccordance with the GRI Standards, amongst
others. Periodically, we adjust our approachas standards and best practice evolve.
Our annual materiality survey, a key partof our materiality process, is performed
together with The Coca-Cola Company.
At the end of 2021 we approached around1,860 external and internal stakeholders,
including consumers, customers, suppliers,
employees, communities, governments,
non-governmental organisations, investors,
trade associations and academics.
The outcome of the survey is a rankingof material issues, plotted in the materiality
matrix. By assessing the importance of
these issues to our stakeholders and theirdecisions, combined with an assessment of
the impact on society and the environment,
we derive the relative materiality of eachissue and prioritise them accordingly.

Although these are the material issues
facing our business, they should not beviewed in isolation as they are interconnected
and impacting each other. The Social
Responsibility Committee of the Board
subsequently endorses the prioritised list ofissues, resulting in the materiality matrix below.
In our 2021 materiality survey, packaging
and waste management was again assessedas the number one topic, for the fourthyear in a row, followed by climate change(for the second consecutive year). For our
stakeholders, the importance of sustainablesourcing and economic impact continue
being very high, and the top five league
is complemented by product quality.
The Executive Leadership Team has
responsibility for integrating our sustainability
priorities into our business strategy andactivities. Management of the potential risks,
opportunities and impacts of our material
issues takes place across the Company
and is disclosed throughout this report.
Additional information about our material
issues is included in our GRI Content
Index online.
We support the UN sustainability agenda
and align our efforts with the UN Sustainable
Development Goals (SDGs). Our Mission
2025 sustainability commitments, ourshort-, medium- and long-term ESG goals,
and our material issues, are all linked to the
UN SDGs and their underlying targets. You
can find more about how our material issues
and sustainability commitments link to the
SDGs on pages 54-55 of this report andon our website.

Packaging and waste management
Climate changeHigh

Economic impact
Corporate governanceCorporate citizenship

Product quality

Employeewellbeing andengagement

Sustainable sourcing

Human rights, diversity and inclusion
Nutrition
Water stewardship

Moderate

Importance to stakeholders

Very high2021 Materiality matrix

Responsible marketing

Moderate

High
Impact of the issue on environment and society

Economic dimension

Environmental dimension

Social dimension

Very highINTEGRATED ANNUAL REPORT 2021

Recommendations
from stakeholder
forums inform
our plansThroughout 2021,
we worked to implement
recommendations from our2020 stakeholder forum, which
focused on climate actionin the new normal. 2020
forum output was one of thedrivers that inspired our bold
NetZeroby40 commitment(please refer to the
NetZeroby40 section of thereport on page 46-48).

Due to the continuing impact of COVID-19,
our 2021 stakeholder forum was yet
again held online. While safeguarding
everybody’s health, it also allowed us toreduce our carbon footprint. Forum 21’s
theme was ‘Winning ESG Partnerships:
When One Plus One Exceeds Two’, andthe event placed special emphasis on
sustainable packaging and climate action.
Over 60 stakeholders from 24 countries
attended to discuss better, stronger ESG
partnerships. As in prior years, participants
included our investors, customers,
suppliers, NGOs, academia, policy makers,
and other stakeholders.
The Forum sought to get input regarding
several aspects of partnerships including:• the key ingredients of successful
partnerships;• processes for creating shared value
for partners or win-win situations; and• ways to measure success.
The primary outcome of Forum 21 wasrecommended ingredients needed tocreate successful ESG partnerships.
These include:

57

Additional stakeholders suggestions
included:• driving improvements along thewhole value chain, thus empowering
local businesses, NGOs, customers
and consumers;• driving industry-level, collaborative
business alliances;• knowledge sharing and expert support
for NGOs (e.g., training);• working with local suppliers andmotivating them to follow ESG
standards to become a part of corporate
supply chains; and• partnering on empowering young
women in STEM.
These outcomes and recommendations
were subsequently discussed with theSocial Responsibility Committee of theBoard. They will also serve as a basis forcreating a Partnership Model that will help
us guide and design joint ESG initiatives.
The Partnership Model will be sharedwith both our stakeholders and ourmarkets in 2022.

• shared vision, cultural alignment
and passion;• shared sustainability mindset, similarbusiness models and strategies;• successful thinking and long-termplanning;• a clearly defined picture of successand milestones; and• flexibility and understanding
between parties.
Stakeholders also had suggestions forcreating impact through partnerships,
such as advancing business and civil sector
cooperation and bringing more disruptive,
value-adding ideas with scalable,commercial potential. The consensus wasthat approaching objectives as a businesscase is linked with future success.
Our stakeholders stressed the need toensure goals for ESG partnerships are
truly circular, with focus on impact andoutcome, not just inputs and outputs.
They also suggested that the Coca-Cola
System continues sharing knowledge andresources and co-creating with partners.

At Forum 21, an ESG PartnershipAward was presented to the Romanian
packaging recovery organisation
GreenPoint Management, a company wehave partnered with for over three years.
The award recognised GreenPoint
Management’s contribution to thedevelopment of infrastructure for separate
waste collection and responsible waste
management in Bucharest and other
Romanian cities.
In 2022 we will continue expanding andstrengthening partnerships in those areasprioritised as highly material.

58

COCA-COLA HBCManaging risk and materiality continued

Effective managementof riskManaging risk and uncertainty

Group management

In 2021, we continued to drive the principles
of our SmartRisk programme throughour business. SmartRisk, our approachto enterprise risk management (ERM),
is designed to encourage managers toproactively identify and understand risks
as early as possible and find ways of turningpotential problems and incidents into
opportunity – or at least reduce the impact
if and when risks occur.

The CRO also facilitates a discussion twice
each year with Group Function Heads
and their teams to review key operational,
strategic and emerging risks across thebusiness and identify best practices for
mitigation plans to improve our risk andresilience response.

The risk management programme is led
by our Chief Risk Officer (CRO), who works
in close collaboration with the risk owners
across our business units and Groupfunctions in assessing and managing
business risks. The CRO is tasked withmaintaining a wide-angled view of all businessstreams and emerging risks and opportunities
and, through regular reporting, ensures thatrisk visibility is provided to the Executive
Leadership Team and our Board.

Risk and resilience in our business
units and markets
Risk sponsors and risk and insurance
coordinators in every business unit facilitate
the continuous identification and assessmentof operational and emerging risks on acountry-by-country basis as set out in our
ERM framework.
This assessment is discussed at seniorleadership team meetings every month andrisk registers, or lists of risks, are updated
accordingly. All risk registers are visible to
the Group’s Business Resilience Team who
review principal risks, emerging risks and key
trends, providing benchmarking for risks
across the business.
Twice a year the Business Resilience Team,
led by the CRO, hosts a business resilience
conference where all risk sponsors and risk
and insurance coordinators are updated
on key trends and emerging risks acrossthe business. The CRO also facilitates a
discussion with the regional management
teams and General Managers twice eachyear in key markets to discuss risk andresilience issues and trends, and tobenchmark risks across the business.
At least once every other year, business units
participate in an incident management andcrisis resolution (IMCR) validation exercise.
This includes participation in a crisis
simulation based on a relevant business risk.

The outcome of these discussions and thereviews with the business units and region
teams are reviewed by the Group’s Risk andCompliance Committee. The Committee’scomments are shared with the Executive
Leadership Team and the Audit and Risk
Committee of the Board.
The CRO presents an overview of key
operational, strategic and emerging
risks each quarter to both the Executive
Leadership Team and the Board’s Audit andRisk Committee. This quarterly overview
includes risk mitigation approaches suchas insurance coverage, and resilience
programmes such as fraud prevention
and crisis management.

The role of the Board
The Board retains overall accountability
and responsibility for the Group’s risk
management and internal control systems,
has defined the Group’s risk appetite, and,through the Audit and Risk Committee,
has reviewed the effectiveness of thesesystems. During the year, the Board
conducted a robust assessment of theprincipal and emerging risks, considering thenature and extent of the principal risks thathave the potential to impact the ability of theGroup to achieve its strategic objectives,
and reviewed its risk appetite statement toensure that it remained not only aligned toour objectives but supportive of our robust
ERM programme and internal control systems.
Our internal audit department conducts
an annual independent review of the ERM
programme and its implementation,assessing the Company’s processes andtheir application against business bestpractices and International AccountingStandards. The Head of Corporate Audit
makes recommendations to improve theoverall risk management programme, whererequired, with the findings submitted to the
Audit and Risk Committee of the Board.
Building on this review, the Board and its
Committees also conduct annual reviewsof the effectiveness of our internal controls
and further details of that review are set
out in the Audit and Risk Committee Reporton pages 108-109.

Principal risks in 2021
In 2021 the COVID-19 pandemic continued
to have a significant impact on our business.
While general market conditions improved
as restrictions on hotels, restaurants andcafés lifted, we continued to see intermittent
restrictions during the year as surges in
COVID-19 cases continued and governments
acted accordingly. Despite this volatility, ourbusiness remained agile, adjusting channel
mix and customer support and service toensure excellent business results.
The continued roll-out of vaccines acrossour territories and the lower severity of the
now dominant Omicron variant reduced thehealth and safety risk to our people from thepandemic. However, we continued to see
surges in case numbers across our markets.
Despite numerous internal cases, we
experienced no disruptions in our operations.
The final stages of 2021 saw tensions rise
between Russia and Ukraine that led toconflict in early 2022. We focused on thehealth and safety of our people in all impacted
countries. We also implemented several
previously developed contingency plans
to maintain business operations as border
restrictions and sanctions were announced.
On the 8th March 2022, The Coca-Cola
Company (TCCC) announced that it issuspending its business in Russia. At thetime of publication the Group is working
closely with TCCC to implement thisdecision. In addition, economic sanctions
imposed on Russia have had a significant
impact on foreign exchange rates and theprice of a number of commodities such asoil – which affects PET prices, and aluminum.
Countersanctions imposed by Russia may
have an impact on our Russian operations
as well as other countries in our territory.
We expect the geopolitical environment
to remain volatile for some time.
Related at least in part to the COVID-19
pandemic, global commodities showed agreat deal of volatility during the year puttingpressure on our suppliers as well as ourCompany directly. The cost of most of the
key commodities critical to our businessincreased during the year. Aluminium, forexample, increased 40% as a result of supply
chain constraints and lower production
globally. In addition, shortages of some
ingredients and supplies during the year
threatened to impact our operations.
The number of cyber-attacks directed atcompanies continued to rise in 2021 witha significant increase in ransomware attacks.

INTEGRATED ANNUAL REPORT 2021

59

Risk management in action:

Managing healthand safety

To manage those health and safety risks
as well as potential business disruptions,
our Group Incident Management and Crisis
Resolution Team continued to monitor
case rates.

We entered 2021 hoping
to see a return to normal
operations. However,
the COVID-19 pandemic
continued to affect global
business conditions and posedcontinuing health and safety
risks to our people.

As depicted in the diagram below, we
maintained weekly records of internal caserates against case rates in each market.
We focused on controlling and reducing
transmission within our workplace andensuring our efforts to protect employees
were effective.

Where consistent with legal requirements
and government guidance, we actively
encouraged employees to be vaccinated.
In Russia for example, governments
mandated employees in certain industries,
beverages being one, be fully vaccinatedor risk closure of facilities. Throughcommunication campaigns and facilitationof vaccination hubs, we met challenging
government deadlines without disruption
to our operations.

We worked closely with The Coca-Cola
Company to maintain additional safety
protocols within our production facilities
to protect staff and the integrity ofour production.

Country active cases per 100k vs Coca-Cola HBC active/FTEs (16 November 2021)

1.6

1.61 1.60
1.44

1.4

1.33

1.2

1.26
1.11 1.09 1.09 1.09

1.0

1.06 1.04

1.01 1.00 0.99

0.95 0.95

0.8

0.90 0.90 0.88

0.85 0.82

0.81 0.78

0.74

0.08

0.00

0.10

0.20

0.16

0.06

0.00

0.20

0.10

0.05

0.05

0.05

0.00

0.03

0.00

0.08

0.04

0.20
0.02

0.00

0.00

0.00

0.16
0.00

0.0

0.19

0.2

0.15

0.4

0.24

0.6

0.67

0.63

0.10

0.09

1.75 1.75

0.00

1.81 1.78

0.21

1.8

0.12

% country active cases per 100K and % active infection / FTEs

2.0

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Resilient supply chain
2021 was a volatile year for
securing supply of key
ingredients, packaging andservices at a reasonable cost,to maintain production andserve our customers.

increase from 9 November

decrease from 9 November

Our treasury and procurement teams
worked closely with our key suppliers
to manage costs and supply by:• contracting volumes of key ingredientsand packaging materials;• expanding our supplier base byintroducing new/alternative suppliers;• securing raw materials for our suppliers
to provide them with security of supply;and• hedging/fixing forward prices.
We expect 2022 will be another challenging
year due to ongoing shortages andincreasing costs of certain raw materials,
supply chain disruptions andlogistics challenges.
We will continue to partner with our new
and existing suppliers to minimise costs
and disruptions.

no change from 9 November

60

COCA-COLA HBCManaging risk and materiality continued
We moved to strengthen our cyber-security
programme through improving identity
protection, securing an increasingly remote
workforce and reducing vulnerabilities byhardening our IT environment. In addition,
we developed a cyber incident management
and crisis resolution (IMCR) plan, fully
integrating our cyber response with ourwell-established IMCR programme. The plan
was tested using simulations at business unit,
Group and Executive Leadership Team levels.
Many of our office-based employees
continued to work from home in line withgovernment guidelines and our processes
for managing COVID-19 transmission risk.
In 2021, the Company started to transitionsome offices to permanent flexible working
arrangements enabling our employees,
at their request, to continue to work fromhome for at least part of their working week.
Several policies and procedures were
implemented to ensure a safe working
environment at home. As noted in the
Emerging Risks section, we will continue
to monitor the impact of these newworking arrangements.
In 2021, we saw government initiatives
aimed at introducing or increasing taxes ina number of areas relevant to our business.
In Poland for example, the introduction of abroad-based beverage tax had a significant
impact at a time when the business was
already under pressure from input cost
increases. Governments are increasingly
turning to levying additional taxes to
respond to economic conditions, including
increased debt levels, as well as publicconcerns on matters such as the healthimpact of sugar and single-use plastics.
Sustainability remained top of mind for ourbusiness and our stakeholders in 2021,

notably including our commitment to
NetZero emissions by 2040.

Emerging risks

We made significant progress on ourquantitative assessment of climate changerisks with the development of our 2021
water risk assessment (see page 71).
Water is fundamental to our businessand climate change will have a significant
impact on the water sources that our local
communities and our business rely upon.
The water risk assessment better enables
us to focus our investment and resources
on water priority areas for our long-term
management plans to assure supply andbusiness continuity.

Employee health and engagementin new ways of working

We continued to work to reduce andmanage plastic packaging waste. We believe
that, wherever possible, collection systems
should be established at a national level.
Where effective systems don’t exist, weparticipate actively to support the set-up
and implementation of new packaging
collection schemes. However, delivering thissort of meaningful change takes time andour progress has been incremental.
A broader discussion on our climate-relatedrisks, their link to materiality, and our risk
management approach is provided as part ofour statement on implementing therecommendations of the Task Force on
Climate-related Financial Disclosureslocated on pages 66-67.
One of the fallouts of the COVID-19
pandemic was higher than normal
resignation rates reported by many
companies – often referred to as the ‘Great
Resignation’. We maintained good retention
rates (85% in 2021 vs 89% in 2020) although
we did see challenges in certain employee
groups, primarily truck drivers and businessdevelopers in some countries.

One of the outcomes of the COVID-19
pandemic has been a rise in the numberof our people working from home. As homeworking or hybrid arrangements are
becoming more permanent, the Company
has less direct control over the provisionof safe and productive working conditions
as we do in our office spaces. This increases
the risk of occupational injuries impacting
employee safety and our reputation as acaring, responsible employer; as well as
increased costs of lost time and potential
compensation claims.
In addition, the risk of our people feelingisolated and less engaged increases.
This may impact their mental health andreduce the level of teamwork; and individualand group productivity which is critical tomeeting one of our strategic Growth Pillars,see ‘Cultivate the potential of our people’
pages 40-42. It may decrease ourattractiveness as an employer of choice
and decrease our retention rates. It is criticalthat our line managers have the right skills
to support our people to stay connected
and engaged with the Company. We alsoneed to utilize new technologies tosupport productive work, team building
and engagement.

Risk management in action

Egypt in focus
In the second half of the year,
the Company announced that
it would acquire Coca-Cola
Bottling Company of Egypt(CCBCE) and the acquisition
was completed in January 2022

Although CCHBC has considerable
experience in working in emerging markets,
Egypt has a unique risk profile. We areworking closely with the Egyptian team
to better understand the risks andopportunities inherent in the business andto share best risk management practices.
Coca-Cola HBC and CCBCE established ajoint integration management team in late
2021 to ensure seamless transition of theEgyptian business into our ERM and IMCR
programmes in 2022.

Political and security context
After a number of tumultuous years, thecurrent Egyptian government has beenvery stable. The recent lifting of the stateof emergency that had been in place since2014 and a statement of support from the
IMF on its macroeconomic reforms areindicators of a positive outlook.

Major infrastructure projects including theconstruction of rail networks, roads andbridges are also providing jobs and stability.
Our Egyptian business has a very robust
security programme, led by an experienced
management team that will continue
to monitor the security environment andmaintain effective mitigation programmes
to protect our people and our key assets.

Competitive environment
As Egypt is one of the few countries
in the world where Coca-Cola does nothave leading market share, we expect our
primary competitors to be concerned
about the additional capability that
Coca-Cola HBC will bring to support analready successful business. We expect
them to respond strongly. We are very
positive about the impact enhancedINTEGRATED ANNUAL REPORT 2021

We will continue to monitor the impact
of new working arrangements throughemployee listening mechanisms, including
regular employee surveys, as well as provide
support through our employee assistanceprogramme and Mental Wellbeing policy,
guidance and other support materials.

Changing retail landscape
The Covid-19 pandemic has had both
positive and negative impacts on retailers.
We expect continuing changes as large
retailers and buying groups grow andconsolidate, increasing their pricing power.
This can lead to increasing pricing pressure
on our business which could reduce
our profits.

A significant part of changes in retail is thecontinuing growth of e-commerce.
E-commerce provides exciting opportunities
for our company to enhance our relationshipwith customers and consumers that candrive revenue growth. In 2021 for example,
we more than quadrupled orders made on
our online customer portal to over 8% of
all transactions. Our e-Commerce sales
grew by 87%.
As digital and e-commerce grows,
competition from new entrants and existing
industry competitors; or failing to invest
sufficiently or implementing an effective
digital commerce strategy could impact
our revenue growth.

Smaller retailers have continued to facechallenging economic conditions and insome cases the removal of government
subsidies in some countries may have further
negative impact on them. Our business is
significantly dependent on smaller retailers
to deliver our products to consumers,
particularly in emerging markets. If smaller
retailers don’t survive, we may lose part ofan important channel for delivering our
products to consumers which could reduce
our revenue. It is important that we continue
to assist smaller retailers by helping thembuild their capabilities and leveraging our
growing e-Commerce expertise.

Sustainable sourcing

route-to-market and revenue growth
management capabilities will have on ourcompetitive position in the medium tolonger term.

to bring them in line with our sustainability
goals. CCHBC is committed to doing this aspart of our long-term sustainability strategy.

Economic conditions
Egypt has a relatively high inflation rate andalso imports ingredients paid in US dollars.
Exchange rate fluctuations and inflation
may affect the profitability of the business.
CCHBC has well developed capabilities tomanage these uncertainties.

Sustainability
While the Coca-Cola business in Egypt
has prioritised several key areas in its own
sustainability strategy, such as packaging
collection, community investment andwater stewardship, there are other areasthat will require focus and investment

In the short to medium term, we expect
increasing environmental, social andcorporate governance (ESG) due diligencerequirements across our supply chain,including new directives such as the
EU Mandatory Due Diligence regime.
While we have a good understanding of ESG
performance in our larger suppliers, we
may increasingly be held responsible for theactions or lack of compliance of suppliers
deeper in our supply chain where we haveless visibility. This increases the amountof management time spent in due diligenceand can lead to reputation risks, and fines
as well as additional costs in finding
alternative suppliers.

Water
Egypt is almost entirely dependent on theRiver Nile as its source of water. Ethiopia’sconstruction of the Great Renaissance
Dam across the Blue Nile, which provides
around 85% of the Nile’s water, has led totensions over water access. This is a key
risk for Egypt. We remain optimistic thatthe countries impacted, primarily Egypt,
Sudan and Ethiopia, will find a peacefullong-term solution that will allow Egypt
to meet its water needs into the future.

61

Our relationships with suppliers are criticalfor us to meet our sustainability objectives
as outlined in Growth pillar ‘Earn our licenceto operate’ page 48 and ‘Fuel growth throughcompetitiveness and investment’ on pages
35-36. To ensure that we are able to meetincreasing stakeholder and regulatory
expectations, we will continue to build ourrelationships with suppliers through initiatives
such as our supplier sustainability forums
as well as greater engagement to ensure
more sustainable sourcing (e.g. training, joint
initiatives, joint sustainable goal setting etc.)
In the longer term, many of our suppliers,
particularly in key agricultural ingredientssuch as sugar and fruit juice, will be impacted
by climate change. This could lead toincreased costs due to increased scarcity
or having to use alternative suppliers
or ingredients. As part of our climate risk
assessment process, we are conducting
deeper assessments into the potential
impact of climate change on our suppliers
and the implications for our business.
We will continue working with our suppliers
to support them in setting and deliveringscience-based carbon reduction targets.

62

COCA-COLA HBCManaging risk and materiality continued

Principal riskstrend

Principal risks

Description

Potential impact

1. Plastics andpackaging waste

Concerns related to packaging
waste and plastic pollution.

• Decreased credibility in public discussions• Long-term damage to our reputation andlicence to operate• Increased cost of doing business, including
discriminatory taxes• Loss of consumer base

2. Changing retail
environment​ he risk of significant changes toTconsumer purchasing behaviour
and customer requirements.

• Reduced availability of our portfolio and overallprofitability

3. Commodity costs

The risk of raw material pricing
fluctuations, particularly resin,sugar, gasoil and aluminium.

• Increased input costs

4. Product-related
taxes and regulatorychanges

The risk of governments imposing • Cost increases that cannot be passed on intaxes and regulatory changes such priceas beverage taxes, sugar upper• Increased costs to meet additional regulatory
limits, sweetener restrictions,requirements
additional labelling requirements. • Brand and reputation damage• Forced changes in the portfolio mix

5. Foreign exchange
fluctuations

The risk of foreign exchange
volatility and rate fluctuations
caused by uncertainty andcomplexity of macroeconomic
environment and geopoliticaldevelopments, exacerbated by
COVID-19.

• Financial loss
• Increased cost base• Asset impairment• Limitations on cash repatriation

6. Cyber incidents

A cyber attack or data centre
failure resulting in businessdisruption, or breach of corporate
or personal data confidentiality.

• Financial loss
• Operational disruption• Damage to corporate reputation• Non-compliance with data protection
legislation (e.g. GDPR)

7. Geopolitical andsecurity environment

Volatile and challenging
macroeconomic, security andgeopolitical conditions. The riskof civil unrest and conflict withother countries.

• Safety of our people• Disruptions to our operations• Financial impact of economic andother sanctions

8. Managing ourcarbon footprint

The risks and opportunities
associated with reducing carbon
emissions along our value chain.

• Opportunity to reduce costs and enhance
relationships with key stakeholders throughincreased use of renewable energy andnew technologies• Reputation costs of not meeting oursustainability commitments• Costs associated with moving to low GHG
emissions, low-emission coolers, vehicles• Future carbon taxes• Scarcity of resources impacting production

Increasing
StableDecreasing
Risk included
in viability
assessment

Link to growth
pillars
1

2

4

5

3

INTEGRATED ANNUAL REPORT 2021

Key mitigations

Link to material issues• World Without Waste global vision• Mission 2025 packaging-related commitments• Partnerships with local communities, NGOs, start-ups and academia to manage packaging recovery
and minimise environmental impacts• Packaging and waste
management• Sustainable sourcing• Prioritisation of assortment per channel to drive higher margin packs• Enhanced marketing campaigns to capture growing occasions of socialising at home accelerated
by COVID-19 restrictions• Refreshed and enhanced key account capabilities and tools to partner and grow profitable revenue
with customers• Work closely with our out-of-home channel customers to drive transactions and support them selling online
to more effectively manage the impact of COVID-19, or in their reopening as restrictions ease
• Accelerate Right Execution Daily (RED) to support our commitment to operational excellence• Develop our digital and e-commerce capabilities to capture opportunities associated with existing and new
distribution channels• Localised management plans in specific countries dependent on channel impact and risk and including
variance in the impact of COVID-19 restrictions• Economic impact• Pricing volatility managed by Treasury/Procurement departments for hedgeable raw materials universe
through hedging/fixing of forward prices• Protocols are in place under the Treasury and Procurement Policies endorsed by the Board• Reporting and visibility to the Financial Risk Management Committee and the Audit and Risk Committee• Recovery through pricing whilst maintaining growth, avoiding disruption and still being competitive• Economic impact• Sustainable sourcing• Focus on product innovation and expansion to a 24/7 beverage portfolio• Expand our range of low- and no-calorie beverages• Proactive approach to better understand concerns undertaken by Corporate Affairs and Sustainability
in conjunction with our The Coca-Cola Company counterparts.
• Country-specific response plans to address the specific localised nature of the risk.
• Group strategy focusing on proactive and reactive advocacy with strategic plans, tax risk assessments,
assets repository and targeted business unit support plans in place• Corporate citizenship• Responsible marketing• Economic impact• Economic impact• Treasury policy requires, where possible, the hedging of 25% to 80% of rolling 12-month forecasted
transactional foreign currency exposure• Hedging beyond 12 months may occur in exceptional cases subject to approval of Group CFO• Derivative financial instruments are used, where available, to reduce net exposure to currency and commodity
price fluctuations• Implement a NIST-aligned cyber security and privacy control framework and monitor compliance• Safeguard critical IT and operational assets• Enhanced ability to detect, respond and recover from cyber incidents and attacks• Foster a positive culture of cyber security• Monitor threat landscape and remediate associated vulnerabilities• Cyber-related crisis management (IMCR) exercise with Executive Leadership Team• Economic impact• Monitoring systems established with defined indicators to provide warning of escalation• Security risk assessments developed on a country-by-country basis to inform robust security plans• Business continuity programmes take into account risks associated with unrest and conflict and theimpact of sanctions• Continued development and training in IMCR programme• Employee wellbeing
and engagement• Economic impact• Approved science-based targets for 2030 and net zero commitment for 2040
• Energy management programmes and transition to renewable and clean energy• Engagement and partnering with local and international stakeholders• Focus on sustainable procurement• Areas of risk monitored by country risk teams and specific tactical plans in place across the operations.
• Physical risk analysis including quantification and stress testing (consistent with TCFD requirements)
and natural disaster plans in place across the operations• Review of Egyptian operations to understand impact on Group• Climate change• Sustainable sourcing

63

64

COCA-COLA HBCManaging risk and materiality continued
Principal risks

Description

9. Water availability
and usage• Lack of water for local communities which
The risks related to water
diminishes our licence to operate and damages
availability, water stress and water
our brand reputation
quality in our areas of operation,
exacerbated by the effects of• Insufficient water or increased costs toclimate change and excessive
manufacture our products
water consumption in a catchment
area leading to unsustainable
water availability.

10. Health and safety• Fatalities and/or serious injury and illness
The risk to the health and safetyof employees, contractors, third parties andof our people as a result ofmembers of the public
occupational workplace accidents,
incidents and illnesses (including• Business continuity for people being absent
COVID-19 management).
from work due to infection or self-isolation due
to COVID-19• Mental wellbeing of our people

11. People retention

Inability to attract, retain andengage sufficient numbersof qualified and experienced
employees in highly competitive
talent markets.

• Failure to achieve our growth plans

12. Suppliers andsustainable sourcing

Inability to secure supply of key
ingredients, packaging andservices at a reasonable costbecause of supply-demand
imbalances and/or crop yields.

• Production disruptions• Increased input costs

13. Ethics andcompliance• Damage to our corporate reputation
The risk of fraud against theCompany as well as risk of• Significant financial penalties
anti-bribery and corruption (ABAC) • Management time diverted to resolving
fines or sanctions if ourlegal issues
employees, or the third parties we • Economic loss because of fraud
engage to deal with governments,
and reputational damages, fines and penalties,
fail to comply with ABACin the event of non‑compliancerequirements. The risk of
inadvertent non-compliance withinternational sanctions in certain
countries.

14. Quality

The risk of serious product quality • Illness to consumers
issues or contamination of our• Reputation damage
products.
• Regulatory intervention• Adverse financial impact

15. Strategic
stakeholder
relationships• Termination of agreements or unfavourable
We rely on our strategic
renewal terms could adversely affectrelationships and agreements
profitability
with The Coca-Cola Company(including Costa Coffee), Monster
Energy and our premium
spirits partners.

Principal risks
trend
Increasing
StableDecreasing
Risk included
in viability
assessment

Link to growth
pillars
1

2

4

5

3

Potential impact

INTEGRATED ANNUAL REPORT 2021

65

Key mitigations

Link to material issues• Identification and implementation of water stewardship programmes in water priority locations
to mitigate shared water risks• Alliance for Water Stewardship certification for all plants• Source vulnerability assessment for all plants• Implement water usage reduction plans• Water stewardship• Sustainable sourcing• Deployment of Behaviour Based Safety (BBS) programmes• End-to-End (E2E) contractor management process• Health and Safety Board to continue• The Coca-Cola Company lifesaving rules in place and incorporated in CCHBC Baseline
Assessment programme• COVID-19 pandemic protocols in place across the entire organisation and reviewed regularly• Business continuity plans updated and tested• Regular country and System lessons learned shared across the entire organisation• Increased focus on mental wellbeing in Employee Assistance Programme• Employee wellbeing andengagement• Upgrade our Employer Value Proposition and Employer Brand• Develop leaders and people for key positions internally, improve leaders’ skills and commitment totalent development• Continuous employee listening to address culture and engage effectively• Promote an inclusive environment that allows all employees to achieve their full potential• Create shared value with the communities in which we work to ensure we are seen and considered
as an ethical business with an attractive purpose• Expand talent pool by hiring more diverse workforce• Employee wellbeing andengagement• Human rights, diversity
and inclusion• Corporate citizenship• Contracted volumes of key ingredients and packaging materials• Contracted prices when feasible• Ensure hedgeable contracts• Expand supplier base and introduce new/alternative suppliers• Secure raw materials for suppliers to provide security of supply• Economic impact• Sustainable sourcing• Annual ‘Tone from the Top’ messaging• Code of Business Conduct, ABAC and commercial compliance training and awareness campaigns forour entire workforce and training on international sanctions for our employees exposed to this risk
• All third parties that we engage must comply with our Supplier Guiding Principles, which include ABAC
and international sanctions compliance• All third parties that we engage to deal with governments on our behalf are subject to ABAC due diligence.
Screening of third parties and transactions potentially exposed to international sanctions risk
• Cross-functional joint task force in Nigeria that proactively addresses risks in our key operations• Risk-based internal control framework and assurance programme with local management accountability• Periodic risk-based internal audits of ABAC compliance programme• Speak Up! hotline• Corporate governance• Full implementation of CCHBC Quality and Food Safety prevention programmes• Quality and Food Safety management system certification.
• Quality and Food Safety capabilities development programmes implementation as part of Maturity
Matrix programme• Elevated supplier quality management• Continued development and training in IMCR programme• Product quality• Management focus on effective day-to-day interaction with our strategic partners• Working together as effective partners for growth• Engagement in joint projects and business planning with a focus on strategic issues• Participation in ‘top-to-top’ senior management forums• Economic impact• Corporate governance66

COCA-COLA HBCManaging risk and materiality continued

Managing
climatechange risk
Assessment and mitigationof climate-related risk is
integrated into our enterpriserisk management programme,
which underpins our robust,risk-based approach to thephysical and transitional risks
associated with climate change.
We analyse our internal data and work withrecognised specialist agencies, ourinsurance brokers and insurers to obtainregional analysis of climate science.
This helps us make informed decisions andimproves our understanding of the potential
climate vulnerabilities in our operations
and the communities in which we operate.
This data and resulting analysis is sharedacross our business units, supporting
climate resilience across our planningand operations.
At Coca-Cola HBC, we believe that therecommendations of the Task Forceon Climate-related Financial Disclosures(TCFD) are an important step in theestablishment of a framework for reporting
climate-related risks and their financial
impacts. We support efforts to improve
the quality and consistency of disclosures,
having been a leader in the field with our firstcarbon reduction commitments in 2006 andan early adopter of science-based targets.
The Board continues to have oversightof climate-related risks and opportunities
through the activities of the Social
Responsibility Committee and the Audit
and Risk Committee. The Coca-Cola System,
including Coca-Cola HBC, has identified
eight material risks relating to the physicaland transitional impact of climate change
on our business.
These are depicted in the diagram on page 70.
The eight risks are linked to Principal risks‘’Plastics and packaging waste’ and ‘Managing
our carbon footprint’ see page 62; and ‘Water
availability and usage’ and ‘Suppliers andsustainable sourcing’ page 64.
Water scarcity is classified as a physical risk
while the potential impact of changing water
regulations is classified as a transitional risk.

Access to good-quality water, a key
ingredient in our products, is critical for thesustainability of our business as well as forthe communities where we operate.

The Chief Risk Officer provides the Executive
Leadership Team (ELT) and the Audit andRisk Committee with quarterly updatesof these risks.

In 2021, we enhanced our understandingof climate-related risks by conducting acomprehensive quantitative assessmentof water risk (see Managing water risk acrossour territory on page 71). We will continue
to refine our water risk assessment annually.
In 2022, we will also build on our experiencein quantitative climate risk assessments byadding an assessment of risks associatedwith carbon emissions.

At management level, climate-related
matters are supervised by the ELT which
includes the Chief Corporate Affairs andSustainability Officer. Led by the Chief
Executive Officer, the ELT has responsibility
for reviewing the assessment of the impact
of climate-related risks and opportunities,
the development of long-term strategies
to manage the impact of climate change, thesetting of annual targets and the approval ofannual business plans which form the basisof the Company performance management.
The ELT meets on a monthly basis andreviews the performance of the Company,
including progress against the Group’s
strategic pillars, in which climate-related
issues and their impact are embedded, as
well as, progress against the Group’s climate
goals and targets.

Our response to climate change transcends
all areas of our strategy and operations and,as a result, our TCFD disclosures can befound throughout this report. The tableon page 67 explains where our disclosures
on climate change can be found in thisreport and how the information aligns to
the TCFD recommendations.
For additional information on our climaterelated disclosures, CCHBC makes anextensive, annual submission to the global
environmental disclosure organisation,CDP.
Our 2021 submission is publicly available at:
2021 CDP Climate response
Due to the size of this disclosure document,
we do not include the full submission here.

Governance of climate-relatedrisks and opportunities
To ensure that climate-related risks andopportunities are given the highest levelof oversight and are embedded into thestrategy and mission of our Company,
our assessment and management of thepotential impact of climate change issupervised by Board’s Social Responsibility
Committee (SRC).
The SRC is responsible for establishing theprinciples governing environment, climate
impact and water security management;
and for ensuring effective processes andsystems are in place to implement oursustainability strategy. The SRC regularly
reviews the Group’s performance in achieving
environment, climate, water and sociallyrelevant goals and ensures that sustainability
and climate objectives are fully integrated
into the Group’s business strategy.
The Chief Corporate Affairs and Sustainability
Officer provides regular updates to the SRC
on the Group’s progress.
The assessment and management ofclimate-related risks and opportunities
are integrated into the Group’s enterpriserisk management process, see page 58.
The Board’s Audit and Risk Committee
oversees all business risks, including
environmental and climate risks.

We have also established a cross-functional
working group with experts from different
functions (Risk, Procurement, Finance,
Environment, Supply Chain, Engineering,
Sustainability) who have been studying
different climate scenarios and assessing
qualitatively and quantitatively the risks andopportunities inherent in those scenarios.
A related cross-functional group has beenworking to develop our science-basedcarbon reduction targets and our
NetZeroby40 goal and plans. They meet
regularly (at least monthly) and present theirwork to the ELT.

Strategy and risk management
Climate-related risks and opportunities areassessed as part of our well-established
enterprise risk management programmeand our approach to managing our principal
risks is holistic and integrated. The impact ofclimate change and emissions are linked to
our water stewardship, sustainable sourcing
and packaging waste agendas. In our Mission
2025 sustainability commitments, climatechange and emissions reduction, water
stewardship and water use reduction,
ingredient sourcing, and packaging waste,
together contribute to four of our total six
sustainability pillars.
We consider all risks, including climaterelated risks, over a range of timeframes
and these are integrated into our businessplanning processes. Short-term risks(1-2 years) are linked with Company
business planning yearly cycles; mid-termrisks (3-5 years) are linked with our strategicplanning process; and long-term risks(6-10 years) are linked with our long-termplanning process.

INTEGRATED ANNUAL REPORT 2021

As part of our ERM programme, our risk
assessments include an assessment of thelikelihood of the risk eventuating and theimpact of a variety of factors including healthand safety, financial impact, damage to
reputation and brands, businessinterruption, and management effort.
Details of our analysis of climate-relatedrisks and opportunities on the Group’sbusiness, strategy and financial planningin the whole value chain and identified eightrisks are disclosed on the next pages.
Incentives for meeting our Mission 2025
sustainability goals are part of thecompensation for members of the ELT.
Targets related to energy usage, emissions
reduction, water usage, sourcing andpackaging are linked to annual bonuses forappropriate employees. We have introduced
carbon reduction in the whole value chain aspart of the long-term incentive plan (LTIP)
for managers eligible for that plan.

Location of TCFD aligned disclosures
Governance: Disclose the Company’s governance around climate-related risks
and opportunities

Compliance statusa) Describe the Board’s oversight ofclimate-related risks and opportunitiesa) Fully consistentSocial Responsibility Committee, pages 116-117b) Describe management’s role in identifying, Audit and Risk Committee, pages 108-111
assessing and managing climate-related risks Risk and materiality, pages 56-65;
and opportunities
Managing climate change risk, pages 66, 68-70b) Fully consistent

Strategy: Disclose the actual and potential impacts of climate-related risks
and opportunities on the Company’s business, strategy and financial planningwhere materiala) Describe the climate-related risks
and opportunities that the organisation
has identified over the short, medium
and long terma) Fully consistent
Material issues, pages 56-57; Principal risks, pages 62-65
2021 CDP Climate response, pages 14-21b) Describe the impact of climate-related risk Principal risks, pages 62-65
and opportunity on the Company’s business, Earn our licence to operate, pages 44-51
strategy and financial planning2021 CDP Climate response, pages 21-37, 40-44c) Describe the resilience of theorganisation’s strategy considering different
climate‑related scenarios, including a
2-degree or lower scenario

Managing climate change risk, pages 66, 68-70
2021 CDP Climate response, pages 38-44
Managing water risk across our territory, page 71b) Work in progress – qualitative impact has
been completed for the whole value chain;
however, more work will be done onunderstanding the quantitative impact on
business strategy and financial planning.
We expect this work to be completed by
end 2022.
c) Work in progress – work has been donewith two scenarios related to physical andtransitional risks associated with the impact
on water availability and costs. More work will
be done on the impact of other elements ofclimate change. We expect this work to becompleted by end 2022.

Risk management: Disclose how the Company identifies, assesses and manages
climate‑related risks and opportunitiesa) Describe the Company’s process for
identifying and assessing climate-related risks
Risk and materiality, pages 56-65
and opportunitiesb) Describe the Company’s process
for managing climate-related risks
and opportunities

Principal risks, pages 62-65a) Fully consistentb) Fully consistent

Key performance indicators, pages 47, 50, 54-55
2021 CDP Climate response, pages 13-21
Managing climate change risk, pages 66-71c) Describe how these processes
are integrated into the overall risk
management programme

Risk and materiality, pages 56-65c) Fully consistent

Metrics and targets: Disclose the metrics and targets used to assess and manage climaterelated risks and opportunitiesa) Disclose the metrics used by theorganisation to assess climate-related risks
and opportunities in line with its strategy
and risk management process

NetZeroby40 target across the whole value chain, page 46
Charts on page 47 with all Scopesb) Disclose Scope 1, Scope 2, and, if
appropriate, Scope 3 greenhouse gas (GHG)
emissions, and the related risks

Mission 2025 commitments reated to the following pillars:
climate and renewable energy, water reduction andstewardship and Word Without Waste on pages 54-55

2021 GRI Content Index, Environmental table, pages 38-40c) Describe the targets used by theorganisation to manage climate-related risks
and opportunities and performanceagainst targets

67a) Work in progress. We have well-defined
metrics on the impact of climate change onwater and transition risk of carbon price, butother elements are largely qualitative at thisstage. We expect this work to be completed
by end 2022.
b) Fully consistentc) Fully consistent. Our Mission 2025
commitments, approved science-basedtargets and NetZeroby40 commitment
provide clear targets.

68

COCA-COLA HBCManaging risk and materiality continued
Physical risks

Physical risks are those caused by higher
concentrations of greenhouse gases in theatmosphere, which in turn lead to higher
average temperatures, more acidic oceans,changing weather patterns and rising
sea levels.
Extreme weather and changing weather
and precipitation patterns can impact ourbusiness in the following ways:

1. Disruption to
manufacturing fromextreme weather

2. Disruption to
distribution caused byextreme weather

3. Reduced ability
to produce as resultof water scarcity

4. Impact on thecost and availabilityof ingredients

Extreme weather events
including floods and storms candisrupt and/or damage ourmanufacturing facilities leading
to an inability to supply products
to our customers and significant
costs associated with repairs.
It can also lead to injuries toour people.

Extreme weather may impact
key transport and logistics
routes and reduce access toour fleets. This may impact ourability to distribute our products
to markets as well as the safetyof our employees andcontractors.

Access to water is fundamental
to our business and to thecommunities we operate in.

We continue to assess theimpact of climate change on
the availability, quality and priceof key ingredients as part of ourassessment of Principal risk
‘Suppliers and sustainablesourcing’.

We assess the risk of businessinterruption from a range of
causes as part of our strategicand operational risk reviews.
We currently mitigate thefinancial costs of extreme
weather events through ourproperty damage insurance
programme. This includes
annual surveys of our facilities
by external risk engineers.
We have also established arobust business continuity
programme to prevent andminimise losses. During the year,
we carried out additional
assessments of plants andwarehouses at risk due toextreme weather. While there
has been an increase in thenumber of extreme weather
events that have been attributed
to climate change, we have not
identified a direct impact on our
manufacturing at this stage andconsider this a longer term risk.
We recognise that much of thedata we currently use in ourassessments is based on
historical information. In 2022,
we will include projected datausing at least two different
climate scenarios to enhance
our understanding of thepotential impact on our
manufacturing.

We assess the risk of businessinterruption from a range of
causes as part of our strategicand operational risk reviews.
We currently mitigate thefinancial costs through our
insurance programme as wellas use of third-party logistics
providers. We have alsoestablished a robust business
continuity programme that
includes management of
extreme weather to protect ourpeople and to minimise losses.
While we have seen an increasein the number of extreme
events such as storms andbushfires that have been
attributed to climate change,
we have not identified a direct
impact on our distribution
systems at this stage but we do
expect this risk to increase overthe longer term.
In 2022, we will include projected
data using at least two different
climate scenarios to enhance
our understanding of thepotential impact on our
distribution system.

We have assessed the impactthat climate change may haveon the cost and availability ofwater both for our needs andthe needs of the local
communities that we operate
within as part of our assessmentof Principal risk ‘Water availability
and usage’,
A number of our plants arelocated in areas that are or will
be facing water challenges.
These plants are referred to as‘water priority’ plants.
During the year, we conducted
an extensive quantitative
assessment of the impact of
two different climate scenarios
on the availability and cost ofwater by 2030 and 2040.
This assessment is outlined
on page 71.
As noted in this assessment,
we do expect climate change tohave an impact on our businessover the longer term.

This impact is due primarily to
predicted changes to weather
and precipitation patterns.
While we are currently seeingchanges in weather patterns
that have been attributed toclimate change, and expect
those changes to continue,
we have not identified a direct
impact on our business at thisstage. We therefore consider
this a longer term risk.
During the year, we continued
to assess the ability of our
suppliers and alternative
suppliers to continue to supply
key ingredients at the quality,
quantity and cost that we expect
under different conditions.
Moving forward, we will
undertake further work toassess how our suppliers may be
impacted by changes in weather
and precipitation patterns under
different climate scenarios.

INTEGRATED ANNUAL REPORT 2021

Transition risks

The physical effects of climate change
will be limited if action is taken to force atransition to a low-carbon economy. This will
require regulatory, market and technologicalchanges. The speed and severity of thesechanges will have an impact on our business.
A faster and more aggressive approach by
governments, for example, will have a moresignificant financial impact than a more
gradual approach.

69

The transition to a low-carbon economy
also presents a number of opportunities
for our business. Our investments in newtechnologies not only help us meet the
expectations of key stakeholders to do ourpart to reduce carbon emissions, but theyalso present opportunities for significant
cost savings.

5. Increased costs acrossour value chain from
GHG regulations

6. Increased costof packaging

7. Increased costs
and disruptions due
to water regulations

8. Damage to thereputation of thebeverage sector

Our business emits greenhousegases (GHGs) across our value
chain. Actions to introduce
carbon pricing could
increase costs of packaging,
manufacturing, distribution andcold drink equipment over the
medium term.

Our business uses various typesof packaging materials anddelivery methods with different
carbon footprints. Regulations
designed to decrease the useof packaging materials that
contribute to GHG emissions
could increase our costs.
We are already starting to see
governments considering
additional taxes on single use
plastics. This risk is therefore
considered a short to medium
term risk.

As noted in Physical risk #3,
water is fundamental to ourbusiness. We continually assess
the impact of changes to thecost of water or placementof restrictions on the availabilityof water as part of theassessment of Principal risk
‘Water availability and usage’.
These changes may impact ourability to produce or increase thecost of production over the
medium to longer term.

We are reliant on the brandvalue and positive reputationof Coca-Cola. Consumer
perceptions of the beverage
sector as a contributor toclimate change may impact the
reputation of our business andbrands and ultimately demandfor our products.

During the year, we assessed
the impact of changing GHG
regulations as part of ourassessment of Principal risk
‘Managing our carbon footprint’.
We assessed the operationalcosts of carbon taxes on directemissions and capital
expenditures needed to reduce
our carbon emissions basedon a 1.5ºC warming scenario.
In December 2020, we received
an approval of our carbon
reduction targets by the Science
Based Targets initiative and weare committed to reducing our
Scope 1 and 2 emissions by 55%
by 2030 vs 2017 and our Scope
3 emissions by 21% for thesame period.
In 2022, we will extend ourquantitative analysis of the
impact of climate change toinclude the financial impact ofmanaging our carbon footprint.

We include an assessment of
the risk of increased cost of
packaging resulting from climatechange as part of ourassessment of Principal risk
‘Plastics and packaging waste’.
During the year, we continued to
introduce more innovative ways
to reduce packaging. As partof our World Without Waste
initiative, we are making
concerted efforts to increase
the amount of recyclable
packaging across ouroperations, use more recycled
PET and refillable packaging
and help collect the packaging
materials we place on themarket.

We are reducing our water
usage across our business and,as part of our Mission 2025
sustainability commitments,
have committed to a 20%
reduction in water usage in ourwater priority plants. We are also
closely monitoring the potential
for additional taxes, levies or
restrictions in the availabilityof water.
In 2021, we conducted an
extensive quantitative
assessment of the impact of
two different climate scenarios
on the availability and cost ofwater across our business by
2030 and 2040. Shorter-termtransitional costs wereconsidered as part of thatassessment. For further
information on our water risk
assessment, see page 71.

In addition, being seen as partof the problem leads to thetargeting of the beverage sector
for new and/or increasingclimate-related taxes. We
constantly monitor the
likelihood and impact of thesechanges as part of ourassessment of Principal risk
‘Product-related taxes andregulatory changes’. As someof our countries have introduced
or are actively considering
introducing additional taxes,
we consider this to be ashort-term risk.
Our Mission 2025 sustainability
commitments and strong
cultural commitment to being
a contributor to the solutions toclimate change are designed totake advantage of opportunities
associated with those changes,
protect our business andprotect our reputation as a
responsible Company.

70

COCA-COLA HBCManaging risk and materiality continued

The impact of climate change risk
The Coca-Cola Company and its global bottling partners, including
Coca-Cola HBC, have identified eight material risks relating to thephysical and transitional impact of climate change on our businessand these are depicted in the following diagram.
For more details on these eight risks, please see previous pages 68
and 69, where the colour codes of the risks reflect the diagram below.

Cause

Risk

Agriculture andingredients

Packaging

Manufacturing

Distribution

Cold drink
equipment

Estimated share of carbon emissions

25%

31%

11%

6%

27%

Business impacts: Physical risks of climate change
Changes toweather andprecipitation
patterns

Limits availabilityof ingredientsand raw
materials

Extremeweather
events

Disrupts
production
Disrupts/limits
distribution

Water
scarcity

Disrupts/limits
production

GHG
regulation

Increases costof packaging
materials

Business impacts: Risks of transition to a low-carbon economy

Increases cost of manufacturing,
distribution and cold drink
equipment
Changes to
consumer
perceptions

Reputational risk

Waterregulation

Disrupts/limits
production

Customers andcommunities

INTEGRATED ANNUAL REPORT 2021

Managing water risk
across our territory
In 2021, we conducted adetailed assessment of the
impact of climate change on
the availability and cost of water
across all of our markets under
different climate scenarios.
We recognise that we have a responsibility
over and above meeting our productionneeds. Access to clean water is afundamental human right and we arecommitted to ensuring water security for
local communities as well as our businessin areas of water stress.
Climate change is expected to increase
the level of water stress in a number of ourcountries, making water scarcer and morevaluable in those countries. This means that
our costs will increase, both to meet theneeds of our business but also to ensure
we can replenish the watersheds in thosecountries to support local communities.

The additional increase in water utilization
rates, converted into water volume, wasmultiplied by the ‘true cost of water’1 toprovide an estimate of the financial impact
of both increased production demand andclimate change. For plants in water-stressed
areas – our water priority plants – the cost of
replenishing the watershed based on water
withdrawal was added.
We estimated the additional operating
expense required for each plant to meet
additional water needs, as well as one-off
CapEx requirements where appropriate tosupport our risk mitigation programme.
In general terms, our assessment indicatedthat climate change is not likely to increase
the number of plants assessed as waterpriority plants in our existing territory,
although it is expected to increase the levelof water stress in those areas. Climatechange is unlikely to impact the useful
economic life of any of our plants; however
we will need to invest in additional water
infrastructure to meet our needs as well as
maintain our commitments to replenish thelocal watershed in water priority areas.

In our 2021 water risk assessment, we
focussed on our production facilities todetermine which plants are more likely to beaffected by climate change, the extent towhich they may be affected and the financial
impact of ensuring sustainable supply forboth our production and the local community.
In future years, we will gradually broaden thescope of our assessment to also consider
water risks associated with our supply chain.

Optimistic climate scenario

To conduct the 2021 assessment, weestimated annual production volumes up
to 2030 and 2040 for each plant, based onlong-range planning estimates. We thendetermined the water utilisation rates foreach plant for normal and peak production
as well as the capacity of our water sources
without considering the impact of climatechange. This allowed us to create abaseline model.

Under this scenario, our operations inArmenia, Bulgaria, Greece, Cyprus, Russia,
Italy and Nigeria would be located inwater-risk areas.

We then used data available from the World
Resources Institute’s (WRI) Aqueduct Water
Risk Atlas to identify the impact of climatechange on the watersheds supporting
each plant using both an optimistic and a
pessimistic scenario for climate change
impact. In this assessment, the impact ofclimate change is the difference between
water utilisation rates in our baseline andthe WRI scenarios.

The optimistic scenario we used forassessment purposes represents a world
with stable economic growth and global andnational institutions making slow but steadyprogress towards achieving development
goals. Globally, carbon emissions start
declining by 2040 and temperature increases
are limited to between 1.1 and 2.6 degrees(RCP4.5).

By 2030, average baseline water stress is
expected to increase by 30%. To meet our
production needs as well as replenish thelocal watersheds in our water priority areas,
we estimate our annual water costs will
increase by 40% over and above our baseline
costs, and additional one-off CapEx costsin the lead-up to 2030 of €42million will
be required.

Pessimistic climate scenario
The pessimistic scenario used in our analysis
represents a world with uneven economic
development, including higher population
growth but lower GDP growth. Globally,
carbon emissions continue to rise andaverage temperature rises between 2.6
and 4.8 degrees (RCP8.5).
As with the optimistic scenario, our facilities
in Armenia, Bulgaria, Greece, Cyprus, Russia,
Italy and Nigeria would be located in waterrisk areas under the pessimistic scenario.
By 2030, average baseline water stress is
expected to increase by 27%. We estimate
our annual water costs to meet our
production needs as well as replenish thelocal watersheds in our water priority areas
will increase by 45% over and above ourbaseline costs. Additional one-off CapEx
costs in the lead-up to 2030 of €30million
will be required.
By 2040, average baseline water stress is
expected to increase by 46%. We estimate
our annual water costs to meet our
production needs as well as replenish thelocal watersheds in our water priority areas
will increase by 41% over and above ourbaseline costs and additional one-off CapEx
costs in the lead-up to 2040 of €78million
will be required.
Note: The ‘pessimistic’ scenario has less
impact on our business than the ‘optimistic’
scenario in a number of areas. This is because
under the pessimistic scenario used in the
Aqueduct modelling, there is less urban
growth. As the majority of our plants arelocated in or near large urban areas, thereis less stress on the local watersheds.

Mitigating water risk
Efforts to address the risks identified in thisanalysis could include watershed protection
and restoration, rainwater harvesting, andinfrastructure improvements to provide
communities with greater access to water
for drinking and sanitation. We will continue
to implement water usage reductionplans and obtain certification for ourplants under the Alliance for Water
Stewardship programme.

By 2040 under this scenario, averagebaseline water stress is expected to increaseby 47%. To address these risks, we estimate
our annual water costs will increase by
42% over and above our baseline costand additional one-off CapEx costs in thelead-up to 2040 of €79million will be required.

1. The ‘true cost of water’ is a Coca-Cola system
multiplier that is used to calculate both the internalcosts of water but also a number of external factors
such as potential for increased taxes and levies.

71

For more information on our efforts toaddress water challenges, see page 50.

72

COCA-COLA HBC

Viability
statement

Business model and prospects
Our business model and strategy, outlined
on pages 6-9 of this report, documents the
key factors that underpin the evaluation of
our prospects. These factors include our:• attractive geographic diversity;• strong sales and execution capabilities;• ability to innovate;• market leadership;• global brands; and• diverse beverage portfolio.
As for many companies, the COVID-19
pandemic continued to present a challenging
environment for the Group. Despite
significant changes to how consumers
purchase and consume our products andthe impact on our customers, our strong
cash position and ability to innovate has
shown the Group’s business to be robust.
In 2021 we experienced a gradual recovery
from the COVID-19 pandemic as restrictions
on key channels lifted. There continues to be
uncertainty associated with the risk of newvariants and the ability of governments tomanage the economic recovery.
In the latter stages of 2021, tensions
increased between the governments ofRussia and Ukraine, which led to military
conflict in early 2022. Economic sanctions
were imposed on Russia by the US, UK and
EU as well as many other countries, andcounter sanctions by the Russian
government in retaliation. On the 8th March
2022, The Coca-Cola Company (TCCC)
announced that it is suspending its businessin Russia. At the time of publication theGroup is working closely with TCCC to
implement this decision.

In addition, economic sanctions imposedon Russia have had a significant impact
on foreign exchange rates for the Rouble
and the price of a number of commodities
such as oil – which affects PET prices, andaluminum. Countersanctions imposed by
Russia may have an impact on our Russian
operations as well as other countries in our
territory. Although there remains a lotof uncertainty around how and when thisconflict may be resolved, we have considered
as best we can, the potential impact
in our financial projections in a numberof the scenarios.
The Board considers that there will bechanges to our markets over the longer
term but continues to believe that our
diverse geographic footprint, including
exposure to emerging markets that have
low per capita consumption and therefore
greater opportunity for growth, and aproven strategy in combination with ourleading market position, offer significant
opportunities for future growth.
Our Board has historically applied andcontinues to apply a prudent approach to
the Group’s decisions relating to major
projects and investments. From 2017 to
2021, we generated free cash flow of €467
million per year on average.

Key assumptions of the businessplan and related viability period
The Group maintains a well-establishedstrategic business planning process
which has formed the basis of the Board’s
quantitative assessment of the Group’s
viability, with the plan reflecting our current
strategy over a rolling five-year period.
The financial projections in the plan are
based on assumptions for the following:• key macroeconomic data that could
impact our consumers’ disposable
income and consequently our sales
volume and revenues;• various scenarios relating to the abilityof governments in some key markets
to manage economic recovery from theimpact of COVID-19 pandemic;• key raw material costs, including
the impact of climate change on theavailability and cost of water under two
different climate scenarios (see also
page 71 for more information on ourquantitative assessment of the impact
of climate change on water availability andcost. In addition to 2030 and 2040, we also
included interim calculations to 2026 forthe purpose of our viability assessment);
and the impact of the Russia/Ukraine
conflict on commodity costs;

INTEGRATED ANNUAL REPORT 2021

• loss of sales volume and revenues asa result of TCCC’s suspension of its
operations for a period of time in Russia;• foreign currency rates; including theimpact of extended economic sanctions
against Russia and the impact on foreignexchange rates as a result of the Russia/
Ukraine conflict;• spending for production overhead andoperating expenses;• working capital levels; and• capital expenditure.
The Board has assessed that a viability
period of five years remains the mostappropriate. This is due to its alignment
with the Group’s strategic business planning
cycle, consistency with the evaluatedpotential impacts of our principal risks as
disclosed on pages 62-65 and our
impairment review process, where goodwill
and indefinite-lived intangible assets aretested based on our five-year forecasts.

Assessment of viability
Qualitatively, we analysed the output of ourrobust enterprise risk management andinternal business planning and liquidity
management processes, to ensure that therisks to the Group’s viability are understoodand are being effectively managed.
The acquisition and integration of CocaCola Bottling Company of Egypt (‘CCBCE’)
will occur during the period covered by theviability statement. Considering the due
diligence and operational review process
performed as well as the acquisition businesscase, no risks to the Group’s viability overthe five-year period of this assessment havebeen identified as a result of the acquisition.
The Board has concluded that the Group’s
well-established processes acrossmultiple streams continues to provide acomprehensive framework that effectively
supports the operational and strategic
objectives of the Group. It also provides arobust basis for assessment and confirmationof the Group’s ability to continue operations
and meet its obligations as they fall due overthe period of assessment.
Supporting the qualitative assessment wasa quantitative analysis performed as part ofstrategic business planning. This assessment
included, but was not limited to, the Group’s
ability to generate cash.

As part of our assessment, we considered
the continuing impact of the COVID-19
pandemic to the business and found thisto be limited, considering the strong
performance throughout the developmentof the pandemic across our territories andthe re-opening of global economies
along with the progress of vaccination
programmes. However, we also considered
the potential effect of further economic
disruption due to market specifics and theimpact from emergence of COVID-19
variants, along with the Group’s proposed
responses. We also considered to the extent
possible, the potential impact of TCCC’s
decision to suspend its operations in Russia
for a period of time, as well as sanctions andcounter sanctions as a result of the Russia/
Ukraine conflict.
We have continued to stress test the plan
against several severe but plausible
downside scenarios linked to certain
principal risks as follows:
Scenario 1: The impact of changes toforeign exchange rates was considered,particularly the depreciation of foreign
currencies including the Russian Rouble,
also considering effects from the Russia/
Ukraine conflict, and Nigerian Naira. Principal
risks: foreign exchange fluctuations,commodity costs and geopolitical andsecurity environment.
Scenario 2: Lower estimates for sales
volumes for various reasons including theability of a range of stakeholders, including
governments, in several of our key markets
to manage economic recovery fromCOVID-19 pandemic, and the potential
impact of the Russia/Ukraine conflict.
Principal risk: Geopolitical andsecurity environment.
Scenario 3: Lower estimates for sales
revenue for various reasons including thelonger term, changes brought on by
COVID-19 pandemic on consumer demandand preferred channels. Principal risk:
Changing retail environment.
Scenario 4: Continued stakeholder focus
on issues relating to sugar and packaging
resulting in the potential for discriminatory
taxation. Principal risks: Plastics andpackaging waste and Product-related taxes
and regulatory changes.
Scenario 5: The impact of higher raw
material costs, was also considered. Principal
risks: Foreign exchange fluctuations andCommodity costs.

73

Scenario 6: The impact of higher
operational costs of water, as a result of
the effects of climate change under two
different climate scenarios, as well as thecapital expenditure required to meet ourwater needs as well as the needs of local
communities in water stressed areas.
Principal risk: Water availability and usage.
The above scenarios were tested both inisolation and in combination. The stresstesting showed that due to the stable cash
generation of our business, the Group would
be able to withstand the impact of thesescenarios occurring over the period of thefinancial forecasts. This could be conductedby making adjustments, if required, to ouroperating plans within the normal courseof business, including but not limited toadjustments to our operations and temporary
reductions in discretionary spending.
Following a thorough and robust
assessment of the Group’s risks that
could threaten our business model, future
performance, solvency or liquidity, theBoard has concluded that the Group iswell positioned to effectively manage its
financial, operational and strategic risks.

Viability Statement
Based on our assessment of the Group’s
prospects, business model and viability as
outlined above, the Directors can confirm
that they have a reasonable expectation that
the Group will be able to continue operating
and meet its liabilities as they fall due over the
five-year period ending 31 December 2026.

74

COCA-COLA HBC

Financial review
Strong recovery and momentum
The business delivered a very strong
recovery in 2021, with all key metrics above
pre-pandemic levels. This is the resultof consistent focus on our strategic
priorities and disciplined execution in
a volatile environment.
Performance highlights included:

Strongexecution
drives growth
momentum“The business delivereda very strong recovery
in 2021, with all key
metrics above
pre‑pandemic levels.”• FX-neutral revenue growth of 20.6%
like-for-like1. Reported revenues +16.9%• Volume growth of 14.0% like-for-like,or 13.0% on a reported basis, propelled by
the Emerging and Established segments• Revenue growth management initiatives,
led by pricing drove FX-neutral revenue
per case up to 5.8%
• Comparable EBIT grew by 23.6% with
margins +60bps to 11.6%. Reported EBIT
grew by 21.0%• Operating costs as a percent of revenue
improved by 2.2pp, driven by operating
leverage, cost saves higher than plan;
30 bps benefit from the Cyprus
property sale
• This improvement in EBIT and EBIT
margins was achieved while increasing
marketing expenditure by 63%, almost
back to pre-pandemic levels• Consistent investment behind ourstrategic priorities is building growth
momentum. We expanded the roll outof Costa Coffee and launched Caffè
Vergnano in Q4. We announced ourgeographical expansion into Egypt withthe acquisition of Coca-Cola BottlingCompany of Egypt, which closed in
January 2022. And we announced ourcommitment to net zero emissions
by 2040• Strong earnings growth, record high free
cash flow and increased dividend pay-out
target range to 40-50%• The balance sheet remains robust
and flexible.

1. Performance, unless stated otherwise, is negatively
impacted by the change in classification of our Russian
Juice business, Multon, from a joint operation to a joint
venture, following its re-organisation in May 2020.
Performance is also positively impacted by theacquisition of Bambi in June 2019, when compared
to 2019. Unless stated otherwise, performancecompared to 2019 is presented on a like-for-like basis.
2. For details on APMs refer to ‘Alternative Performance
Measures’ and ‘Definitions and reconciliationsof APMs’ sections.
3. Refer to the condensed consolidated income statement.
4. Net Profit and comparable net profit refer to net profit
and comparable net profit respectively after tax
attributable to owners of the parent.

INTEGRATED ANNUAL REPORT 2021

Income statement
Category growth and ongoing market sharegains drove full year volume up 14.0% on a
like-for-like basis, while reported volume wasup 13.0%, still impacted by the reorganisationin the structure of our Russian Juicebusiness (Multon).
FX-neutral revenue per case expanded
by 5.8%, or 3.9% excluding pricing taken
to pass on the Polish sugar tax. The strengthof our brand portfolio was evident, with pricetaken in 95% of our markets, while market
share expanded.
Category mix improved as we drove theSparkling and Energy categories. Package
mix was also accretive thanks to single-serveincidence in the at-home channel, andthe reopening of out-of-home. The rapid
Emerging segment volume growth resulted
in negative country mix at consolidated
Group level.
2021 FX-neutral revenue increased by 20.6%
on a like-for-like basis.
Prioritisation of the growth opportunities
across our 24/7 portfolio continues to drive
performance and has created a stronger
and more resilient mix of categories.
We accelerated market share gains in
non-alcoholic ready-to-drink beverages(NARTD) adding 90bps in value share in
2021, while also improving or maintaining
our Sparkling share position in the
majority of markets.
Reported revenues increased by 16.9%,
which also reflects the negative impactof the change in accounting treatmentof our Russian juice business (Multon) andthe weakening of the Russian Rouble versus
the Euro.
Comparable gross profit grew by 11.7%
while gross profit margins declined by 170
basis points to 36.2%. We saw headwinds
from input cost inflation across all our
key commodities of sugar, aluminium
and PET resin in the second half of theyear in particular.

Key financial information
Volume (million unit cases)
Net sales revenue (€ million)
Net sales revenue per unit case (€)
Currency-neutral net sales revenue2 (€ million)
Currency-neutral net sales revenue per unit case2 (€)
Operating profit (EBIT)3 (€ million)
Comparable EBIT2 (€ million)
EBIT margin (%)
Comparable EBIT margin2 (%)
Net profit (€ million)
Comparable net profit2,4 (€ million)
Comparable basic earnings per share2,4 (€)

75

2021

2020

%
change2,412.7
7,168.4
2.97
7,168.4
2.97
799.3
831.0
11.2
11.6
547.2
578.1
1.584

2,135.6
6,131.8
2.87
5.994.9
2.81
660.7
672.3
10.8
11.0
414.9
431.4
1.185

13.0
16.9
3.5
19.6
5.8
21.0
23.6
40bps
60bps
31.9
34.0
33.7

2021
€ million2020€ million

5,357.4
3,156.9
8,514.3

5,046.0
2,527.1
7,573.1

2,516.4
2,880.8
5,397.2

2,026.2
2,913.6
4,939.8

3,114.5
2.6
3,117.1
8,514.3

2,630.7
2.6
2,633.3
7,573.1

Percentage changes are calculated on precise numbers.

Balance sheet
AssetsTotal non-current assets
Total current assets
Total assets
Liabilities
Total current liabilities
Total non-current liabilities
Total liabilities
EquityOwners of the parent
Non-controlling interests
Total equity
Total equity and liabilities
Figures are rounded.

FX- neutral raw material cost per caseincreased by 8.0%, while comparable COGS
per case increased by 6.3% in the year.
Comparable operating costs increased byonly 7.5% or €125.4 million as we retainedcareful cost discipline throughout the year.
We invested behind growth opportunities
incresing marketing spend by 63% in theyear. Balancing investment in revenue
generating activities with cost savings
elsewhere, resulted in a 2.2 percentage
point improvement in comparable operating
costs as a percent of revenue, whichreached 25.1%.
Comparable EBIT increased by 23.6%
to €831.0 million,taking comparable EBIT
margins up 60 basis points year on year, to11.6%. This includes a 30-basis point benefit
from the sale of a property in Cyprus in
December. This divestment is part of ournormal course of business of efficiently
managing our fixed asset base. Nevertheless,we do not expect a disposal of thismagnitude to repeat.

Comparable taxes amounted to €188.2
million, representing a comparable tax rateof 24.5%, 420bps lower than the rate in
the prior year as we lapped one-off tax
charges in 2020.
Net financing costs decreased to €67.6
million, €2.5 million lower compared withthe prior year.This led to a 34% increaseof comparable net profit to €578.1 million.

76

COCA-COLA HBC

Financial review continued
FX-neutral revenue growthyear on year

19.6%
Comparable EBIT

€831m
Comparable EBIT margin
growth year on year

+60bpsBalance sheet

Borrowings

The balance sheet strengthened further in
2021, increasing the headroom to support
investment in the business as well as thepotential for future inorganic expansion.

Our medium- to long-term aim is to maintaina ratio of net debt to comparable adjusted
EBITDA in the range of 1.5 – 2.0 times.
In 2021, we ended the year with a ratio of
1.1 times. In January we completed theacquisition of Coca-Cola Bottling Companyof Egypt, taking our leverage to 1.6 times.

Total non-current assets increased by€311.4 million, mainly driven by additionsof property, plant and equipment, currencytranslation and the acquisition of a minority
equity shareholding in Caffè Vergnano.
Net current assets rose by €139.6 million in
2021 mainly as a result of higher investments
in financial assets. Trade receivables andinventory also increased, only partially offset
by lower cash and cash equivalents and higher
trade payables. Total non-current liabilities
decreased by €32.8 million in 2021, largely
due to the reclassification of the current
portion of loans payable to joint venturesfrom non-current to current liabilities.

Cash flow
Due to an improvement in operating profit
and working capital, net cash from operating
activities increased by 18.8% during the year.
Capital expenditure, net of receipts fromthe disposal of assets and including principal
repayments of lease obligations, increased
by 16.4% year-on-year. Investment focusedon four key areas: Building additional
production capacity in priority markets andcategories; expanding the coverage of ourcoolers in the market, which are a key driverof improved single-serve mix; accelerating
investments in our digital agenda; andcontinued support of our sustainability
commitments.
Capital expenditure represented 7.5% of
net sales revenue, at the upper end of our
6.5%-7.5% target.
We generated €601.3 million of free cash flowin 2021, up 21.0% from the €497.0 million
generated in 2020. This result reflects higher
operating profitability, working capital
improvements partially offset by higher
capital expenditures.

Our primary funding strategy in the debt
capital markets involves raising financing
through our wholly owned Dutch financing
subsidiary, Coca-Cola HBC Finance B.V.
We use our €5 billion Euro Medium Term
Note (EMTN) and our €1 billion Euro
Commercial Paper (ECP) programmes
as the main basis for financing.
We finished 2021 with an outstandingbalance of €235 million on our Commercial
Paper Programme. We did not issue any newnotes under our Euro Medium Term Note
programme. Our next bond maturity is notdue until November 2024.
At the end of 2021, the Group had €2.6
billion and €0.8 billion available under the
EMTN and ECP programmes respectively
and also €0.8 billion of an undrawn
revolving credit facility (RCF). None of theaforementioned credit facilities carry any
financial covenants which would restrict theGroup’s access to capital.

Dividend
In view of the Group’s progressive dividend
policy, the strength of its balance sheet
and healthy liquidity position, the Board of
Directors has proposed a dividend of €0.71
per share. This is a 10.9% increase fromthe €0.64 per share for 2020. The dividend
payment will be subject to shareholders’approval at our Annual General Meeting.
Furthermore, we have increased thetarget payout ratio to 40 to 50% from35 to 45% previously.

Cash flow
Cash flow from operating activities
Payments for purchases of property, plant and equipment1
Proceeds from sales of property, plant and equipment
Principal repayments of lease obligations
Free cash flow

2021
€ million2020€ million

1,142
(514)
36
(63)
601

962
(419)
13
(59)
497

1. Payments for purchases of property, plant and equipment for 2021 include €7.1 million (2020: €nil) relating to
repayment of borrowings undertaken to finance the purchase of production equipment by the Group’s subsidiaryin Nigeria, classified as ‘Repayments of borrowings’ in the condensed consolidated cash flow statement.
Figures are rounded.

INTEGRATED ANNUAL REPORT 2021

Economic value
HIgher profits combined with lower average
net borrowings in 2021 resulted in a significant
increase in return on invested capital (ROIC)
from 11.1% in 2020 to 14.8% in 2021.
Adjusted for the property sale in Cyprus,
ROIC was 14.4%.
At the same time, our weighted average
cost of capital (WACC) increased from 7.8%
in 2020 to 7.9% in 2021. We continued to
grow the positive economic value generated
by our operations.

Financial risk management
The gradual relaxation of COVID-19 –related mobility restrictions contributed
to boost economic growth in many of thegeographies where we operate. While thispositively affected several currencies relevantto the Group, this strong recovery in demand,
coupled with supply chain disruptions led to
the rapid rise of commodity prices including
oil, aluminium and sugar throught 2021.
Effective financial risk management proved
successful in mitigating a material part of
input cost increases for 2021. At the sametime by adding new risk managed commodity
prices and countries, we enlarged ourapplication of financial risk management
and secured good entry points for futurecommodity exposures as well.
In terms of foreign exchange risk, the Groupis exposed to exchange rate fluctuation of
the Euro versus the US Dollar and the local
currency of each country of our operations.
Our risk management strategy involves
hedging transactional exposures arising fromcurrency fluctuations, with available financial
instruments on a 12-month rolling basis.
As a matter of Group policy, translational
exposures are not hedged.
Higher commdity prices,along with thestrong Russian macroeconomic positionand prompt tightening of monetary policy,
supported the strong performance of theRussian Rouble until the fourth quarterof 2021. At that point, rising geopoliticaltensions had a negative impact on the
Rouble, which was mitigated by our active
financial risk management strategy to a large
extent in the year.

Following a devaluation early in 2021,
the Nigerian Naira continued to weaken
gradually. The market is still affected bylingering shortages of foreign currency in thelocal foreign exchange market. The Group
continues to make use of risk management
instruments offered in Nigeria, which
compensate a part of the financial impactof the weakening Naira, albeit not assistingwith the limited liquidity in hard currency.
Our general policy is to retain a minimum
amount of liquidity reserves in the formof cash and cash equivalents on our balance
sheet. During 2021, we invested our excess
cash primarily in short-term time deposits
and money-market funds.

Looking ahead
With the release of our full year 2021
results announcement on 22nd February,
Coca-Cola HBC set guidance for the year
in a wide range that considered geopoliticalrisks, as well as headwinds from commodities
and currencies. However, in the days that
followed this, the conflict in Ukraine developed
further and faster than anticipated.
As of the publication of our integrated
annual report, we believe that it is still too
early to quantify the impact that the evolving
geopolitical crisis and many governments’developing reactions to it will have on ourbusiness or on our full year 2022 results.
Given that we generated c. 20% of 2021
volumes and EBIT from Russia and Ukraine,
combined with the uncertainty of theduration and economic impact, we no longer
believe that it is prudent to provide guidancefor our group’s current financial year.

Ben Almanzar
Chief Financial Officer

77

Total tax by category in 2021 (%)

Corporate income tax 49.3%
Withholding tax
4.2%
Payroll taxes
37.9%
VAT (cost)
4.0%
Environmental taxes
0.2%
Other taxes
4.4%

Taxes we contribute to ourcommunities
When considering tax, Coca-Cola
HBC gives due consideration to theimportance of earning community trust.
More specifically, we commit to continue
paying taxes in the countries where value
is created and ensure that we are fullycompliant with the spirit as well as theletter of tax laws and regulations acrossall jurisdictions we operate in. In addition,
we commit to being open and transparent
with tax authorities about the Group’s tax
affairs and to disclose relevant information
to enable tax authorities to carry out
their reviews.
We support the communities in the
countries where we operate directly,
by creating economic wealth, and also
indirectly, by paying taxes. These taxes
include corporate income tax calculatedon each country’s taxable profit,
employer taxes and social security
contributions, net VAT cost and othertaxes that are reflected as operating
expenses. Excise taxes and taxes borneby employees are not included.
2021 Borrowing structure (€ m)€2,937m

Bonds issued
Commercial paper
LeasesOther

2,386m
235m
160m
156m

78

COCA-COLA HBC

Financial review continued

Segment highlights
Established markets
Established segment FX-neutral revenues grew by 13.9%,
propelled by both volume and price/mix in 2021. The segment’s
revenues closed only 2.1% below 2019 levels.
Italy, Greece and Ireland all grew volumes by double digits
thanks to a very good performance from the out-of-homechannel enabled by strong execution. There is room for further
improvements as we look ahead, considering that volumes in
the out-of-home channel still remain below 2019 in every market
in the segment. Meanwhile, the at-home channel finished withvolumes 5% above 2019.
EBIT grew by 44% while margins expanded 250 basis points,of which 90 basis points was due to the property sale in Cyprus.
The rest is mainly due to positive operational leverageon revenue growth.

Volume vs. 2020

9.9%
FX-neutral net
sales revenue percase vs. 2020

3.7%

Developing markets
The Developing segment’s currency-neutral revenue increased
by 18.0% with price/mix expanding 17.0%. FX-neutral revenues
are now 5.7% above 2019 levels.
Performance was impacted by the Polish sugar tax. Without it,
the segment’s price/mix growth was 5.8%, and volume
growth was up 4.4%.
It should be noted that Poland’s volume decline was in line with
our expectations given the magnitude of the price increases
to offset discriminatory taxation. We are particularly pleased withperformance of single-serve formats, low- and no-sugar variants
as well as our market share gains. We expect Poland’s volumes
to return to growth in 2022.

Volume vs. 2020

0.8%
FX-neutral net
sales revenue percase vs. 2020

17.0%

EBIT grew by 4.3% with EBIT margin weighed down by the sugar tax.

Emerging markets
We saw sustained, strong momentum in the Emerging segmentwith like-for-like revenue up 27.1%. FX-neutral revenues are now
24% above 2019 levels propelled by Russia, Nigeria and Ukraine
as well as recovery in the rest of the segment.
Nigerian volumes grew by nearly 30%. Strong performancein Sparkling and Energy is driving very healthy category mix.
Combining this with the pricing taken throughout the year,
allowed high-teens price/mix in Nigeria in 2021.
In Russia volume growth was 25% like for like. The category isbenefiting from the healthy consumer demand. Our teams haveharnessed these conditions, with strong activations in thepremium part of the market.
EBIT grew by 17.3% and Emerging remains our highest
margin segment.

Volume vs. 2020

18.6%
FX-neutral net
sales revenue percase vs. 2020

5.3%

INTEGRATED ANNUAL REPORT 2021

Volume (million unit cases)
Net sales revenue (€ million)
Operating profit (EBIT) (€ million)
Comparable EBIT (€ million)
Total taxes1 (€ million)
Population2 (million)
GDP per capita (US$)
Bottling plants (number)
Employees (number)
Water footprint (billion litres)
Carbon emissions (tonnes)
Safety rate (lost time accidents>1 day per 100 employees)

2021

2020

% change

590
2,479
286
301
131
94
44,414
15
6,251
3.751
65,577

537
2,175
203
209
111
94
39,552
15
6,407
3.744
67,450

9.9
14.0
40.5
43.9
17.4
–
12.4
–
(2.4)
0.2
(2.8)

0.44

0.55

(20.0)

79

Volume breakdown by country (%)
Italy
GreeceAustria
Republic of Ireland
and Northern Ireland
Switzerland
Cyprus

43%
18%
13%
13%
11%
2%

1. Total taxes include corporate income tax, withholding tax and deferred tax, as well as social security costs and other taxes that are reflected as operating expenses; as per IFRS accounts.
2. Population source: International Monetary Fund, World Economic Outlook Database, October 2021.

Volume (million unit cases)
Net sales revenue (€ million)
Operating profit (EBIT) (€ million)
Comparable EBIT (€ million)
Total taxes1 (€ million)
Population2 (million)
GDP per capita (US$)
Bottling plants (number)
Employees (number)
Water footprint (billion litres)
Carbon emissions (tonnes)
Safety rate (lost time accidents>1 day per 100 employees)

2021

2020

% change

416
1,366
105
107
46
76
19,622
9
4,261
3.214
45,633

412
1,171
97
102
63
76
17,494
9
4,581
3.159
44,927

0.8
16.6
7.9
4.3
(27.6)
–
12.0
–
(7.0)
1.7
1.6

0.47

0.33

42.4

Volume breakdown by country (%)
PolandHungary
Czech Republic
Baltics
Croatia
Slovakia
Slovenia

43%
22%
12%
8%
7%
6%
2%

1. Total taxes include corporate income tax, withholding tax and deferred tax, as well as social security costs and other taxes that are reflected as operating expenses; as per IFRS accounts.
2. Population source: International Monetary Fund, World Economic Outlook Database, October 2021.

Volume (million unit cases)
Net sales revenue (€ million)
Operating profit (EBIT) (€ million)
Comparable EBIT (€ million)
Total taxes1 (€ million)
Population2 (million)
GDP per capita (US$)
Bottling plants (number)
Employees (number)
Water footprint (billion litres)
Carbon emissions (tonnes)
Safety rate (lost time accidents>1 day per 100 employees)

2021

2020

% change

1,407
3,324
409
424
189
453
6,334
32
16,70010.721
314,582

1,187
2,786
360
361
169
448
5,705
32
16,734
8.654
319,544

18.6
19.3
13.5
17.3
12.2
1.1
11.0
–
(0.2)
23.9
(1.6)

0.14

0.11

27.3

Volume breakdown by country (%)
Nigeria
Russian Federation
Romania
Serbia and Montenegro
UkraineBulgaria
BelarusBosnia and Herzegovina
Armenia
Moldova

28%
27%
14%
10%
10%
4%
3%
2%
1%
1%

1. Total taxes include corporate income tax, withholding tax and deferred tax, as well as social security costs and other taxes that are reflected as operating expenses; as per IFRS accounts.
2. Population source: International Monetary Fund, World Economic Outlook Database, October 2021. Population includes N. Macedonia.
Figures are rounded. Percentage changes are calculated on precise numbers.

80

COCA-COLA HBC

Non-financial reporting directive

Delivering 24/7 takes
an integrated approachThis spread constitutes ournon-financial information
statement. The below provides
page references mappingout how our report complies
with relevant regulation on
non‑financial information.
This information
is supplementary.

Our purpose

Policies and values

Effective oversight

Serving as our north star ambition
to guide everything we do.

Underpinning our business and setting
the direction for how we achieve
our goals.

Our Board and senior management
ensure we stay on course to achieve
our vision.

Our purpose pages 16-17

Values pages 16-17

The Executive Leadership Teampages 104-106• Winning with customers• Nurturing our people• Excellence• Integrity• Learning• Performing as one

Policies (see our website)

We are devoted to growing
every customer and delighting
every consumer 24/7 bynurturing passionate andempowered teams of people
while enriching our communities
and caring for the environment.

Environmental matters• Environmental policy• Climate Change policy• Packaging waste management policy• Sustainable Agricultural Guiding Principles• Water Stewardship policy• Biodiversity statement
Employees• Code of Business Conduct• Diversity and Inclusion policy• Occupational Health and Safety policy• Quality and Food Safety policy
Human rights• Human Rights policy• Supplier Guiding Principles• Slavery and Human Trafficking statement
Social matters• Health and Wellness policy• HIV/AIDS policy• Code of Business Conduct• Supplier Guiding Principles• GMO position statement• Community Contributions policy• Premium spirits Responsible
Marketing policy• Public policy engagement• Quality and Food Safety policy
Anti-bribery and Corruption• Code of Business Conduct• Anti-bribery policy and compliancehandbook• Supplier Guiding Principles• Community contributions policy
Principal risk
• Risk policy

How our Board considers
stakeholders in decision making
pages 100-101
Social Responsibility Committee
pages 116-117

INTEGRATED ANNUAL REPORT 2021

EU taxonomy
The Taxonomy Regulation is a key
component of the European Commission’s
action plan to redirect capital flows towards
a more sustainable economy. The EU
Taxonomy, a classification system forsustainable activities in support of the
EU’s Green Deal, has been introduced
this year, covering as of now two of thesix environmental objectives in the
supplementing Delegated Acts: climatechange mitigation and climate change
adaptation. Under the EU Taxonomy,

non-financial companies are to disclose
which percentage of their turnover, CapEx,
and OpEx meets its criteria.
As a company domiciled in Switzerland,
CCHBC is not in scope of the EU NonFinancial Reporting Directive (NFRD),
thus we are not subject to reporting on
the EU Taxonomy. However, we havebeen voluntarily complying with otherrequirements of the NFRD since 2018.
An internal cross-functional team has beenworking to evaluate the Group’s activities
with regards to the EU taxonomy.

81

For 2021, we have examined thetaxonomy-eligible economic activities
listed in the Delegated Acts and concluded
that the primary economic activity of
CCHBC – manufacturing of beverages
and food products – is not included in
the EU Taxonomy annexes and that noother taxonomy-eligible activities havebeen identified.
In 2022, we will remain alert to theevolving EU legislation around corporate
sustainability disclosure requirements,
and we will continue our work to maintain
top-quality ESG reporting.

Positive influence

Executing our vision

Defining our successBeing conscious of stakeholders, risks,market changes and material issues,
while responding through our businessmodel in a positive way.

To fulfil our Growth Story 2025 we will
execute on each of our five growth pillars,considering all stakeholder at every stepof the journey.

Operating in a sustainable way to ensure
our remuneration and sustainability
commitments are interlinked.

Business model pages 8-9

Growth pillars pages 16-17

Remuneration reportpages 118-140

our
1 Leverage
unique 24/7 portfolio

in the2 Winmarketplace

growth through3 Fuelcompetitivenessand investment
Stakeholder engagement
pages 10‑13
Market trends pages 14-15

the potential
4 Cultivateof our people• Regulatory environment• Sustainability

Principal risks pages 62-65
Material issues page 56
GRI Content Index
https://www.coca-colahellenic.com/
content/dam/cch/us/documents/
oar/Coca-Cola-HBC-2021-GRIContent-Index.pdf.downloadasset.pdf

our licence
5 Earnto operate

The CEO’s individual performance ismeasured in key strategic areas and taken
into account for MIP. These strategic areas
include the Company’s performance in
ESG benchmarks. The Company received
the highest scores in 8 of the 10 mostrecognized ESG benchmarks, DJSI, CDP,MSCI, ecoact, FTSE4GOOD, MSCI and
Vigeo Eiris. The PSP contains metrics
linked to a reduction in CO2 emissions.
The CO2 emissions target in the PSP
implicitly captures reduction in plastics,
which was a key driver of its selection
as a metric.
See pages 123, 134-135
CEO pay ratio
See page 137

Mission 2025 sustainability
commitments pages 54-55• Emissions reduction• Water reduction and stewardship• World Without Waste• Ingredient sourcing• Nutrition• Our people and communities

82

COCA-COLA HBCINTEGRATED ANNUAL REPORT 2021

83

Corporate
GovernanceContents
Corporate Governance
84
88
92
118
141
142

Chairman’s introduction to corporate governance
Board of Directors
Corporate Governance Report
Directors’ Remuneration ReportStatement of Directors’ Responsibilities
2021 SASB Index

84

COCA-COLA HBC

Chairman’s introduction to corporate governance

Governing adaptationand change
Letter from the
Chairman of the Board

Managing and mitigating the effectsof the COVID-19 pandemic
2021 saw further disruption from the ongoing COVID-19 pandemic
and, again, agility and adaptation were required across the Group to
face a wealth of challenges. The Board’s key priority in this regard
remained the safety of our people, customers, partners andcommunities. A number of measures continue to be in place tosupport the physical and mental wellbeing and health of our people
as they work to maintain product supply and continue to serve ourcustomers. We are developing programmes to ensure safe andproductive workplaces for our people as we transition into a
post-COVID working environment.
We have also positioned the Company well to take advantage ofnew, emerging opportunities in the post-pandemic recovery period.
In particular, we continue to invest in digital commerce channels
where we are seeing revenue growth, boosted by shifting consumer
habits amplified by the COVID-19 pandemic, and the Board intends
to continue to invest capital and management attention in this area.

Dear Shareholder

Coca-Cola Bottling Company of Egypt

Our Corporate Governance Report for 2021 details
our robust governance arrangements throughout theGroup and the key activities and decisions undertakenby the Board during the year. Against the backdrop ofcontinued disruption in light of the COVID-19 pandemic,
the Board has remained focused on our Growth Story
2025 to support the long-term sustainable successof our business while also overseeing the Company’s
expansion into Egypt and our commitment to achieving
net zero emissions across the entire value chain by 2040.

In August 2021, we announced the acquisition of the Coca-Cola
Bottling Company of Egypt S.A.E., a leading producer of non-alcoholic
ready-to-drink beverages in Egypt.The Board is excited by theconsiderable opportunities arising from access to the second largest
non-alcoholic ready-to-drink market in Africa by volume and the
expansion of our emerging markets footprint.
The Board was actively engaged in the acquisition process which
is discussed in the Applied Governance section of this reporton page 96.

Net zero emissions
Building on our long history of ambitious sustainability targets, in
2021 the Board endorsed NetZeroby40, the Company’s commitmentof reaching net zero greenhouse gas emissions across our entire
value chain by 2040.
Via an existing, approved science-based target, by 2030 the Company
aims to reduce its value chain emissions in Scopes 1,2 and 3 by 25%.
With our NetZeroby40 target, we have set our sights on a further 50%
reduction in the following decade. To address the 90% of emissionsin Scope 3 resulting from third party actions, we will broaden our
existing partnership approach with suppliers. The detailed actions
and initiatives required to achieve this ambition are reviewed by the
Board’s Social Responsibility Committee.

Celebrating our 70th year
70 years after our business was founded in Nigeria, in 1951, theBoard is focused on ensuring the Company’s enduring success forthe next 70 years. The Board’s priorities reflect our understandingof what is needed to ensure resilience while pursuing growth andexpansion. Our ownership structure, featuring stable long-term
shareholders, and our long-lasting core values help us make decisions
and investments with long-term success in mind which represent
the same well-rooted values.

INTEGRATED ANNUAL REPORT 2021

85

Importance of good governance

Board evaluation

As a Board, we aimed to ensure the highest standards of corporate
governance at the same time that we committed to doing the rightthing in 2021, putting safety first as COVID-19 restrictions continued
to impact our people, customers and communities. Our aim is
to always ensure the highest standards of corporate governance,accountability and risk management. Our internal policies andprocedures, which have been consistently effective since the Groupwas formed, are properly documented and communicated against theframework applicable to companies with a premium listing in the UK.

In line with our commitment to adhere to best corporate governancepractices, an externally facilitated Board effectiveness evaluation
was conducted in the second half of 2021. We will do this once
again in 2022 to build upon the learnings of the 2021 evaluation.
Key outcomes from the Board effectiveness evaluation conducted
in 2021 included on page 102. Further details are disclosed in the
Nomination Committee report on page 114.

The Board and its committees conducted an annual review of theeffectiveness of our risk management system and internal controls,
further details of which are set out in the Audit and Risk Committee
report on page 112. The Board confirms that it has concluded that
our risk management and internal control systems are effective.

The composition and size of the Board continues to be kept underreview. We believe that our Board is well-balanced and diverse,with the right mix of international skills, experience, background,independence and knowledge in order to discharge its duties andresponsibilities effectively.

We are subject to the UK Corporate Governance Code 2018. It sets
out the principles of good practice in relation to: Board leadershipand company purpose; division of responsibilities; composition,
success and evaluation; audit, risk and internal controls; andremuneration. Further information on how we have applied theprinciples and complied with the provisions of the UK Corporate
Governance Code 2018 for the year ended 31 December 2021 canbe found in this report on page 86.

We continue to attach great importance to all aspects of diversity
in our nomination processes at Board and senior managementlevels, while appointing candidates with the credentials that arenecessary for the continuing growth of our operations within ourhighly specialised industry. We believe that having a diverse Board
fosters both innovation and resilience and are proud of our trackrecord of female representation. As of the date of this report, female
Directors comprise more than 30% of our Board.

Board meetings normally take place in Zug, Switzerland, but also
in selected markets across our territories. As was the case in 2020,
certain of these meetings continued to be held online in 2021 due totravel restrictions and safety concerns but the Board also met live inthe second half of the year when COVID-19 related travel restrictions
were lifted. The Board and its committees were therefore able tomeet as often as planned.

Bruno Pietracci and Henrique Braun were elected to the Board at the2021 Annual General Meeting as new non-Executive Directors andJosé Octavio Reyes and Alfredo Rivera both retired from the Board
with effect from the close of that meeting. The skills and expertiseeach member brings to our Board can be found on pages 88 to 90.

Board composition and diversity

Culture and values
The long-term success of our business remains connected to thesuccess of our customers and partners, and our ability to delight
consumers with the beverages and brands that they love. We wereable to accomplish this due to our well-embedded, values-based
culture. The Board plays a critical role in shaping the culture of theCompany by promoting growth-focused and values-based conduct
and ensuring increased focus on continued learning and the smart
risk taking necessary for the Company’s adaptation.
We monitor our progress in integrating our values through various
indicators, including our employee engagement index, diversity
indicators, and health and safety indicators, and our Directors leadby example as ambassadors of our values, cascading good behaviour
throughout the organisation.
As pandemic-related disruptions continued across our territory,
we maintained a stepped-up level of engagement with our people
to ensure we understood their needs and challenges. Two allemployee pulse surveys and one Culture and Engagement survey
were conducted in 2021. While Charlotte Boyle is our designatednon-Executive Director responsible for engaging with our people toprovide feedback to the Board, feedback from our people throughthese surveys was brought to the full Board’s attention in 2021
to facilitate understanding the concerns raised and ensure
rapid response.

Anastassis G. David
Chairman of the Board

86

COCA-COLA HBC

The UK Corporate
Governance Code 2018
As a Swiss corporation listed on the London Stock Exchange (LSE)with a secondary listing on the Athens Exchange, we aim to ensurethat our corporate governance systems remain in line withinternational best practices. Our corporate governance standards
and procedures are continuously reviewed in light of current
developments and rulemaking processes in the UK, Switzerland
and also the EU. Further details are available on our website.
In respect of the year ended 31 December 2021, the Company
was subject to the UK Corporate Governance Code 2018 (a copy
is available at www.frc.org.uk).
Our Board confirms that the Company applied the principles andcomplied with the provisions of the UK Corporate Governance Codethroughout the financial year ended December 2021, except for
the following provisions: (1) The Chairman was not independent on
appointment (provision 9) and has been a Board member for morethan nine years (provision 19), and a full explanation for this departureis provided on pages 87 and 93. On appointment the Board
unanimously supported Anastassis David’s appointment as Chairman.

Section 1: Board leadership and company purpose

See pageA.

Effective and entrepreneurial board to promote
the long-term sustainable success of the company,
generating value for shareholders and contributing
to wider society
B. Purpose, values and strategy with alignment to culture
C. Resources for the company to meet its objectives
and measure performance. Controls framework for
management and assessment of risks
D. Effective engagement with shareholders and stakeholders
E. Consistency of workforce policies and practices
to support long-term sustainable successPursuant to our obligations under the Listing Rules, we apply theprinciples and comply with the provisions of the UK Corporate
Governance Code or explain any instances of non-compliance in
our Annual Report. The Company has applied the principles as far
as possible and in accordance with and as permitted by Swiss law.
Further information on appointment of Directors and compliancewith the UK Corporate Governance Code can be found as follows:
Section 3: Composition, succession and evaluation
J.
K.
L.

•

Chairman’s letter

2-3•Strategic report

2-79

•

Board engagement with key stakeholders

91-100•Shareholder engagement

100•

Audit and Risk Committee report108-113•

Conflicts of interest

103

Section 2: Division of responsibilities

The Board regularly reviews Anastassis David’s position andconsiders that he continues to effectively lead the Board, that his
deep knowledge of the Coca-Cola System position is invaluable
and as such it remains appropriate for him to continue in his role as
Chairman. (2) Provision 38 requires alignment of Executive Director
pension contributions with the wider workforce. Our difficulties incompliance with this provision due to existing contractual obligations
were outlined in the Annual Report published in 2021 and are
explained on page 123 of the Directors’ Remuneration Report.
On the appointment of any new Executive Director, we intend that
their pension contributions will be aligned with the pension scheme
for the wider workforce.

See page

F.
G.
H.
I.

Leadership of board by chair
Board composition and responsibilities
Role of non-Executive Directors
Company secretary, policies, processes, information,
time and resources•

Board composition

92-94

•

Key roles and responsibilities

94-95

•

General qualifications required of all Directors

91•

Information and training

102•

Board appointments and succession planning102

See page

Board appointments and succession plans for board
and senior management and promotion of diversity
Skills, experience and knowledge of board and lengthof service of board as a whole
Annual evaluation of board and directors anddemonstration of whether each director continues
to contribute effectively•

Board composition

92-94

•

Diversity, tenure and experience

91•

Board, committee and Director performance evaluation

102•

Nomination Committee report114-115

Section 4: Audit, risk and internal controls

See page

M. Independence and effectiveness of internal and external
audit functions and integrity of financial and narrative
statements
N. Fair, balanced and understandable assessmentof the company’s position and prospects
O. Risk management and internal control framework
and principal risks company is willing to take to achieve
its long-term objectives•

Audit and Risk Committee report108-113•Strategic Report

2-79

•

Fair, balanced and understandable Annual Report

110, 113,
141•

Going concern basis of accounting

111,141•

Viability statement

72

Section 5: Remuneration

See pageP.

Remuneration policies and practices to support strategy
and promote long-term sustainable success with executive
remuneration aligned to company purpose and values
Q. Procedure for executive, director and senior
management remuneration
R. Authorisation of remuneration outcomes•

Remuneration Committee report118-140

INTEGRATED ANNUAL REPORT 2021

Certain differences between the Company’s
corporate governance practices and the UK
Corporate Governance CodeThe Swiss Ordinance against Excessive Compensation in Listed
Companies further limits the authority of the Remuneration
Committee and the Board to determine compensation. The effective
limitations include requiring that the Annual General Meeting approvethe maximum total compensation of each member of the Board andthe Executive Leadership Team, requiring that certain compensation
elements be authorised in the Articles of Association and prohibiting
certain forms of compensation, such as severance payments andfinancial or monetary incentives for the acquisition or disposalof firms. We are in compliance with the requirements of the Swiss
Ordinance against Excessive Compensation in Listed Companies
and have amended our Articles of Association to that effect.
Anastassis G. David was originally appointed as non-Executive
Director in 2006 at the request of Kar-Tess Holding and was not,at the time of his appointment as Chairman, in 2016, independent
as defined by the UK Corporate Governance Code. In view ofAnastassis David’s strong identification with the Company and its
shareholder interests, combined with his deep knowledge andexperience of the Coca-Cola System, the Board deemed it to bein the best interests of the Group and its shareholders for him to beappointed as Chairman, to continue to promote an effective andappropriately balanced leadership of the Group. In accordance withthe established policy of appointing all Directors for one year ata time, the Board intends to continue to keep all positions underregular review and subject to annual election by shareholders at
the Annual General Meeting. The Board is cognisant of the lengthof tenure of the Chairman and when he was first appointed to theBoard. However, the Board continues to believe that the provenleadership of our Chairman in combination with his deep knowledgeof the Coca-Cola System position him as unique to steer the Groupat the current time.

87

Application of governance codes
Other corporate governance codes
There is no mandatory corporate governance code under Swisslaw applicable to the Company. The main source of law for Swissgovernance rules is the company law contained in article 620 ff.
of the Swiss Code of Obligations, as well as the Ordinance against
Excessive Compensation in Listed Companies.
In addition, the UK’s City Code on Takeovers and Mergers (the ‘City
Code’) does not apply to the Company by operation of law, as theCompany is not incorporated under English law. The Articles of
Association include specific provisions designed to prevent any
person acquiring shares carrying 30% or more of the voting rights(taken together with any interest in shares held or acquired by theacquirer or persons acting in concert with the acquirer) except if(subject to certain exceptions) such acquisition would not have beenprohibited by the City Code or if such acquisition is made throughan offer conducted in accordance with the City Code. For further
details, please refer to the Company’s Articles of Association, which
are available on our website.

Amending the Articles of Association
The Articles of Association may only be amended by a resolutionof the shareholders passed by a majority of at least two-thirds of thevoting rights represented and an absolute majority of the nominal
value of the shares represented.

Share capital structure
The Company has ordinary shares in issue with a nominal valueof CHF 6.7 each. Rights attaching to each share are identical andeach share carries one vote. The Company’s Articles of Association
also allow, subject to shareholder approval, for the conversionof registered shares into bearer shares and bearer shares into
registered shares. Details of the movement in ordinary share capitalduring the year can be found on page 204. There are no persons
holding shares that carry special rights with regard to the controlof the Company.

Powers of Directors to issue and buy back shares
Subject to the provisions of the relevant laws and the Articles
of Association, the Board acting collectively has the ultimate
responsibility for running the Company and the supervision andcontrol of its executive management. The Directors may takedecisions on all matters which are not expressly reserved to theshareholders or by the Articles of Association. Pursuant to theprovisions of the Articles of Association, the Directors require
shareholder authority to issue and repurchase shares. At the Annual
General Meeting on 22 June 2021, the shareholders authorised
the Directors to repurchase ordinary shares of CHF 6.70 each inthe capital of the Company up to a maximum aggregate numberof 10,000,000 representing less than 10% of the Company’s issued
share capital as of 12 May 2021. The authority will expire at theconclusion of the 2022 Annual General Meeting on 21 June 2022
or at midnight on 30 June 2022, whichever is earlier. Total shares
held in treasury are 5,894,583 of which 2,464,448 shares are heldby Coca-Cola HBC AG and 3,430,135 shares are held by its subsidiary,
Coca-Cola HBC Services MEPE.

88

COCA-COLA HBC

Board of Directors

1

2

3

4

5

1. Anastassis G. David

3. Charlotte J. Boyle

Appointed: January 2016. He joined the Boardof Coca-Cola HBC as a non-Executive Director
in 2006 and was appointed Vice Chairman in 2014.

Appointed: June 2017.

Non-Executive Chairman

Skills, experience and contribution: Anastassis
brings to his role more than 20 years’ experience
as an investor and non-executive director in thebeverage industry. Anastassis is also a former
Chairman of Navios Corporation. He holds a BA
in History from Tufts University.
External appointments: Anastassis is activein the international community. He serves asVice Chairman of Aegean Airlines S.A., Vice
Chairman of the Cyprus Union of Shipowners andChairman of the Board of Sea Trade Holdings Inc,a shipowning company of dry cargo vessels. He is
also a member of the Board of Trustees of College
Year in Athens.
Nationality: British

2. Zoran Bogdanovic

Chief Executive Officer, Executive Director
Appointed: June 2018.
Skills, experience and contribution: Zoran
was previously the Company’s Region Director
responsible for operations in 12 countries and has
been a member of the Executive Leadership Teamsince 2013. He joined the Company in 1996 andhas held a number of senior leadership positions,
including as General Manager of the Company’s
operations in Croatia, Switzerland and Greece.
Zoran has a track record of delivering results acrossour territories and demonstrating the values thatare the foundation of our Company culture.
External appointments: None
Nationality: Croatian

Independent non-Executive Director
Skills, experience and contribution: After 14
years with The Zygos Partnership, an international
executive search and board advisory firm,
including nine years as a partner, she retired fromher position in July 2017. Prior to that, Charlotte
worked at Goldman Sachs International and at
Egon Zehnder International, an international
executive search and management assessment
firm. Charlotte obtained an MBA from the London
Business School and an MA from Oxford University
and was a Bahrain British Foundation Scholar.
External appointments: Charlotte serves
as Chair of UK for UNHCR, an independent nonexecutive director and chair of the Environment,
Sustainability and Community Committee of
Capco plc, a non-executive director of Thatchers
Cider Company Ltd, a non-executive adviser tothe Group Executive Board of Knight Frank LLP and
as a Trustee and chair of the finance committeeof Alfanar, the venture philanthropy organisation.
Nationality: British

4. Henrique Braun

Non-Executive Director
Appointed: June 2021.
Skills, experience and contribution: Henrique
has vast experience in corporate functions as well
as regional and business unit operations in The
Coca-Cola Company. He joined The Coca-Cola
Company in 1996 in Atlanta and progressed
through increasing responsibilities in North
America, Europe and Latin America. His career
responsibilities have included supply chain, newbusiness development, marketing, innovation,
general management and bottling operations.
From 2016 to 2020, Henrique served as the
President of the Brazil business unit and from 2013
to 2016, he was the President for Greater China
and Korea. His other roles in The Coca-Cola
Company in the past include Vice President of
Innovation and Operations in Brazil and Director
for Still Beverages (non-carbonated beverages) inEurope. He first joined the Coca-Cola Company asa trainee in Global Engineering in the US. Henriqueholds a bachelor’s degree in agricultural

engineering from the University Federal of Riode Janeiro, a master’s in industrial engineeringfrom Michigan State University and an MBA from
Georgia State University.
External appointments: Henrique currently
serves as President of Latin America Operating
Unit for The Coca-Cola Company, a role he has
held since 2020.
Nationality: American and Brazilian

5. Olusola (Sola) David-Borha

Independent non-Executive Director
Appointed: June 2015.
Skills, experience and contribution: Sola hasmore than 30 years’ experience in financial
services and held several senior roles within the
Stanbic Group, including the position of Chief
Executive of Stanbic IBTC Bank from May 2011 toNovember 2012. She also served as Deputy Chief
Executive Officer of Stanbic IBTC Bank and Headof Investment Banking Coverage Africa (excludingSouth Africa). Stanbic IBTC Holdings is listedon the Nigerian Stock Exchange and is a memberof Standard Bank Group. Between January 2017
and March 2021, Sola has been the Chief Executiveof the Africa Regions (excluding South Africa)
for Standard Bank Group, Africa’s largest bankby assets with operations in 20 countries acrossthe continent.
Sola holds a first degree in Economics andobtained an MBA degree from Manchester
Business School. Her executive education
experience includes the Advanced Management
Programme of the Harvard Business School
and the Global CEO Programme of CEIBS,
Wharton and IESE.
External appointments: Sola serves as
non-executive director on the boards of Stanbic
IBTC Holdings Plc and Stanbic Uganda Holdings
Limited, listed entities that are members of theStandard Bank Group. Finally, Sola was appointed
Chairman of Stanbic IBTC Bank Plc, a non-listed
subsidiary of Stanbic IBTC Holdings Plc in
October 2021.
Nationality: NigerianINTEGRATED ANNUAL REPORT 2021

6

7

9

10

6. Anna Diamantopoulou

Independent non-Executive Director
Appointed: June 2020.
Skills, experience and contribution: Anna,
as a former European Commissioner, brings to
the Group a unique expertise on matters of
employment and equal opportunity together withdeep knowledge of the European CSR agenda.
Anna was an elected Member of the Greek
Parliament for over a decade, during which time
she served as Deputy Minister for Industries,
Minister of Education, Lifelong Learning andReligious Affairs and Minister of Development,
Competitiveness and Shipping of the Hellenic
Republic. From 1999 to 2004, Anna served asa member of the European Commission in chargeof Employment, Social Affairs and Equal
Opportunities.
External appointments: Founder and Presidentof DIKTIO-Network for Reform in Greece andEurope, a leading Athens-based independent,
non-partisan policy institute. A Council Memberof the European Council on Foreign Relations,an Advisory Board Member of Delphi Economic
Forum and a member of the Honorary Boardof the Bussola Institute, a foundation aiming tostrengthen cooperation between the EU and the
GCC. Finally, Anna is the Chair of the European
Commission’s High Level Group on the future ofsocial protection and the welfare state in the EU.
Nationality: Greek

7. William W. (Bill) Douglas III

Independent non-Executive Director
Appointed: June 2016.
Skills, experience and contribution: Bill is aformer Vice President of Coca-Cola Enterprises,
a position in which he served from July 2004 until
his retirement in June 2016. From 2000 until 2004,
Bill served as Chief Financial Officer of Coca‑Cola
HBC. Bill has held various positions within the
Coca-Cola System since 1985, including positions
with responsibility for the IT function. Before
joining the Coca‑Cola System, Bill was associatedwith Ernst & Whinney, an international accounting
firm. He received his undergraduate degreefrom the J.M. Tull School of Accounting at the
University of Georgia.

External appointments: Bill is the Lead Director
and Chairman of the Audit Committee of SiteOne
Landscape Supply, Inc. He is also a memberof the Board of Directors and Chair of the Audit
Committee for The North Highland company.
He also serves on the Board and is a past Chairof the University of Georgia Trustees.
Nationality: American

8. Reto Francioni

Senior Independent non-Executive Director
Appointed: June 2016.
Skills, experience and contribution: Reto has
been Professor of Applied Capital Markets Theory
at the University of Basel since 2006 and is theauthor of several highly respected books on capital
market issues. From 2005 until 2015, Reto was
Chief Executive Officer of Deutsche Börse AG andfrom 2002 until 2005, he served as Chairman of
the Supervisory Board and President of the SWXGroup, which owns the Swiss Stock Exchange andhas holdings in other exchanges. Between 2000
and 2002, Reto was Co-Chief Executive Officer
and Spokesman for the Board of Directors ofConsors AG. Between 1993 and 2000, he held
various management positions at Deutsche Börse
AG, including that of Deputy Chief Executive
Officer. He earned his Doctorate of Law at the
University of Zurich.
External appointments: Reto serves as Chairmanof the Supervisory Board of UBS Europe SE andalso as the Chairman of the Supervisory Boardof Swiss International Airlines. Reto is also a Vice
Chairman at the Board of Directors of Medtech
Innovation Partners AG, Basel.
Nationality: Swiss

89

8

9. Anastasios I. Leventis
Non-Executive Director
Appointed: June 2014.
Skills, experience and contribution: Anastasios
began his career as a banking analyst at Credit
Suisse and then American Express Bank. He has
previously served on the boards of the Cyprus
Development Bank and Papoutsanis SA. He holds
a BA in Classics from the University of Exeter andan MBA from New York University’s Leonard Stern
School of Business.
External appointments: Anastasios is a board
member of A.G. Leventis (Nigeria) Ltd. He is alsoa director of Alpheus Administration, a privatecompany that administers assets for private clientsand charitable foundations. In addition, he serves
as a trustee of the A.G. Leventis Foundation,a member of the Board of Overseers of the
Gennadius Library in Athens and a member of theCampaign board of the University of Exeter. He isa co-founder of the Cyclades Preservation Fund.
Nationality: British

10. Christo Leventis
Non-Executive Director
Appointed: June 2014.
Skills, experience and contribution: Christo
worked as an Investment Analyst with Credit Suisse
Asset Management from 1994 to 1999. In 2001,
he joined J.P. Morgan Securities as an Equity
Research Analyst focusing on European beveragecompanies. From 2003 until March 2014, Christo
was a member of the Board of Directors ofFrigoglass S.A.I.C., a leading global manufacturerof commercial refrigeration products for the
beverage industry. Christo holds a BA in Classics
from University College London and an MBA fromthe Kellogg School of Management in Chicago.
External appointments: Christo is the Chairmanof Alpheus Capital, a single-family private equity
investment office.
Nationality: British

90

COCA-COLA HBC

Board of Directors continued
11

12

13

11. Alexandra Papalexopoulou

12. Bruno Pietracci

13. Ryan Rudolph

Appointed: June 2015.

Appointed: June 2021.

Appointed: June 2016.

Skills, experience and contribution: Alexandra
worked previously for the OECD and theconsultancy firm Booz, Allen & Hamilton, in Paris.
From 2003 until February 2015, she served as amember of the board of directors of Frigoglass
S.A.I.C. From 2010 to 2015, she served as amember of the board of directors of National Bankof Greece and from 2007 to 2009, she served asa member of the board of directors of Emporiki
Bank. Alexandra holds a BA in Economics andMathematics from Swarthmore College in the US
and an MBA from INSEAD in France.

Skills, experience and contribution: Bruno hasa more than 20-year track record of transforming
businesses, people and communities and brings
experience and knowledge of the Coca-Colasystem, having held a number of roles at The
Coca-Cola Company since 2008. From 2018
to 2020, he was President of The Coca-Cola
Company’s Southern and East Africa Business
Unit and from 2016 to 2018, he served as theVice-President of Operations in Europe, Middle
East and Africa. Prior to that, he was the General
Manager for Colombia, Venezuela and Ecuador(from 2014 to 2016) and General Manager of FU
Center in Brazil (from 2012 to 2014). From 2010
to 2012, he was the General Manager of FU Southin Brazil. Bruno joined The Coca-Cola Company
in 2008 as Vice-President of Strategy, Insights
and Innovation in Brazil. Prior to that he worked
at McKinsey & Company in Brazil and Portugal
from 1997 to 2008, working in marketing andsales with consumer-packaged goods andtelecommunications clients. He has served on theboard of Coca-Cola Beverages Africa since 2017and has also served on the boards of Toni Corp
in Ecuador (2016) and Matte Leão in Brazil (2009).
In 2016, he was the Chairman of Corporación
Juego y Niñez in Colombia. Bruno holds abachelor’s degree in mechanical engineering fromthe Universidade Estadual de Campinas in Brazil
and an MBA from INSEAD in France.

Skills, experience and contribution: From 2006
until 2019, Ryan was an attorney and partner at
the law firm Oesch & Rudolph. From 1993 until
2006, he worked as an attorney at the businesslaw firm Lenz & Staehelin in Zurich. Prior to that,
he worked as a public relations consultant at the
public relations agency Huber & Partner in Zurich,as marketing assistant and subsequently as
manager at Winterthur Life Insurance as well as
part-time with D&S, the Institute for Marketing
and Communications Research in Zurich. Ryanobtained an LLM from the University of Zurich
and is admitted to the Zurich bar. Ryan alsostudied at the Faculté des Lettres of the Universityof Geneva, as well as the Ecole Polytechniquein Lausanne.

External appointments: Bruno currently serves
as President of the Africa Operating Unit for
The Cola-Cola Company, a role which he has
held since 2020.

Social Responsibility Committee page 116

Independent non-Executive Director

Non-Executive Director

External appointments: Alexandra is the Strategic
Planning Director at Titan Cement Company S.A.,
where she has been employed since 1992 andhas served as Executive Director since 1995.
Alexandra is treasurer and a member of theboard of directors of the Paul and Alexandra
Canellopoulos Foundation, a member of the boardof directors of the INSEAD business school and amember of the board of trustees of the American
College of Greece.
Nationality: Greek

Non-Executive Director

External appointments: Ryan is an attorney
and partner at the Zurich-based law firm RCS
Trust & Legal AG. In addition, he serves as amember of the Foundation Board of the A.G.
Leventis Foundation and as a member of theboard of various privately-held companies andcharitable foundations.
Nationality: Swiss
Board committees
Audit and Risk Committee page 108
Nomination Committee page 114
Remuneration Committee page 118
Committee Chair

Nationality: Brazilian and ItalianDiversity, tenure and experience of the Board
Board gender diversity

Men
Women

9
4

Board tenure

Board age profile

Board nationality profile

0-1 years

2

40 to 49 years old

3

American1

1-2 years

1

50 to 59 years old

5

American/Brazilian

13-4 years

1

60 to 69 years old

5

Brazilian/Italian1

4-5 years

1

70 years old or more 0

British4

5-6 years

3

Croatian1

6-7 years

2

Greek

2

7-8 years

2

Nigerian1

14-15 years

1

Swiss

2

Board experience
Finance, investments
and accounting

12International exposure

13

FMCG knowledge/
experience

6

Risk oversightand management

12

Sustainability andcommunity engagement

8

Corporate governance7

INTEGRATED ANNUAL REPORT 2021

General qualifications requiredof all Directors
Coca-Cola HBC’s Board Nomination Policy requires that each
Director is recognised as a person of the highest integrity andstanding, both personally and professionally. Each Director must be
ready to devote the time necessary to fulfil his or her responsibilities
to the Company according to the terms and conditions of his or her

91

letter of appointment. Each Director should have demonstrable
experience, skills and knowledge which enhance Board effectivenessand will complement those of the other members of the Board toensure an overall balance of experience, skills and knowledge on the
Board. In addition, each Director must demonstrate familiarity withand respect for good corporate governance practices, sustainability
and responsible approaches to social issues.

Business characteristics

Qualifications, skills and experience

Directors

Our business is extensive and involves complex financialtransactions in the various jurisdictions where we operate

Experience in finance, investments
and accounting

12

Our business is truly international with operationsin 29 countries, at different stages of development,on three continents

Broad international exposure, and emerging
and developing markets experience13

Our business involves the preparation, packaging,sale and distribution of the world’s leading non-alcoholic
beverage brands

Extensive knowledge of our business and thefast-moving consumer goods industry, as well
as experience with manufacturing, route-tomarket and customer relationships

6

Our Board’s responsibilities include the understanding andoversight of the key risks we are facing, establishing our risk
appetite and ensuring that appropriate policies and procedures
are in place to effectively manage and mitigate risks

Risk oversight and management expertise

12

Building community trust through the responsible andsustainable management of our business is an indispensable
part of our culture

Expertise in sustainable sourcing andpackaging, CO2 emissions and experiencein wider stakeholder engagement

8

Our business involves compliance with many different
regulatory and corporate governance requirements acrossa number of countries, as well as relationships with national
governments and local authorities

Expertise in corporate governance and/or
government relations

7

Expertise in ESG matters and sustainable
and responsible business practices

Environmental, social and corporate governance (ESG) areprominent in our business, in particular workforce matters,
environmental and climate change issues and supply
chain sustainability

Environmental, social and corporate governance (ESG)skills and experienceAs evidenced by our commitment to achieve net zero emissions
by 2040, which was announced in October 2021, the Company’s
approach to managing our environmental impact is ambitious.
In support of this ambition, which builds on our long historyof sustainability management, the Board approved a robust planin 2021 in order to achieve its targets by 2040.

As part of this effort, the Social Responsibility Committee proposed
and the Board approved science-based targets for the Company toreduce its value chain emissions in Scopes 1, 2 and 3 by 2040. Anna
Diamantopoulou’s familiarity with the social protection and welfare
state at the EU Commission High-Level Group, in addition with theexpertise of a number of our Board members, that sit at the Boardsof other multi-nationals that face similar challenges and have similar
concerns on the ESG agenda, helped us identifying the commitmentsthat we want to make in the area and set the relevant targets,

92

COCA-COLA HBC

Corporate governance report

Director

Anastassis G. David4
Zoran Bogdanovic
Charlotte J. Boyle
Henrique Braun1
Anna Diamantopoulou
Olusola (Sola) David-Borha
William W. (Bill) Douglas III
Reto Francioni
Anastasios I. Leventis
Christo Leventis
Alexandra Papalexopoulou
Bruno Pietracci1
José Octavio Reyes2
Alfredo Rivera3
Ryan Rudolph

Appointed

Board
Attended/
Total meetings

January 2016
June 2018
June 2017
June 2021
June 2020
June 2015
June 2016
June 2016
June 2014
June 2014
June 2015
June 2021
June 2014
June 2019
June 2016

7/7
7/7
7/7
4/4
7/7
7/7
7/7
7/7
7/7
7/7
7/7
4/4
3/3
3/3
7/7

Audit and Risk
Attended/
Total meetings

Remuneration
Attended/
Total meetings

Nomination
Attended/
Total meetings

4/4

4/4

4/4

4/4

4/4

4/4

Social Responsibility
Attended/
Total meetings

4/4

8/8
8/8
4/4
8/8
3/3
1/1

1. Henrique Braun and Bruno Pietracci were appointed to the Board at the Annual General Meeting on 22 June 2021.
2. José Octavio Reyes retired from the Board and from the Social Responsibility Committee at the Annual General Meeting on 22 June 2021.
3. Alfredo Rivera retired from the Board at the Annual General Meeting on 22 June 2021.
4. Anastassis David was appointed as Chairman in 2016 having been appointed to the Board in 2006.

Board composition
Membership of the Board
On 31 December 2021, our Board comprised 13 Directors: theChairman, one Senior Independent Director, 10 non-Executive
Directors and one Executive Director. The biographies of eachmember of the Board are set out on pages 88 to 90.
The non-Executive Directors, of whom six (representing half of themembers of the Board, excluding the Chairman) are determinedby the Board to be independent, are experienced individuals from a
range of backgrounds, countries and industries. The compositionof the Board complies with the UK Corporate Governance Code’s
recommendation that at least half of the Board, excluding the
Chairman, comprise independent Directors. At the Annual General
Meeting held on 22 June 2021, Henrique Braun and Bruno Pietracci
were appointed as non-Executive Directors. José Octavio Reyes andAlfredo Rivera retired as non-Executive Directors, and José Octavio
Reyes retired as a member of the Social Responsibility Committee
on the same date. There were no other changes to the Board during2021. The changes to committee membership are set out in eachcommittee report.

Outside appointments
The Articles of Association of the Company (article 36) set limits
on the maximum number of external appointments that membersof our Board and executive management may hold. In addition, if a
Board member wishes to take up an external appointment, he or she
must obtain prior Board approval. The Board will assess all requests
on a case-by-case basis, including whether the appointment inquestion could negatively impact the Company or the performanceof the Director’s duties to the Group.
The nature of the appointment and the expected time commitment
are also assessed to ensure that the effectiveness of the Board
would not be compromised.
Details of the external appointments of our non-Executive Directors
are contained in their respective biographies set out on pages 88 to 90.
Our Chairman serves as Vice-Chairman of Aegean Airlines S.A.,
Vice-Chairman of the Cyprus Union of Shipowners and Chairmanof the Board of Sea Trade Holdings Inc., a shipowning company
of dry cargo vessels. He is also a member of the Board of Trusteesof College Year in Athens. In this context, the Board considers
that fewer than four of the positions held by the Chairman are
considered to be significant.

INTEGRATED ANNUAL REPORT 2021

A number of our other Directors also have other external roles buthaving considered the scope of the external appointments of all
Directors, including the Chairman, our Board is satisfied that they do
not compromise the effectiveness of the Board as each Director has
sufficient time to devote to his or her role on the Board as the Board
requires. According to the terms of appointment the Directors are
expected to devote such time as necessary for the performance of
their duties. This will include attendance annually at approximately 10
Board meetings, Annual General Meetings and other ad hoc meetings.
As can be seen in the table of attendance of Board and Board
Committee meetings on page 92, the Directors were able to devote
the time required of them to their role on the Board. The Board has
determined that each member of the Board commits sufficient timeand energy to the role and continues to make a valuable contribution
to the Board and its committees.

Independence
Our Board has concluded that Charlotte J. Boyle, Olusola (Sola)
David-Borha, Anna Diamantopoulou, William W. (Bill) Douglas III,
Reto Francioni and Alexandra Papalexopoulou are deemed
to be independent in accordance with the criteria set out in the
UK Corporate Governance Code, with such individuals being
independent in both character and judgement.
The other non-Executive Directors, Anastassis G. David (Chairman),Henrique Braun, Anastasios I. Leventis, Christo Leventis, Bruno
Pietracci and Ryan Rudolph, were appointed at the request ofshareholders of the Company: Kar-Tess Holding and The Coca-Cola
Company. They are therefore not considered, by the Board, to be
independent as defined by the UK Corporate Governance Code.
Anastassis G. David was appointed as Chairman on 27 January 2016.
The Board firmly believes that Anastassis David embodies theCompany’s core values, heritage and culture and that these
attributes, together with his strong identification with the Company
and its shareholders’ interests, and his deep knowledge andexperience of the Coca-Cola System, ensure an effective andappropriately balanced leadership of the Board and the Company.
Anastassis David was first appointed as a member of the Board
in 2006 before being appointed Chairman in 2016. Prior to his
appointment as Chairman, major shareholders were consulted, andan external search consultancy engaged to find suitable candidates.
The consensus and recommendation was that Anastassis David
was the appropriate candidate to become Chairman and that hecontinues to be effective in his leadership of the Board. Anastassis
David has the continuing support of the Board and major
shareholders to remain as Chairman.

93

Shareholders’ nominees
As described under the heading ‘Major shareholders’ on page 245,
since the main listing of the Company on the Official List of the
London Stock Exchange in 2013, Kar-Tess Holding, The Coca-Cola
Company and their respective affiliates have no special rights inrelation to the appointment or re-election of nominee Directors,
and those Directors of the Company who were originally nominatedat the request of The Coca-Cola Company or Kar-Tess Holding will
be required to stand for re-election on an annual basis in the same
way as the other Directors. The Nomination Committee is responsiblefor identifying and recommending persons for subsequent nominationby the Board for election as Directors by the shareholders on anannual basis.
As our Board currently comprises 13 Directors, neither Kar-Tess
Holding nor The Coca-Cola Company is in a position to control(positively or negatively) decisions of the Board that are subject
to simple majority approval. However, decisions of the Board thatare subject to the special quorum provisions and supermajority
requirements contained in the Articles of Association, in practice,require the support of Directors nominated at the request of at least
one of either The Coca-Cola Company or Kar-Tess Holding in order
to be approved. In addition, based on their current shareholdings,
neither Kar-Tess Holding nor The Coca-Cola Company is in aposition to control a decision of the shareholders (positively
or negatively), except to block a resolution to wind up or dissolve
the Company or to amend the supermajority voting requirements.
The latter requires the approval of 80% of shareholders where
all shareholders are represented and voting. Depending on theattendance levels at Annual General Meetings, Kar-Tess Holdingor The Coca-Cola Company may also be in a position to control
other matters requiring supermajority shareholder approval.
Anastassis G. David, Anastasios I. Leventis, Christo Leventis and
Ryan Rudolph were all originally appointed at the request of Kar-Tess
Holding. Henrique Braun and Bruno Pietracci have been appointed at
the request of The Coca-Cola Company.

Separation of roles
There is a clear separation of the roles of the Chairman and the Chief
Executive Officer. The Chairman is responsible for the operationof the Board and for ensuring that all Directors are properly informed
and consulted on all relevant matters. The Chairman, in the context
of the Board meetings and as a matter of practice, also meetsseparately with the non-Executive Directors without the presenceof the Chief Executive Officer and promotes the culture of opennessand debate within the Board sessions as well as outside theformal sessions.
The Chairman is also actively involved in the work of the Nomination
Committee concerning succession planning and the selection of key
people. The Chief Executive Officer, Zoran Bogdanovic, is responsible
for the day-to-day management and performance of the Company
and for the implementation of the strategy approved by the Board.

94

COCA-COLA HBC

Corporate governance report continued
Key roles and responsibilities
Board of Directors

Our Board has ultimate responsibility for our long-term success and fordelivering sustainable shareholder value as well as contributing to wider
society. The Board is responsible for setting the Company’s purpose,values and strategy and ensures the alignment with its culture; this includes
ensuring that workforce policies and practices are consistent with theCompany’s values and support its long-term sustainable vision. Further
details are set out on pages 95 to 97. This is achieved by approving thecorporate strategy, monitoring performance toward strategic objectives,
overseeing implementation of the strategy by the Executive Leadership
Team and approving matters reserved by the Articles of Association
for decision by the Board. Specific tasks are delegated by the Board toits committees for audit and risk, nomination, remuneration andsocial responsibility.

Chairman• leads the Board, sets
the agenda andpromotes a culture of
openness and debate;• is responsible for overall
effectiveness in leading
the Company andsetting the culture;• ensures the highest
standards of corporate
governance;• is the main point ofcontact between the
Board andmanagement; and• ensures effective
communication withshareholders andstakeholders.

Chief Executive
Officer• leads the business,
implements strategy
and chairs the
Executive Leadership
Team; and• communicates with theBoard, shareholders,
employees,
government
authorities, otherstakeholders andthe public.

Senior Independent
Director• acts as a sounding
board for the Chairman
and appraises his
performance;• leads the independent
non-Executive
Directors on mattersthat benefit from an
independent review;and• is available toshareholders if they
have concerns whichhave not been resolved
through the normal
channels ofcommunication.

Board committees

Our Board has delegated specific tasks to its committees as set out in the
Organisational Regulations and reports from these committees are set out
in this Corporate Governance Report. Biographies of the Chairs of the

Audit and Risk Committee

Responsibilities• Oversight of the accounting
policies, financial reporting anddisclosure controls; the Group’s
approach to internal controls
and risk management; and thequality, adequacy and scopeof internal and external
audit functions.
• Oversight of the Company’s
compliance with legal,
regulatory and financial
reporting requirements, and thework programme of the internal
audit function.
• External auditor reports directly
to the Committee.

Executive Leadership TeamThe governance process of the Board is set out in our Articles of
Association and the Organisational Regulations. These regulations define
the role and responsibilities of the Board and its committees. These
documents, together with the responsibilities of the Chairman, Chief
Executive Officer and Senior Independent Director, and can be found athttps://www.coca-colahellenic.com/en/about-us/corporate-governance.
In addition, the Swiss Ordinance against Excessive Compensation in Listed
Companies imposes certain obligations on the Board, including arequirement to prepare and make available a remuneration report pursuant
to Swiss law.

Remuneration Committee

Responsibilities• Establishment of the
remuneration strategy for theGroup; determines and agrees
with the Board the
remuneration of Group
Executives and approves
remuneration for the Chairman
and the Chief Executive Officer.
• Makes recommendations to
the Board regarding
remuneration matters to beapproved at the Annual
General Meeting.
• Implementation or modificationof any employee benefit plan
resulting in an increased annual
cost of €5 million or more.

The Executive Leadership Team, led by the Chief Executive Officer, meets
12 times each year and provides the Group with executive leadership.
The Committee has responsibility for: the development of long-term
strategies and the implementation of strategies approved by the Board;

Non-Executive
Directors

Company Secretary• contribute todeveloping Groupstrategy;• scrutinise andconstructively
challenge theperformance ofmanagement in theexecution of theGroup’s strategy; and• oversee succession
planning, including theappointment of
Executive Directors.

• ensures that correct
Board procedures arefollowed and ensures
the Board has full andtimely access to all
relevant information;• facilitates induction andtraining programmes,
and assists with theBoard’s professional
development
requirements; and• advises the Board on
governance matters.

Board committees and the other members of the Board, the Audit and Risk
Committee, the Nomination Committee, the Remuneration Committee
and the Social Responsibility Committee are set out on pages 108 to 140.

Nomination Committee

Responsibilities• Identification and nomination of
new Board members, including
recommending Directors
to be members of each Board
committee.
• Ensuring adequate Board
training; supporting the Boardand each committee in
conducting a self-assessment.
• Oversight of the establishmentof a talent development
framework for the Group.
• Oversees effective succession
planning for the Chief Executive
Officer, in consultation with the
Chairman, and for the Executive
Leadership Team, in
consultation with the Chief
Executive Officer.

Social Responsibility
Committee

Responsibilities• Supports the Board in its
responsibilities to safeguard
the Group’s reputation forresponsible and sustainable
operations.
• Oversight of the Group’s
engagement with stakeholders
to assess their expectations,and the possible consequencesof these expectations for
the Group.
• Establishes principles governingsocial and environmental
management and oversees
development of performance
management to achieve socialand environmental goals.

providing adequate head‑office support for each of the Group’s countries;
working closely with the country General Managers, as set out in ouroperating framework; and the setting of annual targets and approvalof annual business plans which form the basis of the Group’s
performance management.

INTEGRATED ANNUAL REPORT 2021

Applied governance
Summary of key Board activities for 2021 and priorities for 2022
Topic

2021 activity

2022 priority

Strategy• Review the progress towards becoming the leading
24/7 beverage partner and leveraging our unique
24/7 portfolio• Close monitoring of plans to address packaging
challenges and reduce one-way plastic packaging• Review of the strategic acquisitions in Egypt and thecoffee business expansion through the minority
stake investment in Caffè Vergnano• Endorsing the Group’s NetZeroby40 targets• On-going review of the integration plans in Egypt
and monitoring the launches of Caffè Vergnano in
our markets• Continued close alignment with The Coca-Cola
Company• Monitoring progress towards our Growth Story
2025• Monitoring progress towards our NetZeroby40
commitments

Performance• Deep dive reviews of regions and key functions• Regular reviews of the business performanceby reporting segments and monitoring of theperformance of the coffee and snack businesses• Acceleration of commercial execution capabilities
across the organisation based on insights fromthe Group’s big data and advanced analytics work
• Following the Group’s Innovation for Growth plans• Periodic performance reviews with focus
on the Group’s key business indicators• Review of the performance of the Company’s
innovation initiatives and focusing on the
e-commerce performance• Focusing on the performance of the Revenue
Growth Management, Route-to-Market and big
data and advanced analytics programme in orderto build the necessary insight capabilities• Enhancing the cyber security programme in order
Risk management • Continued review of principal and emerging risks
to meet the needs for the accelerated digitalisation
andmitigation
programmes
and internalof the business•
Reviewingtheliquidity,
financingstatusandcommodity
control

Operational

exposure of the Group• Reviewing information technology plans, including
cyber security• Ongoing review of key principal risks, including risks
relating to the COVID-19 pandemic• Reviewing the execution initiatives in modern trade,
e-commerce and growth results• Monitoring the progress of the new sales academy
for the Group’s business developers• Review of the digital strategy and its key priorities
around consumer and customer centricity,
employee experience and operational productivity• Implementation of cost optimisation programmes
and CapEx investments• Review of projects involving the in-house productionof PET from recycled PET flakes and productionof CO2 collected from the air• Review of material capital expenditure projects• Consolidation and integration of new acquisitions• Ongoing review of the Group’s cost optimisationand investment programmes

Culture and values • Discussing the employee engagement surveys

and people plans• Overviewing the plans to adapt the Group’s
organisational design to make it stronger for
the future.
• Working with the designated non‑Executive Director
on issues that are identified through the employee
engagement process

Succession
planning anddiversity• Reviewing succession planning for Board andsenior management• Reviewing the Company’s talent development plans• Monitoring talent and people capability plans• Ongoing review of Performance for Growth, theGroup’s new performance management process• Reflecting on the implementation of the Group’s
organisational design• Ongoing succession planning work and preparing
succession planning and bench strength initiatives
for senior management and Board vacancies• Discussing Board effectiveness andsuccession pipeline

95

96

COCA-COLA HBC

Corporate governance report continued
Applied governance

Board oversight ofterritory expansion to Egypt
In August 2021, we announced the acquisition of approximately
94.7% of Coca-Cola Bottling Company of Egypt S.A.E. (CCBCE),
a leading producer of non-alcoholic ready-to-drink beverages in
Egypt. The transaction completed in January 2022. The remaining
shares in CCBCE are held by some minority holders and we intend toacquire these shares in due course. This is a strategically significant
transaction for the Group which expands our emerging markets
footprint and increases our exposure to high-growth geographies.

Strategically significant
The Board considered the acquisition of CCBCE to be a goodstrategic fit for the Group as it supports the vision of being theleading 24/7 beverage partner and the Growth Story 2025 strategy.
In particular, the Board took into account that the transaction would
give the Group access to the second largest non-alcoholic readyto‑drink market in Africa by volume and would expand the Group’s
exposure to high-growth, emerging markets. It was also felt that
there was significant opportunity to leverage the Group’s provenroute-to-market capabilities and 70 years of experience operatingin emerging markets to increase penetration of The Coca-Cola
Company’s brand portfolio in the country. Overtime the Group isalso confident that it will mange to create further value by moving
CCBCE’s margins towards the Group average.

Timeline and key board activities
The Board first considered the acquisition in 2019. Following these
initial discussions it authorised management to analyse and consider
this opportunity further with particular emphasis on negotiating
the transaction with CCBCE’s majority shareholder and The
Coca-Cola Company.
Following discussions with CCBCE and its major shareholders,and having undertaken a due diligence process, a headline proposal
was put to the Board for approval in March 2021 for consideration.
The Board approved that proposal and authorised management
to negotiate the details of the transaction and final structure withthe major shareholders of CCBCE.
The transaction was signed in August 2021 and was completed
in January 2022.

Robust governance: managing conflicts of interest
One of the Group’s major shareholders, The Coca-Cola Company,
had a significant stake in CCBCE which was acquired as part of
the acquisition. As such, enhanced governance and oversightarrangements were put in place in relation to the acquisition and
the Group’s conflicts of interest policies were followed. The Group’s
approach to conflicts of interest is discussed in the conflictsof interests section of this report on page 103. In particular, themembers of the Board nominated by The Coca-Cola Company
did not take part in the decision-making process in relation to
the acquisition and recused themselves from the relevant Board
meetings that discussed the progress of the acquisition andapproved the transaction terms.

Given The Coca-Cola Company’s holding in both CCBCE andthe Group, the particular arrangements between The Coca-Cola
Company and the Group were considered to be a smaller related
party transaction for the purposes of the UK Financial Conduct
Authority’s Listing Rules. As required by the Listing Rules, the Board
was required to seek the advice of its sponsor that the proposed
terms of the transaction were fair and reasonable as far as theshareholders of the Group are concerned. The Board sought
and carefully considered the fair and reasonable opinion received
from its sponsor in connection with the acquisition before
endorsing the same.

Key issues considered by the Board
The Board received regular updates and reports from bothmanagement and its legal advisers, accountants and financial
advisers during the due diligence process in relation to the acquisition.
The Board was keen to ensure that management had establisheda robust due diligence process that was designed to identify andassess potential risks and issues that could affect the valuationor underlying assumption of the acquisition, and consideredpotential mitigation actions and vice versa to those risks and issues.
The Board questioned and challenged management on these issues.

Regulatory conditions
The acquisition was subject to certain regulatory and other conditions.
Throughout the acquisition process, the Board has received updates
from management on the status of the regulatory approvals required
and the satisfaction of the various transaction conditions.

Stakeholders and stakeholder engagement
CCBCE is expected to continue doing business with its current
suppliers, in line with the Group’s supplier guiding principles.
The Group also has established potential opportunities for local
Egypt suppliers to service the wider Group. By leveraging the Group’s
knowledge and capabilities, as well as their experience in emerging
markets, CCBCE can unlock further growth, reach category leadership
positions and create value for all employees, customers and partnersof the Coca-Cola System in Egypt.

INTEGRATED ANNUAL REPORT 2021

97

Future-focusedgovernance“Several Board members,
including myself, are connected
to our Company’s founders.
This gives our Board a uniquelong-term perspective andsense of ownership.”Anastassis G. David,
Chairman of the Board

Our 70th year:
The Board’s role in ensuring
success over the next 70 years
As we reflect on our journey from our origins
in Lagos, Nigeria, in 1951, we believe that
it is the Board’s role to safeguard theCompany’s future for the next 70 years
and further. Coca-Cola HBC has a legacyof transparency and agility, and an
ownership structure that has long-term
accountability at its heart, allowing us tomake investments for the long term.
The Board’s priorities reflect its
understanding of what is needed toensure resilience while pursuing growthand expansion.

Our portfolio of well-loved, highly visible
brands comes with obligations andresponsibilities to earn and maintainthe trust of our stakeholders, including
the communities where we operate.
To maximise the Company’s impact
and tackle complex problems, the Board
is focused on increasing partnerships andcollaboration. Our Company only succeeds
when our customers, partners andcommunities are successful.
Purposeful organisations perform betterand have advantages attracting theincreasingly scarce talent and skills needed
as more aspects of our industry are digitised.

Culture will continue to play a crucial rolein our ability to seize opportunities, ensure
customer centricity and maintain theagility needed to adapt swiftly. The Board
understands that culture comes from thetop, and must be actively demonstrated
and cascaded to be fully embedded.
As guardians of enduring success in all its
many forms, the Board seeks to ensure
it has the right skills at Board level toensure the right questions are asked andour long-term strategy remains relevant.
We also view diversity, equality and inclusion
as pre-requisites to achieve a fairer society
and the broad range of perspectives
needed to drive meaningful innovation.

98

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Corporate governance report continued
Applied governanceOversight of theCompany’s culture
How the Board measures and assesses culture
The Board is responsible for monitoring and assessing our culture.
The Chairman ensures that the Board is operating appropriately
and sets the Board’s culture which in turn forms the culture of theCompany. The Chief Executive Officer supported by members of
the Executive Leadership Team is responsible for ensuring culture
is embedded throughout the business and its operations and in all
our dealings with our stakeholders.
The Board measures the culture of the Group using internal andexternal metrics which also enable it to identify further actions toensure culture remains appropriate. The Board also monitors theGroup’s performance against its peer group within the same sector.
The Board considers the following:• Health and safety – an area of paramount importance to ourpeople, customers, partners, and consumers of our products,
especially given the continuing impact of the COVID-19
pandemic. We continue to adapt business operations to ensurethat our people, customers and partners can perform their roles
safely and effectively. We closely monitored the developing
situation and challenges to ensure we provided the appropriate
requirements and support.

Culture in action
Doing the right thingThroughout the global pandemic, ourculture of adaptability has been the driving
factor in our success. Ensuring the safetyof our people, as well as customers,
partners and communities, continued
to be a top priority in 2021. The COVID-19
pandemic demonstrated the value of ourcustomer partnerships, while underlining
the need to continue to further develop
our critical capabilities. Our teams haveemerged from two years of a global
pandemic even stronger.
Throughout, our actions have been guided
by our values. Below are some examples
of culture in action during 2021:

Resilience, adaptability and agility• We protected the health and wellbeingof our people as the COVID-19 pandemic
continued, while further investing tosupport the new ways of working.

• Employee retention – our employees are our greatest asset
and it is important that we do everything we can to retain them.
We conduct an annual employee engagement survey of theworkforce, although during 2021 a total of three all-employee
surveys were conducted to provide feedback to senior
management to identify whether further actions were required.
The feedback was reviewed by the Executive Leadership Teamwith the findings reported to the Board.
• Customer retention – assessments of customer satisfaction andongoing conversations with regulators and non-governmentalorganisations. As we increased the number of all-employee
surveys during the pandemic to ensure that we had adequate
insight into employee needs, we also introduced a new customer
feedback approach from Customer Gauge across all our markets
to receive customer feedback on an ongoing basis. This softwareas-a-service tool gives us deeper, more frequent insight than ourannual customer survey, leading to more actionable insights which
can be addressed quickly. Many of our customers were severely
impacted by lockdowns and restrictions on their ability to operate.
We continue to work with our customers, consumers, suppliers,
local community representatives and other business partners
across the value chain every day. Their input, cooperation andtrust factors into Board decision-making and the success of thebusiness. Examples of governance in action are on pages 95 to 96.

• We stood by our out-of-homecustomers as restrictions disrupted
their operations and helped them reopen
as restrictions ease. We introduced our
HoReCa (hotel, restaurant and café)for tomorrow framework to supportchannel acceleration, focusing on being
a full-service partner to our customers.
• We introduced the new Sales Academy
across all our markets, to drive oursalesforce’s capability to deliver improved
customer service, performance andexecution. This has been developed as atransformative digital learning approachto help build our teams’ capabilities
on the job.
• In 2021 we made step changes toempower our salespeople to drive
customer-centric behaviours and ‘close
the loop’ to resolve issues immediately.
• We increased the coverage of ourbusiness-to-business Customer Portal
platform, which has transformed into
an engagement-driven digital platform
for businesses. We quadrupled digitaltransactions in 2021.

• We increasingly worked to digitise
our route to market in the
e-commerce channel, strengthening
our partnerships with e-retailers
and food delivery platforms

Sustainability• We accelerated our #YouthEmpowered
programme using both in-person andonline modules. The programme reachedmore than 210,000 people in 2021
• To improve our supply of rPET we haveintroduced innovative technology
on-site at our Krakow plant in Poland,
and will introduce this into more markets
in 2022-23

INTEGRATED ANNUAL REPORT 2021

99

Applied governance

Workforceengagement
Engagement with key stakeholder groups strengthens ourrelationships and is an ongoing part of the operational managementof the Group. This includes employee surveys, assessing customer
satisfaction and ongoing conversations with regulators andnon-governmental organisations. The continuing challenges ofthe ongoing COVID-19 pandemic resulted in a change to the formof engagement with some of our stakeholder groups. The Board
receives regular updates from senior management on insights andfeedback from stakeholders, which allows the Board to understandand consider the perspectives of key stakeholders in decision-making.
This is a standing agenda item for Board meetings.
Our workforce is core to our strategy and is one of our mostimportant stakeholder groups. The Company’s success largely
depends on the passion of our people and our ability to attract,
retain and develop the best talent. The Board therefore understands
the importance of engaging with its workforce. The safety of ourworkforce continued to be a focus throughout 2021, ensuring
appropriate measures were in place so that they could continue
in their roles and that we were supporting a healthy working
environment. Our workforce continued extraordinary efforts to
support and aid our customers and consumers during uncertain
times caused by the pandemic.

The Board closely monitors and reviews the results of the Company’s
Employee Engagement, Values and Ambassadorship surveys.
In addition, the Board reviews talent development initiatives designed
to support long-term success. For further details please see below
and the Growth Pillar 4 section of the report on pages 39 to 44.
Charlotte Boyle, our designated non-Executive Director for
workforce engagement, attended a number of virtual meetings with
our European Works Council (EWC). Despite not being able to meet
physically in 2021 until the end of October, meetings continued
with the EWC virtually before that time, including virtual meetingsin March and June 2021. Senior leadership present key information
on business and other changes at these meetings and hear feedback
directly from employee representatives. All meetings are attended
by selected members of the senior leadership team, depending on
subjects covered, including our CEO at our meeting in end October.

Workforceengagement
mechanism
Charlotte Boyle, our designated nonExecutive Director for workforce
engagement, attended the meetings
during the year with our European Works
Council. During the course of thesemeetings Charlotte heard from elected
employee representatives from ourbusinesses in EU countries. Thesemeetings allow employee representatives
to understand business updates fromsenior leaders – including the CEO – aboutsignificant matters affecting our people,
and to ask questions and give feedback.
Charlotte was able to listen to employee
representatives about topics raised by
employees and their experience of theCompany’s approach to the workforce,
particularly during the last couple of years,
and was able to bring these insights to theBoard’s discussions.

During 2021, the insights gained fromthese engagement activities continued to
be of great importance, contributing to theBoard’s decisions in relation to ensuring
the appropriate support and resources forour people, not only for their own safety
but to aid them in their roles in helping ourcustomers and consumers.
Charlotte also frequently interacted with
our Group Employee Relations Director,
who is also responsible to monitor
diversity, equity and inclusion, to better
understand the steps that the Company
is taking to become more diverse andinclusive (see page 41 for activities in thisarea). To embed these attributes within
the Company’s culture, multiple initiatives
have been launched to increase awarenessand understanding and improve policies
and practices to create a more equitable
and inclusive workplace for all. The Board
takes the lead by recognising goodpractices and driving accountability.
Charlotte reported back to the Board on
her observations and matters raised by
employees, ensuring Board deliberations
and decision making are fully informed.

100

COCA-COLA HBC

Corporate governance report continued

Engaging with
our stakeholders
Description

How the Board is kept informed

Our people

To understand what our people needed
to work in continually changing
circumstances, the Company conductedin total three all-employee surveys
in 2021. There is a designatednon-Executive Director for engagementwith our people but given the continued
impact of the COVID-19 pandemic,
the practice of presenting survey results
to the full Board continued. The CEO
also held engagement sessions with
employees during the year, including
several calls with Q&A sessions.

Our communities Plant visits, community meetings,
partnerships on common issues,
sponsorship activities, lectures atuniversities, training opportunities andsupport to young people currently notin education, training or employment.
Our consumers

Consumer hotlines, local websites,
plant tours, research, surveys, insights,
focus groups.

Our customers

Regular visits, dedicated account teams,
joint business planning, joint valuecreation initiatives, customer care
centres, customer satisfaction surveys.

Our suppliers

Engagement with our suppliers,
consultants and counterparts inrelated industries.

NGOs

Dialogue, policy work, partnerships
on common issues, membership ofbusiness and industry associations.

Our shareholders Annual General Meetings, investor
roadshows and results briefings,
webcasts, ongoing dialogue with analysts
and investors.

Governments

Trade Associations, recycling andrecovery initiatives, EU Platform for
Action on Diet, Physical Activity and
Health, foreign investment advisory
councils, chambers of commerce.

The Coca-Cola
Company

Day-to-day interaction as business
partners, joint projects, joint businessplanning, functional groups on
strategic issues, ‘top-to-top’ senior
management meetings.

Listening to our stakeholders, and making
a meaningful response, is crucial forcontinued success

Read more
10, 39-43

10, 46

Considering stakeholders in principal
decisions12, 24-29

Putting our people and customers first
The ongoing COVID-19 pandemic continued to create many issues
for the Group and in particular for its people and its customers.

10, 32-37

10, 32-37

13, 44-51

12, 100

12, 44-51

8, 13

Since the start of the COVID-19 pandemic the Board’s top priority
has been the safety and wellbeing of our people, customers,
partners and communities. The Board has remained focussed on
keeping our colleagues safe and healthy, ensuring that processes
and procedures are adapted as appropriate and that the rightequipment is in place. This was, and remains, key to our ability tocontinue to serve our customers and to operate the business for allof the Group’s stakeholders.
Implementing certain new protocols resulted in a reduction in thenumber of employees working on the ground with customers which
in turn had an effect on business development opportunities andopportunities to strengthen the Group’s relationships with its
customers. However, the Board and management looked at otherways for salespeople to engage and communicate effectively withcustomers. Through this engagement with our customers, it wasapparent that having products in the right location was logisticallyproblematic. Therefore, in some markets, our teams helped ourcustomers with their supply chain issues. In order to reduce thepressure on some supermarket customers’ supply chains we delivered
direct to stores rather than to the customers’ central warehouses.
In many of our markets, some customers remained closed forsignificant periods in 2021. Once lockdown measures were eased,
the priority was for our teams to connect with these customers
to offer support and assistance to enable reopening of theirbusinesses. Our business developers engaged with customers tounderstand their key priorities and requirements as they prepared
to reopen after a period of perhaps three to four months’ closure.
We offered and, in many cases, provided extended credit; helpedwith product placement and marketing; and staggered ordering toensure no over-supply and to ease cash flow. By understanding ourcustomers’ needs and taking a collaborative approach, we could plan
and adjust accordingly. Together, we adapted our strategy to aid
customers’ business recovery and viability rather than focusing
solely on our own financial targets.

INTEGRATED ANNUAL REPORT 2021

Stakeholder considerations in the context
of acquisitions
Stakeholder interests and matters were carefully considered by the
Board in the context of the proposed acquisition of the Coca-Cola
Bottling Company of Egypt S.A.E. (CCBCE), a leading producerof non-alcoholic ready-to-drink beverages in Egypt. Investors andshareholders were particularly considered as part of this strategicallyimportant decision, especially the long-term benefits to the Group
from increasing its exposure to high-growth geographies and theopportunities to create value through progressively moving themargins on CCBCE’s products towards the Group’s average margin.
The Group expects that CCBCE will continue doing business with its
current suppliers, in line with the Group’s Supplier Guiding Principles.
The Group also sees potential opportunities for local Egypt suppliers
to service the wider CCHBC Group and vice versa. Finally the Group
expects certain procurement efficiencies at CCBCE level byleveraging CCHBC’s scale and optimisation of the production process
and logistics in line with the Group’s experience in other markets.
Similarly, stakeholder interests were also considered by the Boardin the context of the acquisition of a minority shareholding in Caffè
Vergnano, a premium Italian coffee company, which was announced
in June 2021. The acquisition allowed the Group to further build its
presence in the coffee category, one the Board views as importantto achieve the Company’s 24/7 vision and address an even wider
range of consumer tastes and segments. The opportunities andbenefits for the Group’s customers was a key consideration.
The Board considered that the Caffè Vergnano transaction would
increase the Group’s relevance with its customers within the most
attractive segments of the coffee category, while providing Caffè
Vergnano with significant expansion potential through the Group’s
leading route-to-market network and commercial capabilities.

Future stakeholder engagement
The Board regularly reviews the stakeholder engagement activities
undertaken both by it and the Group as whole and is satisfied thatthe activities outlined above and on pages 10 to 13 remain effective
for the mutual benefit of the Company and its stakeholders.

Shareholder engagement
The Chairman, the Senior Independent Director and the Chair of
the Audit and Risk Committee will be available at the Annual General
Meeting of the Company to answer questions from shareholders.
The Board encourages shareholders to attend as it provides anopportunity to engage with the Board. However, the 2021 Annual
General Meeting was not held in the usual format as no shareholders
were permitted to attend due to pandemic-related restrictions inplace under Swiss law. The Chief Executive Officer chaired themeeting with a number of other Directors, including the Chairman,
as well as members of the Executive Leadership Team and thestatutory auditors participating remotely.

101

At the 2021 Annual General Meeting, more than 20% of votes were
cast against two resolutions being the advisory votes on the UK
Remuneration Report (resolution 7) and on the Swiss Remuneration
Report (resolution 9). In accordance with Provision 4 of the 2018
UK Corporate Governance Code, in December 2021 we published
an update on the key actions that have been taken by the Boardof Directors and Remuneration Committee in response to this.
In addition to the comprehensive shareholder consultation
subsequently undertaken, the Chair of the Remuneration
Committee has further engaged with shareholders to understandtheir feedback regarding the votes. From this engagement, it isunderstood that the significant factor regarding the votes was theCommittee’s decision to adjust the performance metrics relating
to PSP vesting in respect of performance up to 31 December 2020.
More information on the actions taken in response to this vote isincluded in the Remuneration Report on page 118.
Pursuant to Swiss law and the Articles of Association, shareholders
annually elect an independent proxy and we have adopted anelectronic proxy voting system for our Annual General Meetings.
The Company has a dedicated investor relations function which
reports to the Chief Financial Officer. Through the investor relations
team, the Company and Board maintain a dialogue with institutional
investors and financial analysts on operational financial performanceand strategic direction items. We engaged with the investmentcommunity and our shareholders throughout the year, as outlinedin the diagram below. The feedback from shareholders has been
regularly considered by the Board and, where necessary, appropriate
action to further engage with shareholders was taken.

Key investor relations activities in 2021

February• Management Roadshow Europe & UK

March
• UBS Global Consumer and Retail Virtual Conference• Credit Suisse 2021 Consumer Retail ConferenceMay• EU & US Management virtual roadshow• IR virtual roadshow• Investec virtual seminar: Beverages on the rebound – CCH’s
IR Director to participate in a panel discussion

June• Goldman Sachs Global Consumer ESG Conference• Exane BNP Paribas European CEO Conference• Annual General Meeting in Zug• Deutsche Bank Access Global Consumer conference• Exane BNP Paribas 22nd European CEO Conference• Goldman Sachs Global Consumer ESG Conference• Evercore ISI Consumer & Retail Summit• UBS Sustainable Finance Virtual Conference 2021:
The Trajectory of Transition

September• Barclays Global Consumer Staples Conference

November• EU & US Management Virtual Roadshow

December• Citi’s Global Consumer Conference

102

COCA-COLA HBC

Corporate governance report continued
Board, committee and Director
performance evaluation
At least annually, on the basis of an assessment conducted by
the Nomination Committee, the Board reviews its own performanceas well as the performance of each of the Board committees.
This review seeks to determine whether the Board and its committees
function effectively and efficiently. During the year, the Chairman
meets with the Directors to receive feedback on the functioningof the Board and its committees, the boardroom dynamics, and
the Group’s strategy.
Particular focus is given to areas where a Director believes theperformance of the Board and its committees could be improved.
A report is prepared for the Board on its effectiveness and thatof its committees.
For the past six years, the evaluation of the Board’s effectivenesshas been facilitated by Lintstock, and details of the 2021 Lintstockreport are set out on page 103. Lintstock has no other connection
to the Company or individual directors. A summary of the Board
evaluation findings for 2020, the actions taken in response toimprove Board effectiveness in 2021, the Board evaluation findingsfor 2021, and the resulting priorities for 2022 is as follows:2020 Board evaluation findings

2021 actions• Oversight of talent• Understandingof technologicaldevelopments• Considering implicationsof COVID-19• Endorsing the geographic
expansion of the Group to Egypt• Risk management response to thepandemic• Access to the global talent pool,and implementing a programmeof formal / informal exposure topotential successors

2021 Board evaluation findings

2022 priorities• Reviewing the acquisitions• Strengthening the• Oversight of people and talenttechnology expertise• Strategic discussions
on the Board• Undertaking site visits andmeeting in person• Understanding of broader
stakeholder views
The independent Directors meet separately at every regular Board
meeting to discuss a variety of issues, including the effectivenessof the Board. An evaluation of each Director, other than the Chairman,
is conducted by the Chairman and the Senior Independent Director.
The Senior Independent Director leads the evaluation of the
Chairman in conjunction with the non-Executive Directors, taking
into account the views of the Chief Executive Officer, and, as a matterof practice, meets with the other independent non-Executive
Directors when each Board meeting is held to discuss issues together,
without the Chief Executive Officer or other non-Executive Directors
present. The Chairman also holds meetings with the non-Executive
Directors without the Chief Executive Officer present.

Information and training
The practices and procedures adopted by our Board ensure thatthe Directors are supplied on a timely basis with comprehensive
information on the business development and financial positionof the Company, the form and content of which is expected toenable the Directors to discharge their duties and carry out their
responsibilities. All Directors have access to our General Counsel,
as well as independent professional advice at the expense of theCompany. All Directors have full access to the Chief Executive
Officer and senior management, as well as the external auditor
and internal audit team.
The Board has in place an induction programme for new Directors.
Generally, it involves meeting with the Chairman, members of the
Executive Leadership Team and other senior executives, as well
as receiving orientation training in relation to the Group and its
corporate governance practices. The induction programme also
includes meetings with representatives of our sales force,
customers and major shareholders, and visits to our production
plants. Bruno Pietracci and Henrique Braun participated in the
induction programme during 2021 as part of their onboarding
process, although much of this was conducted virtually.
All Directors are given the opportunity to attend training to ensurethat they are kept up to date on relevant legal, accounting andcorporate governance developments. The Directors individuallyattend seminars, forums, conferences and working groups onrelevant topics. The Nomination Committee reviews our Director
training activities regularly. Finally, as part of the continuing
development of the Directors, the Company Secretary ensuresthat our Board is kept up to date with key corporate governancedevelopments. The Board appoints the Company Secretary,
who acts as secretary to the Board.

Board appointments and succession planning
Our Board has in place plans to ensure the progressive renewalof the Board and appropriate succession planning for senior
management. These cover the short, medium and long-term andthese are regularly reviewed. Appointments and succession plans
are based on merit and objective criteria to ensure the Company
is promoting diversity (including gender), social and ethnic
backgrounds, cognitive and personal strengths.
Pursuant to our Articles of Association, the Board consists ofa minimum of seven and a maximum of 15 members, and the
Directors are elected annually for a term of one year by theCompany’s shareholders, which is also in accordance with the UK
Corporate Governance Code. In case of resignation or death of any
member of the Board, the Board may elect a permanent guest,
whom the Board will propose for election by the shareholders at thenext Annual General Meeting. In accordance with the Organisational
Regulations, the Board proposes for election at the shareholders’meeting new Directors who have been recommended by the
Nomination Committee after consultation with the Chairman.

INTEGRATED ANNUAL REPORT 2021

In making such recommendations, the Nomination Committee
and the Board must consider objective criteria including the overallbalance of skills, experience, independence and knowledge of theBoard member, as well as diversity considerations including gender
but also social and ethnic backgrounds. Consideration is also given
to the overall length of service of the Board as a whole when
refreshing its membership. See the Nomination Committee reporton page 114 for further information on the role and work of theNomination Committee, including the Board Diversity Policy.
Through this process, the Board is satisfied that the Board and its
committees have the appropriate balance of experience and skills,
diversity, independence and knowledge of the Company to enable
them to discharge their duties and responsibilities effectively,
including sufficient time commitment.

Conflicts of interest
In accordance with the Organisational Regulations, Directors are
required to arrange their personal and business affairs so as to avoid
a conflict of interest with the Group.
Each Director must disclose to the Chairman the nature and extent
of any conflict of interest arising generally or in relation to any
matter to be discussed at a Board meeting, as soon as the Director
becomes aware of its existence. In the event that the Chairman
becomes aware of a Director’s conflict of interest, the Chairman isrequired to contact that Director promptly and discuss with him or
her the nature and extent of such a conflict of interest. Subject to
exceptional circumstances in which the best interests of theCompany dictate otherwise, the Director affected by a conflict ofinterest is not permitted to participate in discussions and decisionmaking involving the interest at stake.
As The Coca-Cola Company was a major shareholder of the
Coca-Cola Bottling Company of Egypt S.A.E. (CCBCE), membersof the Board appointed by The Coca-Cola Company did not take partin the decision-making process in relation to the Group’s acquisitionof CCBCE. For a detailed description of the enhanced governanceprocedures in place for the transaction see page 86.

103

Lintstock report
In 2021, we once again engaged the advisory firm Lintstock
to facilitate an evaluation of the performance of the Board.
Lintstock specialises in Board performance reviews and has
no other connection with Coca-Cola HBC.

The first stage of the review involved Lintstock engaging with theCompany Secretary to set the context for the evaluation, and to
tailor survey content to the specific circumstances of Coca-Cola
HBC. The surveys were designed to follow up on and further
explore key themes identified in last year’s evaluation, so thatyear-on-year progress can be tracked.
The 2021 surveys addressed core aspects of the Board’s
performance, and had a particular focus on the following areas:• The Board’s oversight of progress with regard to theCompany’s growth pillars, and the priorities for successfully
delivering Growth Story 2025
• The Board’s understanding of, and engagement with,key stakeholder groups, including shareholders, customers,
regulators, and suppliers• The effectiveness with which the Board monitors employee
sentiment and the culture throughout the business• The dynamics on the Board, and the extent to which theBoard provides effective support and constructive challenge
to management• The effectiveness of the Board’s virtual meetings, and thefocus in meetings on key strategic areas such as sustainability
and technology• The Board’s oversight of risk management, including theCompany’s response to the challenges associated withthe pandemic• The Board’s exposure to potential successors for key
positions from within the business, and the effectivenessof the Company’s talent management processes• The Board’s composition in the context of the Company’s
strategic ambitions, including the skills represented and thediversity among members
The performance of the committees of the Board was also
evaluated, as was the performance of the Chairman.
The anonymity of all responses was guaranteed throughout
the process to promote open and honest feedback.

Lintstock subsequently analysed the results and delivered
reports on the performance of the Board, the committees
and the Chairman, which were considered at a subsequent
Board meeting.
The results of the review were positive overall, and theBoard was felt to have performed effectively and maintained
a strong working dynamic despite the challenging circumstancespresented by the pandemic. While the Board’s virtual meetings
were seen to have been successful, resuming in-person
meetings was identified as a top priority for the coming year.
Other priority areas for 2022 were identified as continuing theBoard’s focus on: strategic matters, particularly growth; theintegration of recent acquisitions; people issues, including
succession planning and talent; strengthening technology
expertise on the Board; and risk management, including any
lessons that can be learned from the pandemic.

104COCA-COLA HBC

Corporate governance report continued

The Executive
Leadership
Team

1

2

3

4

5

6

1. The Executive Leadership Teamis chaired by Zoran Bogdanovic,
Chief Executive Officer, and his
biography is set out on page 88.
Other members of the Executive
Leadership Team:

2. Naya Kalogeraki(52) Chief Operating Officer
Senior management tenure: Appointed
July 2016 (5 years), appointed Chief
Operating Officer September 2020
Previous Group roles: Chief Customer
and Commercial Officer from 2016 to 2020.
From 1998, when Naya joined the Company,
she built her career assuming roles ofincreased scale and scope, including
Marketing Director, Trade Marketing Director,
Sales Director and Country Commercial
Director, Greece. She has been heavily
involved in Group strategic projects and task
forces addressing mission-critical business
imperatives. In September 2013, Naya was
appointed to the role of General Manager,
Greece and Cyprus.
Previous relevant experience: Naya joined
the Company in 1998 fromThe Coca-Cola Company where she held
a number of marketing positions up toMarketing Manager.
Nationality: Greek

3. Ben Almanzar

5. Sanda Parezanovic(47) Chief Financial Officer
Senior management tenure: Appointed
April 2021 (less than 1 year)(57) Chief People and Culture Officer
Senior management tenure: Appointed
June 2015 (6 years)

Previous Group roles: None

Previous Group roles: Sanda’s previous
roles in the Group include: Public Affairs& Communications Manager, Serbia andMontenegro from 2003 to 2006; Country
Human Resources and Public Affairs& Communications Manager, Serbia andMontenegro from 2006 to 2010; and Region
Human Resources Director, Bosnia& Herzegovina, Bulgaria, Croatia, Cyprus,
Greece, Northern Ireland, the Republicof Ireland, North Macedonia, Moldova,
Montenegro, Nigeria, Romania, Serbia
and Slovenia from 2010 to 2015.

Previous relevant experience: Ben has aproven track record and broad experience
gained from senior financial positions in
the global fast-moving consumer goods
industry. This includes 10 years with Mars
Incorporated, where he was Regional CFO,
Europe & Southern Africa and most recently
Vice President for Financial Planning,
Analytics and Financial Strategy. Prior tojoining Mars, Ben spent 10 years with Nestlé
in a variety of finance roles in Europe,
including CFO of Nestlé Czech-Slovak,
and CFO for Nestlé Waters in the UK.
Nationality: Dominican Republic and British

4. Ivo Bjelis(54) Chief Supply Chain Officer
Senior management tenure: Appointed
January 2022 (less than 1 year)
Previous Group roles: Ivo joined the Groupin 1996 as Plant Manager in Croatia, while in2002 he took over the position of Country
Supply Chain Manager. Since 2006 Ivo built
his career assuming roles of increased scaleand scope across the board, including
Strategic Initiative Leader for Customer
Centric Supply Chain, Group Supply Chain
Processes and Capabilities Director,
Regional Supply Chain Director, Group
Supply Chain Services Director and Group
Supply Chain Operations Director, leading
the development and the transformationof the Supply Chain strategy over the years.
Nationality: Croatian

Previous relevant experience: Sanda
started in 1989 as Market Researcher andlater Strategic Planner working for various
local research and marketing agencies in
SFR Yugoslavia. She joined Saatchi & Saatchi
Balkans in 1994, holding various senior
management positions in several Balkancountries, including Managing Directorof two start-up agencies, first in North
Macedonia and later in Serbia. In 1999 she
relocated to London, where she worked for
Saatchi & Saatchi and Marketing Drive on
a number of pan‑European and businessdevelopment projects before she joined ourGroup in 2003.
Nationality: SerbianINTEGRATED ANNUAL REPORT 2021

7

8

9

10

11

12

13

From left to right105

Row oneZoran Bogdanovic, Naya Kalogeraki,
Ben Almanzar, Marcel Martin,
Minas Agelidis, Nikos Kalaitzidakis,
Barbara Tönz
Row twoIvo Bjelis, Sandra Parezanovic,
Jan Gustavsson, Vitaliy Novikov,
Mourad Ajarti, Spyros Mello

6. Jan Gustavsson

8. Minas Agelidis

9. Nikos Kalaitzidakis(56) General Counsel, Company Secretary
and Chief Corporate Development Officer
Senior management tenure: Appointed
August 2001 (20 years)(52) Region Director: Austria, Belarus,
Czech Republic, Estonia, Hungary, Islandof Ireland, Latvia, Lithuania, Poland,
Slovakia, Switzerland
Senior management tenure: Appointed
April 2019 (2 years)(52) Region Director: Armenia, Bosnia &Herzegovina, Bulgaria, Croatia, Cyprus,
Greece, Moldova, Montenegro, Republicof North Macedonia, Romania, Serbia,
Slovenia, Ukraine
Senior management tenure: Appointed
May 2018 (3 years)

Previous Group roles: Jan served as
Deputy General Counsel for Coca‑Cola
Beverages plc from 1999 to 2001.
Previous relevant experience: Jan started
his career in 1993 with the law firm White& Case in Stockholm, Sweden. In 1995, hejoined The Coca‑Cola Company as AssistantDivision Counsel in the Nordic and NorthernEurasia Division. From 1997 to 1999, Jan
was Senior Associate in White & Case’s New
York office, practising securities law and M&A.
Nationality: Swedish

7. Marcel Martin(62) Chief Corporate Affairs andSustainability Officer
Senior management tenure: Appointed
Chief Supply Chain Officer January 2015,
appointed Chief Corporate Affairs &Sustainability Officer January 2022 (lessthan 1 year)
Previous Group roles: Marcel joined theGroup in 1993, holding positions withincreasing responsibility in the supply chain
and commercial functions. Since 1995, he
has held general management assignments
in several of our markets, including as
General Manager for Eastern Romania,
Regional Manager Russia, Country General
Manager Ukraine and General Manager
Nigeria. He became General Manager of
our Irish operations in 2010, Supply Chain
Director in 2015 and is now our Chief
Corporate Affairs and Sustainability Officer.
Nationality: RomanianPrevious Group roles: Minas joined theGroup in 1999, holding positions withincreasing responsibility in the commercial
function in Greece (National AccountManager, Athens Region Sales Manager,
National Wholesale Manager, Country Sales
Director). Since 2008, Minas has held generalmanagement assignments in a number ofour markets, including those of Country
General Manager Cyprus, Country General
Manager Bulgaria and Country General
Manager Hungary.
Previous relevant experience: Prior tojoining the Group, Minas spent seven years
at Unilever Greece in managerial positions insales and marketing including those of Brand
Manager, Trade Marketing Manager andNational Account Manager.
Nationality: Greek

Previous Group roles: Nikos joined theGroup in 2006 as Regional Manager for
Northwest Russia and then moved to General
Manager roles in Croatia (2008), Bulgaria(2010), Hungary (2013) and Poland (2014).
Previous relevant experience: Prior tojoining the Group, Nikos spent five years intechnology and telecommunications andseven years with Phillip Morris International
in various roles and geographies acrossEurope and Central Asia.
Nationality: Greek

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Corporate governance report continued
10. Barbara Tönz

12. Mourad Ajarti(50) Chief Customer and Commercial
Officer
Senior management tenure: Appointed
May 2021 (less than 1 year)(45) Chief Digital and Technology Officer
Senior management tenure: Appointed
October 2019 (2 years)

Previous Group roles: Barbara joined
the Group in 1998, building her career firstin Switzerland as Trade Marketing Director,
Sales Director and Commercial Director,
and then in Austria from 2012 as Commercial
Director and Interim General Manager.
Previous relevant experience: In 2016
Barbara enriched her experience within
the Cola-Cola System as Country Director
Sweden for The Coca-Cola Company, withresponsibility expanded to Norway and
Iceland in 2019 before she assumed the roleof Commercial Execution Director Europe.
Prior to joining the Group in 1998, she held
positions in brand and customer
development at Unilever.

Previous Group roles: None.
Previous relevant experience: Mourad
holds an MSc in Computer Systems
Networking & Tele-communications from
L’École Mohammadia d’Ingénieurs. He has
20 years’ experience with two fast-moving
consumer goods industry leaders, Procter& Gamble and L’Oréal. Mourad started
with Procter & Gamble leading SAP
implementation in Morocco, Saudi Arabia
and Europe, and later was CIO for different
lines of business. From 2014 to 2019, Mourad
was CIO for the Asia and Pacific region for
L’Oréal, leading consumer and customer
journey transformation and enabling the useof big data and advanced analytics.
Nationality: British and Moroccan

Nationality: Swiss

11. Vitaliy Novikov(42) Digital Commerce Business
Development Director
Senior management tenure: Appointed
September 2020 (1 year)
Previous Group roles: Vitaliy joined theGroup in 2011 as General Manager of theBaltics business unit. Since then, he has held
General Manager roles in Poland and Italy.
Previous relevant experience: Prior tojoining the Group, Vitaliy spent four years at
Johnson & Johnson as Managing Director of
the Ukrainian operation and prior to this hespent seven years at Henkel in managerial
positions of growing responsibility in Austria
and Ukraine.
Nationality: Ukrainian

Executive Leadership Teamgender diversity

13. Spyros Mello(47) Strategy and Transformation
Director
Senior management tenure: Appointed
November 2021 (less than 1 year)
Previous Group roles: Spyros served
as Deputy General Counsel and Chief
Compliance Officer from 2010 to 2021.
He was Deputy General Counsel from 2007
to 2009 and Senior Corporate Counsel from2005 to 2007.
Previous relevant experience: Spyros
was an associate with the law firm of Sullivan& Cromwell LLP practising securities law
and M&A first in New York from 1999 to2001 and then in London from 2001 to 2004.
Nationality: Greek

Men
Women

10
3

Executive Leadership Team tenure
0-1 years

4

1-2 years

12-3 years2

3-4 years

1

5-6 years

1

6-7 years2

8-9 years

120-21 years

1INTEGRATED ANNUAL REPORT 2021

Key responsibilities of the Executive Leadership TeamThe key responsibilities and elements of the Executive
Leadership Team role are:• the day-to-day executive management of the Group and its
businesses, including all matters not reserved for the Boardor other bodies;• the development of Group strategies and implementationof the strategies approved by the Board;• providing adequate head-office support for each of theGroup’s countries;• setting of annual targets and approval of annual business plans
which form the basis of the Group’s performance
management, including a comprehensive programme ofstrategies and targets agreed between the Country General
Managers and the Regional Directors;• working closely with the Country General Managers, as set
out in the Group’s operating framework, in order to capture
benefits of scale, ensuring appropriate governance andcompliance, and managing performance of the Group; and• leading the Group’s talent and capability development
programmes.

Key activities and decisions in 2021
Long-term direction setting• Evaluating and evolving our 24/7
portfolio strategy together with ourbrand partners.
• Redesigning the Company’sorganisational and reporting structure
to better support organisational big
bets (Project Dolphin).
• Working on the launch and sequentialroll-out of Costa Coffee in theGroup’s markets.
• Reviewing and updating our revenue
growth management strategies andimplementing these in our local
commercialisation plans.
• Rebooting our route-to-market
approach in selected markets.
• Assessing our sustainability priorities
and initiatives on the way to deliver
2025 commitments.
• Setting long-term capability building
priorities and programmes.
• Approving and reviewing deploymentof major automation anddigitalisation initiatives.

2021

Business planning• Aligning key priorities and investment
strategy with TCCC.
• Reviewing progress of the aligned
priorities, investments and spending.
• Reviewing and approving annual
business plans for 2022 for all
operations and central functions.
• Approving Group and country talent,
capabilities development andsuccession plans.
Risk, safety and business resilience• Evaluating the Group’s businessresilience strategies.
• Evaluating the Group’s Risk Registerof major business risks as well as
associated risk response plans.
• Reviewing the Group’s health & safety
policies and material incidents.
• Reviewing the corporate audit planfor 2022.

Business case reviews and approvals• Assessing strategic revenuegenerating initiatives and product /packaging innovation business cases.
• Reviewing and approving progressof selected key initiatives – Data,
Insights & Analytics (DIA), Digital
Commerce, Digital & Technology,
Sustainability, Diversity & Inclusion (D&I)
and Culture.
• Overseeing the strategic evolutionof Supply Chain, Human Resources,
Commercial, Finance and BSS
departments.
• Optimisation and expansion of ourlogistics and manufacturing
infrastructure.
• Capital expenditure proposals review
and approval.
Priority projects• Costa Coffee• Customer Satisfaction• Sustainability initiatives• S4HANA• Engagement• Diversity & Inclusion• Cybersecurity• Business Resilience• Venturing

107

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Monitoring liquidity
and emerging risks
Letter from the Chair of the
Audit and Risk Committee

Dear Stakeholder
The Audit and Risk Committee focused its work
during 2021 on enhancing and strengthening theGroup’s existing financial controls, risk management
and compliance systems, which the Board recognises
as essential components of effective corporate
governance. During 2021, the Audit and Risk Committee
worked closely with the internal audit and finance teams
in overseeing the implementation of the Group’s
internal control framework.
COVID-19 pandemic

Highlights this year
• Risk management response to the on-going pandemic
and business resilience.
• Transition to SAP S4/Hana and monitoring of Cyber
Security Program

Priorities for 2022
• monitoring the developments in accounting and regulatory
matters, including potential changes to IFRS accounting
standards and respective disclosures;• ongoing monitoring of risks as well as impairment testingof goodwill and intangible assets;• ongoing monitoring of internal financial controls, anti-fraud
systems and Code of Business Conduct compliance; and• ongoing monitoring of the Group’s enterprise risk
management and quality assurance, and information
system security processes• overview of the Egypt integration process and related
controls and risk management.

The COVID-19 pandemic continued to impact many countries
in which the Group operates, with measures implemented bygovernments to contain the spread of the virus, including closureof non-essential services, travel bans, quarantines and social
distancing; disrupting business activities and resulting in a significant
economic slowdown. We received regularly a report from our senior
management which explained the actions being implemented toensure the Group remained fully operational.
We have monitored and discussed our risk management processes,
including our risk profile and mitigation but also principal risks and risk
appetite. The COVID-19 pandemic materially changed our risk
profile, especially in light of the changing workplace. We reviewed anelevated number of reported incidents during 2021, including thoserelated to the ongoing impact of the pandemic. We received updates
about the Group’s impairment assessment processes regarding
goodwill and other indefinite-lived intangibles, taking into consideration
the continuing implications of the COVID-19 pandemic.
The on-going COVID-19 pandemic meant that in 2021 the majority
of internal audits were delivered remotely.The Committee follows
the FRC’s Guidance on Risk Management and Internal Control andthe Board is satisfied that the adequate control systems were inplace throughout the year and up to the date of this report.
Other areas of focus during 2021 are included in the sections about
the work and activities of the Audit and Risk Committee and theareas of key significance in the preparation of the Financial
Statements in this report.
The Audit and Risk Committee report describes in more detail thework of the Audit and Risk Committee during 2021. In performing its
work, the Committee balances independent oversight with support
and guidance to management. I am confident to report that theCommittee supported by senior management and the external
auditor consistently carried out its duties to a high standard during
the reporting year.

William W. (Bill) Douglas III
Committee ChairINTEGRATED ANNUAL REPORT 2021

Role and responsibilities
The Audit and Risk Committee monitors the effectiveness of our
financial reporting, internal control and risk management systems,
and processes. The role of the Audit and Risk Committee is set out
in the charter for the committees of the Board of Directors in Annex
C to the Company’s Organisational Regulations. This is available
at https://www.coca-colahellenic.com/en/about-us/corporategovernance.The key responsibilities and elements of the Audit andRisk Committee’s role are:• providing advice to the Board on whether the Annual Report
including the consolidated Financial Statements, taken as awhole, is a fair, balanced and understandable assessment of theCompany’s position and prospects and provides the informationnecessary for shareholders to assess the Group’s position andperformance, including whether there is consistency throughout
the report including the financial reporting, whether the report will
form a good basis of information for the shareholders, and thatimportant messages are highlighted appropriately throughout
the report;• monitoring the quality, fairness and integrity of the consolidated
Financial Statements of the Group, and reviewing significant
financial reporting issues and judgements contained in them;• reviewing the Group’s internal financial control and anti-fraud
systems as well as the Group’s broader enterprise risk management
and legal and ethical compliance programmes (including
computerised information system controls and security) with the
input of the external auditor and the internal audit department;• reviewing and evaluating the Group’s major areas of financial risk
and the steps taken to monitor and control such risk, as well as
guidelines and policies governing risk assessment; and• monitoring and reviewing the external auditor’s independence,
quality, adequacy and effectiveness, taking into consideration therequirements of all applicable laws in Switzerland and the UK, thelisting requirements of the London Stock Exchange and Athens
Stock Exchange, and applicable professional standards.

Members

Membership status

William W. (Bill) Douglas III (Chair)

Member since 2016
Chair since 2016
Member since 2015
Member since 2020

Olusola (Sola) David-Borha
Alexandra Papalexopoulou

109

The Audit and Risk Committee comprises three independent
non-Executive Directors: Bill Douglas (Chair), Olusola (Sola)
David-Borha and Alexandra Papalexopoulou, who were eachre-elected for a one-year term by the shareholders at the Annual
General Meeting in June 2021.
The Board remains satisfied that Bill Douglas, Sola David-Borha andAlexandra Papalexopoulou possess recent and relevant financial andsector experience in compliance with the UK Corporate GovernanceCode. Bill Douglas was formerly Executive Vice President andChief Financial Officer of Coca-Cola Enterprises, Sola David-Borha
has held a number of senior financial positions and Alexandra
Papalexopoulou has served as a treasurer. The Board is also satisfied
that the members of the Committee as a whole have competence inthe sector in which the Company operates in compliance with the UK
Corporate Governance Code and UK listing regime requirements.
Further details on their experience are set out in their respective
biographies on pages 88 to 90.
The Group Chief Financial Officer, as well as the General Counsel,
external auditor, the Head of Corporate Audit, and the Group
Financial Controller, normally attend all meetings of the Audit andRisk Committee. Other officers and employees are invited to attend
meetings when appropriate. The Head of Corporate Audit, and,separately, the external auditor, meet regularly with the Audit andRisk Committee without the presence of management to discuss
the adequacy of internal controls over financial reporting and anyother matters deemed relevant to the Audit and Risk Committee.
The Chair of the Audit and Risk Committee attended our AGM
in June 2021 and regularly interacts with representatives ofour shareholders.

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Work and activities
The Audit and Risk Committee met eight times, all by videoconference call, during 2021 and discharged the responsibilities
defined under Annex C of the Organisational Regulations. The workof the Audit and Risk Committee during the accounting year included
evaluation of and review of the respective matters, as well as
assessment of management’s mitigating actions and responseplans, in the areas below:• the Integrated Annual Report including the consolidated Financial
Statements and the full-year results announcement for the year
ended 31 December 2020 prior to their submission to the Board
for approval, and compliance with Group policies;• the interim consolidated Financial Statements and interim results
announcement for the six-month period ended 2 July 2021, prior
to their submission to the Board for approval;• the trading updates for the three-month period ended 2 April
2021 and the nine-month period ended 1 October 2021;• areas of significance in the preparation of the consolidated
Financial Statements;• the internal control environment, principal risks and risk
management systems (including the nature and extent of theprincipal risks resulting from the COVID-19 pandemic), and theGroup’s statement on the effectiveness of its internal controls
prior to endorsement by the Board, concluding that management
has carried out a robust risk assessment process;• the Viability Statement scenarios and underlying assumptions andrecommendations to the Board that the Viability Statement beapproved, including discussion of management’s conclusions
with respect to Going Concern and the Viability Statement;• the external auditor’s report on the Group’s IFRS earnings
release for the financial year ended 31 December 2020; including
assessment of the auditor’s enhanced audit report and key audit
matters and conclusion that there was nothing that warranted
the attention of the Board; and review of external auditor’s reporton the Group’s interim report for the six-month period ended
2 July 2021;• report on tax audits undertaken during 2021 in a numberof territories;• quarterly reports on internal audit matters across the Group’sbusiness regions, concluding that no material failings
were identified;• consideration and discussion of the guidance to FRC’s Practice
Aid on audit quality;• direct procurement matters and initiatives for 2021, including
contingency plans for COVID-19 as well as commodity exposurefor 2021;• regular reports on health and safety, GDPR compliance, transition
to SAP S4/Hana, cybersecurity, business continuity, security,
quality assurance, environmental protection, asset protection,
treasury and financial risks, anti-bribery and fraud control,
insurance (including placing strategy), enterprise risk management
processes and internal control framework (including any
adjustments to the 2021 schedule and updates to the controls
as a result of the COVID-19 pandemic and the new environment);• project for the optimisation of the Internal Control Framework
Risk Matrix and updates on progress and timing;• reports on litigation and regulatory investigations;• matters arising under the Group’s Code of Business Conduct
and the actions taken to address any identified issues;• an internal quality assessment of the internal audit function,in accordance with the Institute of Internal Auditors AttributeStandards 1311;• impact of the COVID-19 pandemic on trading and revenue andregular updates on developments, potential risks and mitigating
actions, including updates on the Group’s response to the
COVID-19 pandemic in the Group’s territories;• an assessment of the skills of the internal auditors and thesufficiency of the internal audit budget, confirming of the Internal
Auditor’s quality, experience and expertise for the business.
The Audit & Risk Committee is satisfied that internal audit has
the appropriate resources for the business;• updates on risk management and business resilience, including
the Group’s response to the COVID-19 pandemic,the activationand development of Business Continuity strategies and thestreamlining of the Group’s risk management processes. Review
of a description of the top 10 risks per region and the Group’s
updated Strategic Risk Summary;• reports on the Group’s impairment assessment processes
in connection with goodwill and other indefinite-lived intangible
assets for the interim financial report;• regular updates from the external auditor on accounting andregulatory developments. Also, an update on Swiss regulatory
developments,• tax issues including:• an update on increasing substance, coherence andtransparency requirements and the compliance measures that
the Group was taking, including an overview of the Group’s tax
governance and risk management framework, an upgrade ofits tax capabilities, a Group-wide approach to tax controversy
and the continued simplification of the Group’s legal structure;• reviewing the OECD new tax framework in the digital era• report on the introduction, and potential impact, of digital
services taxes by several countries in the Group’s territories;
and• reviewing a bench-marking study by PwC ranking the Grouphigh compared to industry peers on its efforts to establish
tax transparency;• approval of chart of authority and delegation for
operational activities;• external audit plan and pre-approval of audit fees for 2022
• consideration of the external auditor’s independence, quality,
adequacy and effectiveness of its audit of the financial
statements; and• assessed the Company’s external reporting to ensure it is fair,balanced and understandable as a result of the Board’s obligation
under the Corporate Governance Code. The Committee was
responsible for the review of the 2021 Integrated Annual Report
including the Consolidated Financial Statements and associatedreports and information. The Committee received assurancesfrom management and details on the processes underlying the
preparation of published financial information. Following
evaluation of all available information, including considerationof the uncertainties around the COVID-19 pandemic, theCommittee concluded and advised the Board that the 2021
Integrated Annual Report including the Consolidated Financial
Statements is fair, balanced and understandable.
Finally, the Board receives and reviews a report from the Audit andRisk Committee on its activities and discussions at the Board
meeting following each Audit and Risk Committee meeting.

INTEGRATED ANNUAL REPORT 2021

Areas of key significance in the preparationof the Financial Statements
The Audit and Risk Committee considered a number of areas of key
significance in the preparation of the Financial Statements in 2021,
including the following:• appropriateness of critical accounting judgements and estimatesthat affect the reported amounts of assets, liabilities, revenues
and expenses, and the disclosure of contingent assets andliabilities in the consolidated Financial Statements, including
income taxes (detailed in Notes 5, 10, 13, 15, 21 and 29 to theconsolidated Financial Statements), identified by management;• review of the trading environment and resilience of the Group’sbusiness in light of the COVID-19 pandemic and strategic actions
implemented to mitigate risks;• review of impairment testing performed by management andreviewed by the external auditor under IAS 36 as well as the relatedsensitivity analysis with confirmation that management had
undertaken a robust impairment testing process, relying on bothinternal information, and other publicly available metrics toperform their assessment; review key assumptions for specificcountries, challenging management drivers of relevant deviations
and performance to date, as welll as countries WACC rates
development vs prior year
• review of the contingencies, legal proceedings, competition law
and regulatory procedures, including cases involving the national
competition authorities of Greece and litigation matters in Nigeria
and Greece, and the impact of these on the consolidated Financial
Statements and accompanying notes;• review of management’s report that considered the potential
impact of the COVID-19 pandemic on revenues and carrying
amounts of assets;• assessment of management’s judgement on relevant areas for
additional disclosures, to address IAS 34 requirement for
explanation of significant events, in light of the ongoing COVID-19
pandemic;• review of accounting standard IAS 34 that required an explanationof significant events implying that additional disclosure should bemade to reflect the financial impact of the COVID-19 pandemic
and mitigating measures;• discussion of the following accounting pronouncements,
taking effect on 1 January 2021: IFRS 9, IAS 39, IFRS 7 and IFRS
16 (Interest Rate Benchmark Reform-Phase 2), and IFRS 16(Covid-19 related rent concessions);• review of guidance provided from the UK Financial Conduct
Authority and Financial Reporting Council related to areas of focus
for the 2021/2022 financial reporting, climate change, and viability
and going concerns and corporate governance matters;• review of interim judgements performed by management andin alignment with the external auditor, regarding the impairmentof indefinite-lived intangibles in light of the on-going
Covid-19 pandemic;• consideration of quality and safety incidents in Nigeria and Bulgaria;• assessed management’s work in conducting a robust assessmentof the risks that impact the Viability and Going Concern Statements,
including review of scenarios and underlying assumptions;• recommended to the Board to approve the Viability Statement; and• deemed appropriate that the Group continues to apply the going
concern basis for the preparation of the financial statements.

111

External auditor
PricewaterhouseCoopers AG, Birchstrasse 160, CH 8050 Zurich,
Switzerland (‘PwC AG’) has been elected by the shareholders as
the statutory auditor for the Group’s statutory consolidated andstandalone Financial Statements. The signing partner for the
statutory Financial Statements on behalf of PwC AG is Sandra
Boehm Uglow, who has held this role for the first time with regards
to the year ended 31 December 2021.
The Board, at the recommendation of the Audit and Risk
Committee, has retained PricewaterhouseCoopers S.A., 268
Kifissias Avenue – 15232 Halandri, Greece (‘PwC S.A.’), an affiliateof PwC AG, to act as the Group’s independent registered public
accounting firm for the purposes of reporting under the UK rules
for the year ended 31 December 2021. The signing partner for the
Financial Statements on behalf of PwC S.A. is Fotis Smyrnis, who has
held this role for the first time with regards to the year ended 31
December 2021.
The appointment of PwC has been approved by the shareholders
until the next Annual General Meeting by way of advisory vote. ‘PwC’
refers to PwC AG or PwC S.A., as applicable, in this Annual Report.
During the accounting period, the members of the Audit and Risk
Committee met on a regular basis with the newly appointed PwC
signing partners, both with and without management being present.
This provided the Audit and Risk Committee with an opportunity
for open dialogue, to question and be satisfied as to the quality of
the audit work performed by PwC and challenge PwC’s professional
skepticism. During the meetings, the newly appointed PwC signing
partners demonstrated their understanding of the group’s businessrisks and the consequential impact on the financial statement risks,
especially around areas of key significance in the preparationof the Financial Statements including but not limited to the annual
impairment testing, contingencies and legal proceedings including
taxes. The Audit and Risk Committee took an active role inreviewing the scope of the audit, the independence, objectivity andeffectiveness of PwC, and the negotiations relating to audit fees.
The Audit and Risk Committee also met with the management team,which led the discussions with PwC, including the Head of Corporate
Audit, to review the performance of PwC without PwC being present.
Following this review process, the Audit and Risk Committee hasrecommended to the Board that a proposal to reappoint PwC
be put to a shareholders’ vote at the next Annual General Meeting.
PwC has acted as the Group’s sole external auditor since 2003.
The Company ran a competitive tender for the external auditor
services in 2015 which was overseen by the Audit and Risk
Committee. Following the evaluation of the proposals, the Audit
and Risk Committee concluded in 2015 that the best interests of
the Group and its shareholders would be served by retaining PwC
as external auditor and made such recommendation to the Board.
PwC was reappointed by the Board as the Group’s external auditor
with effect from 11 December 2015. Currently, the Audit and Risk
Committee anticipates that the audit contract will be put out totender again in 2025. There are no contractual or other obligations
restricting the Group’s choice of external auditor.

Non-audit services provided by the external auditor
The Audit and Risk Committee considers the independence, in both
fact and appearance, of the external auditor as critical and has long
had an auditor independence policy providing definitions of theservices that the external auditor may and may not provide. In linewith the relevant FRC Guidance, the policy requires the Audit andRisk Committee’s pre-approval of all audit and permissible non-audit
services provided by the external auditor, and only for matters thatare clearly trivial to the Company. Such services include audit, work
directly related to audit, and certain tax and other services as further
explained below. In practice, the Audit and Risk Committee applies
the policy restrictively, and approval for work other than audit andaudit-related services is rarely granted.

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Under the policy, pre-approval may be provided for work associatedwith: statutory or other financial audit work under IFRS or according
to local statutory requirements; attestation services not required bystatute or regulation; accounting and financial reporting consultation
and research work necessary to comply with generally accepted
accounting and auditing standards; internal control reviews andassistance with internal control reporting requirements; review of
information systems security and controls; tax compliance and related
tax services, excluding any tax services prohibited by regulatoryor other oversight authorities; expatriates’ and other individual tax
services; and assistance and consultation on questions raisedby regulatory agencies.
For each proposed service, the external auditor is required toprovide detailed back-up documentation at the time of approval
to permit the Audit and Risk Committee to make a determination
whether the provision of such services would impair the external
auditor’s independence.
PwC has complied with the policy for the financial year ended
on 31 December 2021. The policy was updated on 1 January 2021
to refer to the FRC’s Revised Ethical Standard 2019, however nosignificant changes were performed.

Audit fees and all other fees
Audit fees
The total fees for audit services paid to PwC and affiliates wereapproximately €4.8 million for the year ended 31 December 2021,
compared to approximately €4.5 million for the year ended 31
December 2020. The total fees for 2021 include fees associatedwith the annual audit and review of the Group’s half-year reports,
prepared in accordance with IFRS and local statutory audits.
Audit‑related fees
Fees for audit-related services paid to PwC and affiliates for theyear ended 31 December 2021 were €0.7million, compared to€0.6 million for the year ended 31 December 2020.
Tax‑related fees
No fees were paid to PwC and affiliates for tax services for the year
ended 31 December 2021 or for the year ended 31 December 2020.
All other fees
No fees were paid to PwC or affiliates for non-audit services for the year
ended 31 December 2021 or for the year ended 31 December 2020.
Risk management
During 2021, the Company continued to revise and strengthen
its approach to risk management as described in detail on pages
58-71. The primary aim of this framework is to minimise our
exposure and ensure that the nature and significance of all risks
we are facing are properly identified, reviewed, managed and,
where necessary, escalated. Risk assessments are conducted anddiscussed at monthly Senior Leadership Team meetings in all
our business units. These assessments are reviewed by regional
management teams and the Chief Risk Officer twice a year.
In addition, corporate functions conduct broader risk assessments
across the business with the Chief Risk Officer biannually.
The Company’s Group Risk and Compliance Committee reviews the
emerging as well as the identified risks biannually and the emerging
and material risks as well as mitigating actions is presented by the
Chief Risk Officer to Executive Leadership Team and the Audit andRisk Committee. This process is both top-down and bottom-up andis designed to ensure that risks arising from business activities areappropriately managed. The Audit and Risk Committee confirmsthat the risk management and internal control systems have beenin place for the year under review and up to the approval of theannual report and accounts. Finally, we have in place third- party
insurance to cover residual insurable risk exposure such as property
damage, business interruption and liability protection, including
Directors’ and officers’ insurance for our Directors and officers,
as well as for the officers and directors of certain subsidiaries.

Internal control
The Board has ultimate responsibility for ensuring that the Company
has adequate systems of financial reporting control. Systems
of financial reporting control can provide only reasonable and not
absolute assurance against material misstatements or loss.
In certain of the countries in which we operate, our businesses are
exposed to a heightened risk of loss due to fraud and criminal
activity. We review our systems of financial control regularly in orderto minimise such losses.
Internal audit
Our internal audit function reports directly to the Audit and Risk
Committee, which reviews and approves the internal audit plan foreach year. The internal audit function consists of approximately
40 full-time professional audit staff mainly based in Athens, Sofia,
Moscow and Lagos, covering a range of disciplines and businessexpertise. One of the responsibilities of the internal audit function
is to provide risk-based and objective assurance to the Board as towhether the Group’s framework of risk management, includinginternal control framework, is operating effectively. For this purpose,the Head of Corporate Audit makes quarterly presentations to the
Audit and Risk Committee and meets regularly with the Audit andRisk Committee without the presence of our management.
In addition, the internal audit function reviews the internalfinancial, operational and compliance control systems across all
the jurisdictions in which we operate and reports its findings tomanagement and the Audit and Risk Committee on a regular basis.
The internal audit function focuses its work on the areas of greatest
risk to us, as determined by a risk-based approach to audit planning.
As part of our commitment to maintaining and strengthening bestpractice in corporate governance matters, we also consistently
seek to enhance our internal control environment and risk
management capability.
The internal audit function carries out work across the Group,
providing independent assurance, advice and insight to help theorganisation accomplish its objectives by bringing a systematic,
disciplined approach to evaluating and improving the effectivenessof risk management, control and governance processes. In
December 2021, the Audit and Risk Committee agreed the FY22
audit plan to be undertaken by the internal audit team. The audit plan
coverage is based on risk, strategic priorities and consideration of
the strength of the control environment. The internal audit function
prepares audit reports and recommendations following each audit,
and appropriate measures are then taken to ensure that all
recommendations are implemented. Significant issues, if any,
are raised at once. There were no such issues in 2021.
The Board has adopted a chart of authority, defining financial andother authorisation limits and setting procedures for approving
capital and investment expenditure. The Board also approvesdetailed annual budgets. It subsequently reviews quarterly
performance against targets set forth in these plans and budgets.
A key focus of the financial management strategy is the protectionof our earnings stream and management of our cash flow.
We have conducted an annual review of the effectiveness of our risk
management system and internal control systems in accordancewith the UK Corporate Governance Code. Part of this review involves
regular review of our financial, operational and compliance controls,
following which we report back to the Board on our work and findings
as described above. This allowed us to provide positive assurance
to the Board to assist it in making the statements that our risk
management and internal control systems are effective, as requiredby the UK Corporate Governance Code. Further information is set
out on pages 54-61.

INTEGRATED ANNUAL REPORT 2021

The key features of the Group’s internal control systems that ensure
the accuracy and reliability of financial reporting include: clearly
defined lines of accountability and delegation of authority; policies
and procedures that cover financial planning and reporting;preparation of monthly management accounts; and review of thedisclosures within the Annual Report from function heads to ensurethat the disclosures made appropriately reflect the developments
within the Group in the year and meet the requirement of being fair,balanced and understandable.
The Audit and Risk Committee reviews the results of the internal
audit reports during each meeting, focusing on the key observationsof any reports where processes and controls require improvement.
The Audit and Risk Committee was also provided with updates on
the remediation status of management actions of internal audit
findings and on the internal audit quality assurance and improvement
programme at each meeting.
A particular focus during 2021 was the robustness of the internal
control systems and processes around risk management, in light ofthe on-going COVID-19 pandemic. The Audit and Risk Committee
was kept informed of any changes or adaptations to ensure fullfunctionality as the Company continued to operate under thecircumstances and uncertainties of the COVID-19 pandemic.
The Group Chief Financial Officer and the Regional FinanceDirectors, Country General Managers and Country Chief Financial
Officers have access to the implementation status of therecommendations at all times.
Where internal or external circumstances give rise to an increased
level of risk, the audit plan is modified accordingly. Nevertheless, nosignificant cases occurred this year. Any changes to the agreed audit
plan are presented to and agreed by the Audit and Risk Committee.
Detailed updates on specific areas were provided at the requestof the Audit and Risk Committee, such as, for example, the progresson audit issues relating to a Health and Safety audit and to an
Information Technology including Cyber Security audit .

Whistleblowing measures
Business ethics and anti‑corruption
We seek to grow our business by serving customers and consumers,
and conduct all business activities with integrity and respect.
The Board is responsible for ensuring appropriate proceduresand processes are in place to enable our workforce to raise any
issues of concern and is satisfied that the processes in place areappropriate.The Board maintains zero-tolerance regarding
breaches of our Code of Business Conduct and anti-bribery policies,
as well as any attempts to retaliate against our people who reportpotential violations.
We have mandatory training for all our people, including our ELT, sothat everyone understands our Code of Business Conduct, and we
hold additional targeted anti-bribery training for employees working
in areas we assess as high risk. In April 2021, a new consolidated
e-learning program on our Code of Business Conduct and AntiBribery Policy was introduced. The course is available on-line to all
employees and includes a knowledge test, acknowledgement andre-commitment to compliance with the Code and its related policies.
As in the past, this training will be a regular requirement for all
employees. At the end of the training wave over 26.300 employees,
which was 97,7% of total employees, had completed the course.
Since then, we continue to train every newly hired employee. In 2021
our communication plan on compliance included several initiatives
to continue raising awareness on business ethics among our people,
like our annual Ethics and Compliance Week that was rolled out
across our Business Units. We have also an established anti-bribery
due diligence process for third parties who have contact with publicauthorities on behalf of our Company. For further information please
see the Anti-Bribery Policy and Code of Business Conduct on our

113

website: https://www.coca-colahellenic.com/en/about-us/
corporate-governance/policies. We have established grievancemechanisms, including an independently operated whistleblower‘Speak Up Hotline’, available in all Coca-Cola HBC countries in local
languages to ensure any concerns can be raised. In 2021, weinvestigated 344 allegations (2020: 322) of which 210 (2020: 139)
were received through the ‘Speak Up Hotline’. All allegations
involving potential Code of Business Conduct violations were
investigated in accordance with the Group Code of BusinessConduct Handling Guidelines. Of those investigated, 105 (2020: 105)
matters were substantiated as code violations of which 15 (2020: 26)
involved an employee in a managerial position or involved a loss
greater than €10,000. For details concerning the handlingof allegations received in 2021, see our website.
You can find more on allegations investigated and violations
uncovered in our GRI index: https://www.coca-colahellenic.com/
content/dam/cch/us/documents/oar/Coca-Cola-HBC-2021GRIContent-Index.pdf.downloadasset.pdf. Through the ‘Speak Up
Hotline’ we receive, retain, investigate and act on employee
complaints or concerns regarding accounting, internal control or
ethical matters. This includes any matters regarding thecircumvention or attempted circumvention of internal controls,
including matters that would constitute a violation of our Code ofBusiness Conduct or matters involving fraudulent behaviour by
officers or employees of the Group. All such allegations, complaints
or concerns may be communicated in a variety of ways, in local
languages and on an anonymous basis, to our Head of Corporate
Audit. Communications received by the Head of Corporate Audit, or
directly through the ‘Speak Up Hotline’, are kept confidential and,
where requested, anonymous. The Head of Corporate Audit liaises
regularly with the General Counsel and communicates all significant
allegations to the Chair of the Audit and Risk Committee.
All matters received via the ‘Speak Up Hotline’ or any otherreporting mechanism are thoroughly investigated. The Audit andRisk Committee receives summary reports of escalated incidents
and instances of whistleblowing together with the status ofinvestigations and, where appropriate, management actions toremedy issues identified. The Committee reports to the Boardon such matters, which reviews and considers those reports
as appropriate.
Disclosure Committee
A Disclosure Committee has been established, and disclosure
controls and procedures have been adopted to ensure the accuracy
and completeness of our public disclosures. The Disclosure
Committee is composed of the Group Chief Financial Officer, theGeneral Counsel, the Director of Investor Relations and the Group
Financial Controller.
Performance reporting
Reports on our annual performance and prospects are presented
in the Annual Report following recommendation by the Audit andRisk Committee. In line with UK practice, we have adopted half-year
and full-year reports, and Q1 and Q3 trading updates. Internally,
our financial results and key performance indicators are reviewed by
the Executive Leadership Team on a monthly basis. This information
includes comparisons against business plans, forecasts andprior-year performance. The Board of Directors receives updates on
performance at each Board meeting, as well as a monthly report on
our business and financial performance.

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COCA-COLA HBC

Corporate governance report continued

Ensuring business
continuity and growth
Letter from the Chair of theNomination Committee

Dear Stakeholder
The work of the Nomination Committee has continued
to focus on the composition of the Board and theimportant task of Board and senior management
succession planning.
In 2021, the Committee continued to review the balance of skills,
experience and diversity of the Board and focused on the talentdevelopment, employee engagement and gender diversity initiatives
necessary to ensure that the Group has the people and skills todeliver on its strategy. To this end the Committee oversaw theappointment process for Henrique Braun and Bruno Pietracci as
non-Executive Directors in light of the retirement of José Octavio
Reyes and Alfredo Rivera. The Committee also considers the overall
length of service of the Board as a whole as part of its succession
planning and keeps under review the need to refresh Board
membership. In addition, the Committee oversaw an externallyfacilitated self-assessment process.

Highlights this year
• The successful onboarding of non-Executive Directors,
Henrique Braun and Bruno Pietracci.

Priorities for 2022
• continuous work on succession plans for Board and senior
management positions;• close monitoring of the Group’s talent and development
frameworks in order to ensure the continued strengthof the current talent pipeline;• externally facilitated Board and committee assessments; and• follow up actions on outcome of 2021 evaluation assessment.

Role and responsibilities
The function of the Nomination Committee is to establish andmaintain a process for appointing new Board members, to manage,
in consultation with the Chairman, the succession of the Chief
Executive Officer and to support the Board in fulfilling its duty
to conduct a Board self-assessment. The formal role of theNomination Committee is set out in the charter for the committeesof the Board of Directors in Annex C of the Company’s
Organisational Regulations. This is available online at https://www.
coca-colahellenic.com/en/about-us/corporate-governance.
Key elements of the Nomination Committee’s role are:• reviewing the size and composition of the Board;• identifying candidates and nominating new members to the Board;• planning and managing, in consultation with the Chairman, a Board
membership succession plan;

A summary of the Group’s Nomination Policy for the recruitment ofBoard members is available online at: https://www.coca-colahellenic.
com/content/dam/cch/us/documents/about-us/corporategovernance/summary-of-nomination-policy-for-recruitment-ofboard-members.pdf.downloadasset.pdf. The Board Diversity Policy
is described on page 115.

Reto Francioni
Committee Chair• ensuring, together with the Chairman, the operation of asatisfactory induction programme for new members of the Boardand a satisfactory ongoing training and education programme forexisting members of the Board and its committees as necessary
to deliver on our strategy;• setting the criteria for, and overseeing, the annual assessmentof the performance and effectiveness of each member of theBoard and each Board committee;• conducting an annual assessment of the performance andeffectiveness of the Board, and reporting conclusions andrecommendations based on the assessment to the Board; and• overseeing the employee and management talent development
and succession plans of the Group.
Members

Membership status

Reto Francioni (Chair)

Member since 2016
Chair since 2016
Member since 2017
Member since 2020

Charlotte J. Boyle
Anna Diamantopoulou
Committee at work
Succession
planning

Board
composition

Recruitment

ShortlistingINTEGRATED ANNUAL REPORT 2021

The members of the Nomination Committee are Reto Francioni,
Charlotte Boyle and Anna Diamantopoulou. All members of theNomination Committee are independent non-Executive Directors.
At the Annual General Meeting in June 2021, Reto Francioni,
Charlotte Boyle and Anna Diamantopoulou were re-elected fora one-year term by the shareholders.

Work and activities
The Nomination Committee met four times during 2021 anddischarged the responsibilities defined under Annex C of theCompany’s Organisational Regulations. The Chief Executive Officer
and the Group Human Resources Director regularly attend meetingsof the Nomination Committee. In addition, the Chairman is actively
involved in the work of the Nomination Committee concerning
succession planning and the selection of key people. In 2021, theGeneral Counsel also met with the Nomination Committee on
several occasions. During 2021, the work of the Nomination
Committee included consideration of:• succession planning and development of plans for the recruitmentof new Board members and senior management, including two
non-Executive Directors (given that they were appointed at therequest of The Coca-Cola Company, an external consultancy
was not engaged in connection with these appointments, but isgenerally used for non-Executive Director appointments) andcertain members of the Group’s Executive Leadership Team;• composition of the Board, including the appropriate balanceof skills, knowledge, experience and diversity;• review of the talent management framework;• the performance evaluation and annual assessments of thecommittees and the Board;• follow up actions arising from Board and committee evaluations;• review of the Director induction process and training
programmes; and• review of the Group’s Inclusion and Diversity Policy.

Performance evaluation of the Board
The Nomination Committee led the annual assessment of theperformance of the Board and its committees during the year withthe support of Lintstock, an external advisory firm. The key areas
included in the assessment were Board structure and diversity,
timeliness and quality of information, Board discussions, andeffective contributions of each Director, the performance of theBoard, committees, succession planning, risk appetite and risk
management, and remuneration and performance. The scores werehigh overall, and the results of the evaluation were presented at theDecember 2021 Board meeting. Further details on the internal Board
evaluation are set out on page 103.
As with all employees, the Group offers training opportunities to theBoard and senior management in order to improve their skills, andencourages all Board members and senior management to gain
relevant experience and knowledge to fulfil their position’s duties.

Diversity
The Group continues to have a firm commitment to policies
promoting diversity, equal opportunity and talent development
at every level throughout the organisation, including at Boardand management level, and is constantly seeking to attract andrecruit highly qualified candidates for all positions in its business.
The Group’s Diversity and Inclusion Policy applies to all people whowork for us. Further details on the Group’s Diversity and Inclusion
Policy are set out on page 41 in the Strategic Report.

Interview

Balance of skills
assessment

115

The Group believes that diversity at the Board level acts as a key
driver of Board effectiveness, helps to ensure that the Group canachieve its overall business goals especially in light of our geographicalfootprint, and is critical in promoting a diverse and inclusive culture
across the whole Group. The Board has adopted a formal Board
Diversity Policy, which guides the Nomination Committee and theBoard in relation to their approach to diversity in respect of succession
planning and the selection process for the appointment of new
Board members. The Nomination Committee is responsible for
implementing this policy and for monitoring progress towards theachievement of its objectives.
The requirements and objectives of the Board Diversity Policy,
include that the Nomination Committee is required to take into
account all aspects of diversity, including age, ethnicity, gender,
educational and professional background and social backgroundwhen considering succession planning and new Board appointments;
seek a wide pool of candidates, with a broad range of previous
experience, skills and knowledge; and give preference to executive
search firms that are accredited under the Enhanced Code of
Conduct for Executive Search Firms. Board appointments areevaluated on merit against objective criteria with due regard fordiversity to ensure that candidates contribute to the balance of skills,
experience, knowledge and diversity of the Board. The Board also
considers the overall length of service of the Board as a whole when
considering refreshment of the membership.
The Board understands the benefits of diversity of gender, ethnicity,
knowledge and experience, and this is reflected in the Board
Diversity Policy. The objectives of the Board Diversity Policy include
ensuring female representation on the Board and as such both theBoard and Nomination Committee are mindful of the target set for
FTSE 100 companies by the Hampton-Alexander Review (minimumof 33% of women on the Board and 33% of women on the executive
committee and direct reports by the end of 2020). They are also
mindful of the target set out in the Parker Review to increase ethnic
diversity (at least ‘one person of colour’ on the Board by 2021).
The Board currently has 30% female representation and also meetsthe target set by the Parker Review having had a person of colouron the Board since 2015. The Board is committed to improving theBoard gender balance and the Nomination Committee has, and willcontinue to, consider this in the context of its continuous work on
succession plans for the Board, as well as senior management.
The Executive Leadership Team has 23% female representation
while 30% of our senior leaders are women. Figures showing Boardand senior management gender diversity are shown on pages 90
and 105. The Board is committed to appointing the best people withthe right skill set, regardless of gender, ethnicity, religion or disability,
and as such does not think it is appropriate to set specific targets
for Board appointments.
The Board recognises the importance of diversity in its business.
It is the Board’s responsibility to oversee senior management
succession planning for a diverse pipeline of managers and talent
identified from the management talent development programme.
This links to our strategy to develop our people and ensure we
attract and retain a diverse talent pool, and is one of the fivepillars of our growth strategy. Further information on pages 38-43.
The Nomination Committee, in conjunction with the Executive
Leadership Team, will continue to monitor the proportion of womenat all levels of the Group and ensure that all appointments are madewith a view to having a high level of diversity within the workplaceand in leadership positions.

Appointment

Induction

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COCA-COLA HBC

Corporate governance report continued

Overseeing the journey
to net zero
Letter from the Chair of theSocial Responsibility Committee

Activity highlights 2021
• close governance of licence to operate pillar as part of our
Growth Story 2025 including progress of public Mission
2025 commitments;• endorsement and a detailed review of the actions,
initiatives, and communication plans supporting
NetZeroby40, the Company’s commitment to reach net
zero greenhouse gas emissions by 2040, combined with
science-based carbon reduction targets by 2030;• review of sustainable packaging agenda, progress,
and action plan;• deep-dive analysis of Company results in various
environmental, social and governance (ESG) benchmarks
and ratings;• review of the new Sustainability department structure;• adoption of new food loss policy and biodiversity statement;• update of the packaging waste policy;• ongoing updates on plastic packaging levies and product tax
developments; and• active involvement in annual Stakeholder Forum on ‘Winning
ESG Partnerships – When One Plus One Exceeds Two’,
including preparations and measurement/feedback.

Priorities for 2022
• Progress of public Mission 2025 commitments with a focus
on NetZeroby40 and packaging initiatives;• partnerships for innovation in the area of ESG;
• implementation of 2022 roadmap related to 2030 sciencebased carbon reduction targets to reduce carbon emissions
across the value chain;• plans for added sugar reduction across beverage categoriesaligned with the UNESDA commitment to sugar reduction;• stakeholder outreach activities;• reviewing and streamlining of Company disclosure andreporting standards based on GRI, IIRC, TCFD and SASB
frameworks, and the EU Taxonomy; and• ongoing activities related to ESG benchmarking activities,
plastic packaging levies and product tax developments.

Dear Stakeholder
The Social Responsibility Committee continued its
focus on the overall integration of sustainability in thebusiness strategy and the Group’s progress towards
its Mission 2025 sustainability targets. To support theachievement of our very ambitious NetZeroby40
emissions reduction goal, we oversaw implementationof a new structure and new ways of working in theGroup’s Sustainability department. The key changes
are: (1) a much extended and upgraded Head of
Sustainability role in the Group team; (2) creating across-functional Sustainable Packaging team that will
focus on developing an end-to-end approach; (3) a
new governance model and supporting activities; (4)prioritisation of sustainability as the core theme
for communication.
The Committee monitored sustainability-related regulatory
developments, including the EU Green Deal and other regulations
promoting a circular economy, single-use plastics and packaging
waste, deposit return systems and evolving nutrition
labelling requirements.
During 2021, the Company retained top scores in MSCI ESG ratings,
CDP Climate and Water, ISS ESG, Video Eiris and FTSE4Good.
The Committee is particularly proud that the Company was again
rated as Europe’s most sustainable beverage business in the S&P
Corporate Sustainability Assessment (DJSI).

INTEGRATED ANNUAL REPORT 2021

Going forward in 2022, the Committee will ensure that sustainability
is fully integrated into the business strategy and that the company
continues to create value for all of its stakeholders. Areas of specificattention will include focus on increasing diversity, inclusion andequity; sustainable sourcing; the relevance of biodiversity anddeforestation for the business.

117

Work and activities
The Social Responsibility Committee met four times during 2021.
Along with Committee members, those meetings were attended
by other members of the Board, i.e., Charlotte J. Boyle and Ryan
Rudolph, the CEO, the Chief Corporate Affairs & Sustainability
Officer, and additional senior leaders subject to the discussion topics.
The Chairman of the Board also attended some of the meetings.
During 2021, the Social Responsibility Committee reviewed andprovided guidance and insights to advance the Group’s sustainability
approach in the following areas:

Anastasios I. Leventis
Committee Chair

Role and responsibilities
The Social Responsibility Committee is responsible for thedevelopment and supervision of procedures and systems to ensure
the pursuit of the Company’s social and environmental goals, as set
out in the charter for the committees of the Board of Directors in
Annex C to the Company’s Organisational Regulations. This isavailable at https://www.coca-colahellenic.com/en/about-us/
corporate-governance:
Key areas of responsibility are:• establishing the principles governing the Group’s policies on social
responsibility, and the environment to guide management’s
decisions and actions;• overseeing the development and supervision of procedures andsystems to ensure the achievement of the Group’s social
responsibility and environmental goals;• establishing and operating a council responsible for developing
and implementing policies and strategies to achieve theCompany’s social responsibility and environmental goals (in all
ESG pillars, such as climate change, water stewardship, packaging
and waste, sustainable sourcing, health and nutrition, and ourpeople and community), and ensuring Group-wide capabilities
to execute such policies and strategies;• ensuring the necessary and appropriate transparency andopenness in the Group’s business conduct in pursuit of its social
responsibility and environmental goals;• ensuring and overseeing the Group’s interactions withstakeholders in relation to its social responsibility andenvironmental policies, goals, and achievements, including thelevel of compliance with internationally accepted standards; and• reviewing Group policies on environmental issues, human rights,
and other topics as they relate to social responsibility.
Members

Membership status

Anastasios I. Leventis (Chair)

Member since 2016
Chair since 2016
Member since June 2020
Member since June 2021

Anna Diamantopoulou
Bruno Pietracci• progress and the action plans made against the 17 publicly
communicated 2025 sustainability commitments;• new Group Sustainability structure and introduction of Sustainable
Packaging cross-functional team to manage agenda and trackprogress of accelerating a shift towards more sustainable packaging(rPET, packageless, refillables, and other) and packaging recovery;• detailed plans and initiatives for delivery of science-based carbon
reduction targets and NetZeroby40 commitment;• innovative opportunities related to CO2 capture from the air(CO2 removal) and digital applications for incentivising consumers
for bottling recycling;• low-sugar and zero-sugar products and reformulations as partof the Group’s commitment to reduce calories and added sugar;• volunteering activities across our BUs;
• diversity, equity, and inclusion topics;• health and safety protocols to ensure the safety of all
our employees;• support to our communities throughout the COVID-19 pandemic;• #YouthEmpowered digital programmes and curriculum;• established partnerships in the area of packaging, blockchain,packaging recycling and carbon;• materiality process and review of outcomes of the annualmateriality survey;• opportunities for EU funds related to different environmental
initiatives, mostly for renewable energy, carbon reduction
and packaging optimisations;• stakeholder engagement plan and outcomes of the Annual
Stakeholder Forum; and• use of relevant reporting frameworks including the Global
Reporting Initiative (GRI) Standards, Task Force on Climaterelated Financial Disclosures (TCFD) and the Sustainability
Accounting Standards Board (SASB).

118

COCA-COLA HBC

Directors’ remuneration report

Maintaining our performance
focus during a challenging year
Letter from the Chair of theRemuneration Committee

As the Chair of the Remuneration Committee, I am pleased topresent our Directors’ Remuneration Report for the year ended
31 December 2021. Our primary listing is on the London Stock
Exchange, and our Company is domiciled in Switzerland. We therefore
ensure, as described in this report, that we comply with UK regulations,
except where these conflict with Swiss law. The format of this year’s
Remuneration Report is consistent with the format of last year’s as
there were no significant changes in relevant regulations. As always,
I welcome your feedback and suggestions regarding anything we cando to improve the report further.
The Group’s remuneration philosophy and policies are designed to
attract, motivate and retain the talented people we need to meet
the Company’s strategic objectives, and to give them due recognition.
To this end, the Remuneration Committee has worked to ensurethat the remuneration policy of the Group remains fair, transparent,
and competitive in comparison with our peers, and that remuneration
helps drive our growth strategy and sustainable performance.

Highlights this year
• We developed a more comprehensive shareholder
engagement programme, conducting a consultation
between the Chair of the Remuneration Committee andan extensive number of shareholders for the first time.
• This followed the AGM and was directly in response
to feedback received from shareholders as part of ourconsultations last year.
• The key decisions we made this year in relation to
incentive outcomes and the implementation of ourRemuneration Policy were informed by this shareholder
consultation process.

Dear Shareholder
Our Company and employees continued to rise to
the challenges of the COVID‑19 pandemic during 2021,
navigating reopenings and recovery while continuing
to adapt to new ways of working. While we maintained
business continuity, the health and safety of ourworkforce has always been our first priority.
The Remuneration Committee’s decisions during theyear were considered in the context of the remunerationof all our employees and reflect the importance of
incentivising and rewarding our most critical employees:
those on the front lines serving our customers.
Free cash flow (€m)

Comparable EPS (€)(2020: 497)

(2020: 1.185)

601.3

1.584

Comparable EBIT
(€m)

831

(2020: 672)

ROIC

NSR (Net sales revenue)(2020: 11.1%)(2020: 6,132)

14.8%

Included in MIP

7,168
Included in PSP

Remuneration in context
We achieved strong performance in 2021. In a volatile market
environment, where in many of our countries we had customers
who remained closed for several months, the business has achieved
an acceleration of revenues and profitability as well as a faster paceof market share gains, with all key metrics above pre-pandemic
levels. We have continued to invest in long-term opportunities
including the acquisition of Coca-Cola Bottling Company of Egypt
and the stake in Caffè Vergnano which expands our coffee strategy;
and we have announced targets and funds to achieve net zerocarbon emissions by 2040. Our key financial highlights include:• FX-neutral revenue growth +20.6% like-for-like . Reported
revenues +16.9%;• Volume growth of 14.0% like-for-like, or 13% on a reported basis;• FX-neutral revenue per case up to 5.8% driven by pricing andrevenue growth management strategies;• Comparable EBIT grew by 23.6% with margins +60bps to 11.6%.
Reported EBIT grew by 21.0%;• Operating costs as a percent of revenue improved by 2.2pp,
driven by operating leverage, cost savings higher than plan; and• Strong earnings growth, record high free cash flow and increased
dividend pay-out target range to 40-50%.

Stakeholder experience
Our shareholders
The Committee acknowledges that, at our 2021 Annual General
Meeting all resolutions were successfully passed with the requisite
majority, however, there were significant minority votes against
Resolutions 7 and 9, the advisory votes to approve the UK
Remuneration Report and the Swiss Remuneration Report.
Each were passed with the support of approximately 72% of thevotes cast.

INTEGRATED ANNUAL REPORT 2021

Following the AGM, we extended our engagement with shareholders
and their proxy advisers on remuneration issues. We reached out tothe top 20 shareholders as well as all those who had contacted theBoard to express their views, particularly with regard to the targets forthe 2018 Performance Share Plan awards. Whilst the Remuneration
Committee had sought to ensure that these incentive arrangements
continued to align with their original intent given the impact of
COVID-19, we acknowledge that not all shareholders were supportiveof such adjustments. Through the engagement process, shareholders
did express a range of views on other actions the Committee might
consider to provide retention and incentivisation to the workforce
reflecting the different operating environment presented
by COVID-19.
The Remuneration Committee believes that the decisions it took
were necessary to retain and incentivise the broader management
team, in addition to the executive leadership and CEO. These individuals
were directly responsible for navigating the Company through the
turbulence caused by the COVID-19 pandemic and ensuring theresilience and recovery of the business.
In terms of the shareholder experience, our investors have benefited
from recent and historical strong financial performance. We havereturned €4.1 billion to shareholders over the last two decades witha progressive dividend policy complemented by extraordinary returns
through special dividends. In 2021, we paid a dividend of €0.64, a
3.2% increase despite the decline in EPS. This represented a payout
ratio of 54%, ahead of our medium term target of 35-45%, andwas proposed to ensure we rewarded shareholders and maintained
our commitment to a progressive dividend. While the COVID-19
pandemic is a continuing source of uncertainty globally, basedon our business’s resilience and future opportunities, the Board has
proposed a dividend of €0.71, a 10.9% increase compared with lastyear. We have committed to continue to make progressive dividend
payments in the future.

Our employees and their remuneration
As a continuation to the improvements made in 2020 to enable ourworkforce to operate effectively, in 2021 we maintained our ongoing
dialogue with our employees to listen and understand their needs.
I continue to attend the majority of the Works Council meetingsand plenary during the year which covers approximately half ofour population . I speak with the employee representatives todiscuss their thoughts on the Company’s relationship with them.
The discussions and outcomes are shared in the Remuneration
Committee meetings as input for taking wider decisions related
to remuneration for the workforce and executives.
In reviewing our wider workforce remuneration practices, weprioritised the treatment of our front-line employees: we continue
to focus on protecting them and ensuring that their remuneration istreated fairly. Annual increases were awarded to the wider populationin 2021 as were incentives, and they are planned again for 2022.
We conducted two additional surveys to complement our annual
engagement survey to ensure we remained abreast of the viewsof our employees at a time of significant change and uncertainty.

119

We adjusted our Wellbeing framework to take into account the new
ways of working and needs of our employees.
Furthermore, we ensured that there were no redundancies madeas a result of the impact of the COVID-19 pandemic. Full details of
how we cultivated the potential of our people in 2021 can be foundon page 41-42.

Applying the remuneration policy for Directors in 2021
In 2021, Zoran Bogdanovic’s salary was increased to €815,000
representing an increase of 3.2%, effective 1 May 2021. Following
the freeze in 2020, the Committee believed that as the Company
emerged from the COVID-19 pandemic, an increase for the CEOin line with other employees was appropriate. The average increasefor our other head office employees was 3.1%.
We signalled in last year’s Annual Report that the adjustments
made to employees and CEO incentive outcomes would continue
to try to reflect appropriately the changed environment with the aim
to incentivise and retain our broader workforce. The decisions inrelation to PSP outcomes followed a similar reasoning to the decisions
in 2020, albeit our business had stronger performance in 2021
compared to last year.
As mentioned in last year’s report, the approach under the MIPchanged in 2021, shifting to a multiplicative rather than additive
calculation to give more emphasis on business performance overpersonal performance. The business performance KPIs were
simplified to focus on three key metrics: revenue (40% weighting),
comparable EBIT (40% weighting) and free cash flow (20% weighting).
The formulaic MIP outcome for the CEO was 100% of the maximum
opportunity. The Committee applied downward discretion to adjust
for the benefit of the sale of the Cyprus plant and to reflect thesmall amount of government aid due to COVID-19 received in a few
countries outside the UK but for which there are no mechanisms
available for repayment. The final MIP outcome was 91% of the
maximum opportunity. The effect of this adjustment was to reduce
the outcome for the CEO by 12.6% of salary. Details of the targets,
performance against them and the plan outcomes are set out
on page 134.
As described in more detail on page 135, the Committee took
the decision to adjust targets for the 2019 PSP award. The original
targets for this award were set prior to the onset of the pandemic
and were no longer appropriate in light of that impact. At the timeof revising the targets, the plan would have delivered zero vesting.
The Committee took into consideration the financial, operationaland strategic performance of the business over the three year period,
as well as the shareholder experience including the dividend payouts.
The Committee carefully considered the adjusted targets toensure that they are equally stretched and still represented good
performance at threshold and exceptional performanceat maximum levels.
Performance against the revised targets over the period 2019 to
2021 resulted in a formulaic vesting level of 90% of the maximum
PSP award granted in 2019, which excludes the benefit from the saleof the Cyprus plant. The Committee decided to apply downwards
discretion to this figure, resulting in a final vesting level of 75%of the maximum. Details of the targets and outcomes are explainedon page 135.

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Directors’ remuneration report continued
Looking ahead
The Remuneration Committee will continue to keep policies
under review so as to ensure that plans and programmes relating
to remuneration support the Company’s strategy and objectives
and are closely linked to shareholders’ interests. The Committee
is mindful of the evolution in corporate governance requirements
and will continue to review the application of these as it relates
to aspects of remuneration.
The Remuneration Committee believes that the amended
Remuneration Policy approved by shareholders at the AGM in June
2021 remains appropriate and carefully balances alignment with
the Company’s business strategy and our response to evolving
corporate governance requirements.
As in 2021, for the purposes of the 2022 MIP business performance
will be measured based on performance against three KPIs: revenue(40% weighting), comparable EBIT (40% weighting) and free cash
flow (20% weighting).
The Committee intends that 2022 PSP awards will be made subject
to the same performance metrics as 2021 awards: ROIC (42.5%),
EPS (42.5%) and reduction of CO2 emissions (15%). However,
the Committee has determined to temporarily postpone target
setting in light of the heightened uncertainty as a result of theRussia-Ukraine war. The Group has significant operations in bothcountries. We intend to set targets as soon as possible, within six
months from the standard date of grant and will fully disclose targets
via RNS at that time.
We will proceed with providing the individual grants for the 2022 PSP
in March as per usual process. Taking into account the share pricevolatility at the time of grant, the Remuneration Committee willretain the right to appropriately apply discretion to the share award
outcome at the time of vesting, for example to safeguard against
any inappropriate windfall gains.
In addition, the Committee has welcomed the discussions withshareholders and plans to build on our extensive consultation
during 2021, continuing the productive dialogue with ourshareholders this year.

The role of the Remuneration Committee
The main responsibilities of the Remuneration Committee are toestablish the remuneration strategy for the Group and to approve
compensation packages for Directors and senior management.
Further, the Committee reviews wider workforce remuneration
policies at Coca-Cola HBC and the alignment of incentives andrewards with strategy and culture, taking these into account whensetting the remuneration policy. The Remuneration Committee
operates under the Charter for the Committees of the Board of theCompany set forth in Annex C to the Organisational Regulationsof the Company, available on the Group’s website at: https://www.
coca-colahellenic.com/en/ about-us/corporate-governanceMembers

Membership status

Charlotte J. Boyle (Chair)

Member since 2017
Chair since June 2020
Appointed June 2016
Appointed June 2020

Reto Francioni
Anna Diamantopoulou

In accordance with the UK Corporate Governance Code, theRemuneration Committee consists of three independent nonExecutive Directors: Charlotte J. Boyle (Chair), Reto Francioni
and Anna Diamantopoulou, who were each last elected by theshareholders for a one-year term on 22 June 2021.
The Remuneration Committee met four times in 2021; in March,June, September and December. Please refer to the Corporate
Governance Report on page 92 for details of the Remuneration
Committee meetings.

Q&A

Chair of theRemuneration
Committee
What was the reason behind thesignificant minority vote against
the remuneration report last year
and what has the Committee done
to address any issues?
The Committee understands from ourextensive consultation with shareholders
that the primary reasons for the votes
against the Annual Report on
Remuneration (with 72% in favour) was
the Committee’s decision to adjust theperformance metrics relating to PSP
vesting in respect of performance up to
31 December 2020.
In reaction to the vote, the Committee
decided for the first time to conduct
an extensive shareholder consultation,
reaching out to many shareholders andengaging with all shareholders who
expressed concerns. As the Chair of theCommittee, I met with 12 shareholders to
discuss matters related to remuneration.
We reached out to the top 20 shareholders
as well as all those who contacted theBoard to express concerns, particularly
regarding targets for 2018 Performance
Share Plan awards. Whilst the Remuneration
Committee had sought to ensure thatthese incentive arrangements continued
to align with their original intent given
the impact of the COVID-19 pandemic,
we acknowledge that shareholders havea range of views as to the appropriatenessof such adjustments.
The Remuneration Committee believes
that the adjustments made were necessary
to retain and incentivise the broader
management team, in addition to the
executive leadership and CEO. These
individuals were directly responsible
for navigating the Company through the
turbulence caused by COVID-19 andensuring the resilience and recoveryof the business.

INTEGRATED ANNUAL REPORT 2021

How was the impact of the
COVID-19 pandemic factored into
the target-setting process for 2021?
In respect of the long-term Performance
Share Plan (PSP), which covers a threeyear performance period, the Committee
determined that given the uncertainty
around the COVID-19 pandemic, it wasprudent to delay the final calibration oftargets for the awards for 2021 until
there was greater certainty in themacroeconomic environment.
In line with guidance from the Investment
Association, PSP awards were granted for2021 in the usual timeframe in March 2021.
PSP targets for 2021 were subsequently
confirmed and publicly announced in theautumn of 2021.

Did the Company take government
aid during the year and what werethe views of shareholders on this?
The Company received a small amountof government aid (amounting to €4.7m in
total) – mostly in Italy and Switzerland, andI note that there was no government aid
received in the UK. There were different
views from our shareholders regarding theconsideration of government aid.
UK shareholders were firmly of the viewthat no incentives should pay out where
support had been taken and not paid back.
The Company notes that the mechanisms
which are in place for repaying support
in the UK are not necessarily in placein all geographies.
In general, our US shareholders placed
more focus on the treatment of employees
during the period and were pleased that theCompany did not make any COVID-19
related redundancies during 2021.
MIP payouts in relation to 2021 as for 2020
were adjusted to exclude the benefits of
the aid taken.

Did the Committee make any
adjustments to incentive outcomesfor 2021?
As described above, the Company
received a small amount of government
aid and the mechanisms are not place forrepaying this in all geographies. As for
2020, the outcome of the 2021 MIP was
reduced for the CEO and the Executive
Leadership Team to take into account
this support received and to remove thebenefit from the sale of the Cyprus plant.
The impact was to reduce the implied
formulaic outcome from 100% to 91%
of the maximum.

The performance period for the 2019
PSP contained two years (2020 and 2021)
where the impact of the COVID-19
pandemic was felt. 2019 was a year withsolid business performance.
Fx neutral revenue grew +4.4%. EBIT
margin grew 330 basis points to 10.8%.
OpEx improved by 80 bps. ROIC expanded
by 50 bps to 14.2%. FCF increased by
20% year on year. EPS increased by 10%
resulting in 1.436. In order to ensure
the PSP continued to be effective in its
core purpose – to motivate and retain
employees (including executives) overa long period – the Committee determined
to adjust the targets to maintain relevancy.
In doing so, the Committee put in place
safeguards to ensure the revised targets
led to outcomes which were fair for all
employees and considered the broader
stakeholder environment.
The Committee considered analyst
forecasts and adjusted the targets todeliver suitable stretch when considering
these external reference points.
The Committee noted that, at the time
when COVID-19 first impacted, it was
anticipated that it would not be until 2022
that we caught up with the 2020 businessplan. In fact, this was achieved in 2021, in
spite of the fact that we have continued tooparate in a ‘non-normal’ environment andsome of our channels notably HORECA has
been impacted by lockdowns.
The Committee applied the same treatment
to the 2019 PSP for all employees, withno preference given to any population.
Alternative approaches to the PSP werealso considered such as using discretionto adjusting vesting or making a larger
award in 2022. Feedback to thesealternative approaches was mixed fromour shareholders and there was not one
approach that proved universally acceptable.
The formulaic outcome against the adjusted
targets was vesting of 90% excluding thebenefit from the sale of the Cyprus plant.
Furthermore, the Committee also decided
it was appropriate to apply downward
discretion and the awards will vest at 75%of the original grant.

121

Is the Committee satisfied withthe use of ESG metrics in its
executive incentives?
The Company has used ESG metrics for
either short-term or long-term incentives
for a number of years, reflecting ourapproach to responsible, long-term
management and the importance ofensuring our licence to operate. The CEO’s
individual performance is measured in key
strategic areas and taken into accountfor MIP. These strategic areas include
the Company’s performance in ESG
benchmarks. The Company received
the highest scores in 8 of the 10 mostrecognized ESG benchmarks, DJSI, CDP,MSCI, ecoact, FTSE4GOOD, MSCI and
Vigeo Eiris. The PSP contains metrics linked
to a reduction in CO2 emissions. The CO2
emissions target in the PSP implicitly
captures reduction in plastics, which wasa key driver of its selection as a metric.
These selected metrics directly align withand incentivise delivery of the Company’s
ESG objectives, particularly our ambitious
goal to achieve net zero emissions acrossour entire value chain by 2040.
The achievement of ESG metrics has an
impact on the overall MIP opportunity andaccount for 15% of the PSP opportunity.
The Committee is satisfied that thisis sufficient focus in order to achieve
our ambitious sustainability targets,without diluting focus on financial
and growth objectives.

Charlotte J. Boyle
Chair of the Remuneration Committee

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Directors’ remuneration report continued
Remuneration throughout the organisation – a snapshot
Attracting

Recognising

Finding the people we want and need

Adopting behaviours that produce exceptional performance

Retaining

Motivating

Continuing to attract the best talent

Achieving business, financial and non-financial targets

Reward strategy and objective
The objective of the Group’s remuneration philosophy is toattract, retain and motivate employees who are curious, agile andcommitted to high performance. Our reward strategy seeks topromote a growth mindset and reinforce desirable behaviours,
ensuring that employees are fairly rewarded and that their individual
contributions are linked to the success of the Company.
Variable pay is an important element of our reward philosophy.
A significant proportion of total remuneration for top managers(including the Chief Executive Officer and the members of the
Executive Leadership Team) is tied to the achievement of ourbusiness objectives. These objectives are defined by key businessmetrics that are consistent with our growth strategy and will deliver
long-term shareholder value. The variable pay element increases
or decreases based on the achieved business performance.
Through equity-related long-term compensation, we seek toensure that the financial interests of the Chief Executive Officer,
the members of the Executive Leadership Team and senior
managers are aligned with those of shareholders.

All of our remuneration plans, both fixed and variable, are designed
to be cost-effective, taking into account market practice, businessperformance, and individual performance and experience where
relevant. We pay close attention to our shareholders’ viewsin reviewing our remuneration policy and programmes.
In line with the UK Corporate Governance Code, the following
factors, which align well with our objectives, were also considered:• clarity and simplicity: we believe that our policy provides
transparency for Executives and shareholders about what
performance we are looking for across our portfolio;• risk: we note the reputational and other risks that can result fromexcessive rewards and believe that our robust target-setting andlong history of applying discretion to performance outcome
addresses this;• predictability and proportionality: we believe that the link between
individual awards, the delivery of strategy and the long-term
performance of the Company is clearly explained in this report
and that our approach ensures proportionate pay outcomes that
do not reward poor performance; and• alignment to culture: we want our Executives to make decisions
that support the long-term performance and health of the business.

How we implement our reward strategy
The chart below illustrates how we put our reward strategy into practice, with the different remuneration arrangements that apply
to different employee groups.
Chief Executive
Officer and Executive
Leadership Team

Chief Executive Officer,
Executive Leadership
Team and selectedsenior management

Selected middle andsenior management

All management

All employees

Shareholding guidelines

Performance Share Plan

Long-Term Incentive Plan

Support the alignment
with shareholderinterests ensuring
sustainable
performance: Chief
Executive Officer –required to hold sharesin the Company equal invalue to 300% of annual
base salary withina five-year period anda post-employment
shareholding
requirement applying
from this year.

Performance shareawards vest over three
years. PSP awards arecascaded down to selectsenior managers,
promoting a focus on
long-term performanceand aligning them toshareholders’ interests.

Cash long-term
incentive awards vest
over three years. LTIP
awards are cascaded
down to select middle
and senior management
to reinforce long-term
performance and ensure
retention of our talents.

Management Incentive
Plan

Employee Share Purchase
Plan (dependent on
country practice)

Management
employees may be
eligible to receive anaward under the annual
bonus scheme that
promotes a highperformance culture.
Performance conditions
are bespoke to the roleand business unit.

Executive Leadership
Team – required to holdshares in the Company
equal in value to 100% of
annual base salary withina five-year period.
Note: Participants in the Performance Share Plan are not eligible to participate in the Long-Term Incentive Plan.

The Employee Share
Purchase Planencourages shareownership and aligns
the interests of ouremployees with thoseof shareholders.
Fixed pay and benefits(base salary, retirement
and other benefits –dependent on country
practice)

Base salaries may reflect
the market value ofeach role as well as theindividual’s performanceand potential.
Retirement and otherbenefits are subject tolocal market practice.

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123

Remuneration arrangements for the Chief Executive Officer – at a glanceBase salary

Retirement
benefits

Other
benefits

ESPP

MIP

PSP

Total
compensation

Variable pay subject
to performance

Fixed pay

The table below summarises the remuneration arrangements in place for our Chief Executive Officer. See page 133 for total compensation figures.
Pay element

DetailBase salary

The base salary of the Chief Executive Officer is €815,000.
The base salary of the Chief Executive Officer will be increased by 3.1% to €840,000 with effectfrom 1 May 2022.

Retirement benefits

The Chief Executive Officer participates in a defined benefit pension plan under Swiss law.
Employer contributions are 15% of annual base salary.

Other benefits

Other benefits include (but are not limited to) medical insurance, housing allowance, company
car/allowance, cost of living adjustment, trip allowance, partner allowance, exchange rate
protection, tax equalisation and tax filing support and advice. Benefit levels vary each year
depending on need.

The Chief Executive Officer may participate in the Company’s Employee Share Purchase Plan.
ESPP(Employee Share Purchase Plan) As a scheme participant, the Chief Executive Officer has the opportunity to invest a portion of
his base salary and/or MIP payments in shares. The Company matches employee contributions
on a one-to-one basis up to 3% of base salary and/or MIP payout.
Awards are subject to potential application of malus and clawback provisions.

MIP(Management Incentive Plan)

The MIP consists of a maximum annual bonus opportunity of up to 140% of base salary.
Payout is based on business performance targets and individual performance. The Business
Performance element will result in an outcome between 0% and 200% of the target MIP and
the Individual Performance element will result in an outcome of up to 100%, with the overall
payout as a percentage of salary being based on the multiplication of these two figures.
For 2022, Business Performance will be measured based on performance against three
KPIs: revenue (40% weighting), comparable EBIT (40% weighting) and free cash flow
(20% weighting).
50% of any MIP payout will be deferred into shares for a further three-year period. Payments
are subject to potential application of malus and clawback provisions.

PSP(Performance Share Plan)

The PSP is an annual share award which vests after three years. For the award in 2022,
vesting will be based on performance conditions measured over a three-year period against:(i) comparable earnings per share (EPS) (42.5% weighting);(ii) return on invested capital (ROIC) (42.5% weighting);(iii) reduction of CO2 emissions (15% weighting).
An additional two-year holding period will apply following vesting.
Awards are subject to potential application of malus and clawback provisions.

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Directors’ remuneration report continued
Remuneration policy
Introduction
The following section (pages 124 to 126) sets out our Directors’ remuneration policy as approved by shareholders at the Annual General
Meeting in June 2021. No changes are being proposed to the policy this year and the 2021 policy will continue to apply.
As a Swiss-incorporated company, we are not required to put forward our remuneration policy for a shareholder vote, but we intend to
do so voluntarily at least every three years (or when there are changes). We continue to endeavour to make sure that our disclosure complies
with UK regulations, except where these conflict with Swiss law.

Policy table – Chief Executive Officer
The Company currently has a single Executive Director, being the Chief Executive Officer. Therefore, for simplicity, this section refers only
to the Chief Executive Officer. This remuneration policy would, however, apply for any new Executive Director role, in the event that one wascreated during the term of this remuneration policy. In that case, references in this section to the Chief Executive Officer should be read as
being to each Executive Director.

Fixed
Base salary

Retirement benefits

Purpose and link to strategy
To provide a fixed level of compensation appropriate to therequirements of the role of Chief Executive Officer and tosupport the attraction and retention of the talent able to deliver
the Group’s strategy.
Operation
Salary is reviewed annually, with salary changes normally effective
on 1 May each year.
The following parameters are considered when reviewing thebase salary level:• the Chief Executive Officer’s performance, skills andresponsibilities;• economic conditions and performance trends;• experience of the Chief Executive Officer;• pay increases for other employees; and• external comparisons based on factors such as: the industry of
the business, revenue, market capitalisation, headcount,geographical footprint, stock exchange listing (FTSE) andother European companies.
Malus and clawback provisions do not apply to base salary.
Maximum opportunity
Whilst there is no maximum salary level, any increases awarded
to the Chief Executive Officer will normally be broadly alignedwith the broader employee population.
The salary increase made to the Chief Executive Officer may
exceed the average salary increase under certain circumstancesat the Remuneration Committee’s discretion. These
circumstances may include: business and individual performance;material changes to the business; internal promotions; accrual ofexperience; changes to the role; or other material factors.
Performance metrics
Individual and business performance are key factors when
determining any base salary changes.
The annual base salary for the Chief Executive Officer is set out
on page 123.

Purpose and link to strategy
To provide competitive, cost-effective post-retirement benefits.
Operation
The Chief Executive Officer participates in a defined benefit
pension plan. However, we have adjusted the pension scheme
to be co-contributory, in line with the pension scheme for thewider Swiss workforce, for new Executive Directors’
appointments from 2020 onwards.
Normal retirement age for the Chief Executive Officer’s plan is 65
years. In case of early retirement, which is possible from the ageof 58, the Chief Executive Officer is entitled to receive theamount accrued under the plan as a lump sum.
Malus and clawback provisions do not apply to retirement
benefits.
Maximum opportunity
The contributions to the pension plan are calculated as apercentage of annual base salary (excluding any incentive
payments or other allowance/benefits provided) based on age
brackets as defined by Fedral Swiss legislation.
This percentage is currently 15% of base salary and increases to
18% for age above 55.
Performance metrics
None.

INTEGRATED ANNUAL REPORT 2021

Other benefits

ESPP (Employee Share Purchase Plan)

Purpose and link to strategy
To provide benefits to the Chief Executive Officer which areconsistent with market practice.
Operation
Benefit provisions are reviewed by the Remuneration Committee
which has the discretion to recommend the introduction of
additional benefits where appropriate.
Typical provisions for the Chief Executive Officer include benefits
related to relocation such as housing allowance, company car/allowance, cost of living adjustment, trip allowance, partner
allowance, exchange rate protection, tax equalisation and tax
filing support and advice. For all benefits, the Company will bear
any income tax and social security contributions arising fromsuch payments.
Malus and clawback provisions do not apply to benefits.
Maximum opportunity
There is no defined maximum as the cost to the Company
of providing such benefits will vary from year to year.
Performance metrics
None.

Purpose and link to strategy
The ESPP is an Employee Share Purchase Plan, encouraging
broader share ownership, and is intended to align the interestsof employees and the Chief Executive Officer with thoseof the shareholders.
Operation
This is a voluntary share purchase scheme across many of theGroup’s countries. The Chief Executive Officer as a scheme
participant has the opportunity to invest from 1% to 15% of hisbase salary and/or MIP payout to purchase the Company’s
shares by contributing to the plan on a monthly basis.
The Company matches the Chief Executive Officer’s
contributions on a one-to-one basis up to 3% of the employee’sbase salary and/or MIP payout. Matching contributions are used
to purchase shares one year after the purchase of shares by
employees. Matching shares are immediately vested.
Dividends received in respect of shares held under the ESPP areused to purchase additional shares and are immediately vested.
The Chief Executive Officer is eligible to participate in the ESPP
operated by the Company on the same basis as other employees.
Malus and clawback provisions apply. Further details may befound in the Additional notes to the Executive Director’s
remuneration policy table section on page 128.
Maximum opportunity
Maximum investment is 15% of gross base salary and MIP
payout. The Company matches contributions up to 3% of grossbase salary and MIP payout. Matching contributions are used topurchase shares one year after the matching. Matching sharesare immediately vested.
Performance metrics
The value is directly linked to the share price performance.
It is therefore not affected by other performance criteria.

Variable pay
MIP (Management Incentive Plan)

PSP (Performance Share Plan)

Purpose and link to strategy
To support profitable growth and reward annually forcontribution to business performance. The plan aims to promotea high-performance culture with stretching business andindividual targets linked to our key strategies.
Operation
Annual cash bonus awarded under the MIP is subject to businessand individual performance metrics and is non-pensionable.
The Chief Executive Officer’s individual objectives are regularly
reviewed to ensure relevance to business strategy and are set
and approved annually by the Chair of the Remuneration
Committee and Chairman of the Board of Directors.
Stretching targets for business performance are set annually,
based on the business plan of the Group as approved by the Boardof Directors. The Remuneration Committee will determine thebusiness performance metrics and weightings on an annual basis.
Performance against these targets and bonus outcomesis assessed by the Remuneration Committee, which may
recommend an adjustment to the payout level where it considers
the overall performance of the Company or the individual’scontribution warrants a higher or lower outcome.
Malus and clawback provisions apply. Further details may befound in the Additional notes to the Executive Director’s
remuneration policy table section on page 128.

Purpose and link to strategy
To align the Chief Executive Officer’s interests with the interestsof shareholders, and increase the ability of the Group to attract
and reward individuals with exceptional skills.
Operation
The Chief Executive Officer is granted conditional awards ofshares which vest after three years, subject to the achievementof performance metrics and continued service. Grants take place
annually, normally every March.
Performance metrics and the associated targets are reviewed
and determined around the beginning of each performance
period to ensure that they support the long-term strategy
and objectives of the Group and are aligned withshareholders’ interests.
Dividends may be paid on vested shares where the performance
metrics are achieved at the end of the three-year period.
Malus and clawback provisions apply. Further details may
be found in the Additional notes to the Executive Director’s
remuneration policy table section on page 128.

125

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Directors’ remuneration report continued
Variable pay continued
MIP (Management Incentive Plan)

PSP (Performance Share Plan)

Maximum opportunity
The Chief Executive Officer’s maximum MIP opportunity is set
at 140% of annual base salary. The Business Performanceelement will result in an outcome between 0% and 200% of thetarget MIP and the Individual Performance element will result in an
outcome of up to 100%, with the overall payout as a percentage
of salary being based on the multiplication of these two figures.
Threshold, target and maximum achievement for the Business
Performance element will result in an outcome as follows:• Threshold: 0% of base salary• Target: 70% of base salary• Maximum: 140% of base salary• The maximum opportunity level will therefore only pay out
for both a stretch level of business performance and fullachievement of the individual performance element.
Performance metrics
The MIP awards are based on business metrics linked to ourbusiness strategy. These may include, but are not limited to,measures of revenue, profit, profit margins and operating
efficiencies. The weighting of individual performance metrics shallbe determined by the Remuneration Committee around the
beginning of the MIP performance period.
Details related to the key performance indicators can be foundin the Annual Report on Remuneration on page 134.
Deferral of MIP
50% of any MIP award is to be deferred into shares which
will be made available after a three-year deferral period which
commences on the first day on the fiscal year in which thedeferred share award is made.
Deferred shares may be subject to malus and clawback (for aperiod of two years following this incentive award) to the extent
deemed appropriate by the Remuneration Committee, in linewith best practice.

Maximum opportunity
Awards (normally) have a face value up to 330% of base salary.
In exceptional circumstances only, the Remuneration Committee
has the discretion to grant awards up to 450% of base salary.
Performance metrics
Vesting of awards is subject to the three-year Group performance
metrics. For each award, the Remuneration Committee will
determine the applicable metrics, weightings and target calibration
making up the performance condition.
Following the end of the three-year period, the Remuneration
Committee will determine the extent to which performance
metrics have been met and, in turn, the level of vesting.
Participants may receive vested awards in the form of sharesor a cash equivalent.
For each performance metric, achieving threshold performance
results in vesting of 25% of the award and maximum performance
results in vesting of 100% of the award. There will be a straight-line
vesting between these performance levels.
Performance share awards will lapse if the Remuneration
Committee determines that the performance metrics have notbeen met. The Remuneration Committee will have discretion to
reduce or negate PSP award vesting, in case of significant adverse
environmental, social or governance impacts regarding theCompany’s activities.
Holding period
Any vested award (net of shares sold to cover tax liability) is subject
to a further two-year holding period following the end of thethree-year performance period. During this two-year period, thesebeneficially owned shares are subject to a no-sale commitment.
Any shares subject to the holding period count towards theshareholding requirement.
Adjustments
In the event of an equity restructuring, the Remuneration
Committee may make an equitable adjustment to the terms of
the performance share award by adjusting the number and kind of
shares which have been granted or may be granted and/or making
provision for payment of cash in respect of any outstanding
performance share award.
Where exceptional circumstances exist such that the original
targets no longer meet the intent at the time of grant, theCommittee will have the discretion to adjust targets in a mannerthat is considered to be no less stretching than the original
performance condition. Where any such adjustment is made, thedetails will be fully disclosed in the following Remuneration Report.
Change of control
In the event of change of control, unvested performance shareawards held by participants vest immediately on a pro-rated basis
if the Remuneration Committee determines that the performance
metrics have been satisfied or would have been likely to be satisfied
at the end of the performance period, unless the Remuneration
Committee determines that substitute performance shareawards may be used in place of the previous awards. For vested
shares subject to the additional holding period, the holding period
will lapse and the participants are no longer subject to theno-sale commitment.

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127

Additional notes to the Executive Director’s remuneration policy table
Chief Executive Officer’s remuneration policy illustration
The graph below provides estimates of the potential reward opportunity for the Chief Executive Officer and the split between the
different elements of remuneration under three different performance scenarios: ‘Minimum’, ‘Target’ and ‘Maximum’. In line with thereporting regulations, a scenario assuming 50% share price growth over the three-year PSP performance period is also shown below.
The assumptions used for these charts are set out in the table below (€ 000s).
2%

Maximum
performance +50%
share price growth

12%

13%

Maximum

14%

16%

Target21%

23%

Minimum

45%

48%

16%

38%

20%

47% 5,679

2%
3%

Base salary

19% 7,024

38% 3,881

15%
7%
1,814

Cash and non-cash beneﬁts

Minimum performance

Target performance

Maximum performance

Maximum performance + 50% share price growthPensionMIP

PSP

PSP – share price appreciation

Fixed remuneration only, i.e. base salary, pension and other benefits(including ESPP participation).
No payout under the MIP or PSP.
Fixed remuneration.
MIP payout of 70% of base salary.
PSP vesting at 181.5% of base salary.
Fixed remuneration.
MIP payout of 140% of base salary.
PSP vesting at 330% of base salary.
Fixed remuneration.
MIP payout of 140% of base salary.
PSP vesting at 330% of base salary.
50% assumed share price growth over three-year PSP performance period.

Other than in the ‘Maximum performance + 50% share price growth’ scenario, no share price growth or dividend assumptions have been
included in the charts above.

Fixed

Variable

Total

Component

Minimum (€ 000s)

Target (€ 000s)

Maximum (€ 000s)

Maximum performance+ 50% share price growth(€ 000’s)

Base salary1
PensionCash and non-cash benefits2
MIP
PSP
PSP – 50% share priceappreciation

€815
€122
€877
–
–

€815
€122
€894
€571
€1,479

€815
€122
€911
€1,141€2,690

€815
€122
€911
€1,141€2,690–€1,814–€3,881–€5,679€1,345€7,024

1. Represents the annual base salary as at the last review in May 2021.
2. ESPP employer contributions may vary depending on the MIP payout provided that the Chief Executive Officer decides to contribute a portion of the MIP towards the ESPP.
The figures provided have been calculated on the basis of the applicable MIP payout and the Chief Executive Officer deciding to contribute 3% to the ESPP.

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ESOP (Employee Stock Option Plan)The ESOP was replaced by the PSP in 2015 and the last grant under the ESOP took place in December 2014. Although the Remuneration
Committee does not intend to award under the ESOP going forward, there are still outstanding stock option awards which may be exercisedin future years. Awards vest in one-third increments each year for three years and can be exercised for up to 10 years from the dateof the award.

Malus and clawback provision for variable pay plans
The MIP, PSP, ESOP and ESPP plans include malus provisions which give the Remuneration Committee and/or the Board discretion to judge
that an award should lapse wholly or partly in event of material misstatement of financial results and/or misconduct, significant reputationalrisk and corporate failure.
The Remuneration Committee and/or Board also has the discretion to determine that clawback should be applied to awards under the MIP,
PSP, ESOP and ESPP plans for the Chief Executive Officer and members of the Executive Leadership Team. Clawback can potentially beapplied to payments or vested awards for up to a two-year period following payment or vesting.

Shareholding guidelines
In order to strengthen the link with shareholders’ interests, the Chief Executive Officer is required to hold shares in the Company equalin value to 300% of annual base salary. Members of the Executive Leadership Team are required to hold 100% of annual base salary.
The Chief Executive Officer has five years from appointment to accumulate shares equal to 300% of annual base salary (with shares acquired
from PSP awards and shares resulting from the deferral of the 50% of the MIP counting towards fulfilment of the shareholding requirement).
The Committee continues to review the potential need for stronger shareholding requirements in the long term and this is subject to further
review in the future.
The Policy contains a post-employment shareholding requirement whereby the Chief Executive Officer would, if leaving the Company,
be required to hold shares equivalent to 200% of base salary (or actual shareholding at termination date if lower than this) for a periodof two years after leaving employment.

Remuneration arrangements across the GroupThe remuneration approach for the Chief Executive Officer, the members of the Executive Leadership Team and senior management
is similar. The Chief Executive Officer’s total remuneration has a significantly higher proportion of variable pay in comparison with the restof our employees. The Chief Executive Officer’s remuneration will increase or decrease in line with business performance, aligning it withshareholders’ interests.
The structure of the remuneration package for the wider employee population takes into account local market practice and is intended
to attract and retain the right talent, be competitive and remunerate employees for promoting a growth mindset while contributing to theGroup’s performance. As part of the Performance for Growth framework introduced in 2019, we revised and updated the remuneration
framework with features such as each business unit having more flexibility on target positioning, managers having the flexibility to retain key
talent, and guidance provided for increased awards for high-potential and/or exceptional performance.

Policy table – non-Executive Directors
Base fees
Purpose and link to strategy
To provide a fixed level of compensation appropriate to the requirements of the role of non-Executive Director and to attract and retain
high-quality non-Executive Directors with the right talent, values and skills necessary to provide oversight and support to management
to grow the business, support the Company’s strategic framework and maximise shareholder value.
Operation
Non-Executive Directors’ fees are set at a level that will not call into question the objectivity of the Board. When considering market levels,
comparable companies typically include those in the FTSE index with similar positioning as the Company, other Swiss companies with similarmarket capitalisation and/or revenues, and other relevant European listed companies.
Maximum opportunity
Fee levels for non-Executive Directors include an annual fixed fee plus additional fees for membership of Board committees when applicable,
as summarised below for the period from the AGM June 22, 2021 to AGM June 2022. The proposed fees which will be voted on at the next
AGM can be found on page 136:
• Base non-Executive Director’s fee: €73,500• Senior Independent Director’s fee: €15,800• Audit and Risk Committee Chair fee: €28,900• Audit and Risk Committee member fee: €14,500• Remuneration, Nomination and Social Responsibility Chair fees: €11,600• Remuneration, Nomination and Social Responsibility member fees: €5,800
Fee levels are subject to periodic review and approval by the Chairman of the Board and the Chief Executive Officer.
Other benefits
Non-Executive Directors do not receive any benefits in cash or in kind. They are not entitled to severance payments in the eventof termination of their appointment. They are entitled to reimbursement of all reasonable expenses incurred in the interests of the Group.
Variable remuneration
Non-Executive Directors do not receive any form of variable compensation.

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129

Legacy arrangements
For the avoidance of doubt, it is noted that the Company will honour any commitments entered into that have previously been disclosed
to shareholders.

Policy on recruitment/appointment
Executive Directors
Annual base salary arrangements for the appointment of an Executive Director will be set considering market relevance, skills, experience,
internal comparisons and cost. The Remuneration Committee may recommend an appropriate initial annual base salary below relevantmarket levels. In such situations, the Remuneration Committee may make a recommendation to realign the level of base salary in thefollowing years. As highlighted above, annual base salary ‘gaps’ may result in higher rates of salary increase in the short term, subject
to an individual’s performance. The discretion is retained to offer an annual base salary necessary to meet the individual circumstancesof the recruited Executive Director and to enable the hiring of an individual with the necessary skills and expertise.
The maximum level of variable pay that may be offered will follow the rules of the MIP and is capped at 140% of the relevant individual’s annual
base salary. The maximum level of equity-related pay that may be offered will follow the PSP rules and is capped at 450% of the relevant
individual’s annual base salary. The typical award is not expected to surpass 330% of base salary. Different performance measures may be
set initially for the annual bonus taking into consideration the point in the financial year that a new Executive Director joins. The above limits
do not include the value of any buyout arrangements.
Benefits will be provided in line with the Group’s policy for other employees. If an Executive Director is required to relocate, benefits may beprovided as per the Group’s international transfer policy which may include transfer allowance, tax equalisation, tax advice and support,
housing, cost of living, schooling, travel and relocation costs.
The Remuneration Committee may consider recommending the buying out of incentive awards that an individual would forfeit by accepting
the appointment up to an equivalent value in shares or in cash. In the case of a share award, the Remuneration Committee may approvea grant of shares under the PSP. When deciding on a potential incentive award buyout and in particular the level and value thereof, theRemuneration Committee will be informed of the time and performance pro-rated level of any forfeited award.
It is expected that Executive Directors appointed during the remuneration policy period will be appointed on similar notice provisions
to the Chief Executive Officer, allowing for termination of office by either party on six months’ notice.

Non‑Executive Directors
It is expected that non-Executive Directors appointed during the remuneration policy period will receive the same basic fee and, as
appropriate, committee fee or fees as existing non-Executive Directors and will be entitled to reimbursement of all reasonable expenses
incurred in the interests of the Group.
It is expected that non-Executive Directors appointed during the remuneration policy period will be appointed on a one-year termof appointment, in the same manner as existing non-Executive Directors.
The Company does not compensate new non-Executive Directors for any forfeited share awards in previous employment.

Termination payments
The Swiss Ordinance against Excessive Compensation in Listed Companies limits the authority of the Remuneration Committee
and the Board to determine compensation. Limitations include the prohibition of certain types of severance compensation.
Our governance framework ensures that the Group uses the right channels to support reward decisions. In the case of early termination,
the non-Executive Directors would be entitled to their fees accrued as of the date of termination, but are not entitled to any additional
compensation. The Chief Executive Officer’s employment contract does not contain any provisions for payments on termination.
Notice periods are set for up to six months and non-compete clauses are 12 months. The notice period anticipates that up to six months’
paid garden leave may be provided. Similarly, up to 12 months of base salary may be paid out in relation to the non-compete period.
In case of future terminations, payments will be made in accordance with the termination policy on page 130.

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Pay element

Good leaver(retirement at 55 or later/at
least 10 years’ continued service)Good leaver(injury, disability)

Bad leaver(resignation, dismissal)

Death in service

Base salary andother benefits /non-Executive
Directors’ fees
ESPP

Payment in lieu of notice is not permissible. The Company could ask the Chief Executive Officer
to be on paid garden leave for up to six months.

MIP

A pro-rated payout asof the date of retirement
will be applied.

A pro-rated payout asof the date of leaving will
be applied.

Deferred shares willcontinue to vest as normal.

Deferred shares willcontinue to vest as normal.

PSP/ESOP

Unvested cash allocations held in the ESPP
will vest upon termination.

All unvested options andperformance share awards
continue to vest as normal
subject to time pro-rating
and are subject to theadditional holding period.

All unvested options andperformance share awards
immediately vest to theextent that the
Remuneration Committee
determines that theperformance conditions
have been met, or are likely
to be met at the end of thethree-year performance
period and are subject to theadditional holding period.

For vested shares that are
subject to the additional
holding period, they willcontinue to be subject tothe no-sale commitment
until the end of the relevant
Any options that vest are
two-year period.
exercisable within 12
Under Swiss law, sharemonths from the dateawards are consideredof termination.
annual compensation
For vested shares that are
and as such when time
subject to the additional
pro-rating is required, theholding period, they will
year of grant (12 months)
and not the vesting period continue to be subject tothe no-sale commitment(36 months) for time
until the end of the relevant
pro-rating calculations
two-year period.
is considered.

Unvested cash allocations
under the ESPP areforfeited.
In the event of resignation
or dismissal, as per Swisslaw, the Chief Executive
Officer is entitled to a
pro-rated MIP payout.

Available ESPP shares willbe transferred to heirs.

Any outstanding deferredshares will lapse.
All unvested options andperformance share awards
immediately lapse without
any compensation.

Deferred shares willcontinue to vest as normal.
All unvested options andperformance share awards
immediately vest subject
to time and performancepro-rating.

In the event of resignation,
all vested options must be
exercised within six months
from the date of
termination.
Upon dismissal, all vested
options must be exercised
within 30 days from the dateof termination.
For vested shares that are
subject to the additional
holding period, they willcontinue to be subject tothe no-sale commitment
until the end of the relevant
two-year period.

A pro-rated payout will beapplied and will be paid
immediately to heirs,
based on the latest rolling
estimate.

Any options that vest are
exercisable within 12
months from the dateof termination.
For vested shares that are
subject to the additional
holding period, the no-salecommitment will cease
immediately.
Under Swiss law, shareawards are consideredannual compensation
and as such when time
pro-rating is required, theyear of grant (12 months)
and not the vesting period(36 months) for time
pro-rating calculations
is considered.

Corporate events
In the event of an equity restructuring, the Remuneration Committee may make an equitable adjustment to the terms of the performance
share award by adjusting the number and kind of shares that have been granted or may be granted and/or making provision for paymentof cash in respect of any outstanding performance share award.
In the event of a change of control, unvested performance share awards held by participants vest immediately on a pro-rated basis if theRemuneration Committee determines that the performance conditions have been satisfied or would have been likely to be satisfied at theend of the performance period, unless the Remuneration Committee determines that substitute performance share awards may be usedin place of the previous awards.

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131

Service contracts
Zoran Bogdanovic, the Chief Executive Officer, has a service contract with the Company with a six-month notice period. As noted in the
Termination payments section on page 129, the Chief Executive Officer’s employment contract does not include any termination benefits,
other than as mandated by Swiss law. The Swiss Code of Obligations requires employers to pay severance when an employment relationshipends with an employee of at least 50 years of age after 20 years or more of service.
The Chief Executive Officer is also entitled to reimbursement of all reasonable expenses incurred in the interests of the Company.
In accordance with the Swiss Ordinance against Excessive Compensation in Listed Companies, there are no sign-on policies/provisions
for the appointment of the Chief Executive Officer.
The table below provides details of the current service contracts and terms of appointment for the Chief Executive Officer and other Directors.
Name

Title

Anastassis G. David

Chairman andnon‑Executive Director
Chief Executive Officer

Zoran Bogdanovic
Charlotte J. Boyle
Henrique Braun
Olusola (Sola) David-Borha
Anna Diamantopoulou
William W. (Bill) Douglas III
Reto Francioni
Anastasios I. Leventis
Christo Leventis
Alexandra Papalexopoulou
Bruno Pietracci
Ryan Rudolph

Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Senior Independent
non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director

Date originally appointed to theBoard of the Company

Date appointed to theBoard of the Company

Unexpired term of service
contract or appointment as
non-Executive Director

27 July 2006

22 June 2021

One year

11 June 2018

22 June 2021

20 June 201722 June 2021
24 June 201516 June 2020
21 June 2016
21 June 2016

22 June 2021
22 June 2021
22 June 2021
22 June 2021
22 June 2021
22 June 2021

Indefinite, terminable
on six months’ notice
One year
One year
One year
One year
One year
One year

25 June 2014
25 June 201424 June 2015
22 June 2021
21 June 2016

22 June 2021
22 June 2021
22 June 2021
22 June 2021
22 June 2021

One year
One year
One year
One year
One year

The Chief Executive Officer’s service contract and the terms and conditions of appointment of the non-Executive Directors are available
for inspection by the public at the registered office of the Group.

Consideration of employee views
The Remuneration Committee does not currently consult specifically with employees on policy for the remuneration of the Chief Executive
Officer. Pay movement for the wider employment group is considered when making pay decisions for the Chief Executive Officer. The Chairof the Remuneration Committee is also the designated non-Executive Director for workforce engagement. As such, she attends meetingsof our European Works Council and meets with elected employee representatives from our businesses in EU countries. She then reportsback to the Board on her observations and matters raised by employees, ensuring Board and Remuneration Committee deliberations anddecision-making are fully informed.

Consideration of shareholder views
Shareholder views and the achievement of the Group’s overall business strategies have been taken into account in formulating the
remuneration policy. Following shareholder feedback before and after the Annual General Meeting, the Remuneration Committee and theBoard consult with shareholders and meet with institutional investors to gather feedback on the Company’s remuneration strategy andcorporate governance. The Company would be happy to engage with shareholders in the future to discuss the outcomes of the
remuneration policy.
In reviewing and determining remuneration, the Remuneration Committee takes into account the following:• the business strategies and needs of the Company;• the views of shareholders on Group policies and programmes of remuneration;• the alignment of remuneration policy with the principles of clarity, simplicity, risk, predictability, proportionality and alignment with culture;• market comparisons and the positioning of the Group’s remuneration relative to other comparable companies;• input from employees regarding our remuneration programmes;• the need for similar, performance-related principles for the determination of executive remuneration and the remuneration of other
employees; and• the need for objectivity. Board members, the Chief Executive Officer and Executive Leadership Team members play no part in determining
their own remuneration. The Chair of the Remuneration Committee and the Chief Executive Officer are not present when the
Remuneration Committee and the Board discuss matters that pertain to their remuneration.
This ensures that the same performance-setting principles are applied for Executive remuneration and for other employees in the organisation.

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Directors’ remuneration report continued
Annual Report on Remuneration
Introduction
This section of the report provides detail on how we have implemented our remuneration policy in 2021 which, in accordance with the UK
remuneration reporting regulations, will be subject to an advisory shareholder vote at our 2022 Annual General Meeting.

Activities of the Remuneration Committee during 2021
During 2021, the key Remuneration Committee activities were to:• undertake extensive shareholder consultation to understand different views on our remuneration approach and explain theCommittee’s decisions;• review and sign off the 2020 Directors’ Remuneration Report;• review the 2021 base salary for the Chief Executive Officer;• review and approve the 2021 base salaries for the Executive Leadership Team members and general managers;• review and approve the 2020 MIP payout for the Chief Executive Officer;• review and approve payout levels for the 2020 MIP in relation to Executive Leadership Team members and general managers;• review and approve the performance achievement of the 2018 PSP award, number of shares vesting and dividend equivalents;• set and approve 2021 PSP targets;• review award levels for 2021 PSP awards;• determine the adjustments to the operation of the MIP and PSP to ensure that they continued to align with their original intent taking
the impact of the COVID-19 pandemic into account;• review short and long-term incentives arrangements for the wider workforce; and• review the assets of the Company’s Irish defined benefit pension plans.

Advisers to the Remuneration Committee
The Chief People and Culture Officer, the Head of Rewards and the General Counsel regularly attend meetings of the Remuneration Committee.
While the Remuneration Committee does not have external advisers, in 2021 it authorised management to work with external consultancy
firm Willis Towers Watson, which provided independent advice on ad hoc remuneration issues during the year. These services are considered
to have been independent, objective and relevant to the market. Other than employee engagement benchmarking services, Willis Towers
Watson does not provide any other services to the Company or to any individual director. The total cost in connection with this work was€31,622, invoiced on a time spent basis. Willis Towers Watson is a member of the Remuneration Consultants Group and provides advice
in line with its Code of Business Conduct. Considering this, and the level and nature of the service received, the Committee remains satisfied
that the advice is objective and independent.

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133

Non-Executive Directors’ remuneration for the years ended 31 December 2021 and 2020

Anastassis G. DavidCharlotte J. Boyle
Henrique Braun3
Olusola (Sola) David-Borha
Anna Diamantopoulou4
William W. (Bill) Douglas lll
Reto Francioni
Anastasios I. Leventis
Christo Leventis
Alexandra Papalexopoulou
Bruno Pietracci5
José Octavio Reyes6
Alfredo Rivera7
Ryan Rudolph

Financial
year

Base fee (€)

Audit and Risk
Committee(€)

FY2021
FY2020
FY2021
FY2020
FY2021
FY2020
FY2021
FY2020
FY2021
FY2020
FY2021
FY2020
FY2021
FY2020
FY2021
FY2020
FY2021
FY2020
FY2021
FY2020
FY2021
FY2020
FY2021
FY2020
FY2021
FY2020
FY2021
FY202073,50073,50073,50073,50036,750–73,50073,50073,50036,75073,50073,50073,50073,50073,50073,50073,50073,50073,50073,50036,750–36,75073,50036,75073,50073,50073,500––––––14,50014,500––28,90028,900––––––14,500
7,250
–
–
–
–
–
–
–
–

1

Remuneration
Committee(€)

Nomination
Committee(€)

SocialResponsibility
Committee(€)

SeniorIndependent
Director(€)

Social security
contributions2
(€)

Total
(€)

–
–
11,600
5,800
–
–
–
–
5,800
2,900
–
–
5,800
5,800
–
–
–
–
–
5,800
–
–
–
–
–
–
–
–

–
–
5,800
5,800
–
–
–
–
5,800
2,900
–
–
11,60011,600
–
–
–
–
–
2,900
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–
–
5,800
2,900
–
–
–
–
11,60011,600
–
–
–
2,900
2,900
–
2,900
5,800
–
–
–
–

–
–
–
–
–
–
–
–
–
–
–
–
15,80015,800
–
–
–
–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
2,988
–
7,156
7,134
7,392
3,685
–
–
6,399
7,700
–
–
–
–
–
3,263
3,224
–
2,249
4,456
–
–
5,977
5,958

73,50073,50090,90088,00039,738–95,156
95,13498,292
49,135
102,400
102,400
113,099
114,400
85,10085,10073,50073,50088,00095,61342,874–
41,89983,75636,75073,50079,47779,458

1. Non-Executive Director fees for 2021 were in line with the fees that were revised in 2018.
2. Social security employer contributions as required by Swiss legislation.
3. Henrique Braun was appointed to the Board of Directors on 22 June 2021. The Group applied a half-year period base fee.
4. Anna Diamantopoulou was appointed to the Board of Directors on 16 June 2020. The Group applied a half-year period base fee.
5. Bruno Pietracci was appointed to the Board of Directors on 22 June 2021. The Group applied a half-year period base fee.
6. José Octavio Reyes retired from the Board of Directors on 22 June 2021. The Group applied a half-year period base fee.
7. Alfredo Rivera retired from the Board of Directors on 22 June 2021. The Group applied a half-year period base fee.

Non-Executive Directors do not participate in any of the Group’s incentive plans, nor do they receive any retirement or other taxable
benefits. Fee levels in the table above were last reviewed in 2018 and no change was made for 2021.

Single figure table
Single total figure of remuneration for the Chief Executive Officer for the years ended 31 December 2021 and 2020.
Base pay1€ 000s2021
2020

Zoran Bogdanovic

807

790

Cash and non-cash
benefits2€ 000s
2021
2020

853

651

Annual bonus3€ 000s
2021
2020

1,038

407

Employee Share
Purchase Plan4€ 000s
2021
2020

30

32

Long-term incentives5€ 000s
2021
2020

Retirement
benefits6€ 000s2021
2020

Total single figure€ 000s
2021
2020

2,061

133

4,921

1,325

135

3,340

1. ‘Base pay’ includes the monthly instalments linked to the base salary for 2021 and 2020.
2. ‘Cash and non-cash benefits’ includes the value of all benefits paid during 2021. These are outlined in the ‘Cash and non-cash benefits’ section on page 134 and include any
gross-ups for the tax benefit.
3. Annual bonus for 2021 includes the MIP payout, receivable early in 2022 for the 2021 performance year, including the amount deferred in shares.
4. ‘Employee Share Purchase Plan’ reflects the value of Company matching share contributions under the ESPP.
5. ‘Long-term incentives’ for 2021 reflects the 2019 awards made under the Performance Share Plan and the dividend equivalent shares paid on PSP shares that will vest in early 2022.
The number of shares due to vest to the Chief Executive Officer for the 2019 award is 65,435. The Chief Executive Officer will also get 4,324 shares representing the dividend
equivalents for the awarded shares for 2019, 2020 and 2021. The value reflects the number of shares multiplied by the average market price over the last three months of thefinancial year. The figure will be restated in next year’s report based on the share price at vesting (as has been done for the 2018 award in the 2020 figure above). €81,574 of the€2,060,637 total vested value of the 2019 award was due to increase in share price since date of grant.
6. ‘Retirement benefits’ includes the pension plan under Swiss law. Employer contributions are 15% of annual base salary. The disclosed figure also includes risk and administration
costs of €11,042.

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Directors’ remuneration report continued
Fixed pay for 2021
Base salary
In 2021, Zoran Bogdanovic’s salary was increased to €815,000 representing an increase of 3.2% effective 1 May 2021. Following the freeze
in 2020, the Committee believed that as the Company emerged from the COVID-19 pandemic, an increase for the CEO in line with other
employees was appropriate. The average increase for our other head office employees was 3.1%.

Retirement benefits
Zoran Bogdanovic receives an annual retirement benefit of 15% of base salary, aligning to the retirement benefit provided under Swiss law
and based on the age brackets defined by federal Swiss legislation. During the year, €133,042 of retirement benefit was received inclusiveof €11,042 for risk and administration costs.

Cash and non‑cash benefits
Zoran Bogdanovic received additional benefits during 2021. These included cost of living and foreign exchange rate adjustment (€281,406),
private medical insurance (€17,841), partner allowance (€1,000), home trip allowance (€3,094), tax support (€16,239), company car (€26,439),
housing allowance (€105,952), Company matching contribution related to the ESPP (€30,303 – reflecting the maximum match of 3% under
the plan), tax equalisation (€292,134), and the value of social security contributions (€108,400).

Variable pay for 2021
MIP performance outcomes – 2021
2021 was the first year in which the Company operated a multiplicative annual bonus under which the payout is calculated by multiplying
the outcome from the Business Performance element by the outcome for the Individual Performance element.
The Business Performance element for the 2021 MIP was based on the following metrics:• Net Sales Revenue, with an opportunity of 56% of salary for maximum performance (28% of salary for target performance).
• Comparable EBIT, with an opportunity of 56% of salary for maximum performance (28% of salary for target performance).
• Free cash flow, with an opportunity level of 28% of salary for maximum performance (14% of salary for target performance).
The outcome of the Business Performance element is multiplied by the outcome for the Individual Performance element.
The financial metrics, the associated targets and level of achievement are set out below.
The CEO’s individual performance was determined based on to receiving the highest scores in 8 out of the 10 most recognized ESG
benchmarks, ranking 8 in Refinitiv’s Diversity and Inclusion Index, Employee Sustainable Engagement maintained at the same level,completion of strategic M&A projects such as the acquisition of Coca-Cola Bottling Company of Egypt, the stake in Caffè Vergnano,
and the financial results which surpassed the consensus and 2020 financial results.
A few of our business units received government in the first half of the year in 2021 amounting to 4.7m EUR. There was no mechanism
in place to return those funds. In addition, the results were positively impacted by the sale of the Cyprus plant. Therefore, the Committee,
took the decision to apply discretion to reduce the formulaic outcome of the MIP for the CEO and the Executive Leadership Team.
As such the formulaic business results would have been 200% resulting in 140% of the salary.
Performance level (payout % of Target opportunity)
Threshold (0%)

Target (100%)

Maximum (200%)

Achievement

Payout(% ofbasesalary)Net Sales Revenue (€m)

6,279.0

6,825.0

7,166.3

7,168.4

56%

Comparable EBIT (€m)

708.3

769.9

831.5

831.0

56%

Free Cash Flow (€m)

381.8

415.0

456.5

601.3

28%

MetricTotal (Business Performance multiplied by Individual performance)

140%

Application of downward discretion by the Remuneration Committee (12.6%) Final outcome 127.4% of the base salary
The Remuneration Committee considered the above formulaic outcome to ensure that it was both fair and appropriate given the wider
stakeholder experience described above. The Committee adjusted the outcome downwards in relation to the small amount of government
support received and to offset the benefit from the sale of Cyprus plant to result in 127.4% of the salary of the Chief Executive Officer.
The annual bonus award in respect of the 2021 financial year for the Chief Executive Officer was therefore €1,038,310.
In accordance with the terms of the MIP, 50% of the award will be paid out in March 2022 and the remaining 50% will be deferred into sharesfor a period of three years. MIP payouts are not driven by share price appreciation.

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135

Performance Share Plan (PSP) awards – 2021
The PSP is the Company’s primary long-term incentive vehicle. In March 2021, the Chief Executive Officer was granted a performance shareaward over 97,206 shares under the PSP, representing 330% of base salary at date of grant.
The award is subject to a three-year performance period, aligned to the Company’s financial year, with performance measured to the endof financial year 2023, and vesting anticipated in March 2024. These vested shares will then be subject to a further two-year holding period,
and the Chief Executive Officer agrees to a no-sale commitment during this time.
The following table sets out the details of the performance share award made to the Chief Executive Officer under the PSP for 2021.
Type of award madePerformance share award over 97,206 shares, receivable for nil cost
Share price at date of grant€27.66 (£23.80)
Date of grant
18 March 2021
Performance period
1 January 2021 to 31 December 2023
€2,688,718
Face value of the award(The maximum number of shares that would vest if all performancemeasures and targets are met, multiplied by the share priceat the date of grant)
Face value of the award as a % of annual base salary
330%
Percentage that would be distributed if threshold performance
25% of maximum award
was achieved in both PSP key performance indicators
Percentage that would be distributed if threshold performance
12.5% of maximum award
was achieved only in one PSP key performance indicator
Similar to the award made in March 2020, the 2021 award was subject to comparable earnings per share (EPS) and return on invested capital(ROIC) targets as outlined below, and for the 2021 award a sustainability metric was introduced as set out below.
The reduction in greenhouse gas emissions metric was selected to directly align with and incentivise delivery of the Company’s ESG
objectives, particularly our ambitious goal to achieve net zero emissions across our entire value chain by 2040. The CO2 emissions target
in the PSP implicitly captures reduction in plastics, which was a key driver of its selection as a metric.
ThresholdMaximum
Vesting (%Targetof max)

MeasureDescription

WeightingTargetVesting(% of max)Comparable EPS

Calculated by dividing the comparable net profit attributable
to the owners of the parent by the weighted average numberof outstanding shares during the period.
ROIC is the percentage return that a company makes on
its invested capital. More specifically, we define ROIC as thepercentage of comparable net profit excluding net finance costs
divided by the capital employed. Capital employed is calculated
as the average of net debt and shareholders’ equity attributable
to the owners of the parent through the year.
This target supports the Company’s ambitious goal to achieve
net zero emissions across its entire value chain by 2040. Alignedwith science and 1.5 degree Celsius scenarios and approved by
the Science Based Targets initiative (SBTi) and calculated as
thousand tonnes of CO2 emissions equivalent.

42.5%

1.63p

25%

1.89p

100%

42.5%

13.0%

25%

14.9%

100%

15%

3.973

25%

3.758

100%

Return on invested
capital (ROIC)

Reduction in CO2emissions

The vesting schedule for PSP performance conditions is a straight line between the threshold and maximum performance levels.

Performance Share Plan (PSP) outcomes of the 2019-2021 award• Due to the COVID-19 impact on the business, the Committee has considered that the stretch built into the target ranges for the
2019-2021 PSP awards prior to the onset of the pandemic were inappropriate in light of that impact. We wished to recognise ourwider management team’s efforts in achieving exceptional business outcomes and ensure their continued drive and commitment.
The Committee therefore determined to adjust the targets to maintain relevance. In doing so, the Committee put in place safeguards
to ensure the revised targets led to outcomes which were fair for all employees.
• The Committee considered analyst forecasts and adjusted the targets to be stretching when considering these external reference points.
• The Committee applied the same treatment to the 2019 PSP for all employees, with no preference given to any population.
• Alternative approaches to the PSP were considered, such as using discretion to adjust vesting or making a greater award in 2022.
Ultimately, the Committee was of the view that a formulaic adjustment to targets best maintained the purpose of the PSP and did notlead to overall increases in future target pay.The revised targets are equally stretching and still represent good performance at thresholdlevels and exceptional performance at maximum levels, which would deliver superior returns to shareholders.

136

COCA-COLA HBC

Directors’ remuneration report continued

ThresholdMeasureOriginal targetsof 2019 award

WeightingTarget

50%
50%

1.62
13.8%

25%
25%

Comparable EPS
ROIC

MeasureRevised targetsof 2019 award

Comparable EPS
ROIC

Weighting

50%
50%

Maximum
Vesting(% of max)ThresholdTarget1.39
12.5%

Vesting25%
25%

Maximum
Target1.59
14.3%

Three-year target

Vesting(% of max)

1.80
15.8%

100%
100%
Total
(% of max)

Vesting

ActualAchievement

Vesting

100%
100%

1.54
14.362

81%
100%

90%

Application of downward discretion by the Remuneration Committee (15%) Final outcome 75% of max
In proposing these adjustments, the following is noted:• Prior to the impact of the pandemic, targets were calibrated such that awards were expected to vest at around 50% of maximum forstrong performance. The same stretch applied to revised targets, namely that these awards were expected to vest at around 50%
of maximum for strong performance.
• We took into account analysts’ consensus forecasts and ensured that targets were stretched beyond that (as we did in 2020) to reduce
outcomes as if government aid monies had not been received.
• The changes in the table above would apply to all PSP participants throughout the organisation, which represents approximately 50
individuals (including the Executive Leadership Team and CEO) allowing them to be appropriately rewarded and share in the successof any future good performance.
• The Committee took into careful consideration the varied shareholder feedback we received during consultation and continues to be
mindful of it in relation to subsisting awards. While some of our shareholders expressed concern over adjusting long-term incentive
targets, others indicated they would not be averse to a change in the targets for the 2019 and 2020 awards – understanding our rationale
for the need for change, provided that we explain clearly our thinking and apply equally rigorous and stretching targets as the ones weoriginally applied at the time of award. We have aimed to follow this as a a primary principle.
The formulaic outcome against the adjusted targets was vesting of 90% of the maximum with the exclusion of the benefit of the saleof the Cyprus plant. Furthermore, the Committee took a step back and considered all factors in the round, including both the shareholder
experience and employee experience, and determined that it was appropriate to apply downward discretion and reduce the outcome to 75%
of maximum for all 50 participants, including the CEO and Executive Leadership Team.
If no adjustment had been made to the performance conditions, the payout under the 2019 PSP award would have been 23%.

2020 PSP awards
Many of the same considerations outlined above in relation to the 2019 PSP awards apply in the same way to 2020 PSP awards.
The Committee continues to keep under review the appropriateness of the targets for the 2020 PSP awards and whether adjustments
should be made in light of the prevailing environment at the time. It is also mindful of ensuring any incentive outcomes are always fair
and appropriate in the round. Any approach will ultimately intend to represent good performance at threshold levels and exceptional
performance at maximum levels, which would deliver superior returns to shareholders.

Dilution limit
Usage of shares under all share plans and executive share plans adheres to the dilution limits set by the Investment Association Principles
of Remuneration (10% for all share plans and 5% for all executive share plans, in any 10-year period).

Implementation of policy in 2022
For 2022, we will continue to apply the remuneration policy approved by shareholders in 2021, as outlined on pages 124 to 126.

Base salary and fees
The Chief Executive Officer’s base salary was reviewed in March 2022. The base salary will be increased by 3.1% to €840,000 effective
1 May 2022. Although 2022 salary increase levels for employees have not been confirmed at the date of this report, it is anticipated that
the Chief Executive Officer’s increase will be in line with the increases provided for the wider workforce.
Chairman and Board fees were reviewed for the first time since 2018 and the following increases shall apply, effective following the AGM:
Non-Executive Directors’ fees

Current fees
(unchanged
since 2018)

With effectfrom the dateof AGM

Chairman fee
Basic fee
Senior Independent Director
Audit and Risk Committee Chair
Audit and Risk Committee member
Remuneration/Nomination/Social Responsibility Committee Chair
Remuneration/Nomination/Social Responsibility Committee member€73,500€73,500€15,800€28,900€14,500€11,600€5,800€150,000€82,000€18,000€32,000€16,000€13,000€6,500The increase for the Chairman better reflects the time commitment required for the role and the Committee notes that the new fees remain
below market levels.

INTEGRATED ANNUAL REPORT 2021

137

Management Incentive Plan (MIP)
As of 2021, the MIP operates on a multiplicative basis – i.e. the outcome will be determined by Business Performance multiplied by Individual
Performance, which means that unless the business performance targets are achieved no bonus will be payable.
Business Performance is measured based on performance against three KPIs: revenue (40% weighting), comparable EBIT (40% weighting)and free cash flow (20% weighting). Targets are considered to be commercially sensitive but will be disclosed on a retrospective basis in next
year’s remuneration report. For target performance against this element the outcome will be 70%, rising to 140% for maximum performance.
For the CEO, Individual Performance will be assessed based on the achievement of defined strategic objectives. Based on the Remuneration
Committee’s assessment of performance against these strategic objectives, the outcome for the Individual Performance element may
be up to 100%.
The maximum opportunity level (which would reflect both a stretch level of business performance and full achievement of the individual
strategic objectives) for the CEO will be 140% of base salary, which is unchanged from 2021.

Performance Share Plan (PSP)The levels of PSP awards for 2022 are anticipated to be in line with those awarded in 2021 – i.e. 330% of base salary for the Chief Executive
Officer. It is intended that, as in past years, the three-year performance conditions applicable to the award will continue to be based on ROIC
and EPS as well as the reduction of CO2 emissions metric which was first introduced in 2021.
The weightings will be ROIC: 42.5%, EPS: 42.5%, reduction of CO2 emissions 15% – i.e. unchanged from 2021.
The Committee has determined to temporarily postpone target setting in light of the current heightened uncertainty as a result of theRussia-Ukraine war. The Group has significant operations in both countries. We intend to set targets as soon as possible, within six months
from the standard date of grant and will fully disclose targets via RNS at that time as well as in next year’s annual report. We will proceedwith providing the annual award for the the plan participants, including the CEO, in March 2022. Taking into account the share price volatility
at the time of grant, the Remuneration Committee will retain the right to appropriately apply discretion to the share award outcome at thetime of vesting, for example to safeguard against any inappropriate windfall gains.
The performance period for 2022 awards will be the three years to the end of December 2024 and vesting will occur in March 2025.
These vested shares will then be subject to a further two-year holding period, and the Chief Executive Officer agrees to a no-salecommitment during this time.

Annual percentage change in remuneration of Directors and employees
The following table sets out the change in remuneration for each Director for the last two years compared with the average percentagechange for other employees.
Director

Anastassis G. DavidCharlotte J. Boyle
Henrique Braun
Olusola (Sola) David-Borha
Anna Diamantopoulou
William W. (Bill) Douglas lll
Reto Francioni
Anastasios I. Leventis
Christo Leventis
Alexandra Papalexopoulou
Bruno Pietracci
Jose Octavio Reyes
Alfredo Rivera
Ryan Rudolph

Salary/fees
2020 to 2021
2019 to 2020

(3.06%)(3.06%)(3.06%)(3.06%)(3.06%)(3.06%)(3.06%)(3.06%)(3.06%)(3.06%)(3.06%)(3.06%)(3.06%)(3.06%)

–
–
–
–
–
–
–
–
–
–
–
–
–
–

Taxable benefits
2020 to 2021
2019 to 2020

–
–
–
–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–
–
–
–
–
–
–
–

Annual bonus
2020 to 2021
2019 to 2020

–
–
–
–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–
–
–
–
–
–
–
–

CEO pay ratio
Coca-Cola HBC is domiciled in Switzerland. We are therefore not required to report a CEO pay ratio under UK regulations; however, we arevoluntarily disclosing ratios below. Similar to the section ‘Annual percentage change in remuneration of Directors and employees’ above,
we have chosen to make a comparison with employees in Switzerland as this is the market in which our CEO is based. The international
nature of our business means that we operate in countries with a significant range in terms of market practice for levels of remuneration andcost of living. Switzerland, for example, has a substantially higher cost of living and employment remuneration compared to other countries.
For this reason, comparisons with our Swiss workforce are likely to be more informative about the pay distribution of our workforce.
The table below compares the 2021 single figure of remuneration for the CEO with that of the employees who are paid at the 25th percentile(lower quartile), 50th percentile (median) and 75th percentile (upper quartile) of the Company’s workforce based in Switzerland, ranked based
on total remuneration.
Year

2021
2020
2019

Method25th percentile
pay ratio (P1)Medianpay ratio (P2)75th percentile
pay ratio (P3)

Option A
Option A
Option A

65:1
39:1
33:1

52:1
33:1
29:1

42:1
26:1
23:1

138

COCA-COLA HBC

Directors’ remuneration report continued
Option A is based on a sample of full-time Swiss employees. Their pay and benefits is calculated, and every Swiss employee is ranked todetermine P25, P50 and P75. Several Swiss employees around each percentile were identified to ensure that they accurately represent therelevant percentile ranking.
The methodology used to identify the lower quartile, median and upper quartile employees was to rank all employees of the Swiss workforce
on total remuneration (for employees who were in employment for the full calendar year). Two employees around each percentile wereidentified to ensure they accurately represent the relevant percentile ranking. The total remuneration for each of these employees was thencalculated consistent with the methodology applied for deriving the CEO’s single figure remuneration.
The table below sets out the total pay and benefits for the lower quartile, median and upper quartile:
25th percentilein €Medianin €75th percentilein €64,112
76,03576,352
95,581

94,833
118,432

Annual base salary
Total remuneration

Total remuneration of Swiss employees includes base salary, annual bonuses, other cash compensation (e.g. overtime), other cash andnon-cash benefits (e.g. company car, tax support, relocation etc.), pension employer contributions and employer social security
contributions during 2021.
We are satisfied that the pay ratios reported this year are consistent with our wider pay, reward and progression policies for employees.
As described on page 122, we have an overall remuneration philosophy that operates throughout the Group, ensuring that employees are
fairly rewarded and that their individual contributions are linked to the success of the Company.
Variable pay is an important element of our reward philosophy and a significant proportion of total remuneration for top managers (including
the CEO) is tied to the achievement of our business objectives. As employees advance through the Company there will be the opportunity
to receive higher rewards commensurate with increased accountability and market practice. The increase in the CEO pay ratio in 2021
is driven by business performance exceeding 2021 business plans impacting 2021MIP and 2019 PSP award. The 2018 PSP award that vested
in early 2021 and was included in the 2020 CEO pay ratio was capped at 50% and the 2020 MIP was applicable for half year. The CEO’s total
remuneration has a significantly higher proportion of variable pay in comparison with the rest of our employees. The CEO’s remuneration will
therefore increase or decrease in line with business performance, aligning it with shareholders’ interests.

Chief Executive Officer pay and performance comparison
The graph below shows the Total Shareholder Return (TSR) of the Company compared with the FTSE 100 index over a 10-year period to
31 December 2021. The Remuneration Committee believes that the FTSE 100 Index is the most appropriate index to use for historic
performance due to the size of the Company and our listing location.
Total Shareholder Return versus FTSE 100
300

250

200

150

100

50

Dec 11

Dec 12Coca-Cola HBC

Total remuneration– single figure(€ 000s)
MIP (% of maximum)
PSP (% of maximum)

Dec 13

Dec 14

Dec 15

Dec 16

Dec 17

Dec 18Dec 19Dec 20Dec 21FTSE 100

2012
Dimitris
Lois

2013
Dimitris
Lois

2014
Dimitris
Lois

2015
Dimitris
Lois

2016
Dimitris
Lois

Dimitris
Lois

2017
Zoran
Bogdanovic

2018
Zoran
Bogdanovic

2019
Zoran
Bogdanovic

2020
Zoran
Bogdanovic

2021
Zoran
Bogdanovic

1,524
68%
–

1,928
49%
–

1,918
45%
–

3,012
75%
–

2,923
55%
–

15,378
53%
90%

410
5%
–

3,710
48%
100%

2,499
56%
75%

3,340
40%
50%

4,921
91%
75%

Dimitris Lois sadly passed away on 2 October 2017. The 2017 total remuneration values above reflect the period 1 January 2017 to
2 October 2017. The total remuneration value for Zoran Bogdanovic reflects the period from his appointment as Chief Executive Officer
to the end of the financial year, 7 December 2017 to 31 December 2017.
As the Company listed on the London Stock Exchange in April 2013, the amounts included in respect of the period before that daterelate to the remuneration the previous Chief Executive Officer received in his capacity as Chief Executive Officer of Coca-Cola Hellenic
Bottling Company S.A.

INTEGRATED ANNUAL REPORT 2021

139

Relative importance of spend on pay (€m)
The graphic below presents the year-on-year change in total expenditure for all employees across the Group and distributions made toshareholders in the form of dividends, share buy-backs and/or capital returns.
2021

1,051.2

235.8

2020

955.8

227.9

Total staﬀ costs

Distribution to shareholders (total shares)

Compared with the prior year, the total staff costs have increased by 6%, while dividends distributed to shareholders have increased by 3%.

Shareholder voting outcomes
The table below sets out the result of the vote on the remuneration-related resolutions at the Annual General Meeting held in June 2021.
Votes forVotes against

Abstentions

Total votes castVoting rights
represented

188,898,393
72.10%
189,272,983
72.24%
250,109,133
93.54%
267,895,965

73,049,577
27.88%
72,675,321
27.74%
17,250,378
6.43%
347,298

48,5750.02%
48,241
0.02%
76,8690.03%
86,850261,996,545

71.78%

261,996,545

71.78%

268,330,113

73.70%

268,243,263

73.68%

99.87%
265,205,431

0.13%
1,660,130n.a1,464,552

266,865,561

73.30%

98.98%

0.62%

n.a.

Resolution

Advisory vote on the UK Remuneration Report
Advisory vote on the Swiss Remuneration Report
Advisory vote on the remuneration policy
Approval of the maximum aggregate amountof remuneration for the Board until the next
Annual General Meeting
Approval of the maximum aggregate amountof remuneration for the Executive Leadership Teamfor the next financial year

In reaction to the 72% in favor vote, the Committee decided for the first time to conduct an extensive shareholder consultation, reachingout to many shareholders and engaging with all shareholders who expressed concerns. We value our ongoing dialogue with shareholders
and welcome any views on this report.

Payments to past Directors and payments for loss of office
There were no payments made to past Directors of the Group or loss of office payments made during the year.

Payments to appointed Directors
There were no payments made to appointed Directors during the year.

Outside appointments for the Chief Executive Officer
Zoran Bogdanovic does not hold any appointments outside the Company.

Total Directors’ and Executive Leadership Team members’ remuneration
The table below outlines the aggregated total remuneration figures for Directors and Executive Leadership Team members in the year.
Total remuneration paid to or accrued for Directors, the Executive Leadership Team and theChief Executive Officer
Salaries and other short-term benefits
Amount accrued for performance share awards
Pension and post-employment benefits for Directors, the Executive Leadership Team and theChief Executive Officer

2021€ million2020€ million

23.6
16.3
6.4

21.6
15.9
4.9

0.9

0.8

Credits and loans granted to governing bodies
In 2021, no credits or loans were granted to active or former members of the Company’s Board, members of the Executive Leadership Teamor any related persons.

140

COCA-COLA HBC

Directors’ remuneration report continued
Share ownership
The table below summarises the total shareholding as at 31 December 2021, including any outstanding shares awarded through our incentive
plans, for the Chief Executive Officer and other Directors. There have been no changes in the interests of any Directors in shares in the period
to 16 March 2022.
With performance measures
PSP

Name

Zoran Bogdanovic2
Anastassis G. David3
Charlotte J. Boyle
Henrique Braun
Olusola (Sola) David-Borha
Anna Diamantopoulou
William W. (Bill) Douglas III
Reto Francioni
Anastasios I. Leventis4
Christo Leventis5
Alexandra Papalexopoulou
Bruno Pietracci
José Octavio Reyes
Alfredo Rivera
Ryan Rudolph

Shareinterests

Performance Unvested andsharessubject togranted in performance2021
conditions

Yes
Yes

Yes
Yes

97,206
–
–
–
–
–
–
–
–
–
–
–
–
–
–

Vested327,430 48,829
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

Without performance measures
ESOP
ESPP
Number ofoutstanding
NumberVesting
shares heldof stockat theas at 31
options
Fully
end ofDecemberoutstanding
vested2021
2021

Current
shareholding
Beneficially as % of baseownedsalary1

162,477 162,477
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

193,729
–
1,017
–
–
–
10,000
7,000
–
–
–
–
–
–
–

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

47,641
–
–
–
–
–
–
–
–
–
–
–
–
–
–

Shareholding
guideline
met1

722%
–
–
–
–
–
–
–
–
–
–
–
–
–
–

Yes
–
–
–
–
–
–
–
–
–
–
–
–
–
–

1. The shareholding requirement was introduced from the date of the 2015 PSP award, 10 December 2015 and has been updated to 300% in 2020.
2. Zoran Bogdanovic holds 19,113 stock options with an exercise price of £15.50 dating from the Stock Option 2010 Grant. This grant was originally due to expire on 9 December 2020.
However, due to a restriction on trading in company shares, these options were not able to be exercised. The Remuneration Committee therefore agreed a temporary extension
in the expiration date of these options of 30 days after the end of the restricted period, in line with the provisions of the relevant plan rules. He exercised 43,538 options which were
due to expire 2021.
3. Anastassis G. David is a beneficiary of:(a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect
to 85,355,019 shares held by Kar-Tess Holding and(b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest
with respect to 832,268 shares held by Ari Holdings Limited.
4. Anastasios I. Leventis is a beneficiary of:(a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect
to 85,355,019 shares held by Kar-Tess Holding and(b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest
with respect to 286,880 shares held by its trustee, Selene Treuhand AG and(c) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Avgie Leventis, that has an indirect interest with respect
to 2,138,277 shares held by Carlcan Holding Limited.
5. Christo Leventis is a beneficiary of:(a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect
to 85,355,019 shares held by Kar-Tess Holding and(b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest
with respect to 482,228 shares held by its trustee, Selene Treuhand AG and(c) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Avgie Leventis, that has an indirect interest with respect
to 2,138,277 shares held by Carlcan Holding Limited.

Approval of the Directors’ Remuneration Report
The Directors’ Remuneration Report set out on pages 118 to 140 was approved by the Board of Directors on 16 March 2022 and signed
on its behalf by Charlotte J. Boyle, Chair of the Remuneration Committee.

Charlotte J. Boyle
Chair of the Remuneration Committee
16 March 2022

INTEGRATED ANNUAL REPORT 2021

Statement of Directors’ responsibilities
The Directors are responsible for preparing the Annual Report,
including the consolidated Financial Statements, and the Corporate
Governance Report including the Remuneration Report and theStrategic Report, in accordance with applicable law and regulations.
The Directors, whose names and functions are set out on pages
88-90, confirm to the best of their knowledge that:(a) The Annual Report, taken as a whole, is fair, balanced andunderstandable, and provides the information necessary forshareholders to assess the Group’s position and performance,business model and strategy.
(b) The consolidated Financial Statements, which have been
prepared in accordance with International Financial ReportingStandards, as issued by the IASB, give a true and fair view of theassets, liabilities, financial position and profit or loss of the Company
and the undertakings included in the consolidation of the Grouptaken as a whole.
(c) The Annual Report includes a fair review of the development andperformance of the business and the position of the Company andthe undertakings included in the consolidated Coca-Cola HBC Grouptaken as a whole, together with a description of the principal risks anduncertainties that they face.

141

The activities of the Group, together with the factors likely toaffect its future development, performance, financial position, cash
flows, liquidity position and borrowing facilities are described in theStrategic Report (pages 10 to 72). In addition, Notes 24 ‘Financial
risk management and financial instruments’, 25 ‘Net debt’, and 26‘Equity’ include: the Company’s objectives, policies and processes
for managing its capital; its financial risk management objectives;
details of its financial instruments and hedging activities; and its
exposures to credit risk and liquidity risk. The Group has considerable
financial resources, together with long-term contracts with anumber of customers and suppliers across different countries.
The Directors have also assessed the principal risks and the othermatters discussed in connection with the Viability Statementon page 72. The Directors considered it appropriate to adopt thegoing concern basis of accounting in preparing the annual Financial
Statements and have not identified any material uncertainties
to the Group’s ability to continue to do so over a period of at least
12 months from the date of approval of these financial statements.

By order of the Board
Anastassis G. David
Chairman of the Board
March 2022

Disclosure of information required under Listing Rule 9.8.4R
For the purposes of Listing Rule 9.8.4CR, the information required to be disclosed by premium listed companies in the United Kingdom
is as follows:
Listing Rule

Information to be included

Reference in report

9.8.4(1)9.8.4(2)9.8.4(4)9.8.4(5)9.8.4(6)9.8.4(7)9.8.4(8)9.8.4(9)9.8.4(10)9.8.4(11)9.8.4(12)9.8.4(13)9.8.4(14)Interest capitalised by the Group and an indication of the amount and treatment of any associated tax relief
Details of any unaudited financial information required by LR 9.2.18
Details of any long-term incentive scheme described in LR 9.4.3
Details of any arrangement under which a Director has waived any emoluments
Details of any arrangement under which a Director has agreed to waive future emoluments
Details of any allotments of shares by the Company for cash not previously authorised by shareholders
Details of any allotments of shares for cash by a major subsidiary of the Company
Details of the participation by the Company in any placing made by its parent company
Details of any contracts of significance involving a Director
Details of any contract for the provision of services to the Company by a controlling shareholder
Details of any arrangement under which a shareholder has waived or agreed to waive any dividends
Details of any arrangement under which a shareholder has agreed to waive future dividends
Agreements with a controlling shareholder

Not applicableNot applicableNot applicableNot applicableNot applicableNot applicableNot applicableNot applicableNot applicableNot applicableNot applicableNot applicableNot applicable

142

COCA-COLA HBC

2021 SASB Index

2021 SASB
Index

Majority of the information required by the
Sustainability Accounting Standards Board (SASB)
framework is included in the 2021 IAR and 2021 GRIContent Index. Part of the information refers to our
public website https://www.coca-colahellenic.com/

Table 1. Sustainability disclosure topics & accounting metrics
Topic

Accounting metric

Fleet fuelmanagement

Fleet fuel consumed

Energymanagement

Percentage renewable

Category
Quantitative

Operational energy consumed
Percentage grid electricity

Gigajoules (GJ)
Percentage (%)

CodeFB-NB-110a.1

Gigajoules (GJ)
Quantitative

Response
1,078,121
0%
7,093,841

Percentage (%)

FB-NB-130a.1 42%

Percentage renewable

Percentage (%)

23%

Total water withdrawn

Thousand cubic
metres (m³)

26,373

Total water consumed
Quantitative

Water
management

Unit of measure

Thousand cubic
metres (m³)

16,157FB-NB-140a.1

and percentage of each inregions with High or ExtremelyHigh Baseline Water Stress

Percentage (%)

39%

Description of water
management risks anddiscussion of strategies
and practices to mitigate
those risks

n/a2021 IAR, Water stewardship, and Risk
sections (pages 50; 58, 61-63)2021 GRI Content Index (GRI 303:
FB-NB-140a.2 Water and Effluents).

Discussion
and analysis

CCHBC website_Sustainability section_
Water stewardship

Revenue from: zeroand low‑calorie

EUR€1,194.3 million only from Sparkling softdrinks (SSD) portfolio,
22.7% of total SSD revenue.

no added sugar beverages

Health &nutrition

EUR
Quantitative

artificially sweetened
beverages

EUR

Not reported; we report towards our
UNESDA commitment for added sugar
FB-NB-260a.1 reduction in the EU and the UK by 10% by
2025 vs. 2019: in 2021 we reduced the addedsugar in our beverages by 3% vs 2019.
CCHBC website_Sustainability section_
Nutrition
Not reported.

Percentage (%)

Percentage of advertising
impressions (1) made on
children and (2) made on
children promoting productsthat meet dietary guidelines
Quantitative

Productlabelling &marketing

Not reported. As a member of both the
Coca-Cola System and UNESDA, we abideby the respective responsible marketing
guidelines. In addition, we have a responsible
marketing policy for premium spirits, while
FB-NB-270a.1 our strategic approach towards marketing
to children is covered by our health andwellness policy.
https://www.coca-colahellenic.com/en/
about-us/corporate-governance/policies/
health-wellness-policy

Revenue from products
labelled as (1) containing
genetically modified
organisms (GMOs) and (2)non-GMO
Number of incidents of
non-compliance with industry
or regulatory labelling and/or
marketing codes

Reporting currency(1) None – we don’t produce/sell
GMO products.
FB-NB-270a.2 (2) non-GMO: €7,168.4 million(100% of the portfolio).

Quantitative

CCHBC website_GMO Policy
NumberQuantitative

Zero incidents of non-compliance in 2021.
FB-NB-270a.3 Refer to the 2021 GRI Content Index(417-2 and 417-3).

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143

Coca-Cola HBC AG 2021 IAR has been prepared in accordance with
the Global Reporting Initiative (GRI) Standards, Core level. It has been
independently assured by denkstatt. Independent assurance
statement is on pages 242-244 of the 2021 IAR.
Currently, we do not track all metrics included in the Non-Alcoholic
Beverages Standards and will work towards including more datain the future.

Table 1. Sustainability disclosure topics & accounting metrics (continued)
Topic

Accounting metric

Productlabelling &marketingcontinued

Total amount of monetarylosses as a result of legal
proceedings associated withmarketing and/or labelling
practices

Packaging
lifecycle
management

Category

Response
Zero incidents of non-compliance in 2021.

Refer to the 2021 GRI Content Index
FB-NB-270a.4 (417-2 and 417-3).

Quantitative

Metric tonnes (t)739,321(2) percentage madefrom recycled and/or
renewable materials

Percentage (%)

10.0 % rPET (placed on the market);
35.0% recycled glass; 50.0 % recycled
aluminium

Quantitative
Percentage (%)(3) percentage that isrecyclable, reusable,
and/or compostable

Suppliers’ social andenvironmental responsibility
audit: non-conformance rate
and associated corrective
action rate for (a) major and (b)minor non-conformances

FB-NB-410a.1

n/aDiscussion
and analysis

FB-NB-410a.2

Rate

Quantitative

99.9%

CCHBC website_Sustainability section_
World without waste

2021 GRI Content Index (205-2,
308-1,308-2, 407-1, 408-1, 409-1, 414-1

FB-NB-430a.1

CCHBC website_Sustainable sourcing
and Our suppliers sections
CCHBC website_Sustainability section_
Sourcing
CCHBC website_Supplier Guiding
Principles

Percentage of beverage
ingredients sourced fromregions with High or ExtremelyHigh Baseline Water Stress

Ingredientsourcing

Code

Reporting currency

Total weight of packaging

Discussion of strategies toreduce the environmental
impact of packaging
throughout its lifecycle

Environmental& social
impactsof ingredientsupply chain

Unit of measure

List of priority beverage
ingredients and descriptionof sourcing risks due toenvironmental and social
considerations

Percentage (%) by cost
Quantitative

FB-NB-440a.1

CCHBC website_Sustainability section_
Sourcing

n/aDiscussion
and analysis

3.9% of supplier’s locations are in highwater risk as per our assessment by using
WWF Water Risk Filter.

2021 GRI Content Index (102-9, 205-2,
FB-NB-440a.2 308-1, 308-2, 407-1, 408-1, 409-1,
414-1)CCHBC website_Sustainable sourcing
and Our suppliers sections

Table 2. Activity metrics
Activity metric

Category

Unit of measure

Code

Response

Volume of products sold

Quantitative

Millions of hectolitres (Mhl)

FB-NB-000.A

143.58

Number of production facilities

Quantitative

FB-NB-000.B

54 production facilities produce
non-alcoholic beverages

Total fleet road miles travelled

Quantitative

FB-NB-000.C

335,886,412

NumberKilometres

144

COCA-COLA HBCINTEGRATED ANNUAL REPORT 2021

145

Financialstatements
Contents
146

Independent auditor’s report

Consolidated financial statements
154
154
155
156
158

Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated cash flow statement

Notes to the consolidated financial statements
Basis of reporting
159 1. Description of business
159 2. Basis of preparation and consolidation
160 3. Foreign currency and translation
161 4. Accounting pronouncements
161 5. Critical accounting estimates and judgements
Results for the year
162
164
165
166
166
169
169

6. Segmental analysis
7. Net sales revenue
8. Operating expenses
9. Finance costs, net
10. Taxation
11. Earnings per share
12. Components of other comprehensive income

Operating assets and liabilities
169
172
174
178
180
180
182
182
183
187
189

13. Intangible assets
14. Property, plant and equipment
15. Interests in other entities
16. Leases
17. Inventories
18. Trade, other receivables and assets
19. Assets classified as held for sale
20. Trade and other payables
21. Provisions and employee benefits
22. Offsetting financial assets and liabilities
23. Business combinations

Risk management and capital structure
189
200
204

24. Financial risk management
and financial instruments
25. Net debt
26. Equity

Other financial information
205
207
209
209
209

27. Related party transactions
28. Share-based payments
29. Contingencies
30. Commitments
31. Post balance sheet events

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COCA-COLA HBC

Independent auditor’s report to Coca-Cola HBC AG

Report on the audit of the consolidated financial statements
OpinionIn our opinion:• Coca-Cola HBC AG’s (‘Coca-Cola HBC’ or the ‘Group’) consolidated financial statements (the ‘financial statements’) give a true and fairview of the state of the Group’s affairs as at 31 December 2021 and of its profit and cash flows for the year then ended; and• the financial statements have been properly prepared in accordance with International Financial Reporting Standards (‘IFRSs’) as adopted
by the European Union (‘EU‘).
We have audited the financial statements, included within the 2021 Integrated Annual Report (the ‘Annual Report’), which comprise: theconsolidated balance sheet as at 31 December 2021; the consolidated income statement and consolidated statement of comprehensive
income, the consolidated cash flow statement, and the consolidated statements of changes in equity for the year then ended; and the notes
to the financial statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit & Risk Committee.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (‘ISAs’). Our responsibilities under ISAs are further describedin the Auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements,
which include the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (‘IESBA Code’) and the
FRC’s Ethical Standard, as applicable to listed public interest entities. We have fulfilled our other ethical responsibilities in accordance withthese requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the IESBA Code, the FRC’s Ethical Standard
and other applicable laws and regulations were not provided to the Group.
Other than those disclosed in Note 8 of the financial statements, we have provided no non-audit services to the Group in the period from
1 January 2021 to 31 December 2021.

Our audit approach
Overview
Audit scope

Key audit matters
Materiality• We performed full scope audit procedures on the financial information of 15 subsidiary undertakingsand one joint venture in 14 countries spread across all of the Group’s reportable segments.
• We also conducted procedures around specific account balances and transactions and analytical review
procedures for other subsidiary undertakings and Group functions.
• Taken together, the undertakings which were in scope for the purpose of our audit accounted for 85%
of consolidated net sales revenue, 84% of consolidated profit before tax and 87% of consolidated total
assets of the Group.
• Goodwill and indefinite-lived intangible assets impairment assessment.
• Uncertain tax positions.
• Overall materiality: €36.7 million (2020: €29.6 million) based on 5% of profit before tax.
• Performance materiality: €27.5 million (2020: €22.2 million)

The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.

Key audit matters
Key audit matters are those matters that, in the auditor’s professional judgement, were of most significance in the audit of the financial
statements of the current year and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon,
were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters. This is not a complete list of all risks identified by our audit.

INTEGRATED ANNUAL REPORT 2021

147

Key audit matter

How our audit addressed the key audit matter

Goodwill and indefinite-lived intangible assets
impairment assessment
Refer to Note 13 Intangible assets.

We evaluated the appropriateness of management’s identification of
the Group’s CGUs, related control activities and the process by which
management prepared the CGUs’ value-in-use calculations.

We tested the mathematical accuracy of the CGUs’ value-in-use
calculations and compared the cash flow projections included thereinto the financial budgets, approved by the directors, covering a
The above amounts have been allocated to individual cash-generating
one-year period, and management’s projections for the subsequent
units (‘CGUs’), which in accordance with International Accounting
four years. In addition, we evaluated the reliability of the cash flow
Standard (‘IAS’) 36 require the performance of an impairment
projections by comparing key elements of the prior year projections
assessment at least annually or whenever there is an indication ofwith actual results.
impairment. The impairment assessment involves the determination
We challenged management’s cash flow projections in relation to theof the recoverable amount of the CGU, being the higher of theassumptions applied to the value-in-use calculations focusing onvalue-in-use and the fair value less costs to dispose of.
future performance in light of the gradual recovery from COVID-19
This area was a key matter for our audit due to the size of goodwill
global pandemic with respect to short-term and long-term revenue
and indefinite-lived intangible assets balances and because thegrowth rates and the level of costs.
determination of whether elements of goodwill and of indefinite-lived
With the support of our valuation specialists, we assessed theintangible assets are impaired involves complex and subjective
appropriateness of certain assumptions including discount, annual
estimates made by management about the future results of therevenue growth, perpetuity revenue growth and foreign exchange
CGUs. These estimates include assumptions surrounding revenue
rates. We also evaluated management’s assessment of the potential
growth rates, costs, foreign exchange rates and discount rates.
effect of climate change to the cost of water.
Furthermore, the ongoing COVID-19 pandemic, macroeconomic
We performed our independent sensitivity analyses on the key
volatility, competitor activity and regulatory/fiscal developments
could adversely affect each CGU and potentially the carrying amount drivers of the value-in-use calculations for the CGUs with significant
balances of goodwill and indefinite-lived intangible assets.
of goodwill and indefinite-lived intangible assets.
Goodwill and indefinite-lived intangible assets as at 31 December
2021 amount to €1,759.3 million and €269.6 million, respectively.

Management has identified the Italy CGU to be sensitive to possible
changes in the assumptions used, which could result in the calculated
recoverable amount being lower in future periods than the carrying
value of the CGU. Additional sensitivity disclosure has been includedin the financial statements in respect of this CGU.
No impairment charge was recorded in 2021.

Uncertain tax positions
Refer to Note 10 Taxation and Note 29 Contingencies.
The Group operates in numerous tax jurisdictions and is subject toperiodic tax inspections, in the normal course of business, by local
tax authorities on a range of tax matters in relation to corporate tax,
transfer pricing and indirect taxes. As at 31 December 2021, theGroup has current tax liabilities of € 80.1 million, which include€52.6 million of provisions for tax uncertainties.
The impact of changes in local tax regulations and ongoinginspections by local tax authorities, could materially impact theamounts recorded in the financial statements.
Where the amount of tax payable is uncertain, the Group establishes
provisions based on management’s estimates with respect tothe likelihood of material tax exposures and the probable amountof the liability.
We consider this area as a key audit matter given the level ofjudgement and uncertainty involved in estimating tax provisions
and the complexities of dealing with tax rules and regulations
in numerous jurisdictions.

As a result of our work, we found that the determination by
management that no impairment was required for goodwill andindefinite-lived intangible assets was supported by assumptions
within reasonable ranges.
We assessed the appropriateness and completeness of the related
disclosures in Note 13, as regards to goodwill and indefinite-lived
intangible assets and considered them to be reasonable.
In order to understand and evaluate management’s judgements,
we considered the status of current tax authority inspections
and enquiries, the outcome of previous tax authority inspections,judgemental positions taken in tax returns and current year estimates
as well as recent developments in the tax jurisdictions in which theGroup operates.
We challenged management’s key assumptions, particularly in cases
where there had been significant developments with tax authorities.
Our component audit teams, through the use of tax specialists withlocal knowledge and relevant expertise, assessed the tax positions
taken by the subsidiary undertakings in scope, in the context ofapplying local tax laws and evaluating the local tax assessments.
Additionally, with our group engagement team tax specialists
we further evaluated management’s estimation of tax exposuresand contingencies in order to assess the adequacy of the Group’s
tax provisions.
We held virtual meetings with the local management to discuss
the individual tax position of the in-scope subsidiary undertakings
and with the Group engagement tax team for the Group’s overall
tax exposure.
From the evidence obtained we consider the provisions in relation to
uncertain tax positions as at 31 December 2021 to be reasonable.
We also evaluated the related disclosures provided in the financial
statements in Note 10 and Note 29 and concluded that these
are appropriate.

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COCA-COLA HBC

Independent auditor’s report continued
The COVID-19 global pandemic, which was a key audit matter last year, continued to be an area of focus in light of uncertainty overthe effective containment of the pandemic and any potential impact to the Group. The audit procedures performed did not identify any
significant impact on the control environment, as a result of the COVID-19 global pandemic and remote working, the recoverability of tradereceivables and management’s assessment of the going concern basis of accounting. Having considered the gradual recovery from the
COVID-19 global pandemic and the audit effort required in 2021 and to the date of this audit report, the impact of the COVID-19 global
pandemic is no longer included as a key audit matter.

How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed sufficient work to be able to provide an opinion on the financial statements
as a whole, taking into account the operating structure of the Group, the accounting processes and controls, and the industry in which theGroup operates.
The Group operates through its trading subsidiary undertakings in 27 European countries and in Nigeria, as set out in Notes 1 and 6 of thefinancial statements. The processing of the accounting records for these subsidiary undertakings is largely centralised in a shared services
centre in Bulgaria, except for the subsidiary undertakings in Russia, Ukraine, Belarus, Armenia and North Macedonia, which process theiraccounting records locally. The Group also operates centralised treasury functions in the Netherlands and in Greece and a centralised
procurement function for key raw materials in the Netherlands.
Based on the significance to the financial statements and in light of the key audit matters as noted above, we identified 15 subsidiary
undertakings and one joint venture in 14 countries spread across all of the Group’s reportable segments (including the significant trading
subsidiary undertakings in Russia, Italy, Nigeria, Poland, Romania and Switzerland) which, based on our scoping analysis, required a full scope
audit of their financial information. In addition, audit procedures were performed with respect to the centralised treasury functions by thegroup engagement team and with respect to the centralised procurement function by the component audit team in the Netherlands.
The group engagement team also performed analytical review and other procedures on balances and transactions of subsidiary
undertakings not covered by the procedures described above.
At the planning phase of the audit process, we held a one-day virtual audit planning workshop focusing on planning and risk assessment
activities, fraud assessment, COVID-19 global pandemic considerations, auditor independence, accounting and auditing developments,
including climate change, and centralised testing procedures. This audit planning workshop was attended by all audit teams, including those
responsible for the Group’s subsidiary undertakings that are subject only to a statutory audit. The group engagement team was also
responsible for planning, designing and overseeing the audit procedures performed at the shared services centres in Bulgaria and Greece.
In addition, we performed work centrally on IT general controls, cybersecurity risks and the upgrade of the Group’s ERP system and sharedaudit comfort with the component teams while the group engagement team performed audit procedures with respect to the Group
consolidation, financial statement disclosures and a number of other areas that require significant judgement and estimates, including
goodwill and intangible assets and the Group’s overall going concern assessment.
We issued Group audit instructions to the component audit teams setting out the work to be performed and we had an active dialogue
throughout the year. Due to the travel and other restrictions put in place in response to the ongoing COVID-19 global pandemic, the groupengagement team held frequent virtual meetings to oversee the work performed. In addition to holding formal periodic meetings, the groupengagement team had ongoing informal interactions with the component audit teams to be continuously updated and to monitor theirprogress and results of their procedures. Furthermore, the group engagement team remotely reviewed component auditor working papers
and undertook other forms of interaction as considered necessary, depending on the significance of the component and the extent ofaccounting and audit issues arising. Moreover, the group engagement team participated in the virtual meetings and discussions between
the component audit teams and the management of the trading subsidiary undertakings in Russia, Italy, Nigeria, Poland, Romania, Greece,and Switzerland, and the management of the joint venture in Russia, to discuss business performance and outlook, matters relating to theongoing COVID-19 global pandemic, regulation and taxation, and any specific accounting and auditing matters identified, including fraud
and internal controls.
Based on the above, the undertakings which were in scope for the purpose of our audit accounted for 85% of consolidated net sales revenue,
84% of consolidated profit before tax and 87% of consolidated total assets of the Group. This, together with the additional procedures
performed at Group level, gave us appropriate audit evidence for our opinion on the financial statements.

Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together
with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on
the individual financial statement line items and disclosures and to evaluate the effect of misstatements, both individually and in aggregate,
on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole, as follows:
Overall group materiality€36.7 million (2020: €29.6 million).
How we determined it
5% of profit before tax.
Rationale for benchmark
We chose profit before tax as the benchmark because, in our view, it is one of the principal measuresappliedconsidered by users and is a generally accepted benchmark. We chose 5% which is within the rangeof acceptable quantitative materiality thresholds in generally accepted auditing practice.

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149

For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The rangeof materiality allocated across components was from €2.7 million to €15.0 million.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and thenature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes.
Our performance materiality was 75% of overall materiality, amounting to €27.5 million.
In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment andaggregation risk and the effectiveness of controls – and concluded that an amount at the upper end of our normal range was appropriate.
We agreed with the Audit & Risk Committee that we would report to them misstatements identified during our audit above €1.5 million(2020: €1.0 million) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Group’s ability to continue to adopt the going concern basis of accounting included:• Verification that the cash flow projections used in the goodwill impairment, going concern and viability assessments were consistent;• Review of management’s assessment supporting the Group’s ability to continue to adopt the going concern basis of accounting, ensuring
appropriate stress test scenarios were considered;• Assessment of the reasonableness of management’s assumptions used in the cash flow projections.
• Testing of the mathematical integrity of the cash flow forecasts and reconciled these to the Board approved budget and management’s
projections for the subsequent periods;• Evaluation of the Group’s liquidity for the period under assessment by considering the Group’s available cash resources, committed
undrawn credit facilities and other debt instruments in place as well as the maturity profile of the Group’s debt. We confirmed theoutstanding amounts of the financing facilities and verified their nature, terms and conditions;• Consideration whether climate change is expected to have any significant impact during the period of the going concern assessment; and• Evaluation of the appropriateness of the related disclosures provided in the financial statements in Note 2 and Note 31.
Based on the work performed, we have not identified any material uncertainties relating to events or conditions that, individually orcollectively, may cast significant doubt on the Group’s ability to continue as a going concern for a period of at least twelve months from when
the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparationof the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s ability to continue
as a going concern.
In relation to the Group’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt
the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements, our auditor’s report
thereon and the Swiss statutory reporting, which we obtained prior to the date of this auditor’s report. The directors are responsible for theother information which includes reporting based on the Task Force on Climate-related Financial Disclosures (‘TCFD’) recommendations.
Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except
to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to
be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures
to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required toreport that fact. We have nothing to report based on these responsibilities.

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COCA-COLA HBC

Independent auditor’s report continued
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate
governance statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code specified for our review.
Our additional responsibilities with respect to the corporate governance statement as other information, are described in the Reportingon other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governancestatement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material
to add or draw attention to in relation to:• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks andan explanation of how these are being managed or mitigated;• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basisof accounting in preparing them, and their identification of any material uncertainties relating to the Group’s ability to continue to do soover a period of at least twelve months from the date of approval of the financial statements;• The directors’ explanation as to their assessment of the Group’s prospects, the period this assessment covers and why the period
is appropriate; and• The directors’ statement as to whether they have a reasonable expectation that the Group will be able to continue in operation and meetits liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the Group was substantially less in scope than an audit and only
consisted of making inquiries and considering the directors’ process supporting their statement; checking that the statement is in alignment
with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial
statements and our knowledge and understanding of the Group and its environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides theinformation necessary for the members to assess the Group’s position, performance, business model and strategy;• The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and• The section of the Annual Report describing the work of the Audit & Risk Committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the Group’s compliance with theCode does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors.

Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities in the Annual Report, the directors are responsible for the preparationof the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors
are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are freefrom material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing
as applicable matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate
the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but
is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capableof detecting irregularities, including fraud, is detailed below.

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151

Based on our understanding of the Group and the industry in which it operates, we considered the extent to which non-compliance withapplicable laws and regulations might have a material effect on the financial statements, including, but not limited to, the corporate regulations
arising from its listings on the London Stock Exchange and Athens Exchange, tax laws and regulations applicable to Coca-Cola HBC andits subsidiaries and regulations relating to unethical and prohibited business practices. We evaluated management’s incentives andopportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and where management
made subjective judgements in respect of significant accounting estimates that involved making assumptions and considering future events
that are inherently uncertain. The group engagement team shared this risk assessment with the component auditors so that they could
include appropriate audit procedures in response to such risks in their work. Audit procedures performed by the group engagement team
and/or component auditors included among others:• Discussions with management, internal audit, internal legal counsel, management’s experts and external legal advisors, where relevant,including consideration of known or suspected instances of non-compliance with laws and regulation and fraud;• Evaluation and testing of the operating effectiveness of management’s controls designed to prevent and detect irregularities;• Assessment of matters reported on the Group’s whistleblowing helpline and the results of management’s investigation of such matters;• Reading the minutes of Board meetings to identify any inconsistencies with other information provided by management;• Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to
impairment of goodwill and indefinite-lived intangible assets and uncertain tax positions (see related key audit matters above);• Identifying and testing journal entries, in particular any entries posted with unusual account combinations, journal entries posted by senior
management and consolidation entries.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliancewith laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of notdetecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberateconcealment by, for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques.
However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek
to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw
a conclusion about the population from which the sample is selected.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit.
We also:• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures madeby management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability tocontinue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to
the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are basedon the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial
statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Groupto express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit.
We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit andsignificant audit findings, including any significant deficiencies in internal control that we identify during our audit. Those charged withgovernance are responsible for overseeing the Group’s financial reporting process.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in theaudit of the financial statements of the current year and are therefore the key audit matters. We describe these matters in our auditor’sreport unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine thata matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected tooutweigh the public interest benefits of such communication.

152

COCA-COLA HBC

Independent auditor’s report continued
Use of this report
This report, including the opinions, has been prepared for and only for Coca-Cola HBC AG for the purpose of the Disclosure Guidance
and Transparency Rules sourcebook and the Listing Rules of the FCA and for no other purpose. We do not, in giving these opinions, 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, savewhere expressly agreed by our prior consent in writing.

Other required reporting
Appointment
We have been the Group’s auditors since 2003 and following a tender process that the Group conducted in 2015, at the recommendationof the Audit & Risk Committee, we were reappointed by the directors on 11 December 2015 to audit the financial statements for the year
ended 31 December 2016 and subsequent financial periods.

Assurance Report on the European Single Electronic Format pursuant to the Athens Exchange listing requirements
We have examined the digital files of Coca-Cola HBC, which were compiled in accordance with the European Single Electronic Format(ESEF) defined by the Commission Delegated Regulation (EU) 2019/815, as amended by Regulation (EU) 2020/1989 (hereinafter “ESEF
Regulation”), and which include the consolidated financial statements of the Group for the year ended 31 December 2021, in XHTML format
549300EFP3TNG7JGVE49-2021-12-31-en.xhtml, as well as the provided XBRL file 549300EFP3TNG7JGVE49-2021-12-31-en.zip withthe appropriate marking up, on the aforementioned consolidated financial statements.
Regulatory framework
The digital files of the European Single Electronic Format (ESEF) are compiled in accordance with ESEF Regulation and 2020 / C 379/01
Interpretative Communication of the European Commission of 10 November 2020, as provided by the Greek Law 3556/2007 and therelevant announcements of the Hellenic Capital Market Commission and the Athens Exchange (hereinafter “ESEF Regulatory Framework”).
In summary, this Framework includes the following requirements:• All annual financial reports should be prepared in XHTML format.
• For consolidated financial statements in accordance with International Financial Reporting Standards, the financial information statedin the consolidated balance sheet, the consolidated income statement and consolidated statement of comprehensive income, theconsolidated cash flow statement and the consolidated statements of changes in equity should be marked-up with XBRL ‘tags’, according
to the ESEF Taxonomy, as in force. The technical specifications for ESEF, including the relevant classification, are set out in the ESEF
Regulatory Technical Standards.
The requirements set out in the current ESEF Regulatory Framework are suitable criteria for formulating a reasonable assurance conclusion.
Responsibilities of the management and those charged with governanceManagement is responsible for the preparation and submission of the consolidated financial statements of the Group, for the year ended
31 December 2021 in accordance with the requirements set by the ESEF Regulatory Framework, as well as for those internal controls thatmanagement identifies as necessary, to enable the compilation of digital files free of material error due to either fraud or error.
Auditor’s responsibilities
Our responsibility is to plan and carry out this assurance work, in accordance with no. 214/4 / 11.02.2022 Decision of the Board of Directorsof the Hellenic Accounting and Auditing Standards Oversight Board (HAASOB) and the “Guidelines in relation to the work and the assurance
report of the Certified Public Accountants on the European Single Electronic Format (ESEF) of issuers with securities listed on a regulated
market in Greece” as issued by the Board of Certified Auditors on 14/02/2022 (hereinafter “ESEF Guidelines”), providing reasonableassurance that the consolidated financial statements of the Group prepared by management in accordance with ESEF comply in all material
respects with the applicable ESEF Regulatory Framework.
Our work was carried out in accordance with the Code of Ethics for Professional Accountants of the International Ethics Standard Board for
Accountants (IESBA Code).
The assurance work we conducted is limited to the procedures provided by the ESEF Guidelines and was carried out in accordance with
International Standard on Assurance Engagements 3000, “Assurance Engagements other than Audits or Reviews of Historical Financial
Information’’. Reasonable assurance is a high level of assurance, but it is not a guarantee that this work will always detect a material
misstatement regarding non-compliance with the requirements of the ESEF Regulation.

INTEGRATED ANNUAL REPORT 2021

153

Conclusion
Based on the procedures performed and the evidence obtained, we conclude that the consolidated financial statements of the Group forthe year ended 31 December 2021, in XHTML file format 549300EFP3TNG7JGVE49-2021-12-31-en.xhtml, as well as the provided XBRL
file 549300EFP3TNG7JGVE49-2021-12-31-en.zip with the appropriate marking up, on the aforementioned consolidated financial
statements have been prepared, in all material respects, in accordance with the requirements of the ESEF Regulatory Framework.

Other matter
PwC Switzerland has reported separately on the Group and Company financial statements of Coca-Cola HBC AG for the year ended
31 December 2021 for Swiss statutory purposes. The reports are available in pages 212 and 216.

Fotis Smyrnis
the Certified Auditor, Reg. No. 52861
for and on behalf of PricewaterhouseCoopers S.A.
Certified Auditors, Reg. No. 113
Athens, Greece
23 March 2022

Notes:
a. The maintenance and integrity of the Coca-Cola HBC AG website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of thesematters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.
b. Legislation in the UK and Switzerland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

154

COCA-COLA HBC

Consolidated financial statements

Consolidated income statement
For the year ended 31 December
Note

2021
€ million2020€ million

Net sales revenue
Cost of goods sold
Gross profit

6, 7

7,168.4(4,570.2)
2,598.2

6,131.8(3,810.3)
2,321.5

Operating expenses
Share of results of integral equity method investments
Operating profit

8
15
6(1,833.3)
34.4
799.3

(1,682.2)
21.4
660.7

5.3
(72.9)(67.6)
3.2
734.9

3.8
(73.9)(70.1)
3.3
593.9(187.4)547.5(178.9)
415.0

547.2
0.3
547.5

414.9
0.1
415.0

11
11

1.50
1.49

1.14
1.14

Note

2021
€ million2020€ million

547.5

415.0

(2.7)
69.5
73.6
14.6
(9.5)
145.5

(2.2)
22.7
(254.9)(25.4)(2.4)(262.2)

–
16.1
(6.1)
10.0
155.5
703.0

(0.2)
(12.5)
2.0(10.7)(272.9)
142.1

702.7
0.3
703.0

142.0
0.1
142.1

Finance income
Finance costs
Finance costs, net
Share of results of non-integral equity method investments
Profit before tax
Tax
Profit after tax

9
15

10

Attributable to:
Owners of the parent
Non-controlling interests

Basic earnings per share (€)
Diluted earnings per share (€)

Consolidated statement of comprehensive income
For the year ended 31 December
Profit after tax
Other comprehensive income:Items that may be subsequently reclassified to income statement:
Cost of hedging
Net gain on cash flow hedges
Foreign currency translation gains/(losses)
Share of other comprehensive income/(loss) of equity method investments
Income tax relating to items that may be subsequently reclassified to income statement
Items that will not be subsequently reclassified to income statement:
Valuation loss on equity investments at fair value through other comprehensive income
Actuarial gains / (losses)
Income tax relating to items that will not be subsequently reclassified to income statement
Other comprehensive income/(loss) for the year, net of tax (refer to Note 12)
Total comprehensive income for the year
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
The accompanying notes form an integral part of these consolidated financial statements.

24
24
12
12, 1512

12

INTEGRATED ANNUAL REPORT 2021

155

Consolidated balance sheet
As at 31 December
2021€ million2020€ million

13
14
15
24
10
18

2,043.3
2,830.9
365.8
16.6
31.0
69.8
5,357.4

1,986.1
2,616.6
313.7
14.0
35.1
80.5
5,046.017
18
24, 25

519.8
948.6
878.9
26.7
782.8
3,156.8
0.1
3,156.9
8,514.3

417.6
773.9
106.6
13.2
1,215.8
2,527.1–
2,527.1
7,573.1

25
24
20
21

381.7
11.6
1,885.8
157.2
80.1
2,516.4

315.2
10.0
1,542.8
99.6
58.6
2,026.2

25
24
10
21

2,555.7
3.0
197.7
118.8
5.6
2,880.8
5,397.2

2,610.3
1.3
182.5
113.3
6.2
2,913.6
4,939.8

26
26
26
26
26
26

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
8,514.3

2,014.4
3,321.4(6,472.1)(155.5)(1,242.1)
266.7
4,897.9
2,630.7
2.6
2,633.3
7,573.1

Note

AssetsIntangible assets
Property, plant and equipment
Equity method investments
Other financial assets
Deferred tax assets
Other non-current assets
Total non-current assets
Inventories
Trade, other receivables and assets
Other financial assets
Current tax assets
Cash and cash equivalents
Assets classified as held for sale
Total current assets
Total assets
Liabilities
Borrowings
Other financial liabilities
Trade and other payables
Provisions and employee benefits
Current tax liabilities
Total current liabilities
Borrowings
Other financial liabilities
Deferred tax liabilities
Provisions and employee benefits
Other non-current liabilities
Total non-current liabilities
Total liabilities
EquityShare capital
Share premiumGroup reorganisation reserve
Treasury shares
Exchange equalisation reserve
Other reserves
Retained earnings
Equity attributable to owners of the parent
Non-controlling interests
Total equity
Total equity and liabilities
The accompanying notes form an integral part of these consolidated financial statements.

25
19

156

COCA-COLA HBC

Consolidated financial statements continued

Consolidated statement of changes in equity
Share capital€ million

Balance as at 1 January 2020
Shares issued to employees
exercising stock options
Share-based compensation:
Performance shares
Appropriation of reserves
Dividends
Transfer of cash flow hedge
reserve, including cost of hedging
to inventories, net of tax1
Profit for the year, net of tax
Other comprehensive loss forthe year, net of tax
Total comprehensive income
for the year, net of tax2
Balance as at 31 December 2020

Attributable to owners of the parent
Group
Exchange
Share reorganisation
Treasury equalisation
Other
premium
reservesharesreserve
reserves€ million€ million€ million€ million€ million

Retainedearnings€ million

Total€ million

Noncontrollinginterests€ million

Total
equity€ million

2,010.8

3,545.3(6,472.1)(169.8)(964.7)256.3

4,491.7

2,697.5

2.7

2,700.2

3.6

4.0

–

–

–

–

–

7.6

–

7.6

–
–
–

–
–
(227.9)

–
–
–

–
14.3
–

–
–
–

9.5
(13.9)
–

–
(0.4)
2.2

9.5
–
(225.7)

–
–
(0.2)

9.5
–
(225.9)–2,014.4––
3,321.4––(6,472.1)––(155.5)––(964.7)–(0.2)–
251.7 4,493.5
–
414.9

(0.2)
2,488.7
414.9

–
2.5
0.1

(0.2)
2,491.2
415.0

–

–

–

–

(277.4)15.0(10.5)(272.9)–(272.9)–2,014.4–
3,321.4–(6,472.1)–(277.4)(155.5) (1,242.1)

15.0
266.7

404.4
4,897.9142.0
2,630.7

0.1
2.6

142.1
2,633.3

1. The amount included in other reserves of €0.2 million gain for 2020 represents the cash flow hedge reserve, including cost of hedging, transferred to inventory of €0.1 million loss,
and the deferred tax income thereof amounting to €0.3 million.
2. The amount included in the exchange equalisation reserve of €277.4 million loss for 2020 represents the exchange loss attributed to the owners of the parent, including €22.5 million
loss relating to the share of other comprehensive income of equity method investments.
The amount of other comprehensive income net of tax included in other reserves of €15.0 million gain for 2020 consists of loss on valuation of equity investments at fair value
through other comprehensive income of €0.2 million, cash flow hedges gain of €20.5 million, share of other comprehensive income of equity method investments of €2.9 million loss
and the deferred tax expense thereof amounting to €2.4 million.
The amount of €404.4 million gain attributable to owners of the parent comprises profit for the year of €414.9 million plus actuarial losses of €12.5 million, minus deferred tax incomeof €2.0 million.
The amount of €0.1 million gain included in non-controlling interests for 2020 represents the share of non-controlling interests in profit for the year.

The accompanying notes form an integral part of these consolidated financial statements.

INTEGRATED ANNUAL REPORT 2021

157

Consolidated statement of changes in equity continued
Share capital€ million

Balance as at 1 January 2021
Shares issued to employees
exercising stock options
Share-based compensation:
Performance shares
Movement in shares held forequity compensation plan
Appropriation of reserves
Dividends
Transfer of cash flow hedge
reserve, including cost of hedging
to inventories, net of tax3
Profit for the year, net of tax
Other comprehensive income forthe year, net of tax
Total comprehensive income forthe year, net of tax4
Balance as at 31 December 2021

Attributable to owners of the parent
Group
Exchange
Share reorganisation
Treasury equalisation
Other
premium
reservesharesreserve
reserves€ million€ million€ million€ million€ million(155.5) (1,242.1)

Retainedearnings€ million

Total€ million

Noncontrollinginterests€ million

Total
equity€ million

266.7

4,897.9

2,630.7

2.6

2,633.3

2,014.4

3,321.4(6,472.1)

7.9

11.7

–

–

–

–

–

19.6

–

19.6

–

–

–

–

–

15.1

–

15.1

–

15.1

–
–
–

–
–
(235.8)

–
–
–

–
8.9
–

–
–
–

(0.1)
(9.0)
–

–
0.1
2.2

(0.1)
–
(233.6)

–
–
(0.3)

(0.1)
–
(233.9)–2,022.3––
3,097.3––(6,472.1)–(19.9)–
252.8 4,900.2–
547.2(19.9)
2,411.8
547.2

–
2.3
0.3

(19.9)
2,414.1
547.5

–

–

–

–
2,022.3–
3,097.3–(6,472.1)––(146.6) (1,242.1)
–
–
88.1

57.4

10.0

155.5

–

155.5

–
88.1
(146.6) (1,154.0)

57.4
310.2

557.2
5,457.4

702.7
3,114.5

0.3
2.6

703.0
3,117.1–

3. The amount included in other reserves of €19.9 million gain for 2021 represents the cash flow hedge reserve, including cost of hedging, transferred to inventory of €24.0 million gain,
and the deferred tax expense thereof amounting to €4.1 million.
4. The amount included in the exchange equalisation reserve of €88.1 million gain for 2021 represents the exchange gain attributed to the owners of the parent, primarily related
to the Swiss Franc and the Russian Rouble, including €14.5 million gain relating to the share of other comprehensive income of equity method investments.
The amount of other comprehensive income net of tax included in other reserves of €57.4 million gain for 2021 consists of cash flow hedges gain of €66.8 million, share of othercomprehensive income of equity method investments of €0.1 million gain and the deferred tax expense thereof amounting to €9.5 million.
The amount of €557.2 million gain attributable to owners of the parent comprises profit for the year of €547.2 million, actuarial gains of €16.1 million and deferred tax expenseof €6.1 million.
The amount of €0.3 million gain included in non-controlling interests for 2021 represents the share of non-controlling interests in profit for the year.

For further details, refer to Note 24 ‘Financial risk management and financial instruments’, Note 26 ‘Equity’ and Note 28 ‘Share-based payments’.
The accompanying notes form an integral part of these consolidated financial statements.

158

COCA-COLA HBC

Consolidated financial statements continued

Consolidated cash flow statement
For the year ended 31 December
Note

Operating activities
Profit after tax
Finance costs, net
Share of results of non-integral equity method investments
Tax charged to the income statement
Depreciation of property, plant and equipment
Impairment of property, plant and equipment
Employee performance shares
Amortisation of intangible assets
Share of results of integral equity method investments
Gain on disposals of non-current assets(Increase)/decrease in inventories(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Tax paid
Net cash inflow from operating activities
Investing activities
Payments for purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Payments for business combinations
Payment for acquisition of joint operation
Net payment for acquisition of integral equity method investment
Net receipts from integral equity method investments
Payments for acquisition of non-integral equity method investments
Net receipts from non-integral equity method investments
Joint arrangement reclassification
Net (payments for)/proceeds from investments in financial assets at amortised cost
Net (payments for)/proceeds from investments in financial assets at fair value throughprofit or loss
Loans to related parties
Interest (paid)/received
Net cash (outflow)/inflow from investing activities
Financing activities
Proceeds from shares issued to employees exercising stock options
Proceeds from borrowings
Repayments of borrowings
Principal repayments of lease obligations
Dividends paid to owners of the parent
Dividends paid to non-controlling interests
Proceeds from/(payments for) settlement of derivatives regarding financing activities
Interest paid
Net cash outflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Movement in cash and cash equivalents
Cash and cash equivalents at 1 January
Net (decrease)/increase in cash and cash equivalents (2020: Net increase in cash and cash
equivalents, excl. joint arrangement reclassification)
Joint arrangement reclassification
Effect of changes in exchange rates
Cash and cash equivalents at 31 December
The accompanying notes form an integral part of these consolidated financial statements.

9
15
10
14
14
13
15
8

23
15
27
15
27
15

26

26

15
25

2021
€ million2020€ million

547.5
67.6
(3.2)
187.4
330.3
6.0
14.9
1.0
1,151.5(34.4)(28.4)(114.5)(109.0)419.3(142.3)
1,142.2

415.0
70.1
(3.3)
178.9
372.5
15.6
9.5
0.9
1,059.2(21.4)
(1.4)
9.4
178.5
(79.6)(183.2)961.5(506.5)
35.8
(5.6)
(0.9)
–
47.8
(87.0)
1.9–(102.8)(419.2)
13.4
–
–
(0.5)
27.1
(2.4)
1.3
(13.1)
264.4(640.6)(0.9)(0.3)(1,259.1)

370.4
(2.5)
0.2
239.1

19.6
129.3
(133.8)(63.1)(233.6)(0.2)
4.9(45.5)(322.4)(439.3)7.6
211.8(655.8)(58.7)(225.7)(0.2)(1.1)(64.7)(786.8)413.8

1,215.8823.0(439.3)
–
6.3
782.8

426.9
(13.1)(21.0)
1,215.8

INTEGRATED ANNUAL REPORT 2021

159

Notes to the consolidated financial statements
1. Description of businessCoca-Cola HBC AG and its subsidiaries (the ‘Group’ or ‘Coca-Cola HBC’ or ‘the Company’) are principally engaged in the production,
sales and distribution of primarily non-alcoholic ready-to-drink beverages, under franchise from The Coca-Cola Company. The Company
distributes its products in Nigeria and 27 countries in Europe. Information on the Company’s operations by segment is included in Note 6.
On 11 October 2012, Coca-Cola HBC, a Swiss stock corporation (Aktiengesellschaft/Société Anonyme) incorporated by Kar-Tess Holding(a related party of the Group, refer to Note 27), announced a voluntary share exchange offer to acquire all outstanding ordinary registeredshares and all American depositary shares of Coca-Cola Hellenic Bottling Company S.A. As a result of the successful completion of this offer,
on 25 April 2013 Coca-Cola HBC acquired 96.85% of the issued Coca-Cola Hellenic Bottling Company S.A. shares, including shares
represented by American depositary shares, and became the new parent company of the Group. On 17 June 2013, Coca-Cola HBC completed
its statutory buy-out of the remaining shares of Coca-Cola Hellenic Bottling Company S.A. that it did not acquire upon completion of its
voluntary share exchange offer. Consequently, Coca-Cola HBC acquired 100% of Coca-Cola Hellenic Bottling Company S.A. which was
eventually delisted from the Athens Exchange, from the London Stock Exchange where it had a secondary listing and from the New York
Stock Exchange where American depositary shares were listed.
The shares of Coca-Cola HBC started trading in the premium segment of the London Stock Exchange (Ticker symbol: CCH) and on the
Athens Exchange (Ticker symbol: EEE) and regular way trading in Coca-Cola HBC American depositary shares commenced on the New York
Stock Exchange (Ticker symbol: CCH) on 29 April 2013. On 24 July 2014, the Group proceeded to the delisting of its American depositaryshares from the New York Stock Exchange and terminated its reporting obligations under the US Securities Exchange Act of 1934.
The deregistration of Coca-Cola HBC shares under the US Securities Exchange Act of 1934 and the termination of its reporting obligations
became effective on 3 November 2014.

2. Basis of preparation and consolidation
Basis of preparation
The consolidated financial statements of the Group for the year ended 31 December 2021 have been prepared in accordance with International
Financial Reporting Standards (‘IFRS’) as adopted by the European Union (‘EU‘) and in compliance with Swiss law. The consolidated financial
statements of the Group for the year ended 31 December 2020 were prepared in accordance with IFRS as issued by the International
Accounting Standards Board (‘IASB’) and in compliance with Swiss law. IFRS as adopted by the EU differ in certain respects from IFRS
as issued by the IASB. These differences have no impact on the Group’s consolidated financial statements for the periods presented.
These consolidated financial statements were approved for issue by the Board of Directors on 22 March 2022 and are expected to beverified at the Annual General Meeting to be held on 21 June 2022.
Going concern
In 2021, the Group experienced a gradual recovery from the COVID-19 pandemic as evidenced by the reopening of its markets and returnto pre-pandemic levels of performance. However, COVID-19 continues to be a source of uncertainty for the near term and could potentiallylead to further economic disruption.
As part of the consideration of whether to adopt the going concern basis in preparing the consolidated financial statements, management
has reviewed a range of scenarios and forecasts as part of its continuous focus on risk management, including the potential financial impactof a slower COVID-19 pandemic recovery, along with the Group’s proposed responses. The relevant assumptions have been modelled on
the estimated potential impact of severe but plausible downside scenarios, linked to the Group‘s principal risks. The Group’s strong balance
sheet and liquidity position, its leading market shares and largely variable cost base, together with its unique portfolio of brands and resilient
and talented people will, management believe, allow the Group to fully overcome the challenges posed by the ongoing COVID-19 pandemic.
In addition, management considered the potential effect of climate change-related risks to the cost of water and concluded that there
is no impact over the period of assessment.
Having considered the outcome of these assessments, based on a quantitative viability exercise, it is deemed appropriate that the Group
continues to adopt the going concern basis for the preparation of the consolidated financial statements under the historical cost convention,
as modified by the revaluation of financial assets at fair value through profit or loss, investments in equity instruments classified at fair value
through other comprehensive income and derivative financial instruments.
Change in accounting estimate
In the current financial year, the Group has applied a change in the estimate of useful lives applicable to certain categories of production
equipment, included within the plant and equipment asset category (Note 14). As a result, effective 1 January 2021, the expected useful lifeof the specific categories of production equipment was extended by five years. The change was driven by the reassessment of the expectedperiod of usage and has resulted in an approximately €33 million decrease in the depreciation expense in the current year. This is primarilyreflected in the ‘Cost of goods sold’ line of the consolidated income statement.

160

COCA-COLA HBC

Notes to the consolidated financial statements continued
2. Basis of preparation and consolidation continued
Basis of consolidation
Subsidiary undertakings are those companies over which the Group, directly or indirectly, has control. The Group controls an entity when theGroup is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns throughpower over the entity. Subsidiary undertakings are consolidated from the date on which control is transferred to the Group and cease to beconsolidated from the date on which control is transferred out of the Group.
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions
with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquiredof the carrying value of net assets of the subsidiary is recorded in equity.
Inter-company transactions and balances between Group companies are eliminated. The subsidiaries’ accounting policies are consistent
with policies adopted by the Group.
When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when such control
is lost, with the change in carrying amount recognised in the income statement. The fair value is the initial carrying amount for the purposesof subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously
recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets
or liabilities. This means that amounts previously recognised in other comprehensive income, if any, are reclassified to the income statement.

3. Foreign currency and translation
The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which theentity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each
entity are expressed in Euro, which is the presentation currency for the consolidated financial statements.
The assets and liabilities of foreign subsidiaries are translated into Euro at the exchange rate prevailing at the balance sheet date. The resultsof foreign subsidiaries are translated into Euro using the average monthly exchange rate (being a reasonable approximation of the rates
prevailing on the transaction dates). The exchange differences arising on translation are recognised in other comprehensive income.
On disposal of a foreign entity, accumulated exchange differences are recognised as a component of the gain or loss on disposal.
Transactions in foreign currencies are recorded at the rate ruling at the date of transaction. Monetary assets and liabilities denominated inforeign currencies are remeasured at the rate of exchange ruling at the balance sheet date. All gains and losses arising on remeasurement areincluded in the income statement, except for exchange differences arising on assets and liabilities classified as cash flow hedges, which aredeferred in equity until the occurrence of the hedged transaction, at which time they are recognised in the income statement. Share capitaldenominated in a currency other than the functional currency is initially stated at the spot rate on the date of issue but is not retranslated.
The principal exchange rates used for translation purposes in respect of one Euro are:
US Dollar
UK Sterling
Polish Zloty
Nigerian Naira
Hungarian Forint
Swiss Franc
Russian Rouble
Romanian Leu
Ukrainian Hryvnia
Czech Koruna
Serbian Dinar

Average
2021

Average
2020

Closing
2021

Closing
2020

1.18
0.86
4.56
484.31358.49
1.08
87.23
4.92
32.30
25.64
117.57

1.14
0.89
4.44
435.06350.65
1.07
82.23
4.84
30.66
26.45
117.58

1.13
0.84
4.60
481.32370.08
1.04
83.87
4.95
30.78
24.95
117.56

1.22
0.91
4.54
480.68364.83
1.08
90.55
4.88
34.64
26.21
117.57

INTEGRATED ANNUAL REPORT 2021

161

4. Accounting pronouncementsa) Accounting pronouncements adopted in 2021
The Group has adopted the following amendments which were endorsed by the EU that are relevant to its operations and effective foraccounting periods beginning 1 January 2021:• Interest Rate Benchmark Reform – Phase 2 – Amendments to IFRS 9, IAS 39, IFRS 7 and IFRS 16; and• COVID-19 – Related Rent Concessions – Amendments to IFRS 16.
The adoption of these amendments did not have a significant impact on the consolidated financial statements of the Group.

b) Accounting pronouncements not yet adopted
At the date of approval of these consolidated financial statements, the following amendments relevant to the Group’s operations were
issued but not yet effective and not early-adopted:• Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16;• Onerous Contracts – Cost of Fulfilling a Contract – Amendments to IAS 37;• Reference to the Conceptual Framework – Amendments to IFRS 3;• Annual Improvements to IFRS Standards 2018-2020;• COVID-19-Related Rent Concessions beyond 30 June 2021 – Amendments to IFRS 16;• Classification of Liabilities as Current or Non-current – Amendments to IAS 1 (not endorsed by the EU);
• Disclosure of Accounting Policies – Amendments to IAS 1 (not endorsed by the EU);
• Definition of Accounting Estimates – Amendments to IAS 8 (not endorsed by the EU); and• Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12 (not endorsed by the EU).
The above amendments are not expected to have a material impact on the consolidated financial statements of the Group.

5. Critical accounting estimates and judgements
In conformity with IFRS, the preparation of the consolidated financial statements for Coca-Cola HBC requires management to makeestimates and judgements that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent
assets and liabilities in the consolidated financial statements and accompanying notes. Although these estimates and judgements are
based on management’s knowledge of current events and actions that may be undertaken in the future, actual results may ultimately differ
from estimates.

Estimates
The key items concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant riskof causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below:• Income taxes (refer to Note 10);
• Impairment of goodwill and indefinite-lived intangible assets (refer to Note 13); and• Employee benefits – defined benefit pension plans (refer to Note 21).

Judgements
In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving
estimations as described above, which have the most significant effect on the amounts recognised in the consolidated financial statements:• Joint arrangements (refer to Note 15).

162

COCA-COLA HBC

Notes to the consolidated financial statements continued
6. Segmental analysis
The Group has essentially one business, being the production, sale and distribution of ready-to-drink, primarily non-alcoholic, beverages.
The Group operates in 28 countries, which are aggregated into reportable segments as follows:

Established markets
Developing markets
Emerging markets

Austria, Cyprus, Greece, Italy, Northern Ireland,
the Republic of Ireland and Switzerland.
Croatia, Czech Republic, Estonia, Hungary,
Latvia, Lithuania, Poland, Slovakia and Slovenia.
Armenia, Belarus, Bosnia and Herzegovina,
Bulgaria, Moldova, Montenegro, Nigeria, North
Macedonia, Romania, the Russian Federation,
Serbia (including the Republic of Kosovo)and Ukraine.

The Group’s operations in each of the three reportable segments have been aggregated on the basis of their similar economic characteristics,
assessed by reference to their net sales revenue per unit case as well as disposable income per capita, exposure to political and economic
volatility, regulatory environments, customers and distribution infrastructures. The accounting policies of the reportable segments are
the same as those adopted by the Group. The Group’s chief operating decision-maker is its Executive Leadership Team, which evaluates
performance and allocates resources based on volume, net sales revenue and operating profit.

a) Volume and net sales revenue
The Group sales volume in million unit cases1 for the years ended 31 December was as follows:
Established
Developing
Emerging
Total volume

2021

2020

589.9
415.5
1,407.3
2,412.7

536.9
412.1
1,186.6
2,135.6

1. One unit case corresponds to approximately 5.678 litres or 24 servings, being a typically used measure of volume. For biscuits volume, one unit case corresponds to 1 kilogram.
Volume data is derived from unaudited operational data.

Net sales revenue per reportable segment for the years ended 31 December is presented in the graphs below:
2021

2020

€7,168.4 million€6,131.8 million

Established
Developing
Emerging€2,479.0m€1,365.6m€3,323.8m

Established
Developing
Emerging€2,174.6m€1,170.9m€2,786.3m

Sales or transfers between the Group’s segments are not material, nor are there any customers who represent more than 10% of net sales
revenue for the Group.

INTEGRATED ANNUAL REPORT 2021

163

In addition to non-alcoholic, ready-to-drink beverages (‘NARTD’), the Group sells and distributes premium spirits. An analysis of volume
and net sales revenue per product type for the years ended 31 December is presented below:
Volume in million unit cases1:
2021
2020
NARTD2
2,409.3
2,133.2
Premium spirits
3.4
2.4
Total volume2,412.7
2,135.6
Net sales revenue in € million:
NARTD
Premium spirits
Total net sales revenue

6,944.5
223.9
7,168.4

5,974.4
157.4
6,131.8

1. One unit case corresponds to approximately 5.678 litres or 24 servings, being a typically used measure of volume. For premium spirits volume, one unit case also corresponds
to 5.678 litres. For biscuits volume, one unit case corresponds to 1 kilogram. Volume data is derived from unaudited operational data.
2. NARTD: non-alcoholic, ready-to-drink beverages.

Net sales revenue from external customers attributed to Switzerland (the Group’s country of domicile), Russia, Italy and Nigeria was as follows
for the years ended 31 December:2021€ million2020€ million

354.3
953.3
901.6
702.0
4,257.2
7,168.4

368.0
773.3
751.5
509.0
3,730.0
6,131.82021€ million2020€ million

Operating profit:
Established
Developing
Emerging
Total operating profit

285.6
104.7
409.0
799.3

203.3
97.0
360.4
660.7

Finance costs:
Established
Developing
Emerging
Corporate³
Inter-segment finance cost
Total finance costs

9(17.7)(7.9)(15.0)(120.1)87.8(72.9)(21.5)(5.7)(13.2)(138.0)104.5(73.9)

9

1.2
0.5
9.7
81.7
(87.8)
5.3

1.1
0.7
10.1
96.4
(104.5)3.8

10(57.6)(10.6)(91.1)(28.1)(187.4)(41.8)(28.7)(89.0)(19.4)(178.9)

3.2
547.5

3.3
415.0

Switzerland
RussiaItaly
Nigeria
All countries other than Switzerland, Russia, Italy and Nigeria
Total net sales revenue from external customersb) Other income statement items
Year ended 31 December

Finance income:Established
Developing
Emerging
Corporate³
Inter-segment finance income
Total finance income
Income tax expense:
Established
Developing
Emerging
Corporate3
Total income tax expense
Reconciling items:
Share of results of non-integral equity method investments
Profit after tax
3. Corporate refers to holding, finance and other non-operating subsidiaries of the Group.

Note

15

164

COCA-COLA HBC

Notes to the consolidated financial statements continued
6. Segmental analysis continued
Depreciation and impairment of property, plant and equipment and amortisation of intangible assets included in the measure of operating
profit are as follows:Year ended 31 December

Depreciation and impairment of property, plant and equipment:
Established
Developing
Emerging
Total depreciation and impairment of property, plant and equipment
Amortisation of intangible assets:
Developing
Emerging
Total amortisation of intangible assets

Note

2021
€ million2020€ million

14(92.1)(54.1)(190.1)(336.3)(109.6)(66.4)(212.1)(388.1)

13

(0.3)
(0.7)
(1.0)

(0.2)
(0.7)
(0.9)

c) Other items
The balance of non-current assets4 attributed to Switzerland (the Group’s country of domicile), Russia, Italy and Nigeria was as follows for theyears ended 31 December:
Switzerland
Russia5
Italy
Nigeria
All countries other than Switzerland, Russia, Italy and Nigeria
Total non-current assets⁴

2021€ million2020€ million

557.5
330.2
1,082.3642.1
2,654.6
5,266.7

540.0
307.4
1,108.8553.3
2,465.0
4,974.5

4. Excluding other financial assets, deferred tax assets, pension plan assets and trade and loans receivable.
5. Excluding the investment in Multon, the Group’s Russian juice business (refer to Note 15).

Expenditure on property, plant and equipment per reportable segment was as follows for the years ended 31 December:
Established
Developing
Emerging6
Total expenditure on property, plant and equipment2021€ million2020€ million

104.7
89.5
319.4
513.6

108.2
69.3
241.7
419.2

6. Expenditure on property, plant and equipment for 2021 includes €7.1 million (2020: €nil) relating to repayment of borrowings undertaken to finance the purchase of production
equipment by the Group’s subsidiary in Nigeria, classified as ‘Repayment of borrowings’ in the consolidated cash flow statement.

7. Net sales revenue
Accounting policy
The Group essentially produces, sells and distributes ready-to-drink, primarily non-alcoholic, beverages. Under IFRS 15 ‘Revenue fromcontracts with customers’ the Group recognises revenue when control of the products is transferred, being when the products aredelivered to the customer.
Net sales revenue is measured at the fair value of the consideration received or receivable and is stated net of sales discounts andconsideration paid to customers. These mainly take the form of promotional incentives and are amortised over the terms of the related
contracts as a deduction in revenue.
The Group provides volume rebates to customers once the quantity of goods purchased during the period exceeds a threshold specified
in the contract. To estimate the variable consideration for the expected future rebates, the Group uses the most likely amount method
and the amount is recognised in sales revenue only to the extent that it is highly probable that a significant reversal in the amount of
cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the Grouptransfers the related goods. Contract liabilities are recognised as revenue when the Group performs under the contract (i.e. transfers
control of the related goods to the customer).
Net sales revenue includes excise and other duties where the Group acts as a principal but excludes amounts collected by third parties
such as value-added taxes as these are not included in the transaction price. The Group assesses these taxes and duties on a jurisdictionby-jurisdiction basis to decide on the appropriate accounting treatment.
Coca-Cola HBC receives contributions from The Coca-Cola Company in order to promote sales of its brands. Contributions for pricesupport, marketing and promotional campaigns in respect of specific customers are recognised as an offset to promotional incentives
provided to those customers to which the contributions contractually relate. These contributions are accrued and matched to theexpenditure to which they relate (refer to Note 27).
Revenue recognised in 2021 that was included in the contract liability balance at the beginning of the year amounted to €10.4 million(2020: €6.9 million). Refer to Note 20 for contract liabilities as at 31 December 2021 and 2020.
Refer to Note 6 for an analysis of net sales revenue per reportable segment.

INTEGRATED ANNUAL REPORT 2021

165

8. Operating expenses
Operating expenses for the year ended 31 December comprised:
Selling expenses
Delivery expenses
Administrative expenses
Restructuring expenses
Acquisition and integration costs (refer to Note 23)
Operating expenses

2021€ million2020€ million

879.1
533.0
385.7
21.2
14.3
1,833.3

799.7
484.3
388.4
9.8
–
1,682.2

In 2021, operating expenses included net gain on disposals of non-current assets of €28.4 million (2020: €1.4 million net gain).

a) Restructuring expenses
Accounting policy
Restructuring expenses are recorded in a separate line item within operating expenses and comprise costs arising from significant
changes in the way the Group conducts its business such as significant supply chain infrastructure changes, outsourcing of activities andcentralisation of processes. Restructuring provisions are recognised only when the Group has a present constructive obligation, which
is when a detailed formal plan identifies the business or part of the business concerned, the location, function and number of employees
affected, a detailed estimate of the associated costs, as well as an appropriate timeline and the employees affected have been notifiedof the plan’s main features.
As part of the effort to optimise its cost base and sustain competitiveness in the marketplace, the Company undertakes restructuringinitiatives. The restructuring concerns mainly employees’ termination benefits. Restructuring expenses per reportable segment for the years
ended 31 December are presented below:
2021

2020

€21.2 million€9.8 million

Established
Developing
Emerging€14.7m€3.4m€3.1m

Established
Developing
Emerging

€5.5m
€4.0m
€0.3m

b) Employee costs
Employee costs for the years ended 31 December comprised:
Wages and salaries
Social security costs
Pension and other employee benefits
Termination benefits
Total employee costs

2021€ million2020€ million

724.7
138.3
132.3
19.9
1,015.2

681.8
137.9
116.8
19.3
955.8

The average number of full-time equivalent employees in 2021 was 26,787 (2020: 27,722).
Employee costs for 2021 included in operating expenses and cost of goods sold amounted to €766.7 million and €248.5 million respectively(2020: €720.5 million and €235.3 million respectively).

c) Directors’ and senior management remuneration
The total remuneration paid or accrued for Directors and the senior management team for the years ended 31 December comprised:
Salaries and other short-term benefits
Performance share awards
Pension and post-employment benefits
Total remuneration

2021€ million2020€ million

16.3
6.4
0.9
23.6

15.9
4.9
0.8
21.6

166

COCA-COLA HBC

Notes to the consolidated financial statements continued
8. Operating expenses continuedd) Fees and other services of the auditor
Audit and other fees charged in the income statement concerning the auditor of the consolidated financial statements,
PricewaterhouseCoopers S.A. and affiliates, were as follows, for the years ended 31 December:2021€ million2020€ million

4.8
0.7
5.5

4.5
0.6
5.1

Audit fees
Audit-related fees
Total audit and audit-related fees

9. Finance costs, net
Accounting policy
Interest income and interest expense are recognised using the effective interest rate method, and are recorded in the income statement
within ‘Finance income’ and ‘Finance cost’ respectively. Interest expense includes finance charges with respect to leases. Interest expense
also includes amortisation of the loss on the forward starting swaps and the net impact from swaptions recorded in other comprehensive
income (refer to Note 24).
Finance costs, net, for the years ended 31 December comprised:2021€ million2020€ million

5.3(67.1)(1.7)(4.1)(72.9)(67.6)

3.8(71.8)(1.8)(0.3)(73.9)(70.1)

Interest income
Interest expense
Other finance costs
Net foreign exchange remeasurement losses
Finance costs
Finance costs, net
Other finance costs include commitment fees on loan facilities (for the part not yet drawn down) and other similar fees.
For the interest expense incurred with respect to leases, refer to Note 16.

10. Taxation
Accounting policy
Tax is recognised in the income statement, except to the extent that it relates to items recognised in other comprehensive income
or in equity. In this case, the tax is recognised in other comprehensive income or directly in equity.
The current income tax expense is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in
the countries where the Group operates and generates taxable income. Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate,on the basis of amounts expected to be paid to the tax authorities.
Deferred tax is provided using the liability method for all temporary differences arising between the tax bases of assets and liabilities andtheir carrying values for financial reporting purposes. However, the deferred tax liabilities are not recognised if they arise from the initialrecognition of goodwill. Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction otherthan a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Tax rates enacted
or substantively enacted at the balance sheet date are those that are expected to apply when the deferred tax asset is realised ordeferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary
differences can be utilised. Deferred tax assets are recognised for tax losses carried forward to the extent that realisation of the related
tax benefit through the reduction of future taxes is probable.
Deferred tax is provided on temporary differences arising on investments in subsidiaries, associates and joint ventures, except where
the timing of the reversal of the temporary difference can be controlled by the Group, and it is probable that the temporary difference will
not reverse in the foreseeable future. This includes taxation in respect of the retained earnings of overseas subsidiaries only to the extent
that, at the balance sheet date, dividends have been accrued as receivable or a binding agreement to distribute past earnings in future
periods has been entered into by the subsidiary.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to offset current tax assets against current
income tax liabilities and the deferred taxes relate to the same taxation authority on either the same taxable entity or different taxable
entities where there is an intention to settle the balances on a net basis.

Critical accounting estimates
The Group is subject to income taxes in numerous jurisdictions. There are many transactions and calculations for which the ultimate tax
determination cannot be assessed with certainty in the ordinary course of business. The Group recognises a provision for potential casesthat might arise in the foreseeable future, based on assessment of the probabilities as to whether additional taxes will be due. Where thefinal tax outcome on these matters is different from the amounts that were initially recorded, such differences will impact the income tax
provision in the period in which such determination is made. The income tax provision amounted to €52.6 million as at 31 December 2021
(2020: €37.2 million) and is included in the line ‘Current tax liabilities’ of the consolidated balance sheet.

INTEGRATED ANNUAL REPORT 2021

167

The income tax charge for the years ended 31 December was as follows:
Current tax expense
Deferred tax expense
Income tax expense

2021€ million2020€ million

183.5
3.9
187.4

111.5
67.4
178.9

The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicableto profits of the consolidated entities as follows:2021€ million2020€ million

Profit before tax

734.9

593.9

Tax calculated at domestic tax rates applicable to profits in the respective countries
Additional local taxes in foreign jurisdictions
Tax holidays in foreign jurisdictions
Expenses non-deductible for tax purposes
Income not subject to tax
Changes in tax laws and rates
Movement of accumulated tax losses
Movement of deferred tax asset not recognised
Nigeria tax audit settlement
Other
Income tax expense

155.7
13.0
(5.8)
17.5
(2.5)
3.1
3.2
(0.6)
–
3.8
187.4

119.8
10.3
(6.1)
14.5
(6.9)
(0.4)
3.3
(0.2)
16.5
28.1
178.9

Non-deductible expenses for tax purposes include marketing and advertising expenses, service fees, bad debt provisions, entertainment
expenses, certain employee benefits and other items that, partially or in full, are not deductible for tax purposes in certain of our jurisdictions.
In August 2020, Nigerian Bottling Company Ltd (’NBC’), the Group’s subsidiary in Nigeria, settled the additional tax assessed by the Nigerian
tax authorities (‘FIRS’) following the completion of their income tax audit for the years 2005-2019 and their transfer pricing (’TP’) audit for theyears 2011-2019. The net impact to the income tax expense, following the utilisation of provisions for uncertain tax positions, was €16.5 million,out of which €7.2 million was attributable to the results of the TP audit. As a result of the TP audit, the FIRS adjusted NBC’s profitability,
increasing its taxable base accordingly. This increase of NBC’s taxable base resulted in the elimination of accumulated capital allowances
and to the extent these were not sufficient to offset the full impact of the tax adjustment in a certain year, a tax payment was required to be
made. Following the settlement, the total tax assessed by the FIRS amounted to €62.7 million, of which €7.6 million was settled in cash andthe remaining €55.1 million was settled through the elimination of the deferred tax asset relating to the available capital allowances in NBC.
Deferred tax assets and liabilities presented in the consolidated balance sheet as at 31 December can be further analysed as follows:
Deferred tax assets:
To be recovered after 12 months
To be recovered within 12 months
Gross deferred tax assets
Offset of deferred tax
Net deferred tax assets
Deferred tax liabilities:
To be recovered after 12 months
To be recovered within 12 months
Gross deferred tax liabilities
Offset of deferred tax
Net deferred tax liabilities

2021€ million2020€ million

32.9
71.5
104.4
(73.4)
31.0

34.4
67.8
102.2
(67.1)
35.1(255.0)(16.1)(271.1)
73.4(197.7)(237.6)(12.0)(249.6)67.1(182.5)2021€ million2020€ million(147.4)(3.9)–(15.6)
4.1(3.9)(166.7)(95.0)(67.4)
3.7
(0.4)
(0.3)
12.0
(147.4)

A reconciliation of net deferred tax is presented below:
As at 1 January
Taken to the income statement
Joint arrangement reclassification
Taken to other comprehensive income
Taken directly to equity
Foreign currency translation
As at 31 December

168

COCA-COLA HBC

Notes to the consolidated financial statements continued
10. Taxation continued
The movements in deferred tax assets and liabilities during the year, without taking into consideration the offsetting of balances within the same
tax jurisdiction where applicable, are as follows:

Deferred tax assets
As at 1 January 2020
Joint arrangement reclassification (refer to Note 15)
Taken to the income statement
Taken to other comprehensive income
Taken directly to equity
Transfers between assets/liabilities
Foreign currency translation
As at 31 December 2020
Taken to the income statement
Taken to other comprehensive income
Transfers between assets/liabilities
Foreign currency translation
As at 31 December 2021

Provisions€ million

Pensions andbenefit plans€ million

Tax losses
carry-forward€ million

Book inexcess of tax
depreciation€ million

41.2
(0.1)
(8.6)
–
–
–
(4.1)
28.4
4.4
–
–
0.7
33.5

17.7
(0.2)
(1.0)
1.3
–
(1.6)
(0.1)
16.1
(5.5)
0.6
–
0.1
11.3

1.4
–
0.5
–
–
–
–
1.9
(0.1)
–
–
–
1.8

Deferred tax liabilities
As at 1 January 2020
Joint arrangement reclassification (refer to Note 15)
Taken to the income statement
Taken to other comprehensive income
Transfers between assets/liabilities
Foreign currency translation
As at 31 December 2020
Taken to the income statement
Taken to other comprehensive income
Taken directly to equity
Transfers between assets/liabilities
Foreign currency translation
As at 31 December 2021

Leasing€ million

Other
deferredtax assets€ million

Total€ million

14.9–(64.7)
–
–
56.7
(1.2)
5.7
(0.6)
–
(1.7)
–
3.4

29.0
–
(1.5)
–
–
–
(1.0)
26.5
(2.8)
–
–
0.1
23.8

28.6
–
(2.6)
(0.7)
(0.3)
(0.3)
(1.1)
23.6
7.4
(0.5)
–
0.1
30.6

132.8
(0.3)
(77.9)
0.6
(0.3)
54.8
(7.5)
102.2
2.8
0.1
(1.7)
1.0
104.4

Tax in excess
of book
depreciation€ million

Derivative
instruments€ million

Other
deferred tax
liabilities€ million

Total€ million(206.3)
3.3
7.7–(56.7)
19.2(232.8)(14.5)
–
–
1.7
(3.8)
(249.4)

(1.6)
0.7
0.3
(1.4)
0.6
–
(1.4)
2.1
(9.0)
4.1
–
–
(4.2)

(19.9)
–
2.5
0.4
1.3
0.3
(15.4)
5.7
(6.7)
–
–
(1.1)
(17.5)(227.8)
4.0
10.5
(1.0)
(54.8)
19.5(249.6)(6.7)(15.7)
4.1
1.7
(4.9)
(271.1)

Deferred tax assets recognised for tax losses carry-forward in accordance with the relevant local rules applying in the Group’s jurisdictions
can be analysed as follows:
Attributable to tax losses that expire within five years
Attributable to tax losses that expire after five years
Attributable to tax losses that can be carried forward indefinitely
Recognised deferred tax assets attributable to tax losses

2021€ million2020€ million

0.5
–
1.3
1.8

0.5
0.1
1.3
1.9

The Group has unrecognised deferred tax assets attributable to tax losses that are available to carry forward against future taxable incomeof €28.1 million (2020: €26.9 million). These are analysed as follows:
Attributable to tax losses that expire within five years
Attributable to tax losses that expire after five years
Unrecognised deferred tax assets attributable to tax losses

2021€ million2020€ million

19.5
8.6
28.1

15.3
11.6
26.9

The aggregate amount of distributable reserves arising from the realised earnings of the Group’s operations was €3,111.0 million in 2021
(2020: €2,651.3 million). No deferred tax liabilities have been recognised on such reserves given that their distribution is controlled by theGroup or, in the event of plans to remit overseas earnings of subsidiaries, such distribution would not give rise to a tax liability.

INTEGRATED ANNUAL REPORT 2021

169

11. Earnings per share
Accounting policy
Basic earnings per share is calculated by dividing the net profit attributable to the owners of the parent by the weighted average numberof ordinary shares outstanding during the year. The weighted average number of ordinary shares outstanding during the year is thenumber of ordinary shares outstanding at the beginning of the year, adjusted by the number of ordinary shares bought back or issued
during the year multiplied by a time-weighting factor. Diluted earnings per share incorporates stock options for which the average shareprice for the year is in excess of the exercise price of the stock option and which create a dilutive effect.
The calculation of the basic and diluted earnings per share attributable to the owners of the parent entity is based on the following data:
Net profit attributable to the owners of the parent (€ million)
Weighted average number of ordinary shares for the purposes of basic earnings per share (million)
Effect of dilutive stock options (million)
Weighted average number of ordinary shares for the purposes of diluted earnings per share (million)
Basic earnings per share (€)
Diluted earnings per share (€)

2021

2020

547.2
365.0
1.3
366.3
1.50
1.49

414.9
364.0
1.3
365.3
1.14
1.14

12. Components of other comprehensive income
The components of other comprehensive income for the years ended 31 December comprise:

Cost of hedging (refer to Note 24)
Cash flow hedges (refer to Note 24)
Foreign currency translation gains/(losses)
Valuation loss on equity
investments at fair value throughother comprehensive income
Actuarial gains/(losses)
Share of other comprehensive income/(loss) of equity method investments
Other comprehensive loss

Before tax€ million

2021
Income tax€ million

Net of tax€ million

Before tax€ million

2020
Income tax€ million

Net of tax€ million

(2.7)
69.5
73.6

–
(9.5)
–

(2.7)
60.0
73.6

(2.2)
22.7
(254.9)

–
(2.4)
–

(2.2)
20.3
(254.9)

–
16.1

–
(6.1)

–
10.0

(0.2)
(12.5)

–
2.0

(0.2)
(10.5)

14.6
171.1

–
(15.6)

14.6
155.5(25.4)(272.5)–(0.4)(25.4)(272.9)The foreign currency translation gain for 2021 primarily relates to the Russian Rouble and the Swiss Franc, while the loss from the foreign
currency translation for 2020 primarily related to the Russian Rouble and the Nigerian Naira.

13. Intangible assets
Accounting policy
Intangible assets consist of goodwill, franchise agreements, trademarks and water rights. Goodwill and other indefinite-lived intangible
assets are carried at cost less accumulated impairment losses, while intangible assets with finite lives are amortised over their useful
economic lives. The useful lives, both finite and indefinite, assigned to intangible assets are evaluated on an annual basis.
Intangible assets with indefinite lives (‘not subject to amortisation’)
Intangible assets not subject to amortisation consist of goodwill, franchise agreements and trademarks.
Goodwill is the excess of the consideration transferred over the fair value of the share of net assets acquired. Goodwill and fair value
adjustments arising on the acquisition of subsidiaries are treated as the assets and liabilities of those subsidiaries. These balances aredenominated in the functional currency of the subsidiary and are translated to Euro on a basis consistent with the other assets andliabilities of the subsidiary.
The useful life of franchise agreements is usually based on the term of the respective franchise agreements. The Coca-Cola Company
does not grant perpetual franchise rights outside the United States. However, given the Group’s strategic relationship with The CocaCola Company and consistent with past experience, the Group believes that franchise agreements will continue to be renewed at each
expiration date with no significant costs. The Group has concluded that the franchise agreements are perpetual in nature and they havetherefore been assigned indefinite useful lives.
The Group’s trademarks are assigned an indefinite useful life when they have an established sales history in the applicable region,
it is the intention of the Group to receive a benefit from them indefinitely and there is no indication that this will not be the case.
Goodwill and other indefinite-lived intangible assets are tested for impairment annually and whenever there is an indication of impairment.

170

COCA-COLA HBC

Notes to the consolidated financial statements continued
13. Intangible assets continued
Accounting policy continued
Intangible assets with indefinite lives (‘not subject to amortisation’) continued
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from thebusiness combination in which the goodwill arose. Other indefinite-lived intangible assets are also allocated to the Group’s cash-generating
units expected to benefit from those intangibles. The cash-generating units (‘unit’) to which goodwill and other indefinite-lived intangible
assets have been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired.
If the recoverable amount (i.e. the higher of the value-in-use and fair value less costs to sell) of the cash-generating unit is less than the
carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit andthen pro rata to the other assets of the unit on the basis of the carrying amount of each asset in the unit. Impairment losses recognised
against goodwill are not reversed in subsequent periods.
Intangible assets with finite lives
Intangible assets with finite lives mainly consist of water rights and certain brands, are amortised over their useful economic lives and are
carried at cost less accumulated amortisation and impairment losses. Intangible assets with finite lives are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Critical accounting estimates
Determining whether goodwill or indefinite-lived intangible assets are impaired requires an estimation of the value-in-use of the
cash‑generating units to which they have been allocated in order to determine the recoverable amount of the cash-generating units.
The value-in-use calculation requires the Group to estimate the future cash flows expected to arise from the cash-generating unit,
discounted at an appropriate rate. Estimating the future cash flows involves a significant degree of uncertainty.
The movements in intangible assets by classes of assets during the year are as follows:

Cost
As at 1 January 2020
Disposals
Foreign currency translation
As at 31 December 2020
Amortisation
As at 1 January 2020
Charge for the year
Disposals
As at 31 December 2020
Net book value as at 1 January 2020
Net book value as at 31 December 2020
Cost
As at 1 January 2021
Additions (refer to Note 15)
Arising from business combinations (refer to Note 23)
Foreign currency translation
As at 31 December 2021
Amortisation
As at 1 January 2021
Charge for the year
As at 31 December 2021
Net book value as at 1 January 2021
Net book value as at 31 December 2021

Goodwill€ million

Franchiseagreements€ million

Trademarks€ million

Other intangible
assets€ million

Total€ million

1,956.1(38.4)(31.1)
1,886.6

146.4
–
(1.6)
144.8

187.1
(42.3)
(7.5)
137.3

27.6
(12.7)(0.1)
14.8

2,317.2(93.4)(40.3)
2,183.5

182.4
–
–
182.4
1,773.7
1,704.2

–
–
–
–
146.4
144.8

9.3
0.5
(2.6)
7.2
177.8
130.1

20.1
0.4
(12.7)
7.8
7.5
7.0

211.8
0.9
(15.3)
197.4
2,105.4
1,986.1

1,886.6
16.4
1.0
37.7
1,941.7

144.8
–
–
–
144.8

137.3
–
–
–
137.3

14.8
–
3.1
–
17.9

2,183.5
16.4
4.1
37.7
2,241.7

182.4
–
182.4
1,704.2
1,759.3

–
–
–
144.8
144.8

7.2
0.4
7.6
130.1
129.7

7.8
0.6
8.4
7.0
9.5

197.4
1.0
198.4
1,986.1
2,043.3

Disposals of goodwill and trademarks in 2020 relate to the impact from the reorganisation of Multon (refer to Note 15), while the amountof €12.7 million relates to the write-off of fully amortised finite-lived other intangible assets.
Additions of goodwill in 2021 are attributable to the demerger of the Group’s mineral water and adult sparkling beverages integral joint venture
in Italy as well as the formation of a joint operation in Romania, amounting to €15.6 million and €0.8 million respectively (refer to Note 15).

INTEGRATED ANNUAL REPORT 2021

171

Intangible assets not subject to amortisation amounted to €2,028.9 million (2020: €1,973.8 million), and are presented in the charts below:
2021

2020

€2,028.9 million€1,973.8 million

Goodwill€1,759.3m
Franchise agreements€144.8m
Trademarks€124.8m

Goodwill
Franchise agreements
Trademarks€1,704.2m€144.8m€124.8m

The carrying value of intangible assets subject to amortisation amounted to €14.4 million (2020: €12.3 million) and comprised water rightsof €6.4 million, trademarks of €4.9 million and other intangible assets of €3.1 million (2020: €7.0 million water rights, €5.3 million trademarksand €nil other intangible assets).

Impairment tests for goodwill and other indefinite-lived intangible assets
The recoverable amount of each cash-generating unit was determined through a value-in-use calculation. That calculation uses cash flow
projections based on financial budgets approved by the Board of Directors covering a one-year period and cash projections for four additional
years. Cash flows for years two to five were projected by management based on operation and market-specific high-level assumptions including
growth rates, discount rates and forecast selling prices and direct costs. Management determined gross margins based on past performance,
expectations for the development of the market and expectations about raw material costs. Management has also considered the key
impacts from the COVID-19 pandemic when determining the relevant assumptions and has found them to be limited considering thebusiness’s strong performance throughout the development of the pandemic across the Group’s territories and the reopening of global
economies along with vaccination programmes’ progress. Management also considered the potential adverse impact arising fromclimate change on the cost of water, under different climate scenarios. The growth rates used in perpetuity reflect the forecasts in linewith management beliefs. These forecasts exceeded, in certain cases, those expected for the industry in general, due to the strength ofour brand portfolio. Management estimates discount rates using rates that reflect current market assessments of the time value of money
and risks specific to the countries of operation. The Group applies post-tax discount rates to post-tax cash flows, as the valuation calculatedusing this method closely approximates to applying pre-tax discount rates to pre-tax cash flows.
No impairment of goodwill and other indefinite-lived assets was identified from the impairment tests of 2021 and 2020.
The following table sets forth the carrying value of goodwill and other indefinite-lived intangible assets for those cash-generating units whosecarrying value is greater than 10% of the total, as at 31 December 2021.

Italy
Switzerland
The Republic of Ireland and Northern Ireland
Koncern Bambi a.d. Požarevac
All other cash-generating units
Total

Goodwill€ million

Franchiseagreements€ million

Trademarks€ million

Total€ million

640.9
443.9
253.4
115.0
306.1
1,759.3

126.9
–
–
–
17.9
144.8

–
–
–
118.3
6.5
124.8

767.8
443.9
253.4
233.3
330.5
2,028.9

172

COCA-COLA HBC

Notes to the consolidated financial statements continued
13. Intangible assets continued
The carrying value percentage of intangible assets not subject to amortisation as at 31 December 2021 for the above cash-generating units
is presented in the below graph. Also, for the above cash-generating units, cash flows beyond the five-year period (the period in perpetuity)
have been extrapolated using the following estimated growth and discount rates:
Intangible assets not subject toamortisation as at 31 December 2021 (%)

Italy
Switzerland
The Republic of Ireland
and Northern Ireland
Koncern Bambi a.d. Požarevac
Other

Growth rate in perpetuity (%)
2021
2020

Italy
Switzerland
The Republic of Ireland
and Northern Ireland
Koncern Bambi a.d. Požarevac

Discount rate (%)
2021

2020

1.5
0.9

0.9
0.9

6.5
5.7

7.1
6.3

4.0
4.5

4.0
4.5

5.6
6.6

6.3
7.7

38%
22%
12%
12%
16%

Sensitivity analysis
In the cash-generating unit of Italy, which held €767.8 million of goodwill and franchise agreements as at 31 December 2021, possible
changes in key assumptions of the 2021 impairment test would remove the remaining headroom. As at 31 December 2021, the recoverable
amount of the Italian cash-generating units calculated based on value-in-use exceeded the carrying value by €427.8 million; changes per
assumption that would eliminate remaining headroom are summarised in the table below:

Italy

Average grossprofit margin

Growth rate inperpetuity

Discount rate

300bps250bps200bps

As at 31 December 2021, the recoverable amount of the Nigerian cash-generating unit calculated based on value-in-use significantly
exceeded its carrying value. As a result, the key assumptions of the Nigerian cash-generating unit’s impairment test that were disclosed
as at 31 December 2020, are not sensitive to possible changes to a degree that would remove the remaining headroom.
The Group will continue to closely monitor these cash-generating units in order to ensure that timely actions and initiatives are undertaken
to minimise potential adverse impact on their expected performance, particularly in relation to potential currency volatility in Nigeria.

14. Property, plant and equipment
Accounting policy
All property, plant and equipment is initially recorded at cost and subsequently measured at cost less accumulated depreciation andimpairment losses. Subsequent expenditure is added to the carrying value of the asset when it is probable that future economic benefits,
in excess of the original assessed standard of performance of the existing asset, will flow to the operation and the costs can be measured
reliably. All other subsequent expenditure is expensed in the period in which it is incurred.
Assets under construction are recorded as part of property, plant and equipment and depreciation on these assets commences when
the assets are made available for use.
Depreciation is calculated on a straight-line basis to allocate the depreciable amount over the estimated useful life of the assets as follows:
Freehold buildings and improvements
40 years
Leasehold buildings and improvements
Over the lease term, up to 40 years
Production equipment
4 to 20 years
Vehicles
5 to 8 years
Computer hardware and software
3 to 10 years
Marketing equipment
3 to 10 years
Fixtures and fittings
8 years
Returnable containers
3 to 12 years

INTEGRATED ANNUAL REPORT 2021

173

Accounting policy continued
Freehold land is not depreciated as it is considered to have an indefinite life.
Deposits received for returnable containers by customers are accounted for as deposit liabilities (refer to Note 20).
Residual values and useful lives of assets are reviewed and adjusted if appropriate at each balance sheet date.
Property, plant and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds
its recoverable amount, which is the higher of the asset’s fair value less cost to sell and its value-in-use. For the purposes of assessing
impairment, assets are grouped at the lowest level of separately identifiable cash flows.
For the accounting policy regarding right-of-use assets refer to Note 16 ‘Leases’.
The movements of property, plant and equipment by class of asset are as follows:

Cost
As at 1 January 2020
Additions
Disposals1
Reclassified from assets held for sale (refer to Note 19)
Reclassified to assets held for sale (refer to Note 19)
Reclassifications
Foreign currency translation
As at 31 December 2020
Depreciation and impairment
As at 1 January 2020
Charge for the year
Impairment
Disposals1
Reclassified from assets held for sale (refer to Note 19)
Reclassified to assets held for sale (refer to Note 19)
Foreign currency translation
As at 31 December 2020
Net book value as at 31 December 2020
excluding right-of-use assets
Net book value of right-of-use assets
as at 31 December 2020
Net book value as at 31 December 2020
Cost
As at 1 January 2021
Additions2
Arising from business combinations (refer to Note 23)
Disposals
Reclassified to assets held for sale (refer to Note 19)
Reclassifications
Foreign currency translation
As at 31 December 2021
Depreciation and impairment
As at 1 January 2021
Charge for the year
Impairment
Disposals
Reclassified to assets held for sale (refer to Note 19)
Foreign currency translation
As at 31 December 2021
Net book value as at 31 December 2021
excluding right-of-use assets
Net book value of right-of-use assets
as at 31 December 2021
Net book value as at 31 December 2021

Land andbuildings€ million

Plant andequipment€ million

Returnablecontainers€ million

Assets underconstruction€ million

Total€ million

1,490.4
4.7(18.8)–(3.1)
54.1(114.6)
1,412.7

3,807.9
111.7(202.6)
3.9
(0.7)
202.6
(325.8)3,597.0

425.1
36.9(17.3)–––(24.0)
420.7

123.5
351.7
(3.5)
–
–
(256.7)(15.2)
199.8

5,846.9505.0(242.2)3.9(3.8)–(479.6)
5,630.2

496.9
42.0
3.9
(7.4)
–
(2.0)
(34.8)
498.6

2,564.0
247.7
10.7(180.4)3.8(0.7)(204.3)2,440.8

247.0
27.6
0.8
(10.4)
–
–
(9.9)
255.1

1.0
–
0.2
–
–
–
–
1.2

3,308.9
317.3
15.6(198.2)3.8(2.7)(249.0)3,195.7914.1

1,156.2

165.6

198.6

2,434.5

71.9
986.0

110.2
1,266.4

–
165.6

–
198.6

182.1
2,616.6

1,412.7
7.6
–
(9.2)
–
90.8
28.1
1,530.0

3,597.0
137.0
1.3(166.8)
(1.8)
247.7
76.2
3,890.6

420.7
40.9
–
(12.3)
–
–
1.6
450.9

199.8
297.1
–
(0.1)
–
(338.5)0.8
159.1

5,630.2482.6
1.3(188.4)
(1.8)
–
106.7
6,030.6

498.6
42.9
1.0
(2.1)
–
11.8
552.2

2,440.8
206.5
4.0(165.4)(1.7)
50.1
2,534.3

255.1
27.6
0.5
(9.7)
–
0.6
274.1

1.2
–
0.5
–
–
–
1.7

3,195.7277.0
6.0(177.2)(1.7)
62.5
3,362.3

977.8

1,356.3

176.8

157.4

2,668.3

63.2
1,041.0

99.4
1,455.7

–
176.8

–
157.4

162.6
2,830.9

1. Disposals line for 2020 includes €29.8 million on a net book value basis regarding the impact of the reorganisation of Multon (refer to Note 15).
2. Additions line for 2021 includes €13.8 million on a net book value basis regarding the impact of the demerger of the Group’s mineral water and adult sparking beverages integral joint
venture in Italy (refer to Note 15).

174

COCA-COLA HBC

Notes to the consolidated financial statements continued
14. Property, plant and equipment continued
Assets under construction at 31 December 2021 include advances for equipment purchases of €41.8 million (2020: 32.6 million).
The depreciation charge for the year, including that for right-of-use assets (refer to Note 16), recognised in operating expenses and costof goods sold amounted to €181.4 million (2020: €194.0 million) and €148.9 million (2020: €178.5 million) respectively.

Impairment of property, plant and equipment
In 2020, the Group recorded impairment losses of €6.0 million, €2.5 million and €9.9 million and reversals of impairment of €0.3 million,€0.1 million and €2.4 million relating to property, plant and equipment in the Established, Developing and Emerging segments respectively.
The impaired assets, being mainly buildings and production equipment, were written down based mainly on value-in-use calculations.
In 2021, the Group recorded impairment losses of €3.7 million, €0.9 million and €3.8 million and reversals of impairment of €0.2 million,€0.3 million and €1.9 million relating to property, plant and equipment in the Established, Developing and Emerging segments respectively.
The impaired assets, being mainly buildings and production equipment, were written down based mainly on value-in-use calculations.

15. Interests in other entities
List of principal subsidiaries
The following are the principal subsidiaries of the Group as at 31 December:% of voting rights
2021
2020

Country of registration

AS Coca-Cola HBC Eesti
CCB Management Services GmbH
CCHBC Armenia CJSC
CCHBC Bulgaria AD
CCHBC Insurance (Guernsey) Limited1
CCHBC IT Services Limited
CCHBC Reinsurance Designated Activity Company
CCH CirculaRPET S.r.l.2
Coca-Cola HBC Austria GmbH
Coca-Cola Beverages Belorussiya
Coca-Cola Beverages Ukraine Ltd
Coca-Cola Imbuteliere Chisinau SRL
Coca-Cola HBC B-H d.o.o. Sarajevo
Coca-Cola HBC Česko a Slovensko, s.r.o.
Coca-Cola HBC Česká a Slovensko, s.r.o. – organizačná zložka
Coca-Cola HBC Cyprus Ltd
Coca-Cola HBC Finance B.V.
Coca-Cola HBC Greece S.A.I.C.
Coca-Cola HBC Holdings B.V.
Coca-Cola HBC Hrvatska d.o.o.
Coca-Cola HBC Hungary Ltd
Coca-Cola HBC Ireland Limited
Coca-Cola HBC Italia S.r.l.
Coca-Cola HBC Kosovo L.L.C.
Coca-Cola HBC Northern Ireland Limited
Coca-Cola HBC Polska sp. z o.o.
Coca-Cola HBC Romania Ltd
Coca-Cola HBC Services MEPE
Coca-Cola HBC Slovenija d.o.o.
Coca-Cola HBC Sourcing B.V.
Coca-Cola HBC Switzerland Ltd
Coca-Cola HBC-Srbija d.o.o.
Coca-Cola Hellenic Bottling Company-Crna Gora d.o.o., Podgorica
Coca-Cola Hellenic Business Service Organisation
Coca-Cola Hellenic Procurement GmbHCC Beverages Holdings II B.V.
Koncern Bambi a.d. Požarevac
LLC Coca-Cola HBC Eurasia
Nigerian Bottling Company Ltd
SIA Coca-Cola HBC Latvia
UAB Coca-Cola HBC Lietuva

Estonia
Austria
Armenia
Bulgaria
Guernsey
Bulgaria
Republic of Ireland
Italy
Austria
Belarus
UkraineMoldova
Bosnia and Herzegovina
Czech Republic
Slovakia
CyprusThe Netherlands
GreeceThe Netherlands
Croatia
Hungary
Republic of Ireland
Italy
KosovoNorthern Ireland
PolandRomania
GreeceSlovenia
The Netherlands
Switzerland
SerbiaMontenegro
Bulgaria
Austria
The Netherlands
SerbiaRussiaNigeria
LatviaLithuania

100.0%
100.0%
100.0%
99.4%–
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
99.9%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%

1. CCHBC Insurance (Guernsey) Limited was placed under liquidation as at 31 December 2020 and dissolved on 19 February 2021.
2. CCH CirculaRPET S.r.l. was established on 3 May 2021.

100.0%
100.0%
100.0%
99.4%
100.0%
100.0%
100.0%–
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
99.9%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%% ownership
2021
2020

100.0%
100.0%
100.0%
99.4%–
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
99.9%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%

100.0%
100.0%
100.0%
99.4%
100.0%
100.0%
100.0%–
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
99.9%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%

INTEGRATED ANNUAL REPORT 2021

175

Associates and joint arrangements
Accounting policies
Equity method investments comprise investments in associates and joint arrangements and are classified into integral and non-integral
on the basis of whether they are considered part of the Group’s core operations and strategy.
Investments in associates
Investments in associated undertakings are accounted for by the equity method of accounting. Associated undertakings are all entities
over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% to 50% of thevoting rights.
The equity method of accounting involves recognising the Group’s share of the associates’ post-acquisition profit or loss and movements
in other comprehensive income for the period in the income statement and other comprehensive income respectively. Unrealised gains
and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the associate.
The Group’s interest in each associate is carried in the balance sheet at an amount that reflects its share of the net assets of the associate
and includes goodwill on acquisition. When the Group’s share of losses in an associate equals or exceeds its interest in the associate,
the Group does not recognise further losses, unless the Group has incurred obligations or made payments on behalf of the associate.
Investments in joint arrangements
Joint arrangements are arrangements in which the Group has contractually agreed sharing of control, which exists only when decisions
about the relevant activities require unanimous consent. Joint arrangements are classified as joint ventures or joint operations depending
upon the rights and obligations arising from the joint arrangement.
The Group classifies a joint arrangement as a joint venture when the Group has rights to the net assets of the arrangement. The Groupaccounts for its interests in joint ventures using the equity method of accounting as described in the section above.
The Group classifies a joint arrangement as a joint operation when the Group has the rights to the assets, and obligations for the liabilities,of the arrangement and accounts for each of its assets, liabilities, revenues and expenses, including its share of those held or incurred
jointly, in relation to the joint operation.
If facts and circumstances change, the Group reassesses whether it still has joint control and whether the type of joint arrangementin which it is involved has changed.

Critical accounting judgements
The Group participates in several joint arrangements. Judgement is required in order to determine their classification as a joint venture
where the Group has rights to the net assets of the arrangement, or a joint operation where the Group has rights to the assets andobligations for the liabilities of the arrangement. In making this judgement, consideration is given to the legal form of the arrangement,
and the contractual terms and conditions, as well as other facts and circumstances (including the economic rationale of the arrangement
and the impact of the legal framework).

a) Equity method investments
Changes in the carrying amounts of equity method investments are as follows:
As at 1 January 2020
Additions
Decrease
Share of results of equity method investments
Share of other comprehensive income of equity method investments
Share of total comprehensive income
Dividends
As at 31 December 2020
Additions
Decrease
Share of results of equity method investments
Share of other comprehensive income of equity method investments
Share of total comprehensive income
Return of capital
Dividends
As at 31 December 2021

Associates€ million

Joint ventures€ million

Total€ million

29.2
2.4
–
3.3
(4.0)
(0.7)
(1.3)
29.6
88.0
–
3.2
–
3.2
–
(1.9)
118.9

119.3
194.3
(1.7)
21.4
(21.4)–(27.8)
284.1–(34.6)
34.4
14.6
49.0
(6.1)
(45.5)
246.9

148.5
196.7
(1.7)
24.7
(25.4)(0.7)(29.1)
313.7
88.0(34.6)
37.6
14.6
52.2
(6.1)
(47.4)
365.8

176

COCA-COLA HBC

Notes to the consolidated financial statements continued
15. Interests in other entities continued
The carrying amount of equity method investments as at 31 December 2021 comprises integral and non-integral equity method
investments as follows:Integral equity method investments
Non-integral equity method investments
Total equity method investments

Associates€ million

Joint ventures€ million

Total€ million

–
118.9
118.9

242.7
4.2
246.9

242.7
123.1
365.8

Associates
Additions in 2020 regarding associates relate to acquisitions of non-integral associates in our Established segment for a total considerationof €2.4 million, including acquisition costs of €0.2 million.
Frigoglass Industries (Nigeria) Limited, a non-integral associate in which the Group holds an effective interest of 23.9% (2020: 23.9%) throughits subsidiary Nigerian Bottling Company Ltd, is guarantor under the amended banking facilities and notes issued by the Frigoglass Group,
as part of the debt restructuring of the latter. The Group has no direct exposure arising from this guarantee arrangement, but the Group’s
investment in this associate, which stood at €25.2 million as at 31 December 2021 (31 December 2020: €23.9 million), would be at potential
risk if there was a default under the terms of the amended banking facilities or the notes and the Frigoglass Group (including the guarantor)
was unable to meet its obligations thereunder.
On 7 October 2021, the Group acquired a 30% equity shareholding in Casa Del Caffè Vergnano S.p.A. (‘Caffè Vergnano’), a premium Italiancoffee company. The Group also entered into an exclusive distribution agreement for Caffè Vergnano’s products in all its territories outsideof Italy. The corresponding investment was classified as an associate in accordance with the requirements of IAS 28 ‘Investments in
Associates and Joint Ventures’ since the terms of the transaction give the Group significant influence over the investee. The investment
is accounted for using the equity method and was further classified as a non-integral equity method investment in the consolidated financial
statements of the Group, considering that the distribution agreement was separate to the shareholding. The total consideration paid
amounted to €87.0 million, including acquisition costs of €0.1 million, and was presented in the line ‘Payments for acquisition of non-integral
equity method investments’ within the consolidated cash flow statement, while acquisition costs of €1.0 million were incurred but not yet
paid as at 31 December 2021. Consideration and acquisition costs were presented in the line ‘Additions‘ of the table above detailing 2021
changes in the carrying amounts of equity method investments.
Joint ventures
In January 2021, a demerger of Acque Minerali S.r.l., our mineral water and adult sparkling beverages integral joint venture with The CocaCola Company in Italy, was completed. As part of the demerger, certain operating activities were transferred to the Group, resulting in therecognition of €15.6 million of goodwill and €14.0 million of property, plant and equipment, including right-of-use assets, as part of theGroup’s Italian cash-generating unit (refer to Note 13 and Note 14 respectively) and the decrease in equity method investments, by €34.6
million, presented in the line ‘Decrease’ within the table above detailing 2021 changes in the carrying amounts of equity method investments.
There was no significant impact on the Group’s net assets or income statement from this transaction. Also, there was no cash flow impact
for the Group as a result of the transaction.

Investments in joint ventures
The Group has a 50% interest in the Multon Z.A.O. group of companies (‘Multon’), which is engaged in the production and distribution of juices
in Russia and is jointly controlled by the Group and The Coca-Cola Company. The joint arrangement was initially classified as a joint operation,
as it provided to the Group and The Coca-Cola Company rights to the assets and obligations for the liabilities of the joint arrangement.
On 6 May 2020, following the completion of Multon’s reorganisation, the joint arrangement was reclassified from a joint operation to
an integral joint venture, as the new structure gives the Group and The Coca-Cola Company rights to the joint arrangement’s net assets.
As a result, the Group derecognised its share of the joint arrangement’s assets and liabilities with a corresponding increase in equity method
investments of €194.1 million, presented in the line ‘Additions’ of the table above detailing changes in the carrying amount of equity method
investments for 2020. No gain or loss was recognised in the 2020 consolidated income statement as a result of the above reorganisation.
More specifically, intangible assets, property, plant and equipment (excluding right-of-use assets) and right-of-use assets decreasedby €78.1 million, €29.8 million and €1.1 million respectively in 2020 as a result of the above reorganisation (refer to Note 13 and Note 14
respectively). In addition, the decrease of cash and cash equivalents resulting from the reorganisation of Multon, amounting to €13.1 million,
was reported in the line ‘Joint arrangement reclassification’ within investing activities in the 2020 consolidated cash flow statement.
Apart from Multon, the Group has a significant joint venture with Heineken, through its 50% interest in AD Pivara Skopje which is engaged
in the bottling and distribution of soft drinks and beer in North Macedonia. The joint venture was previously conducted through a numberof legal entities, being the BrewTech B.V. group of companies. BrewTech B. V. was incorporated in the Netherlands and the Group owned
50% of its share capital, up to its liquidation on 31 December 2021. As a result of the liquidation, BrewTech B.V.’s interest in AD Pivara Skopje
was transferred by way of liquidation proceeds to its direct shareholders, being the Group and Heineken. The structure of the joint venture
provides the Group with rights to its net assets.

INTEGRATED ANNUAL REPORT 2021

177

Summarised financial information of the Group’s significant joint ventures are as follows (the information below reflects the amountpresented in the IFRS financial statements of the joint venture, and not the Group’s share in those amounts):
2021€ million2020€ million

5.1
137.9
143.0
9.0
54.1
131.5
194.6
(76.0)(76.0)
(7.4)
254.2

56.5
123.9
180.4
3.4
20.8
111.6
135.8
(52.8)(52.8)(7.0)
256.4

Summarised statement of comprehensive income:Revenue
Depreciation
Interest income
Interest expense
Profit before tax
Income tax expense
Profit after tax
Other comprehensive income
Total comprehensive income
Dividends received and capital returns (refer to Note 27)

417.0
(5.4)
7.7
(1.5)
65.0
(12.6)
52.4
29.0
81.4
34.8

367.3
(7.4)
11.8
(4.6)
62.0
(12.8)
49.2(105.0)(55.8)
25.8

Reconciliation of net assets to carrying amount:
Closing net assets
Interest in joint venture at 50%
Goodwill
Carrying value

254.2
127.1
37.6
164.7

256.4
128.2
34.7
162.9

Multon Z.A.O. group of companies
Summarised balance sheet:
Non-current loans to related parties
Other non-current assets
Non-current assets
Cash and cash equivalents
Current loans to related parties
Other current assets
Total current assets
Other current liabilities (including trade payables)
Total current liabilities
Non-current other liabilities
Net assets

Following the reorganisation, the Group’s share of results and share of other comprehensive income of the Multon joint venture for 2020
amounted to €16.4 million income and €21.6 million loss respectively.
2021€ million2020€ million

56.7
0.2
–
13.6
13.8
(20.7)
(0.7)
49.1

53.9
2.5
10.0
9.5
22.0
(15.7)(0.8)
59.4

Summarised statement of comprehensive income:Revenue
Depreciation
Profit before tax
Income tax expense
Profit after tax
Total comprehensive income
Dividends received (refer to Note 27)

79.3
(5.3)
17.2
(2.0)
15.2
15.2
13.0

66.0
(5.7)
15.0
(1.8)
13.2
13.2
1.3

Reconciliation of net assets to carrying amount:
Closing net assets
Interest in joint venture at 50%
Goodwill
Non-controlling interest
Carrying value

49.1
24.6
16.9
(1.6)
39.9

59.4
29.7
16.9
(1.6)
45.0

AD Pivara Skopje1
Summarised balance sheet:
Non-current assets
Cash and cash equivalents
Current loans to related parties
Other current assets
Total current assets
Total current liabilities
Non-current other liabilities
Net assets

1. Figures for 2020 relate to the BrewTech B.V. group of companies, which refers to the previous structure of the joint venture as described above.

178

COCA-COLA HBC

Notes to the consolidated financial statements continued
15. Interests in other entities continued
Summarised financial information for the Group’s investment in other joint ventures is as follows:2021€ million2020€ million

42.3
0.6
0.1
0.7

76.2
(1.6)
0.2
(1.4)

Carrying amount
Share of profit
Share of other comprehensive income
Share of total comprehensive incomeb) Joint operations
Other joint operations of the Group with The Coca-Cola Company comprise mainly a 50% interest in each of the water businesses listed
below, which are engaged in the production and distribution of water in the respective countries.
Country

Joint operation

Country

Joint operation

Austria
Italy
Romania
Baltics

Römerquelle
Fonti del Vulture
Dorna
Neptuno Vandenys

PolandSwitzerland
SerbiaMultivita
ValserVlasinka

In addition, in April 2021 the Group acquired a 50% interest in Stockday S.R.L., an online business-to-business platform and distributor
in Romania, which was up until that point wholly owned by HEINEKEN Romania S.A. The transaction resulted in the two shareholders jointly
controlling Stockday S.R.L. The joint arrangement was classified as a joint operation in accordance with the requirements of IFRS 11 ‘Joint
arrangements‘, as it provides to the shareholders rights to the assets and obligations for the liabilities of the joint arrangement. As a resultof the above transaction, goodwill of €0.8 million was recognised within the Group’s Emerging segment (refer to Note 13).

16. Leases
Accounting policy
Leases for which the Group is in a lessee position are recognised as a right-of-use asset and a corresponding lease liability at the date
at which the lease asset is available for use by the Group. Assets and liabilities arising from a lease are initially measured on a net-presentvalue basis and are recognised as part of ‘Property, plant and equipment’, ‘Current borrowings’ and ‘Non-current borrowings’ in the
consolidated balance sheet respectively.
Lease contracts may contain both lease and non-lease components. The Group allocates the consideration in the contract to thelease and non-lease components respectively. Consideration relevant to the non-lease component is recognised as an expensein the consolidated income statement over the period of the lease.
Lease liabilities include the net present value of the following lease payments:a) fixed payments (including in-substance fixed payments) over the lease term, less any lease incentives receivable;b) variable lease payments that are based on an index or a rate;c) amounts expected to be payable by the lessee under residual value guarantees;d) the exercise price of a purchase option if the Group is reasonably certain it will exercise that option; ande) payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against theright-of-use asset.
Variable lease payments that do not depend on an index or a rate are recognised as an expense in the period in which the event or condition
that triggers the payment occurs.
The lease payments are discounted using the interest rate implicit in the lease (if that rate can be determined), or the incremental borrowing
rate of the lease, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similarvalue in a similar economic environment with similar terms, security and conditions. In determining the incremental borrowing rate to be
used, the Group applies judgement to establish the suitable reference rate and credit spread.
Each lease payment is allocated between the liability (principal) and finance cost. The interest expense is charged to the consolidated
income statement as part of ‘Finance cost’ over the lease period so as to produce a constant periodic rate of interest on the remainingbalance of the liability for each period.
Right-of-use assets are measured at cost comprising the following:a) the amount of the initial measurement of lease liability;b) any lease payments made at or before the commencement date less any lease incentives received;c) any initial direct costs; andd) any restoration costs.
The right-of-use assets are depreciated over the shorter of the assets’ useful life and the lease term on a straight-line basis. If the Groupis reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.

INTEGRATED ANNUAL REPORT 2021

179

Accounting policy continued
The Group utilises a number of practical expedients permitted by the standard, namely:
1) applying the recognition exemption to short-term leases (i.e. leases with a term of 12 months or less) that do not contain a purchase
option; and2) applying the recognition exemption to leases of underlying assets with a low value, which mainly comprise IT equipment.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in the
consolidated income statement.
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an
extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in thelease term if the lease is reasonably certain to be extended (or not terminated). The assessment is revised if a significant event or a significant
change in circumstances occurs, which affects this assessment and which is within the control of the lessee.
Lease payments are presented as follows in the consolidated cash flow statement:• short-term lease payments, payments for leases of low-value assets and variable lease payments that are not included in themeasurement of the lease liabilities are presented within cash flows from operating activities;• payments for the interest element of recognised lease liabilities are included in ’Interest paid’ within cash flows from financing activities;
and• payments for the principal element of recognised lease liabilities are presented within cash flows from financing activities.

Leasing activities
The leases which are recorded on the consolidated balance sheet are principally in respect of vehicles and buildings. Lease terms are negotiatedon an individual basis and contain a wide range of different terms and conditions.
Extension and termination options are included in a number of leases across the Group. These are used to maximise operational flexibility
in terms of managing the assets used in the Group’s operations. Extension options considered reasonably certain to be exercised relate bothto buildings and motor vehicles and do not exceed six and three years respectively. Most termination options have not been consideredreasonably certain to be exercised.
The Group’s carrying amount of lease liability is presented below as at 31 December:
Current lease liability
Non-current lease liability
Total lease liability (refer to Note 25)

2021€ million2020€ million

50.9
109.4
160.3

54.8
129.4
184.2

2021
€ million2020€ million

10.4
31.6
42.0

17.4
36.2
53.6

2021
€ million2020€ million

19.5
33.8
53.3

19.4
35.8
55.2

2021
€ million2020€ million

15.1
1.4
7.4

15.5
1.3
5.1

For the carrying amount of right-of-use assets per class of underlying asset, refer to Note 14.
The Group’s additions to right-of-use assets for the years ended 31 December are as follows:
Land and buildings
Plant and equipment
Total additions
The consolidated income statement includes the following amounts relating to depreciation of right-of-use assets:
Land and buildings
Plant and equipment
Total depreciation charge
The following expenses have been included in cost of goods sold and operating expenses:
Expense relating to short-term leases
Expense relating to leases of low-value assets
Expense relating to variable lease payments

Interest expense on leases in 2021 was €9.9 million (2020: €11.4 million) and is recorded within ‘Finance costs’ (refer to Note 9).
The total cash outflow for leases in 2021 was €91.0 million (2020: €87.6 million).
Expenses relating to short-term leases in 2021 and 2020 comprise consideration for leases with a term of 12 months or less used to coverseasonal business needs.

180

COCA-COLA HBC

Notes to the consolidated financial statements continued
17. Inventories
Accounting policy
Inventories are stated at the lower of cost and net realisable value.
Cost for raw materials and consumables is determined on a weighted average basis. Cost for work in progress and finished goods
comprises the cost of direct materials and labour plus attributable overhead costs. Cost of inventories includes all costs incurred to bring
the product to its present location and condition.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs necessary to complete
and sell the inventory.
Inventories consisted of the following as at 31 December:
Finished goods
Raw materials and work in progress
Consumables
Total inventories

2021€ million2020€ million

244.0
208.0
67.8
519.8

182.9
175.7
59.0
417.6

The amount of inventories recognised as an expense during 2021 was €3,420.4 million (2020: €2,839.6 million). During 2021, provision for
obsolete inventories recognised as an expense amounted to €16.2 million (2020: €23.9 million), whereas provision reversed in the year
amounted to €0.6 million (2020: €0.6 million).

18. Trade, other receivables and assets
Accounting policies
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are
initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method. The normal credit
terms are between 7-90 days upon delivery.
The Group applies the IFRS 9 simplified approach for trade and other receivables and follows an Expected Credit Losses (‘ECLs’) approachfor measuring the allowance of its trade receivables. The expected loss rate is assessed on the basis of historical credit losses of 24 months
before the year end and adjusted to reflect current and forward-looking information. ECLs are based on the difference between thecontractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive. The carrying amountof the receivable is reduced by the loss allowance, which is recognised as part of operating expenses. If a trade receivable ultimately
becomes uncollectible, it is written off initially against any loss allowance made in respect of that receivable with any excess recognisedas part of operating expenses. Subsequent recoveries of amounts previously written off or loss allowance no longer required are credited
against operating expenses.
As of July 2020, the Group has entered into a contract that provides insurance coverage against defaulted trade receivables.
This contract meets the definition of a financial guarantee contract, which is in substance part of the contract terms (that is, integral
to the trade receivables) and is not recognised separately. Therefore, the expected cash flows from the credit insurance are includedin the measurement of ECLs of trade receivables.
Loans are initially recognised at the fair value net of transaction costs incurred. After initial recognition, all interest-bearing loans aresubsequently measured at amortised cost. Amortised cost is calculated using the effective interest rate method whereby any discount,premium or transaction costs associated with a loan are amortised to the income statement over the lending period.
Trade, other receivables and assets consisted of the following as at 31 December:

Trade receivables
Receivables from related parties (refer to Note 27)
Loans receivable
Receivables from sale of property, plant and equipment
Loans and advances to employees
Other receivables
Total trade and other receivables
Prepayments
Pension plan assets (refer to Note 21)
Non-current income tax receivable
VAT and other taxes receivable
Total other assets
Total trade, other receivables and assets

Current assets
2021€ million2020€ million

705.5
60.4
0.5
0.5
6.0
89.3
862.2
69.4
–
–
17.0
86.4
948.6

558.7
47.8
1.8
0.9
7.4
71.8
688.4
61.4
–
–
24.1
85.5
773.9

Non-current assets
2021€ million

0.1
–
1.0
–
–
–
1.1
10.4
42.0
16.3
–
68.7
69.8

2020
€ million

0.9
–
0.5
–
–
–
1.4
21.2
21.0
36.9
–
79.1
80.5

An amount of €43.9 million (2020: €31.3 million) included in ‘Other receivables’ relates to receivables from brand partners in the saleand distribution of premium spirits and energy drinks.
Non-current trade receivables relate to renegotiated receivables, which are expected to be settled within the new contractual due date.
Refer to Note 22 for offsetting impact on trade receivables.

INTEGRATED ANNUAL REPORT 2021

181

Trade receivables
Trade receivables classified as current assets consisted of the following as at 31 December:
Trade receivables
Less: Loss allowance
Total trade receivables

2021€ million2020€ million

781.6(76.1)
705.5

646.5(87.8)
558.7

The ageing analysis of trade receivables classified as current assets is as follows:2021€ million

Within due date
Past due – up to three months
Past due – three to six months
Past due – six to nine months
Past due – more than nine months
Total trade receivables

2020€ millionGrosscarrying
amountLossallowanceTradereceivables

Grosscarrying
amountLossallowanceTradereceivables

636.7
54.2
6.9
3.3
80.5
781.6

(2.9)
(1.2)
(1.0)
(1.0)
(70.0)(76.1)

633.8
53.0
5.9
2.3
10.5
705.5

500.3
35.4
7.5
2.7
100.6
646.5

(2.4)
(2.1)
(1.4)
(0.8)
(81.1)(87.8)

497.9
33.3
6.1
1.9
19.5
558.7

2021
€ million2020€ million(87.8)
14.7
3.7
(6.1)
(0.6)
(76.1)(93.2)
5.5
5.5
(7.9)
2.3
(87.8)

2021€ million2020€ million

57.3
3.3
(0.2)
60.4

44.5
3.6
(0.3)
47.8

2021
€ million2020€ million

57.2
2.6
0.4
–
0.2
60.4

44.5
2.3
0.3
0.1
0.6
47.8

2021
€ million2020€ million

3.7
–
1.4
5.1

2.8
0.1
1.2
4.1

The movement in the loss allowance during the year is as follows:
As at 1 January
Amounts written off during the year
Amounts recovered during the year
Increase in allowance recognised in income statement
Foreign currency translation
As at 31 December

Receivables from related parties
The related party receivables, net of the loss allowance, are as follows:
Within due date
Past dueLess: Loss allowance
Total related party receivables
The ageing analysis of these receivables is as follows:
Within due date
Past due – up to three months
Past due – three to six months
Past due – six to nine months
Past due – more than nine months
Total

Net impairment
Net impairment loss on trade and other receivables recognised in the income statement is analysed as follows:
Trade receivables
Receivables from related parties
Other receivables and assets
Net impairment loss

182

COCA-COLA HBC

Notes to the consolidated financial statements continued
19. Assets classified as held for sale
Accounting policy
Non-current assets and disposal groups are classified as held for sale if it is considered highly probable that their carrying amount will be
principally recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the saleis highly probable and the asset (or disposal group) is available for immediate sale in its present condition. In order for a sale to be consideredhighly probable, management must be committed to a plan to sell the asset, an active programme to locate a buyer and complete theplan must have been initiated, and the sale must be expected to be completed within one year from the date of classification.
In the event that the criteria for continued classification as held for sale are no longer met, the assets are reclassified to property, plantand equipment and the depreciation charge is adjusted for the depreciation that would have been recognised had the assets not beenclassified as held for sale.
Non-current assets and disposal groups classified as held for sale are measured at the lower of the individual assets’ previous carrying
amount and their fair value less costs to sell.
As at 31 December 2021, the Group’s assets classified as held for sale amounted to €0.1 million (2020: €nil), comprising the net book value ofplant and equipment in our Emerging segment that has been written down to fair value less costs to sell (refer to Note 14). The fair value of
assets classified as held for sale was determined through the use of a sales comparison approach and is a non-recurring fair value
measurement within level 3 of the fair value hierarchy.

20. Trade and other payables
Accounting policy
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method.
Trade and other payables consisted of the following as at 31 December:
Trade payables
Accrued liabilities
Payables to related parties (refer to Note 27)
Deposit liabilities
Other tax and social security liabilities
Salaries and employee-related payables
Contract liabilities (refer to Note 7)
Other payables
Total trade and other payables

2021€ million2020€ million

678.3
565.6
326.1
92.6
126.0
56.9
11.8
28.5
1,885.8

583.2
427.1
285.2
78.6
84.9
45.8
10.5
27.5
1,542.8

The Group facilitates a supply chain financing programme under which the supplier can elect on an invoice-by-invoice basis to receivea discounted early payment from the partner bank or continue to be paid in line with the agreed payment terms; in either case the value
and due date of the liability payable by the Group remain unchanged and, as such, the liability remains classified as trade and other payables.
At 31 December 2021, invoices included in the programme amounted to €139.9 million (2020: €90.9 million).
Accrued liabilities regarding volume, marketing and promotional incentives as well as listing fees and other incentives provided to customers
as at 31 December 2021 amounted to €239.9 million (2020: €200.7 million).

INTEGRATED ANNUAL REPORT 2021

183

21. Provisions and employee benefits
Provisions and employee benefits consisted of the following as at 31 December:2021€ million2020€ million

Current:
Employee benefits
Restructuring provisions
Other provisions
Total current provisions and employee benefits

115.2
23.6
18.4
157.2

66.2
26.0
7.4
99.6

Non-current:
Employee benefits
Restructuring provisions
Other provisions
Total non-current provisions and employee benefits
Total provisions and employee benefits

115.5
1.2
2.1
118.8
276.0

110.8
–
2.5
113.3
212.9

a) Provisions
Accounting policy
Provisions are recognised when: the Group has a present obligation (legal or constructive) as a result of a past event; it is probable thatan outflow of resources embodying economic benefits will be required to settle the obligation; and a reliable estimate can be madeof the amount of the obligation.
Where the Group expects a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised
as a separate asset only when such reimbursement is virtually certain.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date or wheneveran employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlierof the following dates: a) when the Group can no longer withdraw the offer of those benefits; and b) when the Group recognises costs
for a restructuring that is within the scope of IAS 37 ‘Provisions, contingent liabilities and contingent assets’ and involves the paymentof termination benefits (refer to Note 8). In the case of an offer made to encourage voluntary redundancy, the termination benefits aremeasured based on the number of employees expected to accept the offer.
The movements in restructuring and other provisions comprise:2021€ million
Restructuringprovision
Other provisions

As at 1 January
Arising during the year
Utilised during the year
Unused amount reversed
Foreign currency translation
As at 31 December

26.0
21.7
(21.5)
(1.4)
–
24.8

Other provisions primarily comprise provisions in relation to employee litigation and legal provisions.

9.9
13.5
(2.8)
(0.1)
–
20.5

2020
€ million
Restructuringprovision
Other provisions

14.6
21.5
(9.2)
(0.6)
(0.3)
26.0

12.0
4.9
(4.9)
(1.9)
(0.2)
9.9

184

COCA-COLA HBC

Notes to the consolidated financial statements continued
21. Provisions and employee benefits continuedb) Employee benefits
Accounting policies
The Group operates a number of defined benefit and defined contribution pension plans in its territories.
The defined benefit plans are made up of both funded and unfunded pension plans and employee leaving indemnities. The assets of fundedplans are generally held in separate trustee-administered funds and are financed by payments from employees and/or the relevantGroup companies.
The liability recognised in the balance sheet in respect of defined benefit plans is the present value of the defined benefit obligation at thebalance sheet date less the fair value of the plan assets.
For defined benefit pension plans, pension costs are assessed using the projected unit credit method. Actuarial gains and losses arisingfrom experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive incomein the period in which they arise. Such actuarial gains and losses are not reclassified to the income statement in subsequent periods.
The defined benefit obligations are measured at the present value of the estimated future cash outflows using interest rates of high-quality
corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the termsof the related obligation. In countries where there is no deep market in such bonds, the market rates on government bonds are used.
Past service cost is recognised immediately in the income statement. A number of the Group’s operations have other long-service benefits
in the form of jubilee plans. These plans are measured at the present value of the estimated future cash outflows with immediate recognitionof actuarial gains and losses in the income statement.
The Group’s contributions to the defined contribution pension plans are charged to the income statement in the period to which thecontributions relate.

Critical accounting estimates
The Group provides defined benefit pension plans as an employee benefit in certain territories. Determining the value of these plans requires
several actuarial assumptions and estimates about discount rates, future salary increases and future pension increases. Due to thelong-term nature of these plans, such estimates are subject to significant uncertainty.
Employee benefits consisted of the following as at 31 December:Defined benefit plans:
Employee leaving indemnities
Pension plans
Long-service benefits (jubilee plans) and other benefits
Total defined benefit plans
Other employee benefits:
Annual leave
Other employee benefits
Total other employee benefits
Total employee benefits obligations

2021€ million2020€ million

78.9
6.2
12.1
97.2

72.2
7.7
12.0
91.9

9.7
123.8
133.5
230.7

4.4
80.7
85.1
177.0

Other employee benefits primarily comprise employee bonuses which are linked to business and individual performance metrics.
Employees of Coca-Cola HBC’s subsidiaries in Austria, Bulgaria, Croatia, Greece, Italy, Montenegro, Nigeria, Poland, Romania, Serbia
and Slovenia are entitled to employee leaving indemnities, generally based on each employee’s length of service, employment category
and remuneration. These are unfunded plans where the Company meets the payment obligation as it falls due.
Coca-Cola HBC’s subsidiaries in Austria, Northern Ireland, the Republic of Ireland and Switzerland sponsor defined benefit pension plans.
Of the three plans in the Republic of Ireland, two have plan assets, as do the two plans in Northern Ireland, and one plan out of the three in
Switzerland. The Austrian plans do not have plan assets and the Company meets the payment obligation as it falls due. The defined benefit
plans in Austria, Republic of Ireland and Northern Ireland are closed to new members.
Coca-Cola HBC provides long-service benefits in the form of jubilee plans to its employees in Austria, Croatia, Nigeria, Poland, Serbia,
Slovenia and Switzerland.
Defined benefit obligation by segment is as follows for the years ended 31 December:
2021

€2.1m
€73.6m2020€2.3m€72.7mEstablished

Developing€21.5m Total €97.2m€16.9m Total €91.9m

Emerging

The average duration of the defined benefit obligations is 18 years and the total employer contributions expected to be paid in 2022
are €10.4 million.

INTEGRATED ANNUAL REPORT 2021

185

The reconciliation of plan assets and plan liabilities for the years ended 31 December is as follows:

As at 1 January 2020
Current service cost
Past service cost
Administrative expenses
Curtailment/settlement
Interest income/(expense)
Actuarial losses
Total income/(expense) recognised in income statement
Loss from change in demographic assumptions
Loss from change in financial assumptions
Experience adjustments
Return on plan assets excluding interest income
Total remeasurements recognised in other comprehensive income
Benefits paid
Employer’s contributions
Participant’s contributions
Net increase in defined benefit obligation from other movements
Foreign currency translation
As at 31 December 2020
Current service cost
Past service cost
Administrative expenses
Curtailment/settlement
Interest income/(expense)
Actuarial gains
Total expense recognised in income statement
Gain from change in demographic assumptions
Gain from change in financial assumptions
Experience adjustments
Return on plan assets excluding interest income
Total remeasurements recognised in other comprehensive income
Benefits paid
Employer’s contributions
Participant’s contributions
Net increase in defined benefit obligation from other movements
Foreign currency translation
As at 31 December 2021

Plan assets€ million

Plan liabilities€ million

Net (deficit) /surplus€ million

458.2
–
–
(0.2)
(3.2)
3.6
–
0.2
–
–
–
26.9
26.9
(24.8)
20.7
4.9
–
(4.8)
481.3
–
–
(0.3)
(16.4)
2.3–(14.4)
–
–
–
34.6
34.6
(23.1)
16.4
4.6
–
20.0
519.4

(532.9)
(9.9)
9.1
–
2.5
(5.6)
(0.4)
(4.3)
(6.1)
(35.0)
13.5–(27.6)
24.7
–
(4.9)
(0.3)
7.2
(538.1)(10.8)
(1.6)
–
14.2
(4.0)
0.6
(1.6)
1.4
16.0
(2.4)
–
15.0
23.1
–
(4.6)
(0.7)
(19.4)(526.3)(74.7)
(9.9)
9.1
(0.2)
(0.7)
(2.0)
(0.4)
(4.1)
(6.1)
(35.0)
13.5
26.9
(0.7)
(0.1)
20.7
–
(0.3)
2.4
(56.8)(10.8)
(1.6)
(0.3)
(2.2)
(1.7)
0.6
(16.0)
1.4
16.0
(2.4)
34.6
49.6
–
16.4
–
(0.7)
0.6
(6.9)

2021
€ million2020€ million

519.4(14.1)(33.5)
(0.7)
471.1

481.3
(2.3)
(11.8)
–
467.2

2021
€ million2020€ million

434.1(519.4)(85.3)
92.2
48.3
55.2
42.0
97.2

452.6
(481.3)(28.7)
85.5
14.1
70.9
21.0
91.9

The effect of the asset ceiling on plan assets and net deficit for the years ended 31 December is as follows:
Fair value of plan assets at 1 January excluding asset ceiling
Opening unrecognised asset due to the asset ceiling
Change in asset ceiling recognised in other comprehensive income
Exchange rate gain
Fair value of plan assets at 31 December including asset ceiling

Present value of funded obligations
Fair value of plan assets
Defined benefit obligations of funded plans
Present value of unfunded obligations
Unrecognised asset due to asset ceiling
Defined benefit obligations
Plus: Amounts recognised within non-current assets (refer to Note 18)
Total defined benefit obligations

186

COCA-COLA HBC

Notes to the consolidated financial statements continued
21. Provisions and employee benefits continued
Funding levels are monitored, in conjunction with the agreed contribution rate. The funding level of the funded plans as at 31 December 2021
was 109% (2020: 103%).
Five of the plans have funded status surplus totalling €42.0 million as at 31 December 2021 (2020: five plans, totalling €21.0 million) thatis recognised as an asset on the basis that the Group has an unconditional right to future economic benefits either via a refund or a reduction
in future contributions.
Defined benefit plan expense is included in employee costs and presented in cost of goods sold and operating expenses.
The assumptions (weighted average for the Group) used in computing the defined benefit obligation comprised the following for the years
ended 31 December:
Discount rate
Rate of compensation increase
Rate of pension increase
Life expectancy for pensioners at the age of 65 in years:
Male
Female

2021
%

2020
%

1.2
2.5
1.0

0.7
2.2
0.8

22
24

22
24

Asset liability matching: Plan assets allocated to growth assets are monitored regularly to ensure they remain appropriate and in line with theGroup’s long-term strategy to manage the plans. As the plans mature, the level of investment risk will be reduced by investing more in assets
such as bonds that better match the liabilities.
Pension plan assets are invested in different asset classes in order to maintain a balance between risk and return. Investments are welldiversified to limit the financial effect of the failure of any individual investment. Through its defined benefit plans the Group is exposed
to a number of risks, as outlined below:• Asset volatility: The liabilities are calculated using a discount rate set with reference to corporate bond yields; if assets underperform
this yield, a deficit will be created. The Northern Ireland, Republic of Ireland and Swiss plans hold a significant proportion of growth assets(equities) which are expected to outperform corporate bonds in the long term while being subject to volatility and risk in the short term.
• Changes in bond yields: A decrease in corporate bond yields will increase the plan liabilities, although this will be partially offset by anincrease in the value of the plans’ bond holdings. Conversely an increase in corporate bond yields will decrease the plan liabilities, although
this will be partially offset by a decrease in the value of the plans’ bond holdings.
• Inflation: The Northern Ireland, Republic of Ireland and Swiss plans’ benefit obligations are linked to inflation, and higher inflation will leadto higher liabilities (although, in most cases, caps on the level of inflationary increases are in place to protect against extreme inflation).
The majority of the assets are either unaffected by or only loosely correlated with inflation, meaning that an increase in inflation will also
increase the deficit.
• Life expectancy: The majority of the pension plans’ obligations are to provide benefits for the life of the member, so increases in life
expectancy will result in an increase in the liabilities.
The sensitivity analysis presented below is based on a change in an individual assumption while all other assumptions remain constant.
Impact on defined benefit obligation as at
31 December 2021
Increase in
Decrease inassumption
assumption

Change inassumptions

Discount rate

50bps

8.2%

9.4%

Rate of compensation increase

50bps

1.8%

1.5%

Rate of pension increase

50bps

5.2%

4.9%

Life expectancy

1 year2.8%

2.8%

INTEGRATED ANNUAL REPORT 2021

187

Plan assets are invested as follows:
Assets category 2021 (%)

Equity securities – Eurozone
Equity securities – Non-Eurozone
Government bonds – Eurozone
Corporate bonds – Eurozone
Corporate bonds – Non-Eurozone
Real estate
Cash
Other

Assets category 2020 (%)

3%
22%
30%
10%
10%
11%
1%
13%

Equity securities – Eurozone
Equity securities – Non-Eurozone
Government bonds – Eurozone
Corporate bonds – Eurozone
Corporate bonds – Non-Eurozone
Real estate
Cash
Other

3%
25%
27%
4%
16%
11%
1%
13%

The assets of funded plans are generally held in separately administered trusts, either as specific assets or as a proportion of a general fund,or are insurance contracts. Plan assets held in trust are governed by local regulations and practice in each country. The category ‘Other’ mainly
includes investments in funds holding a portfolio of assets. Plan assets relate predominantly to quoted financial instruments.
Equity securities were not invested in ordinary shares of the Company as at 31 December 2021 or 31 December 2020.

Defined contribution plans
The expense recognised in the income statement in 2021 for the defined contribution plans is €19.4 million (2020: €18.8 million).
This is included in employee costs and recorded in cost of goods sold and operating expenses.

22. Offsetting financial assets and financial liabilities
Accounting policy
The Group offsets financial assets and financial liabilities to the net amount reported in the balance sheet when it currently has a legally
enforceable right to offset the recognised amounts and it intends to settle on a net basis or to realise the asset and settle the liability
simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal courseof business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.
The Group enters into derivative transactions under International Swaps and Derivatives Association (ISDA) master netting agreements orother similar agreements. In general, under such agreements the counterparties can elect to settle as one single net amount the aggregatedamounts owed by each counterparty on a single day with respect to all outstanding transactions of the same currency and the same typeof derivative. In the event of default or early termination, all outstanding transactions under the agreement are terminated and subject to any
set-off. These agreements do not meet all of the IAS 32 criteria for offsetting in the balance sheet as the Group does not have any current
legally enforceable right to offset amounts since the right can only be applied if elected by both counterparties.
The financial assets and financial liabilities presented below are subject to offsetting, enforceable master netting or similar agreements.
The column ‘Net amount’ shows the impact on the Group’s balance sheet assuming all set-off rights are exercised.
Financial liabilities offset against trade receivables mainly relate to accrued customer rebates.

188

COCA-COLA HBC

Notes to the consolidated financial statements continued
22. Offsetting financial assets and financial liabilities continueda) Financial assets
As at 31 December 2021
Related amounts
not set off in thebalance sheet
Gross amounts ofGross amounts of recognised financial
recognised
liabilities set off in
financial assets
the balance sheet€ million€ million

Derivative financial assets
Cash and cash equivalents
Other financial assets (excluding loans to related partiesand derivatives)
Trade receivables
Total

Net amounts offinancial assets
presented in thebalance sheet€ million

Financial
instruments€ million

Net amount€ million

48.2
782.8

–
–

48.2
782.8

(8.1)
–

40.1
782.8

834.9
764.0
2,429.9–(58.5)(58.5)

834.9
705.5
2,371.4

–
–
(8.1)

834.9
705.5
2,363.3

As at 31 December 2020
Related amounts
not set off in thebalance sheet

Derivative financial assets
Cash and cash equivalents
Other financial assets (excluding loans to related partiesand derivatives)
Trade receivables
Total

Gross amounts ofrecognised
financial assets€ million

Gross amounts ofrecognised financial
liabilities set off inthe balance sheet€ million

Net amounts offinancial assets
presented in thebalance sheet€ million

Financial
instruments€ million

Net amount€ million

16.2
1,215.8––

16.2
1,215.8

(0.7)
–

15.5
1,215.8

92.9
611.0
1,935.9–(52.3)(52.3)

92.9
558.7
1,883.6

–
–
(0.7)

92.9
558.7
1,882.9b) Financial liabilities
As at 31 December 2021
Related amounts
not set off in thebalance sheet
Gross amounts ofGross amounts of recognised financial
recognised
assets set off in
financial liabilities
the balance sheet€ million€ million

Derivative financial liabilities
Trade payables
Total

14.6
736.8
751.4

–
(58.5)(58.5)Net amounts offinancial liabilities
presented in thebalance sheet€ million

Financial
instruments€ million

Net amount€ million

14.6
678.3
692.9

(8.1)
–
(8.1)

6.5
678.3
684.8

As at 31 December 2020
Related amounts
not set off in thebalance sheet

Derivative financial liabilities
Trade payables
Total

Gross amounts ofrecognised
financial liabilities€ million

Gross amounts ofrecognised financial
assets set off inthe balance sheet€ million

Net amounts offinancial liabilities
presented in thebalance sheet€ million

Financial
instruments€ million

Net amount€ million

11.3
635.5
646.8

–
(52.3)(52.3)

11.3
583.2
594.5

(0.7)
–
(0.7)

10.6
583.2
593.8

INTEGRATED ANNUAL REPORT 2021

189

23. Business combinations
Accounting policy
The acquisition method of accounting is used to account for business combinations. The consideration transferred is the fair value of any
asset transferred, shares issued and liabilities assumed. The consideration transferred includes the fair value of any asset or liability resulting
from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed are measured
initially at their fair values at the acquisition date. The excess of the consideration transferred and the fair value of non-controlling interest
over the net assets acquired and liabilities assumed is recorded as goodwill. Acquisition costs comprise costs incurred to effect a businesscombination, such as finder’s, advisory, legal, accounting, valuation and other professional or consulting fees. Integration costs comprise
direct incremental costs necessary for the acquiree to operate within the Group. All acquisition and integration-related costs are
expensed as incurred.
For each business combination, the Group elects to measure the non-controlling interest in the acquiree either at fair value or at the
proportionate share of the acquiree’s identifiable net assets.
Refer also to Note 2 for accounting policy regarding basis of consolidation.
On 31 October 2021, the Group acquired a self-serve coffee vending business in Poland (the ‘Costa Express Business’). The acquisition
was of a group of assets that constituted a business, which have been integrated into the Group’s operations in Poland. Consideration paid
for the acquisition amounted to €5.6 million and is included in the line ‘Payments for business combinations’ of the consolidated cash
flow statement. As a result of the above acquisition, other intangible assets of €3.1 million, goodwill of €1.0 million and property, plant andequipment of €1.3 million were recorded in the Group’s Developing segment (refer to Note 13 and Note 14 respectively). Acquisition-related
costs of €0.4 million were included in the 2021 operating expenses, as a result of the above acquisition (refer to Note 8).
In addition, acquisition and integration costs of €13.9 million incurred in 2021 regarding the acquisition of Coca-Cola Bottling Companyof Egypt S.A.E. (refer to Note 8 and Note 31) were included in operating expenses.

24. Financial risk management and financial instruments
Accounting policies
Financial assets

On initial recognition, financial assets are recorded at fair value plus, in the case of financial assets not at fair value through profit or loss
(FVTPL), any directly attributable transaction costs. Transaction costs of financial assets at FVTPL are expensed.
Financial assets are classified into three categories:a) Financial assets at amortised cost (debt instruments)
The classification of debt instruments at amortised cost depends on two criteria: a) the Group’s business model for managing assets andb) whether the instruments’ contractual cash flows represent solely payments for principal and interest on the principal amount outstanding(the ‘SPPI criterion‘). If both criteria are met, the financial assets of the Group are subsequently measured at amortised cost whereby any
interest income is recognised using the effective interest method. This category includes trade receivables, treasury bills and time
deposits. The accounting policy for trade receivables is described in Note 18.
b) Financial assets through other comprehensive income (FVOCI)The Group also has investments in financial assets at FVOCI. These include equity investments that are not of a trading nature and which
are subsequently recorded at fair value. The Group intends to hold these equity instruments for the foreseeable future and has irrevocably
elected to classify them as FVOCI upon initial recognition. Subsequently, there is no recycling of gains or losses to profit or loss
on derecognition.
c) Financial assets through profit or loss (FVTPL)The Group also has investments in financial assets at FVTPL which are subsequently measured at fair value and where changes in fair value
are recognised in the income statement. Financial assets at FVTPL mainly comprise money market funds.
For those financial assets that are not subsequently held at fair value, the Group assesses whether there is evidence of impairment at eachbalance sheet date.
Derivative financial instruments

The Group uses derivative financial instruments, including currency, commodity and interest rate derivatives, to manage currency,
commodity price and interest rate risk associated with the Group’s underlying business activities. The Group does not enter into
derivative financial instruments for trading activity purposes.
All derivative financial instruments are initially recognised on the balance sheet at fair value and are subsequently remeasured at their fairvalue. Changes in the fair value of derivative financial instruments are recognised at each reporting date either in the income statement
or in equity, depending on whether the derivative financial instrument qualifies for hedge accounting as a cash flow hedge.
Embedded derivatives in financial host contracts are recorded at fair value through profit or loss together with the host contracts.
All derivative financial instruments that are not part of an effective hedging relationship (undesignated hedges) are classified as assets
or liabilities at fair value through profit or loss.

190

COCA-COLA HBC

Notes to the consolidated financial statements continued
24. Financial risk management and financial instruments continued
Accounting policies continued

Derivative financial instruments continued

At the inception of a hedge transaction, the Group documents the relationship between the hedging instrument and the hedged item,
as well as its risk management objective and strategy for undertaking the hedge transaction. This process includes linking the derivative
financial instrument designated as a hedging instrument to the specific asset, liability, firm commitment or forecast transaction.
The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risks of the hedging instruments are
identical to the hedged risks component. The economic relationship between the hedged item and the hedging instrument is assessedon an ongoing basis. Ineffectiveness may arise if the timing or the notional value of the forecast transaction changes or if the credit riskchanges, impacting the fair value movements of the hedging instruments.
Changes in the fair value of derivative financial instruments (both the intrinsic value and the aligned time value) that are designated andeffective as hedges of future cash flows are recognised directly in other comprehensive income and the ineffective portion is recognised
immediately in the income statement. Amounts accumulated in equity are recycled to the income statement as the related hedged asset
acquired or liability assumed affects the income statement.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, exercised, or no longer qualifies for hedge
accounting. At that time, any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecast
transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferredto the income statement.
Derivatives embedded in non-financial host contracts are accounted for as separate derivatives and recorded at fair value if:• their economic characteristics and risks are not closely related to those of the host contracts;• the host contracts are not designated as at fair value through profit or loss; and• a separate instrument with the same terms as the embedded derivative meets the definition of a derivative.
These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only
occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required,or a reclassification of a financial asset out of the fair value through profit or loss.
Regular purchases and sales of investments are recognised on the trade date, which is the day the Group commits to purchase or sell.
The investments are recognised initially at fair value plus transaction costs, except in the case of FVTPL. For investments traded in active
markets, fair value is determined by reference to stock exchange quoted bid prices. For other investments, fair value is estimated byreference to the current market value of similar instruments or by reference to the discounted cash flows of the underlying net assets.

Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, commodity price risk and interest raterisk), credit risk, liquidity risk and capital risk. The Group’s overall risk management programme focuses on the volatility of financial markets
and seeks to minimise potential adverse effects on the Group’s cash flows. The Group uses derivative financial instruments to hedge certain
risk exposures. Risk management is carried out by Group Treasury in a controlled manner, consistent with the Board of Directors’ approved
policies. Group Treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s subsidiaries. The Boardof Directors has approved the Treasury Policy which provides the control framework for all treasury and treasury-related transactions.

Market riska) Foreign currency risk
The Group is exposed to the effect of foreign currency risk on future transactions, recognised monetary assets and liabilities that are
denominated in currencies other than the local entity’s functional currency, as well as net investments in foreign operations. Foreign currency
forward, option and futures contracts are used to hedge a portion of the Group’s foreign currency risk. The majority of the foreign currency
forward, option and futures contracts have maturities of less than one year after the balance sheet date.
Management has set up a policy that requires Group companies to manage their foreign exchange risk against their functional currency.
To manage their foreign exchange risk arising from future transactions and recognised monetary assets and liabilities, entities in the Groupuse foreign currency forward, option and future contracts transacted by Group Treasury. Group Treasury’s risk management policy is tohedge, on an average coverage ratio basis, between 25% and 80% of anticipated cash flows for the next 12 months by using a layer strategy,
and 100% of balance sheet remeasurement risk in each major foreign currency for which hedging is applicable. Each subsidiary designates
contracts with Group Treasury as fair value hedges or cash flow hedges, as appropriate. External foreign exchange contracts are designatedat Group level as hedges of foreign exchange risk on specific monetary assets, monetary liabilities or future transactions on a gross basis.
The impact of COVID-19 has been considered, in relation to the Group’s cash flow hedges, in determining that the hedged forecast cash
flows remain highly probable for the next 12 months.
The following tables present details of the Group’s sensitivity to reasonably possible increases and decreases in the Euro and US Dollar
against the relevant foreign currencies. In determining reasonable possible changes, the historical volatility over a 12-month period of therespective foreign currencies in relation to the Euro and the US Dollar has been considered. The sensitivity analysis determines the potential
gains and losses in the income statement or equity arising from the Group’s foreign exchange positions as a result of the corresponding
percentage increases and decreases in the Group’s main foreign currencies relative to the Euro and the US Dollar. The sensitivity analysis
includes outstanding foreign-currency-denominated monetary items, external loans, and loans between operations within the Group where
the denomination of the loan is in a currency other than the functional currency of the local entity.

INTEGRATED ANNUAL REPORT 2021

191

2021 exchange risk sensitivity to reasonably possible changes in the Euro against relevant other currencies% historicalvolatility over a
12-month period

Nigerian Naira
Russian Rouble
UK Sterling
Ukrainian Hryvnia
Other
Total

16.03%
9.90%
5.23%
6.80%
–

Euro strengthens against
local currency
Loss/(gain)
in income(Gain)/loss
statementin equity€ million€ million

6.2
(0.7)
0.9
0.3
(0.2)
6.5

Euro weakens against
local currency(Gain)/loss
in incomeLoss/(gain)
statementin equity€ million€ million

–
(0.2)
–
–
(1.5)
(1.7)

(8.5)
0.9
(1.0)
(0.2)
(0.2)
(9.0)

–
0.3
–
–
1.7
2.0

2021 exchange risk sensitivity to reasonably possible changes in the US Dollar against relevant other currencies% historicalvolatility over a
12-month periodEuro
Nigerian Naira
Russian Rouble
Other
Total

5.72%
5.89%
9.86%
–

US Dollar strengthens against
local currency(Gain)/loss
in income(Gain)/loss
statementin equity€ million€ million

(1.8)
0.6
0.1
(0.4)
(1.5)

–
–
(3.2)
–
(3.2)

US Dollar weakens against
local currency
Loss/(gain)
in incomeLoss/(gain)
statementin equity€ million€ million

2.0
(0.5)
(0.1)
0.4
1.8

–
–
3.9
–
3.9

2020 exchange risk sensitivity to reasonably possible changes in the Euro against relevant other currencies% historicalvolatility over a
12-month period

Nigerian Naira
Russian Rouble
UK Sterling
Ukrainian Hryvnia
Other
Total

12.39%
21.02%
8.91%
10.48%–

Euro strengthens against
local currency
Loss/(gain)
in income(Gain)/loss
statementin equity€ million€ million

0.6
1.0
(0.2)
0.6
(1.2)
0.8

–
(0.7)
0.7
–
(3.2)
(3.2)

Euro weakens against
local currency(Gain)/loss
in incomeLoss/(gain)
statementin equity€ million€ million

(0.8)
(1.4)
0.4
(0.7)
1.4
(1.1)

–
1.1
(0.9)
–
3.6
3.8

2020 exchange risk sensitivity to reasonably possible changes in the US Dollar against relevant other currencies% historicalvolatility over a
12-month periodEuro
Nigerian Naira
Russian Rouble
Other
Total

7.57%
13.23%
19.48%–US Dollar strengthens against
local currency
Loss/(gain)
in income(Gain)/loss
statementin equity€ million€ million

2.0
5.0
–
(0.2)
6.8

–
–
(3.9)
–
(3.9)

US Dollar weakens against
local currency(Gain)/loss
in incomeLoss/(gain)
statementin equity€ million€ million

(2.3)
(6.6)
(0.1)
0.3
(8.7)

–
–
5.7
–
5.7

b) Commodity price risk
The Group is affected by the volatility of certain commodity prices (being mainly sugar, aluminium, aluminium premium, plastic and gas oil)in relation to certain raw materials necessary for the production of the Group’s products.
Due to the significantly increased volatility of commodity prices, the Group’s Board of Directors has developed and enacted a risk
management strategy regarding commodity price risk and its mitigation. Although the Group continues to contract prices with suppliers inadvance, to reduce its exposure to the effect of short-term changes in the price of sugar, aluminium, aluminium premium, gas oil and plastic,
the Group hedges the market price of sugar, aluminium, aluminium premium, plastic and gas oil using commodity swap contracts based ona rolling forecast for a period up to 36 months. Group Treasury’s risk management policy is to hedge a minimum of 25% and a maximumof 80% of commodity exposure for the next 12 months, with the exception of certain types of plastic for which lower compliance ratios apply.
The following table presents details of the Group’s income statement and equity sensitivity to increases and decreases in sugar, aluminium,
aluminium premium, plastic and gas oil prices. The table does not show the sensitivity to the Group’s total underlying commodity exposureor the impact of changes in volumes that may arise from an increase or decrease in the respective commodity prices. The sensitivity analysis
determines the potential effect on profit or loss and equity arising from the Group’s commodity swap contract positions as a result of thereasonably possible increases or decreases of the respective commodity prices.

192

COCA-COLA HBC

Notes to the consolidated financial statements continued
24. Financial risk management and financial instruments continued
2021 commodity price risk sensitivity to reasonably possible changes in the price of relevant commodities% historicalvolatility over a
12-month period percontract maturity

Sugar
Aluminium
Aluminium premium
Gas oil
Plastic
Total

20.8%
24.1%
46.1%
31.3%
27.0%

Commodity price increases withall other variables held constant(Gain)/loss
in income(Gain)/loss
statementin equity€ million€ million

(0.4)
(0.8)
(0.2)
–
(25.7)(27.1)(22.6)(19.8)
(3.0)
(5.6)
–
(51.0)

Commodity price decreases withall other variables held constant
Loss/(gain)
in incomeLoss/(gain)
statementin equity€ million€ million

0.4
0.8
0.2
–
25.7
27.1

22.6
19.8
3.0
5.6
–
51.0

2020 commodity price risk sensitivity to reasonably possible changes in the price of relevant commodities% historicalvolatility over a
12-month period percontract maturity

Sugar
Aluminium
Aluminium premium
Gas oil
Plastic
Total

20.1%
16.6%
43.4%
59.8%
26.3%

Commodity price increases withall other variables held constant(Gain)/loss
in income(Gain)/loss
statementin equity€ million€ million

(0.2)
(0.4)
–
–
(8.9)
(9.5)

(13.1)
(6.7)
(0.7)
(5.6)
–
(26.1)

Commodity price decreases withall other variables held constant
Loss/(gain)
in incomeLoss/(gain)
statementin equity€ million€ million

0.2
0.4
–
–
8.9
9.5

13.1
6.7
0.7
5.6
–
26.1

c) Interest rate risk
The sensitivity analysis in the following table has been determined based on exposure to interest rates of both derivative and non-derivative
instruments existing at the balance sheet date and assuming constant foreign exchange rates. For floating rate liabilities, the analysis isprepared assuming the amount of liability outstanding at the balance sheet date was outstanding for the whole year. A 50 basis point increaseor decrease for 2021 (2020: 50 basis point) represents management’s assessment of a reasonably possible change in interest rates.
Interest rate risk sensitivity to reasonably possible changes in interest rates
Loss/(gain) in income statement
2021
2020
€ million€ million

Increase in basis points
Decrease in basis points

0.2
(0.2)

0.4
(0.4)

Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its obligations under
the contract or arrangement. The Group has limited concentration of credit risk across trade and financial counterparties. Credit policies
are in place and the exposure to credit risk is monitored on an ongoing basis.
The Group’s maximum exposure to credit risk in the event that counterparties fail to meet their obligations at 31 December 2021 in relation
to each class of recognised financial assets is the carrying amount of those assets as indicated on the balance sheet.
Under the credit policies, before accepting any new credit customers the Group investigates the potential customer’s credit quality,
using either external agencies, in some cases bank references and/or historic experience, and defines credit limits for each customer.
Customers that fail to meet the Group’s benchmark credit quality may transact with the Group only on a prepayment or cash basis.
Customers are reviewed on an ongoing basis and credit limits are adjusted accordingly. There is no significant concentration of credit risk
with regard to loans, trade and other receivables as the Group has a large number of customers who are geographically dispersed.
The Group has policies that limit the amount of credit exposure to any single financial institution. The Group only undertakes investment
and derivative transactions with banks and financial institutions that have a minimum credit rating of ‘BBB-’ from Standard & Poor’s and ‘Baa3’
from Moody’s, unless the investment is in a country where the sovereign credit rating is below BBB-/Baa3. The Group also uses credit default
swaps of a counterparty in order to measure in a timelier way the creditworthiness of a counterparty and set up its counterparties in tiers inorder to assign maximum exposure and tenor per tier. If the credit default swaps of a certain counterparty exceed 400 basis points the Groupwill stop trading derivatives with that counterparty and will try to cancel any deposits on a best-effort basis. In addition, the Group regularly
makes use of time deposits, treasury bills and money market funds to invest excess cash balances and to diversify its counterparty risk.
As at 31 December 2021, an amount of €423.9 million (2020: €795.5 million) is invested in time deposits, €6.2 million in treasury bills (2020: €nil)and €638.8 million (2020: €nil) in money market funds.

INTEGRATED ANNUAL REPORT 2021

193

Liquidity risk
The Group actively manages liquidity risk to ensure there are sufficient funds available for any short-term and long-term commitments.
Bank overdrafts and bank facilities, both committed and uncommitted, are used to manage this risk.
The Group manages liquidity risk by maintaining adequate cash reserves and committed banking facilities, access to the debt and equity
capital markets, and by continuously monitoring forecast and actual cash flows. In Note 25, the undrawn facilities that the Group has at its
disposal to manage liquidity risk are discussed under the headings ‘Commercial paper programme’ and ‘Committed credit facilities’.
This has been an area of focus during the COVID-19 pandemic; however, the Group maintains a healthy liquidity position and is able to meetits obligations as they fall due. As at 31 December 2021, the Group has net debt of €1.3 billion (refer to Note 25). There are no bondmaturities until November 2024. In addition, the Group has an undrawn revolving credit facility of €800 million available, as well as €0.8 billion
available of the €1.0 billion commercial paper facility.
The following tables detail the remaining contractual maturities for financial liabilities. The tables include both interest and principal undiscounted
cash flows, assuming that interest rates remain constant from 31 December 2021.

Borrowings
Derivative liabilities
Trade and other payables (excluding other tax & social
security and contract liabilities)
Leases
As at 31 December 2021

Borrowings
Derivative liabilities
Trade and other payables (excluding other tax & social
security and contract liabilities)
Leases
As at 31 December 2020

Up to
one year€ million

One totwo years€ million

Two tofive years€ millionOverfive years€ million

Total€ million

365.2
11.6

48.4
3.0

707.3
–

1,875.2–

2,996.1
14.6

1,748.058.9
2,183.7

0.4
43.2
95.0

1.1
62.9
771.3

4.1
29.6
1,908.9

1,753.6
194.6
4,958.9Up to
one year€ million

One totwo years€ million

Two tofive years€ millionOverfive years€ million

Total€ million

283.3
10.0

98.2
1.3

714.4
–

1,889.8–

2,985.7
11.3

1,447.4
63.4
1,804.1

0.3
50.7
150.5

1.0
71.0
786.4

4.9
35.5
1,930.2

1,453.6
220.6
4,671.2

Capital risk
The Group monitors its financial capacity and credit ratings by reference to a number of key financial ratios, including net debt to comparable
adjusted EBITDA which provides a framework within which the Group‘s capital base is managed. This ratio is calculated as net debt divided
by comparable adjusted EBITDA.
Adjusted EBITDA is calculated by adding back to operating profit the depreciation and impairment of property, plant and equipment, theamortisation and impairment of intangible assets, the employee performance share costs and other non-cash items, if any. Comparable
adjusted EBITDA refers to adjusted EBITDA excluding restructuring expenses, acquisition and integration costs and the unrealised gains
or losses resulting from the mark-to-market valuation of derivatives and embedded derivatives related to commodity hedging.
Refer to Note 25 for the definition of net debt.
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal
capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may increase or decrease debt, issue or buy back shares, adjust the amountof dividends paid to shareholders, or return capital to shareholders.
The Group’s goal is to maintain a conservative financial profile. This is evidenced by the credit ratings maintained with Standard & Poor’s
and Moody’s, which were reaffirmed in 2021.
Rating agency

Standard and Poor’s
Moody’s

Publication dateLong-term debt

Outlook

Short-term debt

April 2021
May 2021

BBB+
Baa1

StableStableA2
P2

The Group’s medium- to long-term target is to maintain the net debt to comparable adjusted EBITDA ratio within a 1.5 to 2.0 range.

194

COCA-COLA HBC

Notes to the consolidated financial statements continued
24. Financial risk management and financial instruments continued
The ratios as at 31 December were as follows:
Net debt (refer to Note 25)
Operating profit
Depreciation and impairment of property, plant and equipment, including right-of-use assets
Amortisation of intangible assets
Employee performance shares
Adjusted EBITDA
Other restructuring expenses (primarily redundancy costs)
Unrealised (gain)/loss on commodity derivatives
Acquisition and integration costs
Total comparable adjusted EBITDA
Net debt/comparable adjusted EBITDA ratio

2021€ million2020€ million

1,319.7
799.3
336.3
1.0
14.9
1,151.5
21.0
(3.8)
14.3
1,183.0
1.12

1,616.8
660.7
388.1
0.9
9.5
1,059.2
10.0
1.6–
1,070.8
1.51

The reconciliation of other restructuring expenses to total restructuring expenses for the years ended 31 December was as follows:
Total restructuring expenses included in operating expenses (refer to Note 8)
Total restructuring expenses included in share of results of integral equity method investments
Less: Impairment of property, plant and equipment
Other restructuring expenses (primarily redundancy costs)

2021€ million2020€ million

21.2
–
(0.2)
21.0

9.8
0.2
–
10.0

Hedging activity
The carrying amounts of the derivative financial instruments are included in the lines ‘Other financial assets’ and ‘Other financial liabilities’of the consolidated balance sheet.

a) Cash flow hedges
The impact of the hedging instruments on the consolidated balance sheet was:As at 31 December 2021
Contracts with positive fair values
Non-current
Commodity swap contracts
Current
Foreign currency forward contracts
Commodity swap contracts
Contracts with negative fair values
Non-current
Commodity swap contracts
Current
Foreign currency forward contracts
Commodity swap contracts

Notional amount€ million

Carrying amount€ million

182.6
26.8
26.8
155.8
48.3
107.5

40.4
9.0
9.0
31.4
1.3
30.1

59.3
2.5
2.5
56.8
37.9
18.9

(1.2)
(0.1)
(0.1)
(1.1)
(0.6)
(0.5)

Period ofmaturity date

Jan 23-Nov 23
Jan 22-Aug 22
Jan 22-Dec 22

Jan 23-Nov 23
Jan 22-Dec 22
Jan 22-Nov 22

INTEGRATED ANNUAL REPORT 2021

As at 31 December 2020
Contracts with positive fair values
Non-current
Commodity swap contracts
Current
Foreign currency forward contracts
Commodity swap contracts

Notional amount€ million

Carrying amount€ million

145.9
27.7
27.7
118.2
62.1
56.1

9.4
2.3
2.3
7.1
1.1
6.0

74.2
0.5
0.5
73.7
44.0
29.7

(3.3)
–
–
(3.3)
(1.0)
(2.3)

Contracts with negative fair values
Non-current
Commodity swap contracts
Current
Foreign currency forward contracts
Commodity swap contracts

195

Period ofmaturity date

Jan 22-Nov 22
Jan 21-Oct 21
Jan 21-Dec 21

Jan 22-Nov 22
Jan 21-Jun 21
Jan 21-Dec 21

The impact on the hedging reserve as a result of applying cash flow hedge accounting was:

Opening balance 1 January 2020
Net gain of cash flow hedges
Change in fair value of hedging
instruments recognised in OCI
Reclassified to profit or loss
Cost of hedging recognised in OCI
Reclassified to inventory cost
Appropriation of reserves
Closing balance 31 December 2020
Net gain of cash flow hedges
Change in fair value of hedging
instruments recognised in OCI
Reclassified to profit or loss
Cost of hedging recognised in OCI
Reclassified to inventory cost
Closing balance 31 December 2021

Spot component offoreign currency
forward contracts€ million

Intrinsic value of
foreign currency
option contracts€ million

Cost of hedging
reserve of currency
derivatives€ million

Commodity swap
contracts€ million

Interest rate
swap contracts€ million

Total€ million

(3.6)
19.0

0.7
0.1

(0.6)
–

0.2
(4.1)

(40.2)
7.7(43.5)
22.7

19.0
–
–
(13.0)
(4.0)
(1.6)
1.0

0.1
–
–
(0.5)
(0.3)
–
–

–
–
(2.2)
3.2
0.3
0.7
–

(4.1)
–
–
10.4
–
6.5
60.8

–
7.7
–
–
–
(32.5)
7.7

15.0
7.7
(2.2)
0.1
(4.0)
(26.9)
69.5

1.0
–
–
(0.8)
(1.4)

–
–
–
–
–

–
–
(2.7)
2.4
0.4

60.8
–
–
(25.6)
41.7

–
7.7
–
–
(24.8)

61.8
7.7
(2.7)
(24.0)
15.9

An amount of €4.0 million was reclassified from ‘Hedging reserve’ to ‘Other reserves’ during 2020, as a result of a change in the classificationof Multon (refer to Note 15).
The effect of the cash flow hedges in the consolidated income statement was:
2021
Loss/(gain)€ million

2020
Loss/(gain)€ million

–
7.7
7.7

–
7.7
7.7

Net amount reclassified from other comprehensive income to cost of goods soldNet amount reclassified from other comprehensive income to finance costs
Total
There was no significant ineffectiveness on the cash flow hedges during the years ended 31 December 2021 and 2020.

196

COCA-COLA HBC

Notes to the consolidated financial statements continued
24. Financial risk management and financial instruments continuedb) Undesignated hedges
The fair values of derivative financial instruments as at 31 December which economically hedge the Group’s risks and for which hedge
accounting has not been applied were:As at 31 December 2021
Contracts with positive fair values
Current
Embedded derivatives
Foreign currency forward contracts
Commodity swap contracts
Contracts with negative fair values
Non-current
Foreign currency future contracts
Commodity swap contracts
Current
Foreign currency future contracts
Foreign currency forward contracts
Commodity swap contracts
As at 31 December 2020
Contracts with positive fair values
Non-current
Embedded derivatives
Current
Foreign currency forward contracts
Foreign currency future contracts
Commodity swap contracts
Contracts with negative fair values
Non-current
Commodity swap contracts
Current
Foreign currency forward contracts
Commodity swap contracts

Notional amount€ million

Carrying amount€ million

Period ofmaturity date

203.2
203.2
4.9
165.3
33.0

7.8
7.8
0.1
1.1
6.6

Jan 22-Aug 22
Jan 22-Nov 22
Jan 22-Dec 22

431.3
33.4
13.9
19.5
397.9
94.7
246.5
56.7

(13.4)
(2.9)
(0.6)
(2.3)
(10.5)
(3.3)
(2.6)
(4.6)

Notional amount€ million

Carrying amount€ million

191.7
16.1
16.1
175.6
62.9
110.0
2.7

6.8
0.4
0.4
6.4
1.3
4.9
0.2

241.2
9.2
9.2
232.0
198.6
33.4

(8.0)
(1.3)
(1.3)
(6.7)
(2.2)
(4.5)

Jan 23
Jan 23-Nov 23
Apr 22-Oct 22
Jan 22-Nov 22
Jan 22-Nov 22
Period ofmaturity date

Jan21-Jun21
Jan21-Sep21
Jan21-Mar21
Jan21-Dec21

Jan22-Nov22
Jan21-Sep21
Jan21-Dec21

The effect of the undesignated hedges in the consolidated income statement was:

Net amount recognised in cost of goods soldNet amount recognised in operating expenses
Total

2021
Gain
€ million

2020
Loss/(gain)€ million(14.1)(4.4)(18.5)

15.1
(1.2)
13.9

INTEGRATED ANNUAL REPORT 2021

197

Financial instruments’ categories
Categories of financial instruments as at 31 December were as follows (in € million):
2021
Analysis of total assets

AssetsInvestments including loans
to related parties
Derivative financial instruments
Trade and other receivables
Cash and cash equivalents
Total

Debt financial
assets at
amortised cost

Assets at
FVTPL

Derivatives
designated as
hedging
instruments

204.9
–
863.3
782.8
1,851.0

638.8
7.8
–
–
646.6

–
40.4
–
–
40.4

Equity financial Total current andassets at FVOCI
non-current

3.6
–
–
–
3.6

847.3
48.2
863.3
782.8
2,541.6

Current

Non-current

839.7
39.2
862.2
782.8
2,523.9

7.6
9.0
1.1
–
17.7

Analysis of total liabilities
Derivatives
designated as
hedging Total current andinstruments
non-current

Liabilities held at
amortised cost

Liabilities at
FVTPL

1,753.6
2,937.4–
4,691.0

–
–
13.4
13.4

Debt financial
assets at
amortised cost

Assets at
FVTPL

Derivatives
designated as
hedging
instruments

Equity financial
assets at FVOCI

Total current andnon-current

Current

Non-current

100.8
–
689.8
1,215.8
2,006.4

–
6.8
–
–
6.8

–
9.4
–
–
9.4

3.6
–
–
–
3.6

104.4
16.2
689.8
1,215.8
2,026.2

93.1
13.5
688.4
1,215.8
2,010.8

11.3
2.7
1.4
–
15.4

Liabilities held at
amortised cost

Liabilities at
FVTPL

Derivatives
designated as
hedging
instruments

Total current andnon-current

Current

Non-current

1,453.6
2,925.5–
4,379.1

–
–
8.0
8.0

–
–
3.3
3.3

1,453.6
2,925.5
11.3
4,390.4

1,447.4
315.2
10.0
1,772.6

6.2
2,610.3
1.3
2,617.8

Liabilities
Trade and other payables (excluding other tax &social security and contract liabilities)
Borrowings
Derivative financial instruments
Total

–
–
1.2
1.2

1,753.6
2,937.4
14.6
4,705.6

Current

Non-current

1,748.0
381.7
11.6
2,141.3

5.6
2,555.7
3.0
2,564.3

2020
Analysis of total assets

AssetsInvestments including loans
to related parties
Derivative financial instruments
Trade and other receivables
Cash and cash equivalents
Total

Analysis of total liabilities

Liabilities
Trade and other payables (excluding other tax &social security and contract liabilities)
Borrowings
Derivative financial instruments
Total

198

COCA-COLA HBC

Notes to the consolidated financial statements continued
24. Financial risk management and financial instruments continued
Interest rate swap contracts
The Group entered into forward starting swap contracts of €500.0 million in 2014 to hedge the interest rate risk related to its Euro-denominatedforecast issuance of fixed rate debt in March 2016. In August 2015, the Group entered into additional forward starting swap contractsof €100.0 million. In March 2016 the forward starting swap contracts were settled and at the same time a new note was issued. The accumulated
loss of €55.4 million recorded in other comprehensive income is being amortised to the income statement over the term of the new note(refer to Note 25).
The Group entered into swaption contracts of €350.0 million in 2018 and €1,050.0 million in 2019 to hedge the interest rate risk related toits Euro-denominated forecast issuance of fixed rate debt in 2019, and formally designated these contracts as cash flow hedges. In May andNovember 2019, the swaption contracts were settled and, at the same time, new notes were issued. The accumulated loss of €9.6 million
recorded in other comprehensive income is being amortised to the income statement over the relevant period.

Embedded derivatives
During 2015, the Group recognised embedded derivatives whose risks and economic characteristics were not considered to be closely
related to the commodity contract in which they were embedded. The fair value of the embedded derivatives as at 31 December 2021
amounted to a financial asset of €0.1 million (2020: €0.4 million).

Fair values of financial assets and liabilities
For financial instruments such as cash, deposits, debtors and creditors, investments, loans payable to related parties, short-term borrowings(excluding the current portion of bonds and notes payable) and other financial liabilities (other than bonds and notes payable), carrying values
are a reasonable approximation of the fair values. According to the fair value hierarchy, the financial instruments measured at fair value areclassified as follows:
Level 1

The fair value of FVOCI listed equity securities as well as FVTPL securities is based on quoted market prices at the reported date. The fair valueof bonds is based on quoted market prices at the reported date.
Level 2

The fair value of foreign currency forward, option and futures contracts, commodity swap contracts, bonds and notes payable, interest rate
swap contracts, forward starting swap contracts and embedded foreign currency derivatives is determined by using valuation techniques.
These valuation techniques maximise the use of observable market data. The fair value of the foreign currency forward, option and futurescontracts, commodity swap contracts, embedded foreign currency derivatives and cross-currency swap contracts is calculated by reference
to quoted forward exchange, deposit rates and forward rate curves of the underlying commodity at the reported date for contracts withsimilar maturity dates. The fair value of interest rate option contracts is calculated by reference to the Black-Scholes valuation model andimplied volatilities. The fair value of interest rate swap contracts is determined as the difference in the present value of the future interest
cash inflows and outflows based on observable yield curves.
Level 3

The fair value of FVOCI unlisted equity securities as well as certain undesignated derivatives and foreign currency futures contracts isdetermined through the use of estimated discounted cash flows or other valuation techniques. These valuation techniques estimate the fairvalue of undesignated derivatives using settlement and forward prices received from counterparty banks and subscription-based publications,and the fair value of foreign currency futures contracts by using adjusted quoted prices.
Any transfers between levels of the fair value hierarchy are deemed to have occurred at the date of the event or change in circumstancesthat caused the transfer.

INTEGRATED ANNUAL REPORT 2021

199

The following table sets out the fair value hierarchy levels into which fair value measurements are categorised for assets and liabilities
measured at fair value as at 31 December 2021:
Financial assets at FVTPL
Foreign currency forward contracts
Embedded derivatives
Commodity swap contracts
Money market funds
Derivative financial assets used for hedging
Cash flow hedges
Foreign currency forward contracts
Commodity swap contracts
Assets at FVOCI
Equity securities
Total financial assets
Financial liabilities at FVTPL
Foreign currency forward contracts
Foreign currency futures contracts
Commodity swap contracts
Derivative financial liabilities used for hedging
Cash flow hedges
Foreign currency forward contracts
Commodity swap contracts
Total financial liabilities

Level 1€ million

Level 2€ million

Level 3€ million

Total€ million

–
–
–
638.8

1.1
0.1
0.6
–

–
–
6.0
–

1.1
0.1
6.6
638.8

–
–

1.3
39.1

–
–

1.3
39.1

0.7
639.5

–
42.2

2.9
8.9

3.6
690.6

–
–
–

(2.6)
–
–

–
(3.9)
(6.9)

(2.6)
(3.9)
(6.9)

–
–
–

(0.6)
(0.6)
(3.8)

–
–
(10.8)(0.6)(0.6)(14.6)

There were no transfers between Level 1, Level 2 and Level 3 in the year.
The following table provides the fair value hierarchy levels into which fair value measurements are categorised for assets and liabilities
measured at fair value as at 31 December 2020:
Financial assets at FVTPL
Foreign currency forward contracts
Foreign currency futures contracts
Embedded derivatives
Commodity swap contracts
Derivative financial assets used for hedging
Cash flow hedges
Foreign currency forward contracts
Commodity swap contracts
Assets at FVOCI
Equity securities
Total financial assets
Financial liabilities at FVTPL
Foreign currency forward contracts
Commodity swap contracts
Derivative financial liabilities used for hedging
Cash flow hedges
Foreign currency forward contracts
Commodity swap contracts
Total financial liabilities

Level 1€ million

Level 2€ million

Level 3€ million

Total€ million

–
–
–
–

1.3
–
0.4
0.2

–
4.9
–
–

1.3
4.9
0.4
0.2

–
–

1.1
8.3

–
–

1.1
8.3

0.8
0.8

–
11.3

2.8
7.7

3.6
19.8

–
–

(2.2)
–

–
(5.8)

(2.2)
(5.8)

–
–
–

(1.0)
(2.3)
(5.5)

–
–
(5.8)

(1.0)
(2.3)
(11.3)

There were no transfers between Level 1 and Level 2 in 2020. During 2020, the Group reclassified foreign currency derivatives relating
to the Nigerian Naira from Level 2 to Level 3. This reclassification resulted from the use of a more relevant valuation technique which
incorporated greater use of the unobservable inputs and more appropriately approximated their fair values. The fair value of thesederivatives as at 31 December 2020 amounted to a financial asset of €4.9 million.

200

COCA-COLA HBC

Notes to the consolidated financial statements continued
25. Net debt
Accounting policy
Borrowings are initially recognised at the fair value net of transaction costs incurred.
After initial recognition, all interest-bearing borrowings are subsequently measured at amortised cost. Amortised cost is calculated using
the effective interest rate method whereby any discount, premium or transaction costs associated with a borrowing are amortised to theincome statement over the borrowing period.
Refer also to Note 16 for accounting policy on leases.
Cash and cash equivalents comprise cash balances and short-term, highly liquid investments that are readily convertible to known amountsof cash and which are subject to insignificant risk of change in value. Bank overdrafts are classified as short-term borrowings in the balance
sheet and for the purpose of the cash flow statement. Time deposits and treasury bills which do not meet the definition of cash and cash
equivalents are classified as short-term investments at amortised cost. Money market funds are classified as short-term investments
at fair value through profit or loss.
Net debt is defined as current borrowings plus non-current borrowings less cash and cash equivalents, and certain other financial assets.
Net debt for the year ended 31 December comprised:
Current borrowings
Non-current borrowings
Less: Cash and cash equivalents
Financial assets at amortised cost
Financial assets at fair value through profit or loss
Less: Other financial assets
Net debt

2021€ million2020€ million

381.7
2,555.7(782.8)(196.1)(638.8)(834.9)1,319.7315.2
2,610.3(1,215.8)(92.9)–(92.9)
1,616.8

The financial assets at amortised cost include time deposits amounting to €189.9 million (31 December 2020: €92.9 million) as well as
Nigerian treasury bills of €6.2 million (31 December 2020: €nil). The financial assets at fair value through profit and loss in 2021 relate
to money market funds. The line item ‘Other financial assets’ of the consolidated balance sheet includes derivative financial instrumentsof €39.2 million (31 December 2020: €13.5 million) and related party loans receivable of €4.8 million (31 December 2020: €0.2 million).

a) Borrowings
The Group held the following borrowings as at 31 December:Commercial paper
Loans payable to related parties (refer to Note 27)
Other borrowings
Obligations under leases falling due within one year
Total borrowings falling due within one year
Borrowings falling due within one to two years
Loans payable to related parties (refer to Note 27)
Borrowings falling due within two to five years
Bonds, bills and unsecured notes
Borrowings falling due in more than five years
Bonds, bills and unsecured notes
Other borrowings
Obligations under leases falling due in more than one year
Total borrowings falling due after one year
Total borrowings

2021€ million2020€ million

235.0
58.1
37.7
330.8
50.9
381.7

200.0
29.8
30.6
260.4
54.8
315.2

5.1

56.5

598.5

597.9

1,787.2
55.5
2,446.3
109.4
2,555.7
2,937.4

1,785.5
41.0
2,480.9129.4
2,610.3
2,925.5

INTEGRATED ANNUAL REPORT 2021

201

Reconciliation of liabilities to cash flows arising from financing activities:
Borrowings
Due within
Due in more than
one year
one year€ million€ million

Balance at 1 January 2020
Cash flows
Proceeds from borrowings
Repayments of borrowings
Principal repayments of lease obligations
Interest paid
Proceeds from/(payments for) settlementof derivatives regarding financing activities
Total cash flows
Leases increase
Effect of changes in exchange rates
Other non-cash movements
Balance at 31 December 2020
Cash flows
Proceeds from borrowings
Repayments of borrowings
Principal repayments of lease obligations
Interest paid
Proceeds from/(payments for) settlementof derivatives regarding financing activities
Total cash flows
Leases increase
Effect of changes in exchange rates
Other non-cash movements
Balance at 31 December 2021

LeasesDue within
Due in more than
one year
one year€ million€ million

Derivative assets/(liabilities)

Total€ million€ million

705.5

2,408.2

56.3

154.7

–

3,324.7

113.8(619.6)–(53.3)

98.0(36.2)–(0.4)––(58.7)(11.0)

–
–
–
–

–
–
–
–

211.8
(655.8)(58.7)(64.7)–(559.1)
–
(3.3)
117.3
260.4

–
61.4
–
–
11.3
2,480.9–(69.7)
5.1
(3.1)
66.2
54.8

–
–
48.5
(6.6)
(67.2)
129.4

(1.1)
(1.1)
–
–
1.1
–

(1.1)
(568.5)
53.6(13.0)
128.7
2,925.5

77.0(102.6)–(36.2)

52.3(31.2)––––(63.1)
(9.3)

–
–
–
–

–
–
–
–

129.3
(133.8)(63.1)(45.5)–(61.8)
–
0.2
132.0
330.8

–
21.1
–
0.2
(55.9)
2,446.3–(72.4)
0.8
0.4
67.3
50.9

–
–
41.2
1.0
(62.2)
109.4

4.9
4.9
–
–
(2.6)
2.3

4.9
(108.2)
42.0
1.8
78.6
2,939.7

The ‘Other non-cash movements’ primarily include transfers from long-term to short-term liabilities and interest incurred. Also,‘Other non‑cash movements’ in 2020 are impacted by the change in classification of Multon (refer to Note 15), which resulted in an increasein borrowings for the Group.

Commercial paper programme
In October 2013, the Group established a €1.0 billion Euro commercial paper programme (the ‘CP programme’) which was updated in
September 2014, in May 2017 and in May 2020 to further diversify its short-term funding sources. The Euro-commercial paper notes may
be issued either as non-interest-bearing notes sold at a discount or as interest-bearing notes at a fixed or floating rate. All commercial paperissued under the CP programme must be repaid within 7 to 364 days. The CP programme has been granted the Short Term Euro Paper
label (‘STEP’) and the commercial paper is issued through Coca-Cola HBC’s fully owned subsidiary Coca-Cola HBC Finance B.V. and is fully,
unconditionally and irrevocably guaranteed by Coca-Cola HBC AG. The outstanding amount under the CP programme as at 31 December
2021 was €235.0 million (2020: €200.0 million).

Committed credit facilities
In April 2019, the Group updated its then-existing €500.0 million syndicated revolving credit facility, which was set to expire in June 2021.
The updated syndicated revolving credit facility has been increased to €800.0 million and has been extended to April 2024 with the option
to be extended for up to two more years until April 2026. In March 2020, the Company exercised its extension option and the facility was
extended to April 2025. In April 2021, the Company exercised its second option to further extend the maturity of the syndicated loan facility
to April 2026. This facility can be used for general corporate purposes and carries a floating interest rate over EURIBOR. No amounts havebeen drawn under the syndicated revolving credit facility since inception. The borrower in the syndicated revolving credit facility is Coca-Cola
HBC’s fully owned subsidiary Coca-Cola HBC Finance B.V. and any amounts drawn under the facility are fully, unconditionally and irrevocably
guaranteed by Coca-Cola HBC AG.
In December 2019, the Group established a loan facility of US$85.0 million to finance the purchase of production equipment by the Group’s
subsidiary in Nigeria. The facility has been drawn down by Nigerian Bottling Company (NBC) over the course of 2020 and 2021 and maturesin 2027. The obligations under this facility are guaranteed by Coca-Cola HBC AG. As at 31 December 2021, the outstanding liability amounted
to €63.2 million (2020: €48.2 million).

202

COCA-COLA HBC

Notes to the consolidated financial statements continued
25. Net debt continued
Euro medium-term note programme
In June 2013, the Group established a new €3.0 billion Euro medium-term note programme (the ‘EMTN programme’). The EMTN programme
was updated in September 2014, September 2015, April 2019 (when it was increased to €5.0 billion), April 2020 and September 2021.
Notes are issued under the EMTN programme through Coca-Cola HBC’s 100%-owned subsidiary Coca-Cola HBC Finance B.V. and are fully,
unconditionally and irrevocably guaranteed by Coca-Cola HBC AG.
In March 2016, Coca-Cola HBC Finance B.V. completed the issue of a €600 million Euro-denominated fixed rate bond maturing in November
2024. The coupon rate of the bond is 1.875% which, including the amortisation of the loss on the forward starting swap contracts over theterm of the fixed rate bond, results in an effective interest rate of 2.99%. The net proceeds of the issue were used to partially repay €214.6
million of the 4.25%, €600 million seven-year fixed rate notes due in November 2016. The remaining €385.4 million of these notes was repaid
in November 2016 upon maturity.
In May 2019, Coca-Cola HBC Finance B.V. completed the issue of a €700 million Euro-denominated fixed rate bond maturing in May 2027
with a coupon rate of 1%, and the issue of a €600 million Euro-denominated fixed rate bond maturing in May 2031 with a coupon rate of
1.625%. The net proceeds of the new issue were used to partially repay €236.6 million of the 2.375%, €800 million seven-year fixed ratebond due in June 2020, while the remaining €563.4 million was repaid in June 2020 upon its maturity.
In November 2019, Coca-Cola HBC Finance B.V. completed the issue of a €500 million Euro-denominated fixed rate bond maturingin November 2029 with a coupon rate of 0.625%.
As at 31 December 2021, a total of €2.4 billion in notes issued under the EMTN programme were outstanding.
Summary of notes outstanding as at 31 December
Notes

Start date

Maturity date

€600 million€700 million€600 million€500 million
Total

10 March 2016
14 May 201914 May 201921 November 201911 November 2024
14 May 2027
14 May 2031
21 November 2029

Fixed coupon

1.875%
1.000%
1.625%
0.625%

Book Value
2021€ million

598.5
696.5
596.0
494.7
2,385.7

2020€ million

597.9
695.9
595.6
494.0
2,383.4

Fair Value
2021€ million

631.8
717.8
640.7
496.2
2,486.52020€ million

648.2
741.5
678.2
518.3
2,586.2

The weighted average effective interest rate of the Euro-denominated fixed rate bonds is 1.69% and the weighted average maturity is 6.3 years.
The fair values are within Level 1 of the value hierarchy.
None of the Group’s debt facilities are subject to any financial covenants that would impact the Group’s liquidity or access to capital.
Total borrowings at 31 December, were held in the following currencies:Euro
US Dollar
Russian Rouble
Nigerian Naira
Swiss Franc
Bulgarian Lev
Czech Koruna
UK Sterling
Polish Zloty
Romanian Leu
Hungarian Forint
Belarusian Rouble
Bosnian Mark
Croatian Kuna
Other
Total borrowings

Current
2021€ million2020€ million

289.5
13.7
57.6
7.5
4.6
2.2
1.5
2.1
0.8
0.9
0.6
–
0.4
0.1
0.2
381.7

251.8
13.0
24.4
6.3
4.4
5.4
3.5
1.8
1.1
1.6
0.5
–
0.3
0.9
0.2
315.2

Non-current
2021€ million

2,438.8
73.5
5.0
15.5
4.4
5.0
5.3
4.4
0.8
0.7
0.4
0.8
0.3
–
0.8
2,555.7

2020€ million

2,444.2
59.6
61.3
11.5
5.8
8.9
7.3
5.3
1.0
1.9
0.5
0.7
0.6
0.9
0.8
2,610.3

INTEGRATED ANNUAL REPORT 2021

203

The carrying amounts of interest-bearing borrowings held at fixed and floating interest rate as at 31 December 2021, were as follows:Euro
US Dollar
Russian Rouble
Nigerian Naira
Swiss Franc
Bulgarian Lev
Czech Koruna
UK Sterling
Polish Zloty
Romanian Leu
Hungarian Forint
Belarusian Rouble
Bosnian Mark
Croatian Kuna
Other
Total interest-bearing borrowings

Fixedinterest rate
€ million

Floating
interest rate
€ million

Total€ million

2,693.3
83.2
8.5
23.0
9.0
7.2
6.8
1.1
1.6
–
1.0
0.8
0.7
0.1
1.0
2,837.3

35.0
4.0
54.1
–
–
–
–
5.4
–
1.6
–
–
–
–
–
100.1

2,728.3
87.2
62.6
23.0
9.0
7.2
6.8
6.5
1.6
1.6
1.0
0.8
0.7
0.1
1.0
2,937.4

2021€ million2020€ million

548.8
234.0
782.8

513.2
702.6
1,215.82021€ million2020€ million

518.4
161.4
28.1
9.5
8.4
7.3
7.2
6.5
6.5
6.0
5.8
5.8
3.3
2.2
0.8
0.7
4.9
782.8

1,020.9
102.0
7.3
8.3
8.2
8.2
15.6
3.6
6.3
9.3
2.7
9.9
4.8
2.0
0.4
2.5
3.8
1,215.8b) Cash and cash equivalents
Cash and cash equivalents as at 31 December comprise the following:
Cash at bank, in transit and in hand
Short-term deposits
Total cash and cash equivalents
Cash and cash equivalents are held in the following currencies:Euro
Nigerian Naira
Polish Zloty
Russian Rouble
US Dollar
Swiss Franc
Ukrainian Hryvnia
Hungarian Forint
Moldovan Leu
Romanian Leu
Belarusian Rouble
Serbian Dinar
Bosnian MarkUK Sterling
Czech Koruna
Croatian Kuna
Other
Total cash and cash equivalents

As at 31 December 2021, time deposits of €189.9 million (2020: €92.9 million), which do not meet the definition of cash and cash equivalents,
and investment in Nigerian treasury bills of €6.2 million (2020: €nil), which relate to the outstanding balance held for the repayment of Nigerian
Bottling Company former minority shareholders following the 2011 acquisition of non-controlling interests, are recorded as other financial assets.
Cash and cash equivalents of €161.4 million (2020: €102.0 million) equivalent in Nigerian Naira include an amount of €8.9 million(2020: €11.0 million) which relates to the outstanding balance held for the repayment of Nigerian Bottling Company former minority
shareholders, following the 2011 acquisition of non-controlling interests.
The amount of dividends payable to the Company by its operating subsidiaries is subject to, among other restrictions, general limitations
imposed by the corporate laws and exchange control restrictions of the jurisdictions where those subsidiaries are organised and operate.
Also, there are fund transfer restrictions in certain countries in which we operate, in particular Belarus, Nigeria, Serbia and Ukraine, but theserestrictions do not have a material impact on the Group’s liquidity, as the amounts of cash and cash equivalents held in such countries are
generally retained for capital expenditure, working capital and dividend distribution purposes. Intra-group dividends paid by certain of our
subsidiaries are also subject to withholding taxes.

204

COCA-COLA HBC

Notes to the consolidated financial statements continued
26. Equity
Accounting policies
Share capital
Coca-Cola HBC has only one class of shares, ordinary shares. When new shares are issued, they are recorded in share capital at their parvalue. The excess of the issue price over the par value is recorded in the share premium reserve. Incremental external costs directly
attributable to the issue of new shares or to the process of returning capital to shareholders are recorded in equity as a deduction, netof tax, in the share premium reserve.
Dividends
Dividends are recorded in the Group’s consolidated financial statements, against the relevant equity component, in the period in which
they are approved by the Group’s shareholders.

a) Share capital, share premium and Group reorganisation reserve

Balance as at 1 January 2020
Shares issued to employees exercising stock options (refer to Note 28)
Dividends
Balance as at 31 December 2020
Shares issued to employees exercising stock options (refer to Note 28)
Dividends
Balance as at 31 December 2021

Number ofshares(authorised
and issued)

Sharecapital€ million

Sharepremium€ million

369,930,157
582,440–
370,512,597
1,282,821–
371,795,418

2,010.8
3.6–
2,014.4
7.9–
2,022.3

3,545.3
4.0(227.9)3,321.4
11.7(235.8)3,097.3

Groupreorganisation
reserve€ million(6,472.1)–(6,472.1)––(6,472.1)

The Group reorganisation reserve relates to the impact from adjusting share capital, share premium and treasury shares to reflect therespective statutory amounts of Coca-Cola HBC on 25 April 2013, together with the transaction costs incurred by the latter, relating
primarily to the re-domiciliation of the Group and its admission to listing in the premium segment of the London Stock Exchange, following
successful completion of the voluntary share exchange offer (refer also to Note 1). These transactions were treated as a reorganisationof an existing entity that has not changed the substance of the reporting entity.
In 2021, the share capital of Coca-Cola HBC increased by the issue of 1,282,821 (2020: 582,440) new ordinary shares following the exerciseof 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 €19.6 million (2020: €7.6 million).
Following the above changes, on 31 December 2021 the share capital of the Group amounted to €2,022.3 million and comprised
371,795,418 shares with a nominal value of CHF 6.70 each.

b) Dividends
On 16 June 2020, the shareholders of Coca-Cola HBC AG at the Annual General Meeting approved a dividend distribution of €0.62 per share.
The total dividend amounted to €227.9 million and was paid on 28 July 2020. Of this, an amount of €2.2 million related to shares held by the Group.
The shareholders of Coca-Cola HBC AG approved a dividend distribution of €0.64 per share at the Annual General Meeting held on 22 June
2021. The total dividend amounted to €235.8 million and was paid on 3 August 2021. Of this, an amount of €2.2 million related to shares heldby the Group.
The Board of Directors of Coca-Cola HBC AG has proposed a €0.71 dividend per share in respect of 2021. If approved by the shareholders
of Coca-Cola HBC AG, this dividend will be paid in 2022.

c) Treasury shares and reserves
The reserves of the Group as at 31 December were as follows:
Treasury shares
Exchange equalisation reserve
Other reserves
Hedging reserve, net
Tax-free reserve
Statutory reserves
Stock option and performance share reserve
Financial assets at fair value through other comprehensive income reserve, net
Other
Total other reserves
Total reserves

2021€ million2020€ million(146.6)(1,154.0)(155.5)(1,242.1)

9.9
163.8
28.3
86.3
0.6
21.3
310.2
(990.4)(27.5)
163.8
28.4
80.1
0.6
21.3
266.7
(1,130.9)

INTEGRATED ANNUAL REPORT 2021

205

Treasury shares
Treasury shares held by the Group represent shares acquired following approval of share buy-back programmes, forfeited shares under theequity compensation plan operated by the Group, as well as shares representing the initial ordinary shares of Coca-Cola HBC acquired from
Kar-Tess Holding.
An amount of €8.9 million in 2021 (2020: €14.3 million) relates to treasury shares provided to employees in connection with vested
performance share awards under the Group’s employee incentive scheme, which was reflected as an appropriation of reserves between‘Treasury shares’ and ‘Other reserves’, more specifically the ‘Stock option and performance share reserve’ in the consolidated statementof changes in equity.
As at 31 December 2021, 5,894,583 (2020: 6,189,415) treasury shares were held by the Group.

Exchange equalisation reserve
The exchange equalisation reserve comprises all foreign exchange differences arising from the translation of the financial statementsof Group entities with functional currencies other than the Euro.

Other reserves
Hedging reserve

The hedging reserve reflects changes in the fair values of derivatives accounted for as cash flow hedges, net of the deferred tax related
to such balances.
Tax-free and statutory reserves

The tax-free reserve includes investment amounts exempt from tax according to incentive legislation, other tax-free income or income
taxed at source. Statutory reserves are particular to the various countries in which the Group operates. The amount of statutory reservesof the parent entity, Coca-Cola HBC AG, is €nil.
Stock option and performance share reserve

The stock option and performance share reserve represents the cumulative charge to the income statement for employee stock option
and performance share awards less the vested performance share awards.
Other

Other reserves are particular to the various countries in which the Group operates and include shares held for the Group’s employee sharepurchase plan, which is an equity compensation plan in which eligible employees may participate, as well as the Group’s share of changes
in other reserves of equity method investments.

27. Related party transactionsa) The Coca-Cola Company
As at 31 December 2021, The Coca-Cola Company indirectly owned 21.0% (2020: 23.0%) of the issued share capital of Coca-Cola HBC.
The Coca-Cola Company considers Coca-Cola HBC to be a ‘key bottler’ and has entered into bottlers’ agreements with Coca-Cola HBC
in respect of each of the Group’s territories. All the bottlers’ agreements entered into by The Coca-Cola Company and Coca-Cola HBC are
Standard International Bottlers’ (‘SIB’) agreements. The terms of the bottlers’ agreements grant Coca-Cola HBC the right to produce andthe exclusive right to sell and distribute the beverages of The Coca-Cola Company in each of the countries in which the Group operates.
Consequently, Coca-Cola HBC is obliged to purchase all concentrate for The Coca-Cola Company’s beverages from The Coca-Cola
Company, or its designee, in the ordinary course of business. On 10 October 2012, The Coca-Cola Company agreed to extend the termof the bottlers’ agreements for a further 10 years until 2023.
The Coca-Cola Company owns or has applied for the trademarks that identify its beverages in each of the countries in which the Group
operates. The Coca-Cola Company has authorised Coca-Cola HBC and certain of its subsidiaries to use the trademark ‘Coca-Cola’ in theircorporate names.

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Notes to the consolidated financial statements continued
27. Related party transactions continued
The below table summarises transactions with The Coca-Cola Company and its subsidiaries:
Purchases of concentrate, finished products and other items
Net contributions received for marketing and promotional incentives
Sales of finished goods and raw materials
Other income
Other expenses

2021€ million2020€ million

1,598.8
83.1
4.5
2.8
4.2

1,374.6
90.7
3.5
6.3
5.6

The Coca-Cola Company makes discretionary marketing contributions to Coca-Cola HBC’s operating subsidiaries. The participation in sharedmarketing agreements is at The Coca-Cola Company’s discretion and, where co-operative arrangements are entered into, marketing
expenses are shared. Such arrangements include the development of marketing programmes to promote The Coca-Cola Company’s
beverages. Contributions received from The Coca-Cola Company for marketing and promotional incentives during the year amounted to€83.1 million (2020: €90.7 million): contributions made by The Coca-Cola Company to Coca-Cola HBC for price support and marketingand promotional campaigns in respect of specific customers in 2021 totalled €52.6 million (2020: €63.9 million), while contributions madeby The Coca-Cola Company to Coca-Cola HBC for general marketing programmes in 2021 totalled €30.5 million (2020: €26.8 million).
The Coca-Cola Company has also customarily made additional payments for marketing and advertising directly to suppliers as part of theshared marketing arrangements. The proportion of direct and indirect payments, made at The Coca-Cola Company’s discretion, will notnecessarily be the same from year to year.
As at 31 December 2021, the Group had a total amount due from The Coca-Cola Company of €52.8 million (2020: €40.9 million), and a total
amount due to The Coca-Cola Company of €223.1 million (2020: €196.4 million). The Group paid a total consideration of €5.6 million for theacquisition of the Costa Express Business (refer to Note 23).

b) Frigoglass S.A. (‘Frigoglass’), Kar-Tess Holding and AG Leventis (Nigeria) Plc
Truad Verwaltungs AG currently indirectly owns 48.6% of Frigoglass and 99.3% of AG Leventis (Nigeria) Plc and also indirectly controls
Kar-Tess Holding, which holds approximately 23.0% (2020: 23.0%) of Coca-Cola HBC’s total issued share capital.
The below table summarises transactions with the above entities:
Frigoglass & subsidiaries
Purchases of coolers, cooler parts, glass bottles, crowns and raw and other materials
Maintenance and other expenses
AG Leventis (Nigeria) Plc
Purchases of finished goods and other items
Other expenses

2021€ million2020€ million

117.6
28.6

92.7
21.1

9.3
0.1

5.1
0.7

Frigoglass, a company listed on the Athens Exchange, is a manufacturer of coolers, cooler parts, glass bottles, crowns and plastics.
Frigoglass has a controlling interest in Frigoglass Industries (Nigeria) Limited, a company in which the Group has a 23.9% effective interest,
through its investment in Nigerian Bottling Company Ltd.
The Group entered into a supply agreement with Frigoglass for the purchase of cooling equipment in 1999. The supply agreement was
extended in 2004, 2008, 2013, 2018 and, most recently, in 2021, on substantially similar terms. The current agreement expires on
31 December 2025.
As at 31 December 2021, Coca-Cola HBC owed €14.9 million (2020: €11.8 million) to and was owed €0.8 million (2020: €0.8 million)
by Frigoglass and its subsidiaries. During 2021, the Group received dividends of €1.4 million (2020: €nil) from Frigoglass Industries (Nigeria)
Limited, which are included in the line ‘Net receipts from non-integral equity method investments’ in the consolidated cash flow statement.
As at 31 December 2021, the Group owed €0.9 million (2020: €1.8 million) and had a lease liability of €6.0 million (2020: €nil) to AG Leventis(Nigeria) Plc.
Capital commitments to Frigoglass and its subsidiaries as at 31 December 2021 amounted to €33.5 million (€14.1 million as at 31 December2020) including the Group’s share of its joint ventures‘ capital commitments to Frigoglass.

c) Other related parties
The below table summarises transactions with other related parties:
Purchases
Other expenses

2021€ million2020€ million

1.5
15.1

1.8
16.4

During 2021, the Group incurred subsequent expenditure for fixed assets of €1.5 million (2020: €1.8 million) from other related parties.
Furthermore, during 2021, the Group incurred expenses of €15.1 million (2020: €16.4 million) mainly related to maintenance services forcold drink equipment and installations of coolers, fountains, vending and merchandising equipment from other related parties.
As at 31 December 2021, the Group had a total amount due to other related parties of €0.6 million (2020: €1.9 million) and a total amountof loans receivable from other related parties of €0.9 million (2020: €nil).
During 2021, the Group received dividends of €0.5 million from BevService S.r.l. (2020: €1.3 million), which are included in the line ’Net receipts
from non-integral equity method investments’ in the consolidated cash flow statement.

INTEGRATED ANNUAL REPORT 2021

207d) Joint ventures
During 2021, the Group purchased €5.2 million of finished goods (2020: €10.9 million) from joint ventures. In addition, during 2021 the Group
recorded sales of finished goods and raw materials of €4.8 million (2020: €2.8 million) to joint ventures. Furthermore, the Group recorded
other income of €16.2 million (2020: €10.2 million) from joint ventures and other expenses of €13.4 million (2020: €11.5 million) including€7.3 million (2020: €5.6 million) of interest charges from loans with joint ventures.
As at 31 December 2021, the Group owed €149.8 million including loans payable of €63.2 million (2020: €159.6 million including loans payableof €86.3 million) to and was owed €13.9 million including loans receivable of €7.1 million (2020: €13.1 million including loans receivable of€7.0 million) by joint ventures. During the full year ended 31 December 2021, the Group received dividends and capital returns of €47.8 million
from integral joint ventures (2020: dividends of €27.1 million), which are included in the line ’Net receipts from integral equity method
investments’ in the consolidated cash flow statement.

e) Directors and senior management
Bruno Pietracci and Henrique Braun have been elected to the Board of Coca-Cola HBC following a proposal made by The Coca-Cola
Company. There have been no transactions between Coca-Cola HBC and the Directors and senior management except for remuneration(refer to Note 8).

28. Share-based payments
Accounting policies
Stock option and performance share award plan
Coca-Cola HBC provides equity-settled share-based payments to its senior managers in the form of an employee stock option andperformance share award plan (the ‘Plan’).
Stock options under the Plan are measured at fair value at the date of grant. Fair value reflects the parameters of the compensation plan,
the risk-free interest rate, the expected volatility, the dividend yield and the early exercise experience under the Plan. Expected volatility
is determined by calculating the historical volatility of Coca-Cola HBC’s share price over previous years. The fair value determined at the
grant date is expensed on a straight-line basis over the vesting period.
The Plan offers a specified number of performance share awards that vest three years after grant. The fair value is determined at
the grant date and reflects the parameters of the compensation plan, the dividend yield and the closing share price on the date of grant.
The fair value determined at the grant date is expensed on a straight-line basis over the vesting period. At the end of each reporting
period the Group revises its estimates of the number of shares that are expected to vest based on non-market conditions, andrecognises the impact of the revision to original estimates, if any, in the income statement with a corresponding adjustment to equity.
When the terms of an equity-settled award are modified, the minimum expense recognised is the grant date fair value of the unmodified
award, provided the original vesting terms of the award are met. An additional expense, measured as at the date of modification,is recognised for any modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial
to the employee.
Employee Share Purchase Plan
The Group operates an employee share purchase plan (‘ESPP’), an equity compensation plan in which eligible employees can participate.
The Group makes contributions to the plan for participating employees and recognises expenses over the vesting period of thecontributions.
The charge included in employee costs regarding share-based payments for the years ended 31 December is analysed as follows:
Performance share awards
Employee Share Purchase Plan
Total share-based payments charge

2021€ million2020€ million

14.6
5.5
20.1

10.0
5.5
15.5

Terms and conditions
Stock option and performance share award plan
Based on Plan rules, senior managers are granted awards of stock options based on performance, potentiality and level of responsibility.
Options are granted at an exercise price equal to the closing price of the Company’s shares trading on the London Stock Exchange on the
day of the grant. Options vest in one-third increments each year for three years and can be exercised for up to 10 years from the dateof award. When the options are exercised, the proceeds received by the Group, net of any transaction costs, are credited to share capital(at the nominal value) and share premium. The Group has not issued any new stock options since 2014.
Since 2015, performance shares are the primary long-term award. Senior managers are granted performance share awards, which havea three-year vesting period and are linked to Group-specific key performance indicators. The closing price of the Company’s shares tradingon the London Stock Exchange on the day of the grant is used to determine the number of performance share awards granted. In 2018,
the Group modified the performance share plan, in order for eligible employees to receive upon vesting, additional to the specific numberof shares, the value of dividends corresponding to the years from grant till vest date, subject to the approval of the Remuneration Committee.

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COCA-COLA HBC

Notes to the consolidated financial statements continued
28. Share-based payments continued
Employee Share Purchase PlanThe Employee Share Purchase Plan is administered by a Plan Administrator. Under the terms of this plan, employees have the opportunity
to invest 1% to 15% of their salary in ordinary Coca-Cola HBC shares by contributing to the plan through a payroll deduction. Employee
deductions are used monthly to purchase ordinary Coca-Cola HBC shares in the open market (London Stock Exchange).
Coca-Cola HBC will match employee contributions up to a maximum of 3% of the employee’s salary. Employer matching cash contributions
vest one year after the grant, at which time they are used to purchase matching shares on the open market that are immediately vested.
Dividends received in respect of shares held under this plan are used to purchase additional shares at the time of dividend distribution. Sharesare held under the Plan Administrator. For employees resident in Greece, Coca-Cola HBC matches the employees’ contribution with an annual
employer contribution of up to 5% of the employees’ salary that vests annually in December of each year.

Stock option activity
The outstanding stock options are fully vested and are exercisable until 2026.
A summary of stock option activity in 2021 under all grants is as follows:

Outstanding at 1 January
Exercised
Outstanding at 31 December
Exercisable at 31 December
A summary of stock option activity in 2020 under all grants is as follows:

Outstanding at 1 January
Exercised
ExpiredOutstanding at 31 December
Exercisable at 31 December

Numberof stock
options
2021

Weighted1
average
exercise price2021 (EUR)

Weighted
average
exercise price2021 (GBP)

3,621,676(1,282,821)
2,338,855
2,338,855

15.97
15.66
18.08
18.08

14.49
13.17
15.21
15.21

Numberof stock
options
2020

Weighted1
average
exercise price2020 (EUR)

Weighted
average
exercise price2020 (GBP)

4,204,144(582,440)(28)
3,621,676
3,621,676

16.45
12.53
17.09
15.97
15.97

14.05
11.37
15.50
14.49
14.49

1. For convenience purposes, the prices are translated at the closing exchange rate.

Total proceeds from the issuance of the shares under the stock option plan in 2021 amounted to €19.6 million (2020: €7.6 million).
The weighted average remaining contractual life of stock options outstanding at 31 December 2021 was 2.5 years (2020: 3.2 years).

Performance shares activity

A summary of performance shares activity is as follows:

Outstanding at 1 January
Granted2
VestedForfeited/Cancelled
Outstanding at 31 December

Number of
performance
shares2021

Number of
performance
shares2020

2,294,478
835,477(294,832)(359,756)
2,475,367

1,894,023
1,138,829(468,818)(269,556)
2,294,478

2. Includes dividend equivalent shares.

The weighted average remaining contractual life of performance shares outstanding at 31 December 2021 was 1.3 years (2020: 1.5 years).
The fair value for the 2021 performance share plan is £23.80 per share (2020: £14.94). Relevant inputs into the valuation are as follows:
Weighted average share price
Dividend yield
Weighted average exercise period

2021

2020

£23.80nil
3.0 years£14.94nil
3.0 years

29. 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 €7.7 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 €7.5 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.

INTEGRATED ANNUAL REPORT 2021

209

However, on 20 June 2019 the same plaintiff filed a new lawsuit against Coca-Cola HBC Greece S.A.I.C. claiming payment of €10.1 million ascompensation for losses and moral damages again for alleged anti-competitive commercial practices of Coca-Cola Hellenic BottlingCompany S.A. for the same period between 1994 and 2013. On 16 July 2021, the Athens Multimember Court of First Instance issued its
judgment number 1929/2021 (hereinafter the ‘Judgment’), which adjudicates that Coca-Cola HBC Greece S.A.I.C. is obliged to pay to theplaintiff an amount of circa €0.9 million plus interest as of 31 December 2003. Both Coca-Cola HBC Greece S.A.I.C. and the plaintiff haveappealed against this decision to the court of appeals. Both appeals have been scheduled to be heard on 19 January 2023. Management
believes that any liability to the Group that may arise as a result of these pending legal proceedings will not have a material adverse effect on
the results of operations, cash flows, or the financial position of the Group taken as a whole.
With respect to the ongoing investigation of the Greek Competition Commission initiated on 6 September 2016, regarding Coca-Cola HBC
Greece S.A.I.C.’s operations in certain commercial practices in the non-alcoholic beverages market, the Rapporteur of the Greek
Competition Commission appointed for this case issued her Statement of Objections on 5 July 2021. According to this Statement of
Objections, Coca-Cola HBC Greece S.A.I.C. has allegedly breached Article 2 of Law 3959/2011 and Article 102 of ‘Treaty on the Functioningof the European Union‘ (‘TFEU‘) in the Greek on-premise market for the sale of cola and non-cola beverages. In particular, according to thisStatement of Objections, during the period 2015-2020, Coca-Cola HBC Greece S.A.I.C. allegedly undertook a series of anti-competitive
practices in the relevant market, thereby excluding competitors and limiting their growth possibilities. The Statement of Objections
recommends that the Greek Competition Commission should impose a fine upon Coca-Cola HBC Greece S.A.I.C., and that the latter isrequired to omit the allegedly anti-competitive practices in the future. The Statement of Objections is not binding on the Greek Competition
Commission, which will decide on the case after it has taken into consideration all evidence, as well as the arguments put forward by all theparties involved. Coca-Cola HBC Greece S.A.I.C. has vigorously defended its commercial practices, in rebuttal of the allegations set out in
the Statement of Objections. The hearing of the case, before the plenary session of the Greek Competition Commission, was concluded
on 29 November 2021 and the supplementary briefs of the parties were submitted on 16 December 2021. At this stage, it is difficult topredict with certainty the outcome of the hearing and the timing of the decision by the Greek Competition Commission.
In 1992, our subsidiary Nigerian Bottling Company (‘NBC’) acquired a manufacturing facility in Nigeria from Vacunak, a Nigerian company.
In 1994, Vacunak filed a lawsuit against NBC, alleging that a representative of NBC had orally agreed to rescind the sale agreement and instead
enter into a lease agreement with Vacunak. As part of its lawsuit, Vacunak sought compensation for rent and loss of business opportunities.
NBC discontinued all use of the facility in 1995. On 19 August 2013, NBC received the written judgment of the Nigerian court of first instanceissued on 28 June 2012 providing for damages of approximately €17.2 million. NBC has filed an appeal against the judgment. Based on advice
from NBC’s outside legal counsel, we believe that it is unlikely that NBC will suffer material financial losses from this case. We have consequently
not provided for any losses in relation to this case.
In May 2021, the European Commission sent CCH a questionnaire as part of a preliminary investigation into a possible infringement by a CCH
subsidiary, Coca-Cola European Partners, and The Coca-Cola Company of EU competition rules through the granting of conditional rebates
to ’off-trade’ customers capable of foreclosing competition from other suppliers. CCH’s subsidiary will vigorously defend its commercial
practices and is actively co-operating with the European Commission. The fact that the European Commission is carrying out a preliminary
investigation does not mean that it will open formal proceedings. It is not possible to predict how long the investigation will take and its
ultimate outcome.
The tax filings of the Group and its subsidiaries are routinely subjected to audit by tax authorities in most of the jurisdictions in which the Group
conducts business. These audits may result in assessments of additional taxes. The Group provides for additional tax in relation to the outcomeof 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 resultof these pending legal proceedings will not have a material adverse effect on the results of operations, cash flows, or the financial positionof the Group taken as a whole.

30. Commitments
Capital commitments
As at 31 December 2021, the Group had capital commitments for property, plant and equipment amounting to €166.1 million(2020: €115.4 million). Of this, €9.0 million are related to the Group’s share of the commitments arising from joint ventures (2020: €3.0 million).
Capital commitments for 2021 include total future minimum lease payments under leases not yet commenced to which the Group wascommitted at 31 December 2021 of €18.1 million (2020: €11.9 million).

31. Post balance sheet eventsa) Acquisition of Coca-Cola Bottling Company of Egypt S.A.E.
On 12 August 2021, the Group entered into a sale and purchase agreement to acquire approximately 52.7% of Coca-Cola BottlingCompany of Egypt S.A.E. (‘CCBCE’), the bottling partner of The Coca-Cola Company (‘TCCC’) in Egypt, from MAC Beverages Limited
and certain of its affiliated entities (‘MBL acquisition’). The MBL acquisition was completed on 13 January 2022 and resulted in the Groupobtaining control over CCBCE.
The acquisition of CCBCE expands the Group’s existing footprint on the African continent and further increases its exposure to high-growthmarkets, as it provides access to one of the largest non-alcoholic ready-to-drink markets by volume in Africa. In addition, sharing of the Group’s
proven capabilities, experience and best practices with CCBCE is expected to unlock growth opportunities, creating value for all stakeholders.

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COCA-COLA HBC

Notes to the consolidated financial statements continued
31. Post balance sheet events continued
The operating results and assets and liabilities of CCBCE will be consolidated from 14 January 2022.
The fair value of the consideration for the MBL acquisition consists of €264.9 million, which has already been transferred, and an additional
payment that is to be determined, following discussions and conditions agreed between the Group and MBL, based on CCBCE’s past
performance, net financial position and working capital movement.
As part of the MBL acquisition completion, a convertible loan which had been granted to CCBCE from a wholly-owned affiliate of TCCC,
one of its major shareholders, was also transferred to the Group for a consideration of €19.1 million. The consideration was equal to theoutstanding principal amount of the convertible loan and any unpaid interest at the time of its transfer. The loan is convertible at its maturity
in March 2022 into new CCBCE shares at fair market value and was eliminated upon consolidation of CCBCE.
Details of the MBL acquisition with regard to provisionally determined fair values of the net assets acquired, non-controlling interests andgoodwill are as follows:
Fair Value€ million

Franchise agreements
Property, plant and equipment
Inventories
Trade, other receivables and assets
Cash and cash equivalents
Borrowings
Trade and other payables
Net deferred tax liabilities
Net identifiable assets acquired
Less: Non-controlling interests
Add: Goodwill arising on acquisitions
Net assets acquired

367.7
315.3
59.2
65.2
15.9
(217.0)(127.4)(121.9)357.0(169.0)76.9
264.9

The table above excludes the additional payment that may adjust the provisionally determined fair values of the net assets acquired,
non-controlling interests and goodwill.
Fair values on acquisition are provisional due to the timing of the transaction and will be finalised within 12 months of the acquisition date.
The goodwill is attributable to CCBCE’s strong market position and growth potential. The line ‘Borrowings’ in the above table includes theconvertible loan as well as third-party loans of €122.7 million, which have been repaid and replaced with intra-group borrowings. The Grouphas chosen to recognise the non-controlling interests at their proportionate share of the fair value of CCBCE’s net identifiable assets acquired.
On 12 August 2021, the Group entered into an additional sale and purchase agreement to acquire approximately 42% of Coca-Cola BottlingCompany of Egypt S.A.E. (‘CCBCE’), from a wholly-owned affiliate of TCCC (‘TCCC acquisition’). The TCCC acquisition was completed
on 25 January 2022.
The fair value of the consideration paid for the TCCC acquisition amounted to €108.9 million. The transaction was treated as separate to
the MBL acquisition, considering that whilst the transactions above were entered into at the same time and in contemplation of each other,
they are separate from a commercial and contractual perspective and, as such, they are treated as two separate transactions. The TCCC
acquisition was accordingly accounted for as an equity transaction.
Following the completion of both the transactions, the Group holds a 94.7% interest in CCBCE.

b) Other subsequent events
Τhe events involving Ukraine and Russia during the first quarter of 2022 have, among other things, resulted in increased volatility in currency
markets causing the Russian Rouble and the Ukrainian Hryvnia to depreciate significantly against some major currencies. As of 11 March
2022, the Russian Rouble and the Ukrainian Hryvnia had depreciated by approximately 72% and 8% respectively against the Euro, comparedto the 31 December 2021 exchange rates.
On 8 March 2022, The Coca-Cola Company (‘TCCC’) announced that it is suspending its business in Russia. At the time of publication,
the Group is working closely with TCCC to implement this decision.
The Group is currently assessing the financial effect of the above on its Russia and Ukraine operations. No impact to the Group’s ability
to continue as a going concern has been identified because of this event.
The 2021 operating profit from Ukraine and Russia (including share of results of Multon joint venture, our Russian juice business) represented
approximately 2% and 18% respectively of the Group’s consolidated operating profit, while non-current assets represented approximately
1% and 9% respectively of the Group’s total non-current assets as at 31 December 2021.
Management is continuously monitoring developments in the area to ensure timely actions and initiatives are undertaken to minimise any
adverse impact to the Group.
On 15 March 2022, the Remuneration Committee granted 1,220,231 performance share awards under the performance share plan, whichhave a three-year vesting period.

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211

Swiss
Statutory
ReportingContents
Swiss Statutory Reporting
212
216
219
232
233

Report of the statutory auditor on Coca‑Cola
HBC AG’s consolidated financial statements
Report of the statutory auditor on Coca‑Cola
HBC AG’s financial statements
Coca‑Cola HBC AG’s financial statements
Report of the statutory auditor on the Statutory
Remuneration Report
Statutory Remuneration Report

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COCA-COLA HBC

Swiss statutory reporting

Report of the statutory auditor
to the General Meeting ofCoca-Cola HBC AG
Steinhausen (Zug)

Report on the audit of the consolidated financial statements
OpinionWe have audited the consolidated financial statements of Coca-Cola HBC AG and its subsidiaries (the Group), which comprise the consolidated
income statement and consolidated statement of comprehensive income for the year ended 31 December 2021, the consolidated balance
sheet as at 31 December 2021 and the consolidated statement of changes in equity and consolidated cash flow statement for the year thenended, including the notes to the consolidated financial statements and a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements (pages 154 to 210) give a true and fair view of the consolidated
financial position of the Group as at 31 December 2021 and its consolidated financial performance and its consolidated cash flows for theyear then ended in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) andcomply with Swiss law.

Basis for opinion
We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss Auditing Standards.
Our responsibilities under those provisions and standards are further described in the “Auditor’s responsibilities for the audit of theconsolidated financial statements” section of our report.
We are independent of the Group in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession, as wellas the International Code of Ethics for Professional Accountants (including International Independence Standards) of the International Ethics
Standards Board for Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Our audit approach
Overview
Overall Group materiality:
Audit scope

Key audit matters€ 36.7 million
We conducted full scope audit procedures on the financial information of 15 subsidiaries and one joint
venture in 14 countries spread across all of the Group’s reportable segments. We also conducted
procedures around specific account balances and transactions and analytical review procedures for othersubsidiaries and Group functions. Our audit scope addressed 85% of consolidated net sales revenue, 84%of consolidated profit before tax and 87% of consolidated total assets of the Group.
As key audit matters the following areas of focus have been identified:• Goodwill and indefinite-lived intangible assets impairment assessment• Uncertain tax positions

Materiality
The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable assurance that theconsolidated financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are consideredmaterial if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basisof the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group materiality
for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us
to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements,
both individually and in aggregate, on the consolidated financial statements as a whole.
Overall Group materiality€ 36’700’000
Benchmark applied
Profit before tax
Rationale for the materiality We chose profit before tax as the benchmark because, in our view, it is the benchmark against whichbenchmark applied
the performance of the Group is most commonly measured, and it is a generally accepted benchmark.
We agreed with the Audit and Risk Committee that we would report to them misstatements above € 1.5 million identified during our audit
as well as any misstatements below that amount which, in our view, warranted reporting for qualitative reasons.

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213

Audit scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial
statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which theGroup operates.
The Group operates through its trading subsidiaries in 27 European countries and in Nigeria, as set out in Notes 1 and 6 to the consolidated
financial statements. The processing of the accounting records for these subsidiaries is largely centralised in a shared services centre in
Bulgaria, except for the subsidiaries in Russia, Ukraine, Belarus, Armenia and North Macedonia, which process their accounting records locally.
The Group also operates centralised treasury functions in the Netherlands and in Greece and a centralised sourcing function in the
Netherlands for the procurement of key raw materials.
Based on the significance to the consolidated financial statements and in light of the key audit matters as noted below, we identified
15 subsidiaries and one joint venture in 14 countries spread across all of the Group’s reportable segments (including the trading subsidiaries
in Russia, Italy, Nigeria, Poland, Romania, and Switzerland) which, based on our scoping analysis, required a full scope audit of their financial
information. In addition, audit procedures were performed with respect to the centralised treasury functions by the group engagement teamin Greece and with respect to the centralised procurement function by the component audit team in the Netherlands. The groupengagement team also performed analytical review and other procedures on balances and transactions of subsidiaries not covered by theprocedures described above.
As the Swiss statutory auditor, we issued group audit instructions to PwC Greece, who has the responsibility as the group audit engagement
team for the Company’s reporting requirements for the London Stock Exchange. These instructions covered the scope of our group audit
to enable us to fulfil our responsibilities under Swiss law. As the ultimate group engagement team, we had ongoing interactions with the groupengagement team in Greece to be continuously updated and to monitor their progress and results of their procedures. We reviewed the
instructions which PwC Greece issued to component audit teams regarding centralised audit procedures performed at the shared services
centres in Bulgaria and Greece and shared audit comfort with component teams as it relates to IT general controls, cybersecurity risks andthe upgrade of the Group’s ERP system. We reviewed working papers and undertook additional interactions as considered necessary
depending on the significance of the component, accounting and audit matters. The Group consolidation, financial statement disclosuresand a number of areas of significant judgement and estimates, including goodwill and intangible assets and the Group’s overall going concern
assessment, were audited by the group engagement team together with PwC Greece.
Due to the travel and other restrictions put in place in response to the COVID-19 pandemic, the group engagement team held frequentvirtual meetings to oversee the work performed by the group and component audit teams. As the ultimate group engagement team, we held
remote meetings and discussions with the management of the trading subsidiaries in Russia, Italy, Poland, Romania, Switzerland and the
management of the joint venture in Russia to discuss business performance and outlook, matters relating to the ongoing COVID-19
pandemic, regulation and taxation, and any specific accounting and auditing matters identified, including fraud and internal controls.
Based on the above, the subsidiaries and joint venture which were in the scope for the purposes of the group audit accounted for 85%
of consolidated net sales revenue, 84% of consolidated profit before tax and 87% of consolidated total assets of the Group. This, together
with the additional procedures performed by us as group engagement team, provided us with sufficient appropriate evidence for our audit
opinion on the consolidated financial statements.

Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial
statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements
as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

214

COCA-COLA HBC

Swiss statutory reporting continued
Goodwill and indefinite-lived intangible assets impairment assessment
Key audit matter

How our audit addressed the key audit matter

We evaluated the appropriateness of management’s identificationof the Group’s CGUs, related control activities and the process by
Goodwill and indefinite-lived intangible assets (franchise agreements
which management prepared the CGUs’ value-in-use calculations.
and trademarks) as at 31 December 2021 amount to €1,759.3 million
We tested the mathematical accuracy of the CGUs’ value-in-use
and €269.6 million, respectively.
calculations and compared the cash flow projections included therein
The above amounts have been allocated to individual cash-generating
to the financial budgets approved by the Board of Directors, covering
units (CGUs), which in accordance with International Accounting
a one-year period and management’s projections for the subsequentStandard (IAS) 36 require the performance of an impairment
four years. In addition, we assessed the reliability of the cash flow
assessment at least annually, or whenever there is an indication ofprojections by comparing key elements of the prior year projections
impairment. The impairment assessment involves the determination
with actual results.
of the recoverable amount of the CGU, being the higher of the
We challenged management’s cash flow projections in relation tovalue-in-use and the fair value less costs to sell.
the assumptions applied to the value-in-use calculations focusing
This area was a key matter for our audit due to the size of the goodwill
on future performance in light of the gradual recovery from theand indefinite-lived intangible assets balances and because the
COVID-19 pandemic with respect to short-term and long‑term
determination of whether elements of goodwill and of indefinite-lived
revenue growth rates and the level of costs.
intangible assets are impaired involves complex and subjective
With the support of our valuation specialists, we assessed theestimates and judgements made by management about the future
appropriateness of certain assumptions including discount, annual
results of the CGUs. These estimates and judgements include
revenue growth, perpetuity revenue growth and foreign exchange
assumptions surrounding revenue growth rates, costs, foreign
rates.We also evaluated management’s assessment of the potential
exchange rates and discount rates.
effect of climate change to the cost of water.
Furthermore, the COVID-19 pandemic, macroeconomic volatility,
We performed our independent sensitivity analyses on the key drivers
competitor activity and regulatory/fiscal developments couldof the value-in-use calculations for the CGUs with significant balances
adversely affect each CGU and potentially the carrying amountof goodwill and indefinite-lived intangible assets.
of goodwill and indefinite-lived intangible assets.
Refer to Note 13 Intangible Assets including goodwill.

Management has identified the Italy CGU to be sensitive to possible
changes in the assumptions used, which could result in the calculated
recoverable amount being lower in future periods than the carrying
value of the CGU. Additional sensitivity disclosure has been includedin the consolidated financial statements in respect of this CGU.
No impairment charge was recorded in 2021.

As a result of our work, we found that the determination by
management that no impairment was required for goodwill andindefinite-lived intangible assets was supported by assumptions
within reasonable ranges.
We assessed the appropriateness and completeness of the related
disclosures in Note 13, as regards to goodwill and indefinite-lived
intangible assets, and considered them to be reasonable.

Uncertain tax positions
Key audit matter

How our audit addressed the key audit matter

Refer to Note 10 Taxation and Note 29 Contingencies.

In order to understand and evaluate management’s judgements,
we considered the status of current tax authority inspections
and enquiries, the outcome of previous tax authority inspections,judgemental positions taken in tax returns and current year estimates
as well as recent developments in the tax jurisdictions in which theGroup operates.

The Group operates in numerous tax jurisdictions and is subject toperiodic tax inspections by local tax authorities, in the normal courseof business, on a range of tax matters in relation to corporate tax,
transfer pricing and indirect taxes.
As at 31 December 2021, the Group has current tax liabilitiesof €80.1 million, which include €52.6 million of provisions for tax
uncertainties.
The impact of changes in local tax regulations and ongoinginspections by local tax authorities could materially impact theamounts recorded in the consolidated financial statements.
Where the amount of tax payable is uncertain, the Group establishes
provisions based on management’s estimates with respect tothe likelihood of material tax exposures and the probable amountof the liability.

We challenged management’s key assumptions, particularly in cases
where there had been significant developments with tax authorities.
Our component audit teams, through the use of tax specialists withlocal knowledge and relevant expertise, assessed the tax positions
taken by the subsidiary in scope, in the context of applying local tax
laws and evaluating the local tax assessments. Additionally, with ourgroup engagement team tax specialists, we further evaluatedmanagement’s judgements in respect of estimates of tax exposuresand contingencies in order to assess the adequacy of the Group’s tax
provisions.

We consider this a key audit matter given the level of judgements and We held virtual meetings with local management to discuss theuncertainty involved in estimating tax provisions and the complexity
individual tax position of the in-scope subsidiaries and with the groupof dealing with tax rules and regulations in numerous jurisdictions.
engagement team tax specialist for the Group’s overall tax exposure.
From the evidence obtained we consider the provisions in relation
to uncertain tax positions as at 31 December 2021 to be reasonable.
We also assessed the related disclosures provided in Notes 10 and 29
to the consolidated financial statements and concluded that these
are appropriate.

INTEGRATED ANNUAL REPORT 2021

215

The impact of the COVID-19 pandemic, which was a key audit matter last year, continued to be an area of focus in light of uncertainty overthe effective containment of the pandemic and any potential impact to the Group. The audit procedures performed did not identify any
significant impact on the control environment, as a result of the COVID-19 pandemic and remote working, the recoverability of tradereceivables or management’s assessment of the going concern basis of accounting. Having considered the gradual recovery from the
COVID-19 pandemic and the audit effort required in 2021 and to the date of this audit report, the impact of the COVID-19 pandemic
is no longer included as a key audit matter.

Other information in the annual report
The Board of Directors is responsible for the other information in the annual report. The other information comprises all information includedin the annual report, but does not include the consolidated financial statements, the stand-alone financial statements and the remuneration
report of Coca-Cola HBC AG and our auditor’s reports thereon.
Our opinion on the consolidated financial statements does not cover the other information in the annual report and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information in the annual report
and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Board of Directors for the consolidated financial statements
The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and fair view in accordancewith IFRS and the provisions of Swiss law, and for such internal control as the Board of Directors determines is necessary to enable thepreparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is 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 Boardof Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high levelof assurance, but is not a guarantee that an audit conducted in accordance with Swiss law, ISAs and Swiss Auditing Standards will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually orin the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.
A further description of our responsibilities for the audit of the consolidated financial statements is located at the website of EXPERT-suisse:
http://expertsuisse.ch/en/audit-report-for-public-companies. This description forms part of our auditor’s report.

Report on other legal and regulatory requirements
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists
which has been designed for the preparation of consolidated financial statements according to the instructions of the Board of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
PricewaterhouseCoopers AG

Sandra Boehm Uglow
Audit Expert
Auditor In Charge

Mei Ling Ow
Audit Expert

Zurich, 23 March 2022

PricewaterhouseCoopers AG is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate
and independent legal entity. Please see www.pwc.com/structure for further details.

216

COCA-COLA HBC

Swiss statutory reporting continued

Report of the statutory auditor
to the General Meeting ofCoca-Cola HBC AG
Steinhausen (Zug)

Report on the audit of the financial statements
OpinionWe have audited the financial statements of Coca-Cola HBC AG (the Company), which comprise the balance sheet as at 31 December 2021,
statement of income, cash flow statement and notes for the year then ended, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements (pages 219 to 230) as at 31 December 2021 comply with Swiss law and the Company’s
articles of incorporation.

Basis for opinion
We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Our responsibilities under those provisions
and standards are further described in the “Auditor’s responsibilities for the audit of the financial statements” section of our report.
We are independent of the entity in accordance with the provisions of Swiss law and the requirements of the Swiss audit profession andwe have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.

Our audit approach
Materiality
The scope of our audit was influenced by our application of materiality. Our audit opinion aims to provide reasonable assurance that thefinancial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if,
individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of thefinancial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall materiality for thefinancial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine thescope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individuallyand in aggregate, on the financial statements as a whole.
Overall materiality
CHF 32’300’000
Benchmark applied
Net assets
Rationale for the materiality We chose net assets as the benchmark because, in our view, it is the benchmark which reflects the actual
benchmark applied
substance of the entity. This is a generally accepted benchmark for ultimate holding companies.

INTEGRATED ANNUAL REPORT 2021

217

Audit scope
We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. In particular,
we considered where subjective judgements were made; for example, in respect of significant accounting estimates that involved making
assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management
override of internal controls, including among other matters consideration of whether there was evidence of bias that represented a riskof material misstatement due to fraud.
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as awhole, taking into account the structure of the entity, the accounting processes and controls, and the industry in which the entity operates.

Report on key audit matters based on the circular 1/2015 of the Federal Audit
Oversight Authority
We have determined that there are no key audit matters to communicate in our report.

Responsibilities of the Board of Directors for the financial statements
The Board of Directors is responsible for the preparation of the financial statements in accordance with the provisions of Swiss law and theCompany’s articles of incorporation, and for such internal control as the Board of Directors determines is necessary to enable the preparationof financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the entity’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 Board of Directors
either intends to liquidate the entity or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with Swiss law and Swiss Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located at the website of EXPERT-suisse:
http://expertsuisse.ch/en/audit-report-for-public-companies. This description forms part of our auditor’s report.

218

COCA-COLA HBC

Swiss statutory reporting continued
Report on other legal and regulatory requirements
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists
which has been designed for the preparation of financial statements according to the instructions of the Board of Directors.
We further confirm that the proposed appropriation of reserves complies with Swiss law and the Company’s articles of incorporation.
We recommend that the financial statements submitted to you be approved.
PricewaterhouseCoopers AG

Sandra Boehm Uglow
Audit Expert
Auditor In Charge

Mei Ling Ow
Audit Expert

Zurich, 23 March 2022
Enclosures:• Financial statements (balance sheet, statement of income, cash flow statement and notes)• Proposed appropriation of reserves

PricewaterhouseCoopers AG is a member of the global PricewaterhouseCoopers network of firms, each of which is a separate
and independent legal entity. Please see www.pwc.com/structure for further details.

INTEGRATED ANNUAL REPORT 2021

219

Coca-Cola HBC AG, Steinhausen (Zug)
Balance sheet
As at 31 December
CHF thousands

ASSETSCash and cash equivalents
Short-term receivables from direct and indirect participations
Receivables from related parties
Short-term receivables from third parties
Total current assets
Investments in subsidiaries
Property, plant and equipment (incl. right-of-use assets)
Total non-current assets
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Trade payables due to third parties
Short-term liabilities to direct and indirect participations
Short-term lease liabilities
Accrued expenses
Total short-term liabilities
Long-term interest-bearing liabilities to indirect participations
Long-term lease liabilities
Provisions
Total long-term liabilities
Share capital
Legal capital reserves
Reserves from capital contributions
Reserves for treasury shares
Retained earnings
Results carried forward
Loss for the year
Treasury shares
Total shareholders’ equity
Total liabilities and shareholders’ equity

2021

2020

2,026
12,047338
1,491
15,902
6,710,376
4,936
6,715,312
6,731,214

1,880
13,9481,677
1,223
18,7286,966,457
1,875
6,968,332
6,987,060

2.6

1,713
3,149
704
47,74353,309204,482
2,127
15,987
222,596
2,491,029

1,192
4,140
397
28,73534,464
223,668507
10,519234,6942,482,434

2.7

3,982,078
85,2984,229,620
85,29818,260(33,852)(87,504)
6,455,309
6,731,214

42,803(24,543)(97,710)
6,717,902
6,987,060

Note

2.1
1
1
2.2

2.3
2.3
2.4
2.5

2.7
2.8

220

COCA-COLA HBC

Swiss statutory reporting continued

Coca-Cola HBC AG, Steinhausen (Zug)
Statement of income
Note

Year ended 31 December
CHF thousands
2021

2020

256,081
38,320294,401

247,408
23,938271,346(48,278)(16,585)(256,081)(743)(321,687)(27,428)(13,114)(247,408)(565)(288,515)

Operating loss

(27,286)(17,169)

Finance costs(6,403)(7,199)Loss before tax
Direct taxes(33,689)(163)(24,368)(175)

Loss for the year

(33,852)(24,543)

Dividend income
Other operating income
Total operating income
Employee costs
Other operating expenses
Write down of investments
Depreciation on property, plant and equipment (incl. right-of-use assets)
Total operating expenses

2.9

2.10
2.11
2.2

INTEGRATED ANNUAL REPORT 2021

221

Coca-Cola HBC AG, Steinhausen (Zug)
Cash flow statement
Year ended 31 December
CHF thousands
Note

Loss for the year
Depreciation property, plant and equipment
Finance costs
Write down of investments
Net change related to employee performance share plan

Decrease/(increase) in receivables
Decrease in investments in subsidiaries
Decrease in short-term liabilities (excl. financial liabilities)
Increase/(decrease) in accrued expenses
Increase in provisions
Proceeds from dividends received from subsidiaries
Tax paid
Net cash inflow from operating activities
Payments for purchases of property, plant and equipment
Cash outflow from investing activities
Principal repayments of lease obligations
Proceeds from long-term financial liabilities
Repayments of long-term financial liabilities
Dividends paid to owners of the Company
Proceeds from shares issued to employees exercising stock options
Interest paid
Net cash outflow from financing activities
Net increase in cash and cash equivalents
Movement in cash and cash equivalents
Cash and cash equivalents at 1 January
Net increase in cash and cash equivalents
Effect of changes in exchange rates
Cash and cash equivalents at 31 December

2.2

2.2

2.2

2021

2020

(33,852)743
6,403
256,081
22,376(24,543)
565
7,199
247,408
12,633

251,751
2,972(256,081)(631)
12,416160
256,081(181)
266,487

243,262(572)(247,408)(1,977)(2,449)35
247,408(220)
238,079(1,471)(1,471)

(106)
(106)

(405)
5,708
(24,894)(260,250)
21,303(6,244)(264,782)
234

(421)
16,139(8,748)(244,737)
8,162(6,558)(236,163)
1,810

1,880
234
(88)
2,026

48
1,810
22
1,880

222

COCA-COLA HBC

Swiss statutory reporting continued

Notes to the Financial Statements of Coca-Cola HBC AG,
Steinhausen (Zug)Introduction
Coca-Cola HBC AG (‘the Company’) was incorporated on 19 September 2012 by Kar-Tess Holding. On 11 October 2012, the Company
announced a voluntary share exchange offer to acquire all outstanding ordinary registered shares and all American depositary sharesof Coca-Cola Hellenic Bottling Company S.A., Maroussi (GR) (‘CCHBC SA’). As a result of the successful completion of this offer, on 25 April
2013 the Company acquired 96.85% of the issued CCHBC SA shares, including shares represented by American depositary shares, andbecame the new parent company of the Group (the Company and its direct and indirect subsidiaries). On 17 June 2013, the Company
completed its statutory buy-out of the remaining shares of CCHBC SA that it did not acquire upon completion of its voluntary shareexchange offer.

1. Accounting principles
Accounting principles applied in the preparation of the financial statements
These financial statements have been prepared in accordance with the provisions of commercial accounting as set out in the Swiss Code ofObligations (Art. 957 to 963b CO). From 1 January 2021, the Company has prepared its consolidated financial statements in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) in accordance with Art. 963b CO due to a requirementfrom the Athens Exchange, its primary listing in the EU. In accordance with Art. 961 para 2. CO, the Company is presenting a cash flow
statement. Significant accounting and valuation principles are described below:

Dividend income
Dividend income is recognised when the right to receive payment is established.

Other operating income
The Company provides management services to its principal subsidiaries and acts as guarantor to its principal subsidiary, Coca-Cola HBC
Finance B.V. The income from these services is recognised in the accounting period in which the service is provided.

Exchange rate differences
The accounting records of the Company are maintained in Euros and translated to Swiss francs (CHF) for presentation purposes. Except forinvestments in subsidiaries, property, plant and equipment, long-term liabilities and equity, which are translated at historical rates, all assets
and liabilities denominated in foreign currencies are translated into CHF using the closing exchange rate as at 31 December 2021. Income
and expenses are translated into CHF at the average exchange rate of the reporting year except for dividend income and related write downof investments (see Note 2.2) which are valued at the transaction date exchange rate. Net unrealised exchange losses are recorded in theincome statement, while net unrealised gains are deferred within accrued expenses.
Exchange rates

Balance sheet as at
31 December 2021
31 December 2020

EUR
USD
GBP

1.04
0.91
1.23

Income statement for the year ended
31 December 2021
31 December 2020

1.08
–
–

1.08
0.88
1.19

1.07
–
–

Leasing disclosures
Management has applied an economic-view approach to the disclosure of lease contracts considering the underlying usage rights.
Right‑of‑use assets are presented within property, plant and equipment and depreciated over their useful life. The short- and long-termlease liabilities are adjusted for interest and lease payments.

Investments in subsidiaries
Investments in subsidiaries are valued at historical cost and evaluated for impairment if identified triggering events occur.

Property, plant and equipment
Right-of-use assets are included within property, plant and equipment.
Depreciation is calculated on the basis of the following useful lives and in accordance with the following methods:
Property, plant and equipment

Leasehold improvement (building)Leasehold improvement (office infrastructure)
Building infrastructure
Right-of-use buildings and Company cars
Furniture and fixtures, office equipment and other tangible fixed assets
Telephony infrastructure
Communication equipment, computers and PCs
Tablets

Useful life

Method20 years
10 years
12 years
Shorter of usefullife and lease term
8 years
7 years
4 years
3 years

5% linear
10% linear
8.33% linear
Linear
12.5% linear
14.29% linear
25% linear
33.33% linear

INTEGRATED ANNUAL REPORT 2021

223

1. Accounting principles continued
Treasury shares
Treasury shares are recognised at acquisition cost and deducted from shareholders’ equity at the time of acquisition. If treasury shares
are sold, the gain or loss arising is recognised in the income statement as finance income or finance cost as appropriate.

Receivables from related parties
As at 31 December 2021 receivables from related parties are disclosed separate from short-term receivables from third parties.
Comparative figures have been reclassified where necessary to conform with changes in presentation in the current year. More specifically,receivables from related parties of CHF 1,677 thousand have been reclassified from ‘Short-term receivables from third parties’ to ‘Receivablesfrom related parties’.

2. Information relating to the balance sheet and statement of income
2.1 Short-term receivables from direct and indirect participations
The short-term receivables from direct and indirect participations do not bear interest.
As at 31 December
CHF thousands
2021

Name of participation

14
11,221606
11
195
12,047

Coca-Cola Holdings II B.V., Amsterdam
CCB Management Services GmbH, Vienna
Coca-Cola HBC Finance B.V., Amsterdam
Coca-Cola Holdings B.V., Amsterdam
Coca-Cola Hellenic Business Service Organisation, Sofia
Short-term receivables from direct and indirect participations

2020–
13,177668–
103
13,9482.2 Investments in subsidiaries
Direct subsidiary

Coca-Cola HBC Holdings B.V., Amsterdam1
Write down of investment
Investments in subsidiaries

Share of capital

Share of votes

100%

100%

100%

100%

As at 31 December
CHF thousands
2021

6,966,457(256,081)
6,710,376

2020

7,213,865(247,408)
6,966,457

1. Coca-Cola HBC Holdings B.V., Amsterdam was incorporated on 26 June 2013.

In 2015 the Company adopted a practice of reducing the value of its investment in Coca-Cola HBC Holdings B.V. by an amount equal
to the dividend received from that subsidiary. The amount of the write down in 2021 is equal to the dividend received in August 2021 from
Coca‑Cola HBC Holdings B.V. of CHF 256,081 thousand (2020: CHF 247,408 thousand).
The principal direct and indirect participations of the Company are disclosed in Note 15 to the consolidated financial statements.

2.3 Short-term liabilities to direct and indirect participations and accrued expenses
The short-term liabilities to the direct and indirect participations do not bear interest except for the liability to Coca-Cola HBC Finance B.V.,
which is interest-bearing.
Name of participation

As at 31 December
CHF thousands
2021

CCB Management Services GmbH, Vienna
Coca-Cola Hellenic Business Service Organisation, Sofia
Coca-Cola HBC Switzerland
Coca-Cola HBC Finance B.V., Amsterdam
Coca-Cola HBC Northern Ireland Ltd., Lisburn
Coca-Cola HBC Services MEPE, Athens
Total short-term liabilities to direct and indirect participations

1,724
74
4
1,338
–
9
3,149

Accrued expenses

As at 31 December
CHF thousands
2021

Direct taxes
Management incentive plan and Performance Share Plan for own employees
Employee-related costs (social security & insurance, payroll taxes)
Provision for acquiring treasury shares to satisfy subsidiaries’ Performance Share Plan rights
Other accrued expenses
Net unrealised gains from foreign currency translation
Total accrued expenses

188
15,871
4,553
7,542
7,291
12,29847,743

2020

2,469
16
–
1,633
6
16
4,140

2020

215
7,097
3,779
4,293
6,360
6,991
28,735

224

COCA-COLA HBC

Swiss statutory reporting continued
Following the publication of circular letter 37a by the Swiss Federal Tax Administration in May 2018, the Company has recognised a provisionof CHF 13,563 thousand (2020: CHF 7,848 thousand) that relates to the Company’s employees Performance Share Plan, of which CHF 6,975
thousand (2020: CHF 3,672 thousand) is short term and is disclosed in the line item Management Incentive Plan and Performance Share Planfor own employees; while CHF 6,588 thousand (2020: CHF 4,176 thousand) is long term and disclosed in Note 2.5, ‘Provisions’. The provision
for acquiring treasury shares to satisfy subsidiaries’ Performance Share Plan rights amounts to CHF 16,117 thousand (2020: CHF 10,152
thousand) of which CHF 7,542 thousand (2020: CHF 4,293 thousand) is short term and disclosed in accrued expenses while CHF 8,575
thousand (2020: CHF 5,859 thousand) is long term and disclosed in Note 2.5, ‘Provisions’.

2.4 Long-term interest-bearing liabilities
As at 31 December
CHF thousands
2021

204,482
204,482

Coca-Cola HBC Finance B.V., AmsterdamLong-term interest-bearing liabilities

2020

223,668
223,668

Long-term interest-bearing liabilities comprise loans from Coca-Cola HBC Finance B.V. received in 2019, 2020 and 2021 for CHF 184,637
thousand (2020: CHF 207,577 thousand) maturing on 8 November 2024; and CHF 19,845 thousand (2020: CHF 16,091 thousand) maturing
21 November 2029.

2.5 Provisions
As at 31 December
CHF thousands
2021

Long-term Incentive Plan
Provision for acquiring treasury shares to satisfy subsidiaries’ Performance Share Plan rights (refer to Note 2.3)
Performance Share Plan Coca-Cola HBC AG employees (refer to Note 2.3)
Provision for social security costs of Performance Share Plan
Provisions

330
8,575
6,588
494
15,987

2020

171
5,859
4,176
313
10,5192.6 Share capital
Number of shares

Share capital as at 1 January 2020
Shares issued to employees exercising stock options
Share capital as at 31 December 2020

Share capital as at 1 January 2021
Shares issued to employees exercising stock options
Share capital as at 31 December 2021

Nominal value

Total

CHF

CHF thousands

369,930,157
582,440
370,512,597

6,70
6,70
6,70

2,478,532
3,902
2,482,434

Number of shares

Nominal value

Total

CHF

CHF thousands

6,70
6,70
6,70

2,482,434
8,595
2,491,029

370,512,597
1,282,821
371,795,418

INTEGRATED ANNUAL REPORT 2021

225

2. Information relating to the balance sheet and statement of income continued
2.7 Treasury shares
The number of treasury shares held by Coca-Cola HBC AG and its subsidiaries qualifying under article 659b of the Swiss Code of Obligations
and their movements are as follows:
Number of shares

Acquisition cost
per share
CHF

Total
CHF thousands

Total treasury shares as at 31 December 2020

3,430,135

24,8673

85,298

Total treasury shares as at 31 December 2021

3,430,135

24,8673

85,298

Number of shares

Acquisition cost
per share

Total

CHF

CHF thousands

Treasury shares (held by subsidiaries)

Treasury shares held by the Company

Treasury shares held by the Company as at 1 January 2020
Vested PSP shares1
Treasury shares held by the Company as at 31 December 2020

3,228,098(468,818)
2,759,280

35,3599
35,0561
35,4115(114,145)
16,435(97,710)

Treasury shares held by the Company as at 1 January 2021
Vested PSP shares2
Treasury shares held by the Company as at 31 December 2021

2,759,280(294,832)
2,464,448

35,4115
34,6160
35,5066(97,710)
10,206(87,504)

Treasury shares

Total

1. In March 2020, following the vesting of the 2017 PSP plan, 468,818 treasury shares were transferred to relevant participants.
2. In April 2021, following the vesting of the 2018 PSP plan, 294,832 treasury shares were transferred to relevant participants.

2.8 Shareholders’ equity
Share capital

Retained earnings/(accumulated
Legal capital reserves
losses)Reserves
Reserves forfrom capitaltreasury
contributions
shares1
CHF thousands

Balance as at 1 January 2020
Shares issued to employees exercisingstock options
Dividends
Vested PSP shares
Loss for the year
Balance as at 31 December 2020

2,478,532

4,470,097

85,29842,803(114,145)

6,962,585

3,902
–
–
–
2,482,434

4,260(244,737)––
4,229,620––––
85,298–––(24,543)
18,260––16,435–(97,710)8,162(244,737)
16,435(24,543)
6,717,902

Balance as at 1 January 2021
Shares issued to employees exercisingstock options
Dividends2
Vested PSP shares
Loss for the year
Balance as at 31 December 2021

2,482,434

4,229,620

85,29818,260(97,710)

6,717,902

8,595
–
–
–
2,491,029

12,708(260,250)––
3,982,078––––
85,298–––(33,852)(15,592)––
10,206–(87,504)

21,303(260,250)
10,206(33,852)
6,455,309

1. Represents the book value of treasury shares held by subsidiaries.
2. On 22 June 2021 the shareholders of the Company at the Annual General Meeting approved the distribution of a gross dividend of €0.64 (2020: €0.62) on each ordinary registeredshare. The dividend was paid on 3 August 2021 and amounted to CHF 260,250 thousand (2020: CHF 244,737 thousand paid 28 July 2020).

226

COCA-COLA HBC

Swiss statutory reporting continued
2.9 Other operating income
2021

2020

CHF thousands

Management fees
Guarantee fee
Total other operating income

35,4882,832
38,32020,971
2,967
23,938

Management fees relate to service income earned from services provided to the Company’s direct and indirect participations, whereof CHF 3,431 thousand is true-up from prior year.
Guarantee fee is the income the Company receives for the services provided as guarantor to Coca-Cola HBC Finance B.V. and Nigerian
Bottling Company Ltd.

2.10 Employee costs
2021
CHF thousands

Wages and salaries
Social security costs
Pensions and employee benefits
Total employee costs

21,422
3,172
23,684
48,2782020

12,8582,853
11,71727,428Pension and employee benefits mainly include Performance Share Plan expenses for CCHBC AG employees in the amount of CHF 18,999
thousand (2020: CHF 6,458 thousand). Refer to Note 2.3 for more information.

2.11 Other operating expenses
Other operating expenses amounting to CHF 16,585 thousand for 2021 (2020: CHF 13,114 thousand) mainly include CHF 14,352 thousand(2020: CHF 11,323 thousand) for management fees to CCB Management Services GmbH, whereof CHF 1,121 thousand is true-up fromprior year.

3. Other information
3.1 Net release of hidden reserves
No hidden reserves were released for the years ended 31 December 2021 or 31 December 2020.

3.2 Number of employees
In 2021 and 2020, on an annual average basis, the number of full-time-equivalent employees did not exceed 50.

3.3 Contingent liabilities
Euro medium-term note programmes
In June 2013, the Group established a new €3.0bn Euro medium-term note programme (the ‘EMTN programme’). The EMTN programme
was updated in September 2014, September 2015 and April 2019, when it was increased to €5.0bn. The EMTN programme was further
updated in April 2020 and September 2021. Notes are issued under the EMTN programme through the Company’s wholly owned subsidiary
Coca-Cola HBC Finance B.V., a private limited liability company established under the laws of the Netherlands, and are fully, unconditionallyand irrevocably guaranteed by the Company.
In March 2016, Coca-Cola HBC Finance B.V. issued €600m, 1.875%, Euro-denominated notes due in November 2024, which are guaranteedby the Company.
In May 2019, Coca-Cola HBC Finance B.V. issued €700m, 1%, Euro-denominated notes due in May 2027 and also issued €600m, 1.625%,Euro-denominated notes due in May 2031, both of which are guaranteed by the Company.
In November 2019, Coca-Cola HBC Finance B.V. completed the issue of a €500m Euro-denominated fixed rate bond maturing in November
2029 with a coupon rate of 0.625%, which is guaranteed by the Company.
As at 31 December 2021, a total of €2.4bn (2020: €2.4bn) in notes issued under the EMTN programme were outstanding.

INTEGRATED ANNUAL REPORT 2021

227

3. Other information continued
Committed credit facilities
In April 2019, the Group updated its then‑existing €500.0m syndicated revolving credit facility (the ‘RCF’), which was set to expire in June
2021. The updated RCF was increased to €800.0m and extended to April 2024 with the option to be further extended for up to two years until
April 2026. Coca-Cola HBC Finance B.V. exercised its extension option and the RCF has been extended to April 2026. The RCF can be used
for general corporate purposes and carries floating interest rates. No amounts have been drawn under the RCF since its inception. The
borrower under the RCF is the Company’s wholly owned subsidiary Coca‑Cola HBC Finance B.V. and any amounts drawn under the RCF are
fully, unconditionally and irrevocably guaranteed by the Company.
Commercial paper programme
In October 2013 the Group established a new €1.0bn Euro commercial paper programme (the ‘ECP Programme’). The ECP Programme was
updated in September 2014, May 2017 and May 2020. Notes are issued under the ECP Programme by Coca-Cola HBC Finance B.V. andguaranteed by the Company. The outstanding amount under the ECP Programme was €235m as at 31 December 2021 (2020: €200m).
Nigerian Bottling Company Ltd
In December 2019 the Group established an amortising loan facility of US dollar 85m with maturity in December 2027. The purpose of the
facility is to finance the purchase of production equipment by Nigerian Bottling Company Ltd., the Group’s subsidiary in Nigeria. Over thecourse of 2020 and 2021, the facility has been drawn down for approximately US dollar 78m. The obligations under this facility are guaranteedby the Company.
Credit support provider
On 18 July 2013, the Company signed as credit support provider to J.P. Morgan Securities plc, Credit Suisse International, Credit Suisse AG,
ING Bank N.V., Societe Generale, Merrill Lynch International and The Royal Bank of Scotland plc in favour of Coca‑Cola HBC Finance B.V. forthe obligations as defined in the ISDA Master Agreements.1
On 24 July 2013, the Company signed as credit support provider to the Governor and Company of the Bank of Ireland, in favour of Coca‑Cola
HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement.1
On 8 August 2013, the Company signed as credit support provider to Citibank N.A. in favour of CCHBC Bulgaria AD for the obligations as
defined in the ISDA Master Agreement.1
On 8 August 2013, the Company signed as credit support provider to Citibank N.A. in favour of Coca‑Cola HBC Finance B.V. for the
obligations as defined in the ISDA Master Agreement.1
On 24 June 2014, the Company signed as credit support provider to Intesa Sanpaolo S.pA. in favour of Coca‑Cola HBC Finance B.V. for the
obligations as defined in the ISDA Master Agreement.1
On 5 October 2015, the Company signed as credit support provider to Macquarie Bank International Limited in favour of Coca‑Cola HBC
Finance B.V. for the obligations as defined in the ISDA Master Agreement.1
On 22 June 2016, the Company signed as credit support provider to UniCredit Bank AG in favour of Coca‑Cola HBC Finance B.V. for the
obligations as defined in the ISDA Master Agreement.1
On 31 August 2016, the Company signed as credit support provider to BNP Paribas in favour of Coca-Cola HBC Finance B.V. for the
obligations as defined in the ISDA Master Agreement.1
On 1 November 2017, the Company signed as credit support provider to Goldman Sachs Global International in favour of Coca‑Cola HBC
Finance B.V. for the obligations as defined in the ISDA Master Agreement.1
On 22 December 2017, the Company signed as credit support provider to Citigroup Global Markets Limited in favour of Coca‑Cola HBC
Finance B.V. for the obligations as defined in the ISDA Master Agreement.1
On 14 February 2018, the Company signed as credit support provider to Morgan Stanley & Co. International PLC in favour of Coca-Cola HBC
Finance B.V. for the obligations as defined in the ISDA Master Agreement.1
On 25 March 2019, the Company signed as credit support provider to Citigroup Global Markets Europe AG in favour of Coca-Cola HBC
Finance B.V. for the obligations as defined in the ISDA Master Agreement.1
On 1 July 2019, the Company signed as credit support provider to Credit Suisse Securities, Sociedad de Valores, S.A. in favour of Coca‑Cola
HBC Finance B.V. for the obligations as defined in the ISDA Master Agreement.1
On 10 July 2019, the Company signed as credit support provider to Macquarie Bank Limited (London Branch) in favour of Coca‑Cola HBC
Finance B.V. for the obligations as defined in the ISDA Master Agreement.1
On 12 November 2019, the Company signed as credit support provider to UBS AG in favour of Coca‑Cola HBC Finance B.V. for the
obligations as defined in the ISDA Master Agreement.1
On 2 November 2020, the Company signed as credit support provider to J.P. Morgan AG in favour of Coca‑Cola HBC Finance B.V. for the
obligations as defined in the ISDA Master Agreement.1
On 13 November 2020, the Company signed as credit support provider to Goldman Sachs Bank Europe SE in favour of Coca‑Cola HBC
Finance B.V. for the obligations as defined in the ISDA Master Agreement.1
1. The ISDA (International Swap Dealers Association) Master Agreement is a standardised form issued by the International Swap Dealers Association Inc. to be used for credit
support transactions.

228

COCA-COLA HBC

Swiss statutory reporting continued
3.4 Significant shareholders
As at 31 December 2021 and 2020, there were two shareholders exceeding the threshold of 5% voting rights in the Company’s share capital.

Total Kar-Tess Holding
Total Kar-Tess Holding
Total shareholdings related to The Coca-Cola Company
Total shareholdings related to The Coca-Cola Company

Date

Number of shares

Percentage ofissued sharecapital1

31.12.2020
31.12.2021
31.12.2020
31.12.2021

85,355,019
85,355,019
85,112,078
78,252,731

23.0%
23.0%
23.0%
21.0%

Percentage ofoutstanding sharecapital2

23.4%
23.3%
23.4%
21.4%

1. Basis: total issued share capital including treasury shares. Share basis 371,795,418 as at 31 December 2021 (2020: 370,512,597).
2. Basis: total issued share capital excluding treasury shares. Share basis 365,900,835 as at 31 December 2021 (2020: 364,323,182).

3.5 Shareholdings, conversion and option rights
The table below sets out a comparison of the interests in the Company’s total issued share capital that the members of the Board of Directors(‘Directors’) and Executive Leadership Team hold (all of which, unless otherwise stated, are beneficial interests or are interests of a person
connected with a Director or a member of the Executive Leadership Team) and the interests in the Company’s share capital.

Directors
Anastassis G. David3
Zoran Bogdanovic
Charlotte J. Boyle
Henrique Braun4
Olusola (Sola) David-Borha
Anna Diamantopoulou
William W. (Bill) Douglas III
Reto Francioni
Anastasios I. Leventis5
Christo Leventis6
Alexandra Papalexopoulou
Bruno Pietracci7
José Octavio Reyes8
Alfredo Rivera9
Ryan Rudolph

Executive Leadership Team
Minas Agelidis
Mourad Ajarti
Ben Almanzar10
Jan Gustavsson
Michael Imellos11
Nikos Kalaitzidakis
Naya KalogerakiMartin Marcel
Spyros Mello12
Vitaliy Novikov
Sean O’Neill
Sanda Parezanovic
Barbara Tönz13
Footnotes are presented at the end of Note 3.5.

Number ofshares31 December 2021
Percentage ofissued sharecapital1

Percentage ofoutstanding
share capital2–
193,729
1,017–––
10,000
7,000
–
–
–
–
–
–
–

–
0.05%
0.00%
–
–
–
0.00%
0.00%
–
–
–
–
–
–
–

Number ofshares50,112
12,496636
169,298–
44,28649,127
102,403
37,05529,8183,132
80,442
3,020

Number ofshares31 December 2020
Percentage ofissued sharecapitalPercentage ofoutstanding
share capital

–
0.05%
0.00%
–
–
–
0.00%
0.00%
–
–
–
–
–
–
–

–
144,1131,017–––
10,000
7,000
–
–
–
–
–
–
–

–
0.04%
0.00%
–
–
–
0.00%
0.00%
–
–
–
–
–
–
–

–
0.04%
0.00%
–
–
–
0.00%
0.00%
–
–
–
–
–
–
–

Percentage ofissued sharecapital1

Percentage ofoutstanding
share capital2

Number ofsharesPercentage ofissued sharecapitalPercentage ofoutstanding
share capital

0.01%
0.00%
0.00%
0.05%
–
0.01%
0.01%
0.03%
0.01%
0.01%
0.00%
0.02%
0.00%

0.01%
0.00%
0.00%
0.05%
–
0.01%
0.01%
0.03%
0.01%
0.01%
0.00%
0.02%
0.00%

42,492
10,716–
144,343
156,970
35,40935,864
82,212–30,797
1,805
68,817
–

0.01%
0.00%
–
0.04%
0.04%
0.01%
0.01%
0.02%
–
0.01%
0.00%
0.02%
–

0.01%
0.00%
–
0.04%
0.04%
0.01%
0.01%
0.02%
–
0.01%
0.00%
0.02%
–

INTEGRATED ANNUAL REPORT 2021

229

3. Other information continued
The following table sets out information regarding the stock options and performance shares held by members of the Executive Leadership
Team as at 31 December 2021:
Stock options (ESOP)

Zoran Bogdanovic14
Minas Agelidis
Mourad Ajarti
Ben Almanzar10
Jan Gustavsson
Michael Imellos10
Nikos Kalaitzidakis
Naya KalogerakiMartin Marcel
Spyros Mello12
Vitaliy Novikov
Sean O’Neill
Sanda Parezanovic
Barbara Tönz13

Number ofstock options

Already vested

Vesting at theend of 2021

162,477–––
302,658–
11,68047,784
38,151–
15,927–30,794–

162,477–––
302,658–
11,68047,784
38,151–
15,927–30,794
–

–
–
–
–
–
–
–
–
–
–
–
–
–
–

Performance shares (PSP)Unvested and subject
to performance
Granted in 2021
conditions

97,206
19,093
13,92845,192
25,16928,00919,13937,72821,722
11,006
18,902
12,473
20,032–

327,430
63,42736,32945,192
85,48381,56464,99592,09973,79137,30053,96643,94568,034–

Vested48,8296,046––
12,790
14,2396,825
10,494
11,046
5,541
7,100
–
9,897
–

1. Basis: total issued share capital including treasury shares. Share basis 371,795,418 as at 31 December 2021 (2020: 370,512,597).
2. Basis: total issued share capital excluding treasury shares. Share basis 365,900,835 as at 31 December 2021 (2020: 364,323,182).
3. Anastassis G. David is a beneficiary of:(a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect
to 85,355,019 shares held by Kar-Tess Holding and(b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest
with respect to 832,268 shares held by Ari Holdings Limited.
4. Mr. Henrique Braun was appointed to the Board of Directors on 22 June 2021.
5. Anastasios I. Leventis is a beneficiary of:(a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect
to 85,355,019 shares held by Kar-Tess Holding and(b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest
with respect to 286,880 shares held by its trustee, Selene Treuhand AG and(c) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Avgie Leventis, that has an indirect interest with respect
to 2,138,277 shares held by Carlcan Holding Limited.
6. Christo Leventis is a beneficiary of:(a) a private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest with respect
to 85,355,019 shares held by Kar-Tess Holding and(b) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Anastasios George Leventis, that has an indirect interest
with respect to 482,228 shares held by its trustee, Selene Treuhand AG and(c) a further private discretionary trust, for the primary benefit of present and future members of the family of the late Avgie Leventis, that has an indirect interest with respect
to 2,138,277 shares held by Carlcan Holding Limited.
7. Mr. Bruno Pietracci was appointed to the Board of Directors on 22 June 2021.
8. Mr. Jose Octavio Reyes retired from the Board of Directors on 22 June 2021.
9. Mr. Alfredo Riveria retired from the Borad of Directors on 22 June 2021.
10. Mr. Ben Almanzar joined the Executive Leadership Team on 1 February 2021.
11. Mr. Michael Imellos’ employment ceased on 30 June 2021.
12. Mr. Spyros Mello joined the Executive Leadership Team on 1 November 2021.
13. Mrs. Barbara Tönz joined the Executive Leadership Team on 1 May 2021.
14. The Remuneration Committee determined at its meeting in 15 March 2022 that, in line with the terms of the PSP, PSP awards granted to Zoran Bogdanovic in 2019 vested overin aggregate 69,759 shares (including the dividend equivalent shares paid on PSP shares that vested in 2022).

230

COCA-COLA HBC

Swiss statutory reporting continued
3.6 Fees paid to the auditor
The audit and other fees paid to the auditor are disclosed in Note 8 to the consolidated financial statements.

3.7 Conditional capital
On 25 April 2013, the shareholders’ meeting agreed to the creation of conditional capital in the maximum amount of CHF 245,601 thousand,through issuance of a maximum of 36,657 thousand fully paid-in registered shares with a par value of CHF 6.70 each upon exercise of options
issued to members of the Board of Directors, members of the management, employees or advisers of the Company, its subsidiaries andother affiliated companies. The share capital of CHF 2,491,029 thousand as disclosed in the balance sheet differs from the share capital in
the commercial register of CHF 2,482,434 thousand as per 31 December 2021 due to the exercise of management options in the courseof financial year 2021.
Conditional capital

Agreed conditional capital as per shareholders’ meeting on 25 April 2013
Shares issued to employees exercising stock options up until 31 December 2016
Shares issued to employees exercising stock options in 2017
Shares issued to employees exercising stock options in 2018
Shares issued to employees exercising stock options in 2019
Shares issued to employees exercising stock options in 2020
Remaining conditional capital as at 31 December 2020
Shares issued to employees exercising stock options in 2021
Remaining conditional capital as at 31 December 2021

Number of sharesBook value pershare CHF

Total CHF
thousand

36,656,843(3,149,493)(4,122,401)(1,064,190)(1,352,731)(582,440)
26,385,588(1,282,821)
25,102,767

6.70
6.70
6.70
6.70
6.70
6.70
6.70
6.70
6.70

245,601(21,102)(27,620)(7,130)(9,063)(3,902)
176,784(8,595)
168,189

4. Subsequent events
The subsequent events in relation to financial year ended 31 December 2021 are disclosed in Note 31 to the consolidated financial statements.

INTEGRATED ANNUAL REPORT 2021

231

Proposed appropriation of reserves/declaration of dividend
1. Total available reserves
Available reserves

Balance brought forward from previous years
Net loss for the year
Total accumulated losses to be carried forward

CHF thousands

18,260(33,852)(15,592)

Reserves from capital contributions before distribution

3,982,078

Total available reserves

3,966,486

2. Proposed declaration of dividend from reserves
The Board of Directors proposes to declare a gross dividend of €0.71 on each ordinary registered share with a par value of CHF 6.70 fromthe general capital contribution reserve. Own shares held directly by the Company are not entitled to dividends. The total aggregate amountof the dividends shall be capped at an amount of CHF 300,000 thousand (the ‘Cap’), and thus will reduce the general capital contribution
reserve of CHF 3,982,078 thousand, as shown in the financial statements as at 31 December 2021, by a maximum of CHF 300,000 thousand.
To the extent that the dividend calculated on €0.71 per share would exceed the Cap on the day of the Annual General Meeting, due to theexchange rate determined by the Board of Directors in its reasonable opinion, the Euro per share amount of the dividend shall be reduced
on a pro-rata basis so that the aggregate amount of all dividends paid does not exceed the Cap. Payment of the dividend shall be madeat such time and with such record date as shall be determined by the Annual General Meeting and the Board of Directors.

3. Proposed appropriation of reserves/declaration of dividend
Variant 1: Dividend of €0.71 at current exchange rate
As at 31 December 2021

CHF thousands

Reserves from capital contributions before distribution
Proposed dividend of €0.711
Reserves from capital contributions after distribution

3,982,078(280,581)
3,701,497

Variant 2: Dividend if Cap is triggered
As of 31 December 2021

CHF thousands

Reserves from capital contributions before distribution(Maximum) dividend if cap is triggered2(Minimum) reserves from capital contributions after distribution

3,982,078(300,000)
3,682,078

1. Illustrative at an exchange rate of CHF 1.07 per EUR. Assumes that the shares entitled to a dividend amount to 369,330,970.
2. Dividend is capped at a total aggregate amount of CHF 300,000 thousand.

232

COCA-COLA HBC

Swiss statutory reporting continued

Report of the statutory auditor
to the General Meeting ofCoca-Cola HBC AG
Steinhausen (Zug)

Report of the statutory auditor to the General Meetingon the remuneration report 2021
We have audited the remuneration report of Coca-Cola HBC AG for the year ended 31 December 2021. The audit was limited to the informationaccording to articles 14–16 of the Ordinance against Excessive Compensation in Stock Exchange Listed Companies (Ordinance) on pages
233 to 236 of the remuneration report.

Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration report in accordance with Swisslaw and the Ordinance against Excessive Compensation in Stock Exchange Listed Companies (Ordinance). The Board of Directors is also
responsible for designing the remuneration system and defining individual remuneration packages.

Auditor’s responsibility
Our responsibility is to express an opinion on the remuneration report. We conducted our audit in accordance with Swiss Auditing Standards.
Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about
whether the remuneration report complies with Swiss law and articles 14–16 of the Ordinance.
An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration report with regard tocompensation, loans and credits in accordance with articles 14–16 of the Ordinance. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatements in the remuneration report, whether due to fraud or error.
This audit also includes evaluating the reasonableness of the methods applied to value components of remuneration, as well as assessing
the overall presentation of the remuneration report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

OpinionIn our opinion, the remuneration report of Coca-Cola HBC AG for the year ended 31 December 2021 complies with Swiss law and articles
14–16 of the Ordinance.
PricewaterhouseCoopers AG

Sandra Boehm Uglow
Audit Expert
Auditor In Charge
Zurich, 23 March 2022

Mei Ling Ow
Audit Expert

INTEGRATED ANNUAL REPORT 2021

233

Statutory Remuneration Report
Additional disclosures regarding the Statutory Remuneration Report
The section below is in line with the Ordinance against Excessive Compensation in Listed Stock Companies, which requires disclosureof the elements of compensation paid to the Company’s Board of Directors and the Executive Leadership Team (formerly known as the
Operating Committee). The amounts relate to the calendar years of 2021 and 2020. In the information presented below, the exchange rateused for conversion of 2021 remuneration data from Euro to CHF is 1/1.0833 and the exchange rate used for conversion of 2020
remuneration data from Euro to CHF is 1/1.0689.
As the Company is headquartered in Switzerland, it is required for statutory purposes to present compensation data for two consecutive
years, 2021 and 2020. The applicable methodology used to calculate the value of stock option and performance shares follows Swiss Standards.
In 2021 and 2020, the fair value of performance shares from the 2021 and 2020 grants is calculated based on the performance share awards
that are expected to vest. Below is the relevant information for Swiss statutory purposes.
The Statutory Remuneration Report should be read in conjunction with the Directors’ remuneration report presented in the Integrated
Annual Report as the qualitative aspects of remuneration policy are described therein.

Remuneration for acting members of governing bodies
The Company’s Directors believe that the level of remuneration offered to Directors and the members of the Executive Leadership Teamshould reflect their experience and responsibility as determined by, among other factors, a comparison with similar multinational companies
and should be sufficient to attract and retain high-calibre Directors who will lead the Group successfully. In line with the Group’s commitment
to maximise shareholder value, its policy is to link a significant proportion of remuneration for its Executive Leadership Team to the performanceof the business through short- and long-term incentives. Therefore, the Executive Leadership Team members’ financial interests are closelyaligned with those of the Company’s shareholders through the equity-related long-term compensation plan.
The total remuneration of the Directors and members of the Executive Leadership Team of the Company, including performance share
grants, during 2021 amounted to CHF 27.6m (2020: CHF 22.4m). Out of this, the amount relating to the expected value of performance
share awards granted in relation to 2021 was CHF 5.5m (2020: CHF 4.5m). Pension and post-employment benefits for Directors and the
Executive Leadership Team of the Company during 2021 amounted to CHF 1.0m (2020: CHF 0.9m).

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Swiss statutory reporting continued
Remuneration of the Board of Directors

Anastassis G. David
Zoran Bogdanovic2
Charlotte J. Boyle
Henrique Braun3
Olusola (Sola) David-Borha4
Anna Diamantopoulou5
William W. (Bill) Douglas III
Reto Francioni6
Anastasios I. Leventis
Christo Leventis
Alexandra Papalexopoulou
Bruno Pietracci7
José Octavio Reyes8
Alfredo Rivera9
Ryan Rudolph10
Total Board of Directors

Fees

Cash andnon-cashbenefits1

79,623–
98,47239,811
95,33098,472110,930
115,588
92,18979,623
95,33042,95342,95339,811
79,623
1,110,708

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

2021 CHF
Cash
Pension andperformance post-employment
incentives
benefits

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

Total fair value ofstock options at
the date granted

Total
compensation

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

79,623–
98,47239,811
95,33098,472110,930
115,588
92,18979,623
95,33042,95342,95339,811
79,623
1,110,708

1. Cash and non-cash benefits consist of cost-of-living allowance, housing support, Employee Stock Purchase Plan, Private Medical Insurance Relocation Expenses, Home Trip Allowance,lump sum expenses and similar allowances.
2. Zoran Bogdanovic’s compensation was based on his role as CEO, member of the Executive Leadership Team, and his employment agreement. Zoran Bogdanovic was not entitledand did not receive additional compensation as a Director.
3. Henrique Braun was appointed to the Board of Directors on 22 June 2021. The Group has applied a half-year period fee of CHF 39,811. On top of his fees, the Group paid CHF 3,237
in social security contributions as required by Swiss legislation
4. For Olusola (Sola) David-Borha, on top of her fees, the Group paid CHF 7,752 in social security contributions as required by Swiss legislation.
5. For Anna Diamantopoulou, on top of her fees, the Group paid CHF 8,008 in social security contributions as required by Swiss legislation.
6. For Reto Francioni, on top of his fees, the Group paid CHF 6,932 in social security contributions as required by Swiss legislation.
7. Bruno Pietracci was appointed to the Board of Directors on 22 June 2021. The Group has applied a half-year period fee of CHF 42,953. On top of his fees, the Group paid CHF 3,493
in social security contributions as required by Swiss legislation.
8. José Octavio Reyes retired from the Board of Directors on 22 June 2021. The Group has applied a half-year period base fee of CHF 42,953. On top of his fees, the Group paid
CHF 2,436 in social security contributions as required by Swiss legislation.
9. Alfredo Rivera retired from the Board of Directors on 22 June 2021. The Group has applied a half-year period base fee of CHF 39,811.
10. For Ryan Rudolph, on top of his fees, the Group paid CHF 6,475 in social security contributions as required by Swiss legislation.

Non-Executive Directors do not participate in any of the Group’s incentive plans, nor do they receive any retirement benefits.

INTEGRATED ANNUAL REPORT 2021

235

Remuneration of the Board of Directors

Anastassis G. David
Zoran Bogdanovic2
Charlotte J. Boyle
Olusola (Sola) David-Borha3
Anna Diamantopoulou4
William W. (Bill) Douglas III
Reto Francioni5
Anastasios I. Leventis
Christo Leventis
Alexandra Papalexopoulou6
José Octavio Reyes7
Alfredo Rivera
Ryan Rudolph8
John P. Sechi9
Total Board of Directors

Fees

Cash andnon-cashbenefits1

78,564–
94,063
94,063
48,582
109,455
114,052
90,96378,564
98,71384,76478,56478,56447,032
1,095,943

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

2020 CHF
Cash
Pension andTotal fair value of
performance post-employment performance shares
incentives
benefits at the date granted

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

–
–
–
–
–
–
–
–
–
–
–
–
–
–
–

Total
compensation

78,564–
94,063
94,063
48,582
109,455
114,052
90,96378,564
98,71384,76478,56478,56447,032
1,095,943

1. Allowances consist of cost of living allowance, housing support, employee share purchase plan, private medical insurance, relocation expenses, home trip allowance, lump sum
expenses and similar allowances.
2. Zoran Bogdanovic’s compensation was based on his role as CEO, member of the Executive Leadership Team, and his employment agreement. Zoran Bogdanovic was not entitledand did not receive additional compensation as a Director.
3. For Olusola (Sola) David-Borha, on top of her fees, the Group paid CHF 7,625 in social security contributions as required by Swiss legislation.
4. Anna Diamantopoulou was appointed to the Board of Directors on 16 June 2020. The Group has applied a half-year period fee of CHF 48,582. On top of her fees, the Group paid
CHF 3,939 in social security contributions as required by Swiss legislation.
5. For Reto Francioni, on top of his fees, the Group paid CHF 8,230 in social security contributions as required by Swiss legislation.
6. For Alexandra Papalexopoulou, on top of her fees, the Group paid CHF 3,488 in social security contributions as required by Swiss legislation.
7. For José Octavio Reyes, on top of his fees, the Group paid CHF 4,763 in social security contributions as required by Swiss legislation.
8. For Ryan Rudolph, on top of his fees, the Group paid CHF 6,369 in social security contributions as required by Swiss legislation.
9. John P. Sechi retired from the Board of Directors on 16 June 2020. The Group has applied a half-year period base fee of CHF 47,032.

Non-Executive Directors do not participate in any of the Group’s incentive plans, nor do they receive any retirement benefits.

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COCA-COLA HBC

Swiss statutory reporting continued
Remuneration of the Executive Leadership TeamThe total remuneration paid to or accrued for the Executive Leadership Team for 2021 amounted to CHF 26.4m.
2021 CHF

Zoran Bogdanovic, Chief Executive Officer
Other current members6
Former members7
Total Executive Leadership Team

Base salary1

Cashand non-cash
benefits2

Annual bonus
accrual3Pension andpost-employment
benefits4

Total fair value of
performance sharesat the date granted5

Total
remuneration

873,862
4,745,415
581,082
6,200,359

956,346
6,881,649
281,445
8,119,440

992,326
4,324,931
263,227
5,580,484

150,796814,544
51,623
1,016,963

1,553,290
3,973,231
5,526,521

4,526,620
20,739,770
1,177,377
26,443,767

1. Base salary includes non-compete payments in 2021 to former members of the Executive Leadership Team.
2. Cash and non-cash benefits consist of cost-of-living allowance, housing support, schooling, employee share purchase plan, private medical insurance, relocation expenses, home
trip allowance, employer social security contributions, lump sum expenses, all paid and unpaid sign-on bonus, equalisation amounts and similar allowances.
3. The annual bonus accrual for 2021 includes the accrued Management Incentive Plan (MIP) payout, receivable early in 2022 for the 2021 business performance, including amountdeferred in shares, employer social security contribution and gross-up for the tax benefit, of CHF 5,580,484. The monetary value that was paid in 2021 under the MIP reflecting the2020 business performance is approx. CHF 2,139,756.
4. Members of the Executive Leadership Team participate in the pension plan of their employing entity, as appropriate.
5. Values under long-term incentives represent the fair value of performance shares that are expected to vest for the 2021 grant in order to comply with Swiss reporting guidelines.
6. Ben Almanzar was appointed to the role of Chief Financial Officer on 1 February 2021. Barbara Tönz was appointed to the role of Chief Customer and Commercial Officer on 1 May
2021. Spyros Mello was appointed to the role of Strategy and Transformation Director on 1 November 2021.
7. Michalis Imellos’ s employment ceased on 30 June 2021.

The total remuneration paid to or accrued for the Executive Leadership Team for 2020 amounted to CHF 21.3m.

Zoran Bogdanovic, Chief Executive Officer
Other members5
Total Executive Leadership Team

Base salaryCashand non-cash
benefits1

2020 CHF
Cash
Pension andperformancepost-employment
incentives2
benefits3

844,431
5,216,319
6,060,750

730,070
5,926,381
6,656,451

611,3682,548,950
3,160,318

150,885
751,594
902,479

Total fair value of
performance sharesat the date granted4

Total
remuneration

1,532,642
2,972,080
4,504,722

3,869,396
17,415,324
21,284,720

1. Cash and non-cash benefits consist of cost-of-living allowance, housing support, schooling, employee share purchase plan, private medical insurance, relocation expenses, home
trip allowance, employer social security contributions, lump sum expenses and similar allowances.
2. The cash performance incentives represent the monetary value that was paid under MIP in 2020 reflecting the 2019 business performance.
3. Members of the Executive Leadership Team participate in the pension plan of their employing entity, as appropriate.
4. Values under long-term incentives represent the fair value of performance shares that are expected to vest for the 2020 grant in order to comply with Swiss reporting guidelines.
5. Naya Kalogeraki was appointed to the role of Chief Operating Officer on 1 September 2020. Vitaliy Novikov was appointed to the role of Group Commercial & Customer Director
on 1 September 2020. Alain Brouhard’s employment ceased on 30 June 2020.

Credits and loans granted to governing bodies
In 2021, similar to 2020, there were no credits or loans granted to active or former members of the Company’s Board of Directors, membersof the Executive Leadership Team or to any related persons. There are no outstanding credits or loans.

INTEGRATED ANNUAL REPORT 2021

237

Definitions and reconciliations of
Alternative Performance Measures (APMs)
1. Comparable APMs1
In discussing the performance of the Group, ‘comparable’ measures are used, which are calculated by deducting from the directly reconcilable
IFRS measures the impact of the Group’s restructuring costs, the mark-to-market valuation of the commodity hedging activity, acquisition
and integration costs and certain other tax items, which are collectively considered as items impacting comparability, due to their nature.
More specifically, the following items are considered as items that impact comparability:

1. Restructuring costs
Restructuring costs comprise costs arising from significant changes in the way the Group conducts business, such as significant supply chain
infrastructure changes, outsourcing of activities and centralisation of processes. These costs are included within the income statement line
‘Operating expenses’. However, they are excluded from the comparable results so that the users can obtain a better understanding of theGroup’s operating and financial performance achieved from underlying activity.

2. Commodity hedging
The Group has entered into certain commodity derivative transactions in order to hedge its exposure to commodity price risk. Althoughthese transactions are economic hedging activities that aim to manage our exposure to sugar, aluminium, gas oil and plastics price volatility,
hedge accounting has not been applied in all cases. In addition, the Group recognises certain derivatives embedded within commodity
purchase contracts that have been accounted for as stand-alone derivatives and do not qualify for hedge accounting. The fair value gains
and losses on the derivatives and embedded derivatives are immediately recognised in the income statement in the cost of goods sold andoperating expenses line items. The Group’s comparable results exclude the gains or losses resulting from the mark-to-market valuationof those 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 thecorresponding underlying transactions. We believe this adjustment provides useful information related to the impact of our economic risk
management activities.

3. Acquisition and integration costs
Acquisition costs comprise costs incurred to effect a business combination such as finder’s, advisory, legal, accounting, valuation and otherprofessional or consulting fees as well as changes in the fair value of contingent consideration recorded in the income statement. Integration
costs comprise direct incremental costs necessary for the acquiree to operate within the Group. These costs are included within the income
statement line ‘Operating expenses’. However, to the extent that they relate to business combinations that have completed or are expected
to be completed, they are excluded from the comparable results so that users can obtain a better understanding of the Group’s operating
and financial performance achieved from underlying activity.

4. Other tax items
Other tax items represent the tax impact of (a) changes in income tax rates affecting the opening balance of deferred tax arising during
the year and (b) certain tax-related matters selected based on their nature. Both (a) and (b) are excluded from comparable after-tax results
so that users can obtain a better understanding of the Group’s underlying financial performance.
1. 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 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.

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COCA-COLA HBC

Alternative performance measures continued
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 € million except per share data)
2021

As reported
Restructuring costs
Commodity hedging
Acquisition and integration costs
Other tax items
Comparable

Cost ofgoods sold

Gross profit

Operatingexpenses

EBIT

Adjusted
EBITDA(4,570)–(4)––(4,574)Tax

Net profit1

EPS (€)

2,598
–
(4)
–
–
(2,594)(1,833)21–
14–(1,798)

799
21
(4)
14
–
831

1,152
21
(4)
14
–
1,183

(187)
(5)
1
–
3
(188)

547
17
(3)
14
3
578

1.499
0.045
(0.008)
0.039
0.009
1.584

Cost ofgoods sold

Gross profit

Operatingexpenses

EBIT2

Adjusted
EBITDATax

Net profit1

EPS (€)(3,810)–2–(3,809)

2,322
–
2
–
2,323

(1,682)
10––(1,672)

661
10
2
–
672

1,059
10
2
–
1,071

(179)
(2)
–
7
(174)

415
8
1
7
431

1.140
0.022
0.004
0.019
1.185

2020

As reported
Restructuring costs
Commodity hedging
Other tax items3
Comparable
Figures are rounded.

1. Net profit and comparable net profit refer to net profit and comparable net profit respectively after tax attributable to owners of the parent.
2. EBIT for 2020 includes €0.2 million from restructuring within share of results of integral equity method investments.
3. Other tax items for 2020 include €7.2 million regarding net impact from the settlement of the transfer pricing audit for years 2011-2019 in Nigeria (detailed in the ‘Other supplementary
information’ section).

Reconciliation of comparable EBIT per reportable segment (numbers in € million)
Established

EBIT
Restructuring costs
Commodity hedging
Acquisition costs
Comparable EBIT

286
15
(3)
3
301
Established

EBIT4
Restructuring costs
Commodity hedging
Comparable EBIT

203
6
–
209

2021
Developing

105
3
(4)
3
107
2020
Developing

97
4
1
102

Emerging

Consolidated

409
3
3
8
424

799
21
(4)
14
831

Emerging

Consolidated

360
1
–
361

661
10
2
672

Figures are rounded.
4. EBIT for 2020 includes €0.2 million from restructuring within share of results of integral equity method investments.

2. FX-neutral APMs
The Group also evaluates its operating and financial performance on an FX-neutral basis (i.e. without giving effect to the impact of variationof foreign currency exchange rates from year to year). FX-neutral APMs are calculated by adjusting prior year amounts for the impact of
exchange rates applicable to the current year. FX-neutral measures enable users to focus on the performance of the business on a basis
which is not affected by changes in foreign currency exchange rates applicable to the Group’s operating activities from year to year.
The most common FX-neutral measures used by the Group are:
1. FX-neutral net sales revenue and FX-neutral net sales revenue per unit case
FX-neutral net sales revenue and FX-neutral net sales revenue per unit case are calculated by adjusting prior year net sales revenue forthe impact of changes in exchange rates applicable in the current year.
2. FX-neutral comparable input costs per unit case
FX-neutral comparable input costs per unit case is calculated by adjusting prior year commodity costs, and more specifically sugar, resin,aluminium and fuel commodity costs, excluding commodity hedging as described above; and other raw materials costs for the impact
of changes in exchange rates applicable in the current year.

INTEGRATED ANNUAL REPORT 2021

239

The calculations of the FX-neutral APMs and their reconciliation to the most directly related measures calculated in accordance with IFRS
is as follows:
Reconciliation of FX-neutral net sales revenue per unit case (numbers in € million unless otherwise stated)
2021
Developing

Emerging

Consolidated

2,479
–
2,479
590
4.20

1,366
–
1,366
416
3.29

3,324
–
3,324
1,407
2.36

7,168
–
7,168
2,413
2.97

Established

2020
Developing

Emerging

Consolidated

1,171
(14)
1,157
412
2.81

2,786
(124)
2,662
1,187
2.24

6,132
(137)
5,995
2,136
2.81

EstablishedNet sales revenue
Currency impact
FX‑neutral net sales revenue
Volume (m unit cases)
FX-neutral net sales revenue per unit case (€)

Net sales revenue
Currency impact
FX‑neutral net sales revenue
Volume (m unit cases)
FX-neutral net sales revenue per unit case (€)

2,175
1
2,176
537
4.05

Figures are rounded.

Reconciliation of FX-neutral input costs per unit case (numbers in € million unless otherwise stated)
Input costs
Commodity hedging
Comparable input costs
Currency impact
FX-neutral comparable input costs (€)
Volume (m unit cases)
FX-neutral comparable input costs per unit case (€)

2021

2020

1,955
4
1,959
–
1,959
2,413
0.81

1,554
(2)
1,553
10
1,562
2,136
0.73

Figures are rounded.

3. Other APMs
Adjusted EBITDA
Adjusted EBITDA is calculated by adding back to operating profit the depreciation and impairment of property, plant and equipment, theamortisation and impairment of intangible assets, the employee share option and performance share costs, and items, if any, reported in theline ‘Other non-cash items’ of the consolidated cash flow statement. Adjusted EBITDA is intended to provide useful information to analyse
the Group’s operating performance excluding the impact of operating non-cash items as defined above. The Group also uses comparable
Adjusted EBITDA, which is calculated by deducting from Adjusted EBITDA the impact of the Group’s restructuring costs, acquisition andintegration costs and the mark-to-market valuation of the commodity hedging activity. Comparable Adjusted EBITDA is intended to measure
the level of financial leverage of the Group by comparing comparable Adjusted EBITDA to Net debt.
Adjusted EBITDA and comparable Adjusted EBITDA are not measures of profitability and liquidity under IFRS and have limitations, someof 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 depreciatedand 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 efficientuse of working capital and taking into account its net payments for purchases of property, plant and equipment.
The Group considers the purchase and disposal of property, plant and equipment as ultimately non-discretionary since ongoing investment
in plant, machinery, technology and marketing equipment, including coolers, is required to support day-to-day operations and the Group’s
growth prospects. The Group presents free cash flow because it believes the measure assists users of the financial statements in understanding
the Group’s cash-generating performance as well as the availability for interest payments, dividend distribution and own retention. The free
cash flow measure is used by management for its own planning and reporting purposes since it provides information on operating cash flows,
working capital changes and net capital expenditure that local managers are most directly able to influence.
Free cash flow is not a measure of cash generation under IFRS and has limitations, some of which are as follows: free cash flow does not
represent the Group’s residual cash flow available for discretionary expenditures since the Group has debt payment obligations that are notdeducted 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.

240

COCA-COLA HBC

Alternative performance measures continued
3. Other APMs continued
Capital expenditure
The Group uses capital expenditure as an APM to ensure that its cash spending is in line with its overall strategy for the use of cash. Capital
expenditure is defined as payments for purchases of property, plant and equipment plus principal repayments of lease obligations lessproceeds from sale of property, plant and equipment.
The following table illustrates how Adjusted EBITDA, free cash flow and capital expenditure are calculated:
2021€ million2020€ million

Operating profit (EBIT)
Depreciation and impairment of property, plant and equipment, including right-of-use assets
Amortisation of intangible assets
Employee performance shares
Adjusted EBITDA

799
336
1
15
1,152

661
388
1
10
1,059

Share of results of integral equity method investments
Gain on disposals of non-current assets
Cash generated from working capital movements
Tax paid
Net cash from operating activities

(34)
(28)
196
(142)
1,142

(21)
(1)
108
(183)
962

Payments for purchases of property, plant and equipment1
Principal repayments of lease obligations
Proceeds from sales of property, plant and equipment
Capital expenditure

(514)
(63)
36
(541)

(419)
(59)
13
(465)

Net cash from operating activities
Capital expenditure
Free cash flow

1,142
(541)
601

962
(465)
497

Figures are rounded.
1. Payments for purchases of property, plant and equipment for 2021 include €7.1 million (2020: €nil) relating to repayment of borrowings undertaken to finance the purchaseof production equipment by the Group’s subsidiary in Nigeria, classified as ‘Repayments of borrowings’ in the condensed consolidated cash flow statement.

Net debt
Net debt is an APM used by management to evaluate the Group’s capital structure and leverage. Net debt is defined as current borrowings
plus non-current borrowings less cash and cash equivalents and financial assets (time deposits, treasury bills and money market funds),
as illustrated below:

Current borrowings
Non‑current borrowings
Other financial assets
Cash and cash equivalents
Net debt
Figures are rounded.

As at 31 December
2021€ million2020€ million

382
2,556
(835)
(783)
1,320

315
2,610
(93)
(1,216)
1,617

INTEGRATED ANNUAL REPORT 2021

241

Other supplementary information
Effective May 2020, following a re-organisation of Multon‘s structure, the joint arrangement was reclassified from a joint operation to a joint
venture. The table below depicts the Group’s growth including the relevant performance of Multon as a joint operation in the current year(‘like-for-like’), compared to the prior year:
Net sales revenue per unit case2021 vs 2020
Growth (%)

Established
Developing
Emerging
Total Group

VolumeFX-neutral

Total CCH

Total CCH
like-for-like

9.9
0.8
18.6
13.0

9.9
0.8
20.4
14.0

Reported

Total CCH

Total CCH
like-for-like

Total CCH

Total CCH
like-for-like

3.7
17.0
5.3
5.8

3.7
17.0
5.6
5.8

3.8
15.7
0.6
3.5

3.8
15.7
0.9
3.4

Net sales revenue
2021 vs 2020
Growth (%)

Established
Developing
Emerging
Total GroupFX-neutral

Reported

Total CCH

Total CCH
like-for-like

Total CCH

Total CCH
like-for-like

13.9
18.0
24.9
19.6

13.9
18.0
27.1
20.6

14.0
16.6
19.3
16.9

14.0
16.6
21.5
17.9

In August 2020, Nigerian Bottling Company Ltd (’NBC’), the Group’s subsidiary in Nigeria, settled the additional tax assessed by the Nigerian
tax authorities (’FIRS’) following the completion of their income tax audit for the years 2005-2019 and transfer pricing (’TP’) audit for the years
2011-2019. The net impact to the Tax line item in the income statement, following the utilisation of provisions for uncertain tax positions,was €16.5 million, out of which €7.2 million was attributable to the results of the TP audit. This additional tax charge of €16.5 million resulted
in a 2.8pp increase of the Group‘s effective tax rate on a reported basis, for 2020.
NBC was audited by the FIRS with respect to TP for the first time since the inception of the TP rules and principles in the country. The TP
audit focused on the transactions between NBC and The Coca-Cola Company Group entities (’TCCC’) over a 9-year period (2011-2019).
The FIRS challenged the prices of concentrate purchased from and the charges for services provided by TCCC to NBC. As a result, the FIRS
adjusted NBC’s profitability, increasing its taxable base accordingly. The TP audit concluded with a settlement between FIRS and NBC.
This increase of NBC’s taxable base over this 9-year period amounted to €195 million and resulted in the elimination of accumulated capitalallowances of €183 million. In addition, to the extent that the available capital allowances were not sufficient to offset the full impact of the tax
adjustment in a certain year, a tax payment was required to be made. Following the settlement, the total tax assessed by the FIRS amounted
to €62.7 million, of which €7.6 million was settled in cash and €55.1 million was settled through the elimination of the deferred tax asset
relating to the available capital allowances.
The FIRS applied Nigerian TP rules and principles to assess tax on a portion of the income earned by TCCC from its transactions with NBC
which, the FIRS determined, should have been subject to taxation in Nigeria. The outcome of the TP audit and the additional related tax that
was assessed by the FIRS was therefore not associated with the operations of NBC. Consequently, we consider that the income statement
impact of this TP audit (net income statement charge of €7.2 million after the utilisation of provisions for uncertain tax positions) distorted
users’ understanding of the Group’s underlying financial performance for 2020 and we therefore excluded it from the comparable after-tax
results, by reporting it under ‘Other tax matters’ for comparability purposes. Having adjusted for this TP audit charge, the Group’s effective
tax rate on a comparable basis was 28.7% for 2020.

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COCA-COLA HBC

Assurance statement

Independent assurance statement for the 2021 Integrated Annual Report
To the management and stakeholders of Coca-Cola HBC AG:
denkstatt GmbH was commissioned by Coca-Cola HBC AG (hereinafter referred to as “the Company”) to provide independent third-party
assurance for the printed and downloadable pdf versions of the Company’s 2021 Integrated Annual Report (hereinafter referred to as“the Report”) in accordance with the AA1000 Assurance Standard. We have reviewed sustainability-related data and content in the Report.
Financial data were not reviewed as part of this engagement. The assurance engagement covered the nature and extent of the Company’s
application of the principles of inclusivity, materiality, responsiveness and impact, as described in the AA1000 Series of Standards(AA1000AP, 2018). The application level of the Global Reporting Initiative (GRI) Standards (2016, core option) was verified.
denkstatt is an independent professional services company. Our team of experts has extensive professional experience of assurance
engagements related to non-financial information and sustainability management, meaning it is qualified to conduct this independent
assurance engagement. denkstatt has implemented a certified quality and environmental management system which complies with therequirements of ISO 9001:2015 and ISO 14001:2015, and accordingly maintains a comprehensive quality control system.

Management responsibilities
The Company’s management (Management) is responsible for preparing the Report, statements within it and related online content.
Management is also responsible for identifying stakeholders and material issues, defining commitments with respect to sustainability
performance, and establishing and maintaining appropriate performance management and internal control systems, from which reported
information is derived.
Additionally, Management is responsible for establishing data collection and internal control systems to ensure reliable reporting, for
specifying acceptable reporting criteria and for selecting data to be collected for the purposes of the Report. Management responsibilities
also extend to preparing the Report in accordance with the GRI Standards.

Assurance provider’s responsibilities
Our responsibilities are to:• express our conclusions and make recommendations regarding the nature and extent of the Company’s adherence to the AA1000
Accountability Principles (2018), and• express our conclusions on the reliability of the information in the Report, and whether it is in accordance with the criteria in the GRI
Universal Standards (2016).
We did not perform any tasks or services for the Company or other clients in 2021 which would lead to a conflict of interest. We were notresponsible for the preparation of any part of the Report.

Scope of assurance, standards and criteria used
We have fulfilled our responsibilities to provide appropriate assurance that the information in the Report is free from material misstatements.
We planned and carried out our work based on the GRI Standards and the AA1000 Series of Standards. We used the criteria in AA1000AS(AA1000 Assurance Standard v3) to perform a Type 2 engagement and to provide high level of assurance regarding the nature and extent
of the Company’s adherence to the principles of impact, inclusivity, materiality, and responsiveness. The core option was selected as theapplication level for the GRI Universal Standards (2016) and verified accordingly.

Methodology, approach, limitations and scope of work
We planned and carried out our work in order to obtain all evidence, information and explanations that we considered necessary to fulfil
our responsibilities. We completed a wide range of activities in order to gather necessary evidence, including:• Gathering information regarding the Company’s adherence to the principles of impact, inclusivity, materiality, sustainability context,
completeness and responsiveness as required by GRI and AA1000, and conducting interviews with members of the executive
management, staff from the People and Culture Department, the Legal Affairs Department, the Commercial Department, the Supply
Chain Department (including the Procurement team, the Product Quality, Safety and Environment team, the Fleet team and the Cold
Drink Equipment team) and the Corporate Affairs and Sustainability Department as well as managers from other Group functions.
In particular, we verified the management commitment to the above-mentioned principles, and whether they are embedded at market
level, as well as whether systems and procedures are in place to support compliance with these principles.
• Key topics in the interviews conducted at Group level related to the materiality analysis, i.e. health and nutrition, responsible marketing,
employee wellbeing and engagement, vehicle fleets, corporate governance, business ethics and anti-corruption, sourcing, energy andclimate change, cold drink equipment (coolers), TCFD & climate risk assessment, packaging, recycling and waste management, water
stewardship, the World Without Waste initiative, #YouthEmpowered and other community programmes, human rights and diversity,
business risks and opportunities, and social impact.
• Conducting interviews at country headquarters in Belarus, Croatia, Cyprus, Greece, Italy, Nigeria and Russia in order to assure that the
information required for the engagement was complete.
• Performing audits in nine bottling plants, the majority of which were located in emerging markets: Minsk (Belarus), Zagreb (Croatia),
Nicosia (Cyprus), Aigio (Greece), Nogara (Italy), Abuja (Nigeria), Maiduguri (Nigeria), Samara (Russia) and Vladivostok (Russia).
• Making enquiries and conducting spot checks to assess the implementation of Company policies (at plant, market and Group level).
• Making enquiries and conducting spot checks regarding necessary documentation for assessing the current data collection systems,
and the procedures in place to ensure reliable and consistent reporting from the plants to Group level.

INTEGRATED ANNUAL REPORT 2021

243

• Verifying all three inventory scopes (Scope 1, 2 and 3) as defined by the GHG Protocol (Corporate Standard), including progress against
emission reduction targets, reported changes in emissions compared with the baseline years (2010 and 2017) and the figures for absoluteemissions and emissions intensity in 2021.
• Verifying the GRI content index, which was published in a separate section of the Company website, to ensure consistency with therequirements of the GRI Standards (core option).
• Conducting additional interviews with four external stakeholders representing different stakeholder groups (i.e., business partners,
suppliers, and non-governmental organisations) at the annual stakeholder forum in autumn 2021.
The scope of assurance covers all information relevant to sustainability in the Report and focuses on Company systems and activities during
the reporting period. Conversely, the following chapters were not covered in the sustainability assurance process:• Financial Statements and Swiss Statutory Reporting.
Due to the Covid-19 pandemic, in-person audits were conducted in the following countries: Croatia, Cyprus, Greece and Russia.
Other audits and interviews were conducted virtually, by using video conferencing solutions to facilitate virtual tours of manufacturing plants.

Conclusions
On the basis of our work, we found nothing to suggest that the information in the 2021 Integrated Annual Report or in the 2021 GRI content
index is inaccurate or contains material misstatements. Any errors or misstatements identified during the engagement were corrected prior
to the Report being published.

Positive developments• Sustainability is deeply embedded in the Company culture. This is evident in well-structured, easily accessible guidelines which ensure
proper implementation of Company-wide standards, e.g., the Code of Business Conduct, the Inclusion and Diversity Policy, and theMission 2025 Guidebook. It is also reflected in the organisational structure and across all functions, with a clear set of responsibilities
for sustainability strategy, from factory-level to senior management.
• The Company demonstrates a very strong commitment to its goals. Most operations have a strong track record of collecting anddocumenting sustainability data. Data traceability has significantly improved over recent years, due to well-structured monitoring andreporting processes at plant, market, and Group level, as well as specialised software.
• The Company fully understands the links between business risks and sustainability issues. An excellent risk management system has beendeveloped in recent years. The detailed quantitative analysis of climate-related water risks performed by the Company in 2021, using
established tools, can be considered an example of good practice. Procedures for identifying and mitigating risks comprehensively coversustainability-related risks, e.g., by integrating the climate risk management process in enterprise risk management in line with TCFD
recommendations. Specific plans for further progress in aligning with TCFD recommendations in the coming years, such as further
quantitative climate risk assessments, demonstrate clear commitment to the issue.
• The Company has made great progress over the last year on increasing the number of suppliers that undergo environmental, social, andcorporate governance (ESG) assessment using EcoVadis and other tools. In order to further increase positive developments along thevalue chain, supplier-specific dialogues on sustainability-related expectations and areas for improvement should be implemented, as well
as monitoring for actions taken.
• In 2021 the Company further improved reporting procedures in respect of breaches of the Code of Business Conduct, such as discrimination.
This included special training programmes. These efforts are reflected in the development of reporting and in the measures implemented.
• The Company has put great effort into developing the #YouthEmpowered programme by increasing numbers of participants as well as
establishing a data monitoring and reporting system with a high level of maturity. #YouthEmpowered is the flagship social programmeof the Company’s Mission 2025 sustainability commitments. It aims to support young people and increase their employability by providing
modular education opportunities in soft and/or business skills. In 2022 the Company will further refine the #YouthEmpowered programmewith regard to the curriculum and training intensity.
• The deployment of Behaviour Based Safety (BBS) programmes throughout the Group is a highly positive, impactful development in thearea of health and safety.

Findings and conclusions regarding adherence to the AA1000 principles of inclusivity,
materiality, responsiveness, impact, and specific performance-related information:
Inclusivity• Group level: The Company has implemented a comprehensive and efficient stakeholder engagement process at Group level.
Its cornerstones are the annual internal and external materiality survey and the Annual Stakeholder Forum (held online in 2021).
• Market and plant level: Stakeholder engagement activities at market and plant level are in greater evidence – and, especially during theCovid-19 pandemic, resulted in new approaches to stakeholder engagement (e.g., virtual stakeholder forums). The Company is well awareof stakeholder concerns, and it consistently integrates the views of stakeholders at all levels.

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COCA-COLA HBC

Assurance statement continued
Materiality• Group level: A robust process for defining topics material to the Company is in place. The materiality assessment process considers
stakeholder expectations with regard to relevant topics. Moreover, the Company considers its impact on society and the environment
in the materiality assessment, as required by the GRI Standards. The material topics identified during the assessment in 2021 provided
the basis for the sustainability strategy and reporting.
• Market and plant level: As various markets are publishing sustainability reports in combination with socio-economic impact studies,
formalised processes for carrying out the materiality assessment have been more strongly implemented throughout the organisation.
Our recommendation is to continue with the ‘double materiality’ concept as well as work to combine the two perspectives – financial
materiality, and environmental and social materiality – with a risks and opportunities assessment from both the financial andnon‑financial perspectives.

Responsiveness• The Company demonstrated a proactive, fast, and professional response to the health and safety challenges that arose due to thepandemic, in order to protect employees and business partners.
• Specific measures were taken to provide support for employees during the pandemic, including support for emotional, mental,
and physical wellbeing, e.g., through the Employee Assistance Programme (EAP).
• External stakeholders were also supported, e.g., by focussing the #YouthEmpowered programme on HORECA workers, or donatingproducts and financial contributions to emergency relief during the Covid-19-related lockdown. New formats are being developed
to adapt the #YouthEmpowered programme to the pandemic and the progress of digitalisation.

Impact• Group level: The Company has robust processes in place for understanding, assessing, and managing its impacts, including risk
management and strategy development.
• Market level: Sound socio-economic impact studies are conducted in individual markets, on a maximum three-year local cycle, to measure
the organisational impact on communities. Results from these studies are summarised at Group level to disclose the organisation’s impact
on stakeholders, the society and on the Company itself.
• As part of the Mission 2025 strategy, the Company has published a strong set of commitments with a long-term perspective, covering
a wide range of environmental and social impact areas along the value chain. In particular, the Company’s commitment to NetZeroby40
demonstrates its ambitious environmental roadmap.

Additional conclusions and recommendations• The Company demonstrates excellent engagement and know-how in relation to packaging waste management. This competence,
combined with a structured approach, reflects ambitious targets in this area. However, efforts need to be increased, since the Company’s
2025 targets for use of recycled PET and/or PET from renewables, as well as packaging collection for recycling, do not currently appear
to be within reach.
• The product portfolio is under development, with the integration of new product and service segments such as coffee drinks, snacks,
and premium spirits. The majority of the social and environmental impacts of these new segments have already been included in the scopeof ESG assessment, and we recommend further assessment and even stronger integration into the Company’s sustainability
management approach.
• The Company has begun work to include biodiversity topics in its strategy. The newly released biodiversity statement is a very positive
development. In order to make a greater impact, we recommend that the Company continues working on the strong implementationand integration of biodiversity in its strategy.
• Since implementation of the 2020 Green Fleet Program the Company has made great progress on transitioning to use of alternative
vehicles. To make progress in future towards net-zero transport emissions, we recommend integrating medium and heavy-duty vehicles(trucks) into the Green Fleet roadmap and increasing collaboration in this area with third-party carriers.
• The Company should further strengthen workplace accountability practices within its operations, especially in developing markets,
focusing on third-party contractors.

Willibald Kaltenbrunner
Lead Auditor
denkstatt GmbH
Advisory for Sustainable Development
Vienna, 9 March 2022

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245

Shareholder information
We take great pride in being regarded as a transparent andaccessible company in all our communications with investmentcommunities around the world. We engage with key financial
audiences, including institutional investors, sell-side analysts
and financial journalists, as well as our Company’s shareholders.
The investor relations department manages the interaction
with these audiences by attending ad hoc meetings and investor
conferences throughout the year, in addition to the regular meetingsand presentations held at the time of our results announcements.
Geographic concentration (%)

Share price performance
LSE: CCH

In £ per share
Close
High
Low
Market capitalisation (£ million)
ATHEX: EEEIn € per share
Close
High
Low
Market capitalisation (€ million)

2021

2020

2019

25.55
27.84
21.60
9.348

23.77
28.83
14.94
8,660

25.65
30.74
22.99
9,318

2021

2020

2018

30.26
32.80
24.18
11,071

26.42
34.24
16.99
9,625

30.17
35.09
26.93
10,960Source: Bloomberg

Share capital
In 2021, the share capital of Coca-Cola HBC increased by the issueof 1,282,821 new ordinary shares following the exercise of stock
options pursuant to the Group’s employee stock option plan.
Total proceeds from the issuance of the shares under the stock
option plan amounted to €19.6 million.
North America
Western Europe
UK
Nordic
Asia
Other

30%
23%
33%
5%
1%
8%

Listings
Coca-Cola HBC AG (LSE: CCH) was admitted to the premium listing
segment of the Official List of the UK Listing Authority and to tradingon the London Stock Exchange’s main market for listed securities
on 29 April 2013. With effect from 29 April 2013, Coca-Cola HBC
AG’s shares are also admitted on the Athens Exchange (ATHEX:
EEE). Coca-Cola HBC AG has been included as a constituent of the
FTSE 100 and FTSE All-Share Indices from 20 September 2013.
London Stock Exchange
Ticker symbol: CCH
ISIN: CH019 825 1305
SEDOL: B9895B7
Reuters: CCH.L
Bloomberg: CCH LN
Athens Exchange
Ticker symbol: EEE
ISIN: CH019 825 1305
Reuters: EEEr.AT
Bloomberg: EEE GA

Credit ratingStandard & Poor’s: L/T BBB+, S/T A2, stable outlook
Moody’s: L/T Baa1, S/T P2, stable outlook

Following the above changes, and including 5,894,583 ordinary
shares held as treasury shares, on 31 December 2021 the sharecapital of the Group amounted to €2,022.3 million and comprised
371,795,418 shares with a nominal value of CHF 6.70 each.

Major shareholders
The principal shareholders of the Group are Kar-Tess Holding(a Luxembourg company), which holds approximately 23%, and
The Coca-Cola Company, which indirectly holds approximately 21%of the Group’s issued share capital.

Dividends
For 2022, the Board of Directors has proposed a €0.71 dividend pershare a 10.9% increase from previous year and increased dividend
pay-out ratio target to 40-50%, previously 35-45%.
This compares with a dividend payment of €0.64 per share in 2021.
For more information on our dividend policy and dividend history,
please visit our website at www.coca-colahellenic.com.

Financial calendar
12 May 2022
21 June 2022
11 August 2022
10 November 2022

First quarter trading update
Annual General Meeting
Half-year financial results
Third quarter trading update

Corporate website
www.coca-colahellenic.com

Shareholder and analyst information
Shareholders and financial analysts can obtain further informationby contacting:
Investor Relations
Tel: +30 210 618 3100
Email: investor.relations@cchellenic.com
IR website: www.coca-colahellenic.com/en/investor-relations

246

COCA-COLA HBCGlossary
Basis points (bps)One hundredth of one percentage point(used chiefly in expressing differences)
BSO
Business services organisation
BSS
Business solutions and systems
CAGR
Compound annual growth rate
Capital expenditure or CapEx
Gross CapEx is defined as payments forpurchase of property, plant and equipment.
Net CapEx is defined as payments forpurchase of property, plant and equipment
less receipts from disposals of property,
plant and equipment plus principal
repayment of lease obligations
Carbon emissions (Scope 1 and 2)
Emissions of CO2 and other greenhousegases from fuel combustion and energy
use in Coca‑Cola HBC’s own operations inbottling, storage, distribution and in offices
Carbon footprint
Global emissions of CO2 and othergreenhouse gases from Coca‑Cola HBC’swider value chain (raw materials, productcooling, etc.)
CHP
Combined heat and power plants
Coca-Cola brands
Includes Coca‑Cola, Coca‑Cola Zeroand Coca‑Cola Light brands
Coca-Cola HBC
Coca‑Cola HBC AG, and, as the context may
require, its subsidiaries and joint ventures;also, the Group, the Company
Coca-Cola System
The Coca-Cola Company and its
bottling partners
Cold drink equipment
A generic term encompassing point-of-saleequipment such as coolers (refrigerators),
vending machines and post‑mix machines
Comparable adjusted EBITDA
We define comparable adjusted EBITDA
as operating profit before deductions fordepreciation and impairment of property,
plant and equipment (included both in costof goods sold and in operating expenses),
amortisation and impairment of intangible
assets, stock option compensation andother non‑cash items, if any; and further
adjusted for restructuring costs, acquisition
costs and mark to market valuation ofcommodity hedging activity
Comparable net profit
Refers to net profit after tax attributableto owners of the parent adjusted for
restructuring costs, acquisition costs, markto market valuation of commodity hedging
activity and certain other tax items

Comparable operating profit (EBIT)
Comparable operating profit (EBIT) refers to
profit before tax excluding finance income/(costs) and share of results of equitymethod investments and adjusted for
restructuring costs, acquisition costs andmark to market valuation of commodity
hedging activity

Inventory days
We define inventory days as the average
number of days an item remains in inventory
before being sold, using the following
formula: average inventory ÷ cost of goods
sold x 365

Comparable operating expenditure
Comparable operating expenditure refers
to operating expenditure adjusted for
restructuring costs, acquisition costs
and mark to market valuation of certain
commodity hedging activity

Italy
Territory in Italy served by Coca‑Cola HBC(excludes Sicily)

Customer
Retail outlet, restaurant or other operationthat sells or serves Coca-Cola HBC products
directly to consumers
Dividend policy
Our Board of Directors approved a dividend
policy, effective from 2013, aiming toincrease dividend payments progressively
with a medium-term target payout ratioof 35-45% on comparable net profits
DME
Direct marketing expenses
Energy use ratio
The KPI used by Coca‑Cola HBC to measureenergy consumption in the bottling plants,
expressed in megajoules of energy consumed
per litre of produced beverage (MJ/lpb)
FMCG
Fast‑moving consumer goods
Future consumption
A distribution channel where consumers
buy multi-packs and larger packages fromsupermarkets and discounters which are notconsumed on the spot
GDP
Gross domestic product
GRI
Global Reporting Initiative, a global standard
for sustainability reporting
HoReCaDistribution channel encompassing hotels,
restaurants and cafés
IASBInternational Accounting Standards Board
IFRSInternational Financial Reporting Standards,
issued by the International AccountingStandards BoardIIRC
The International Integrated Reporting
Council, a global coalition of regulators,
investors, companies, standard-setters,
the accounting profession and NGOs.
The coalition is promoting communication
about value creation as the next step in theevolution of corporate reporting

Ireland
The Republic of Ireland and Northern Ireland

Joint value creation (JVC)
An advanced programme and process
to collaborate with customers in orderto create shared value
KPIs
Key Performance Indicators
Litre of produced beverage (lpb)
Unit of reference to show environmental
performance relative to production volume
MarketWhen used in reference to geographic
areas, a country in which Coca-Cola HBC
does businessMission 2025
2025 sustainability commitments with
their 17 goals. Developed in late 2018, they
are based on our stakeholder materiality
matrix and aligned with the United Nations
Sustainable Development Goals (SDGs) andtheir targets. The six key focus areas reflect
our value chain: reducing emissions; water
use and stewardship; packaging (World
Without Waste); ingredient sourcing;nutrition; and our people and communities
NetZeroby40
Long-term commitment to achieving net
zero emissions across our entire value chain(Scope 1, 2 and 3) by 2040. Commitment
is endorsed by the “We Mean Business”
coalition and published in October 2021
More details on our Scope 1, 2 and 3
emissions are disclosed on p. 38, from our2021 GRI Content Index:
https://www.coca-colahellenic.com/
content/dam/cch/us/documents/oar/
Coca-Cola-HBC-2021-GRI-Content-Index.
pdf.downloadasset.pdf
Please see also our 2021 CDP
Climate response:
https://www.coca-colahellenic.com/
content/dam/cch/us/documents/a-moresustainable-future/strategic-pillars/
CDP%20RESPONSE%202021_COCACOLA%20HBC%20AG_CLIMATE_CHANGE.pdf.downloadasset.pdf
NetZeroby40 information from our website:www.coca-colahellenic.com/en/a-moresustainable-future/netzeroby40

INTEGRATED ANNUAL REPORT 2021

NARTD
Non‑alcoholic ready‑to‑drinkNGOs
Non‑governmental organisations
NIST
NIST is the US National Institute ofStandards and Technology – a nonregulatory agency of the United States
Department of Commerce
Nm3
Normal cubic metre NSR
Net sales revenue
Operational leverage
Operational leverage is the degree to which
an increase in a company’s revenues will
result in an increase in comparable EBIT
Organised trade
Large retailers (e.g. supermarkets,
discounters etc.)
PET
Polyethylene terephthalate, a formof polyester used in the manufacturingof beverage bottles
Ready-to-drink (RTD)
Drinks that are pre‑mixed and packaged,
ready to be consumed immediately withno further preparation
Right Execution Daily (RED)
Major Group‑wide programme to ensurein‑outlet excellence
Receivable days
The average number of days it takes
to collect receivables using the following
formula: average accounts receivable ÷ net
sales revenue x 365
ROIC
Return on invested capital. ROIC is thepercentage return that a company makes
over its invested capital. We define ROIC
as the percentage of comparable net profit
excluding net finance costs divided by thecapital employed. Capital employed is
calculated as the average of net debt andshareholders’ equity attributable to theowners of the parent through the year
SAP
A powerful software platform that enables
us to standardise key business processes
and systems
SDG
UN Sustainable Development Goals.
On 25 September 2015, countries adopted
a set of 17 goals to end poverty, protect theplanet and ensure prosperity for all as partof a new sustainable development agenda.
Each goal has specific targets to beachieved by 2030
Serving
237ml or 8oz of beverage, equivalent
to 1/24 of a unit case247

Shared services
Centre to standardise and simplify key
finance and human resources processes

TCFD
Task Force on Climate-related
Financial Disclosures

Sparkling beverages
Non‑alcoholic carbonated beverages
containing flavourings and sweeteners,
but excluding, among others, waters andflavoured waters, juices and juice drinks,
sports and energy drinks, teas and coffee

Territory
The 28 countries where Coca-Cola HBC
operates and in which we have bottlingagreements with The Coca-Cola Company
to be their exclusive distribution partner

SKU
Stock Keeping Unit
Still and water beverages
Non‑alcoholic beverages without carbonation
including, but not limited to, waters andflavoured waters, juices and juice drinks,
sports and energy drinks, teas and coffee
Socio-economic impact
In conducting socio-economic studies,
we use input-output modelling to generate
estimates of jobs supported and economic
value added. Data we use in this processincludes our financial information (revenues,
expenses, taxes, sales volume and profits)
as well as some data from The Coca-Cola
Company. While rigorous, the process
involves statistical modelling, which should
be considered when interpreting and using
the results from the studies. Modelling
enables an assessment of three key
dimensions of impact:• Direct: immediate effect in termsof employment, wages and output• Indirect: subsequent effect in the supply
chain• Induced: effect caused by staff spend
on goods or services• We do not conduct socio-economic
studies for all of our markets every year;
studies are conducted for each market
on a rolling basis. In 2021, we updated thestudies for seven markets, adding thisinformation to the aggregate results fromall socio-economic impact studies for theperiod 2018-2021.
Notes to 2021 results from page 9:• Numbers presented are aggregatedbased on the local socio-economic studies
from Coca-Cola HBC markets publishedbetween 2018 and 2021, except for North
Macedonia where the report is from 2017.
• All KPIs represent annual impact.
• Where applicable and relevant in local
socio-economic studies, the impactof other entities of the Coca-Cola System
is included
SSD
Sparkling soft drinks

UNESDA
Union of European Soft Drinks Associations
Unit case (u.c.)Approximately 5.678 litres or 24 servings,
a typical volume measurement unit.
For Bambi volume, one unit casecorresponds to 1 kilogram
UN Global Compact (UNGC)
The world’s largest corporate citizenshipinitiative which provides a framework forbusinesses to align strategies with its
10 principles promoting labour rights,
human rights, environmental protection
and anti-corruption
VolumeAmount of physical product produced
and sold, measured in unit cases
Volume share
Share of total unit cases soldValue share
Share of total revenue
Waste ratio
The KPI used by Coca‑Cola HBC to measurewaste generation in its bottling plants,
expressed in grammes of waste generated
per litre of produced beverage (g/lpb)
Waste recycling
The KPI used by Coca‑Cola HBC to measure
the percentage of production waste atbottling plants that is recycled or recovered
Water footprint
A measure of the impact of water use,in operations or beyond, as defined by theWater Footprint Network methodology
Water use ratio
The KPI used by Coca‑Cola HBC to measurewater use in its bottling plants, expressedin litres of water used per litre of produced
beverage (l/lpb)
Working capital
Operating current assets minus operating
current liabilities excluding financing andinvestment activities#YouthEmpowered (#YE)
Flagship programme from our Mission
2025 sustainability commitments, that aims
to support young people and increase theiremployability by providing modular educationof soft and/or business skills. It is delivered
via classroom sessions, virtual training, self
e-learning modules, mentoring sessions
and other channels handled locally by
our markets.

248

COCA-COLA HBCSpecial note regarding forward-looking statements
This document contains forward-looking statements that involverisks and uncertainties. These statements may generally, but notalways, be identified by the use of words such as ‘believe’, ‘outlook’,‘guidance’, ‘intend’, ‘expect’, ‘anticipate’, ‘plan’, ‘target’, ‘seek’,‘estimates’, ’potential‘ and similar expressions to identify forwardlooking statements. All statements other than statements ofhistorical fact, including, among others, statements regarding thefuture financial position and results; Coca-Cola HBC’s outlook for2021 and future years; business strategy and the effects of the global
economic slowdown; the impact of the sovereign debt crisis, currency
volatility, Coca-Cola HBC’s recent acquisitions, and restructuringinitiatives on Coca-Cola HBC’s business and financial condition;
Coca-Cola HBC’s 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; and effective tax rates and plans and objectives ofmanagement for future operations, are forward-looking statements.
You should not place undue reliance on such forward-looking
statements. By their nature, forward-looking statements involverisk and uncertainty because they reflect Coca-Cola HBC’s current
expectations and assumptions about future events and circumstancesthat may not prove accurate. Forward-looking statements speak
only as of the date they are made. Coca-Cola HBC’s actual results
and events could differ materially from those anticipated in theforward-looking statements for many reasons, including the risks
described in the Risk and materiality section. Although Coca-Cola
HBC believes that, as of the date of this document, the expectations
reflected in the forward-looking statements are reasonable,
Coca-Cola HBC cannot assure that Coca-Cola HBC’s future results,
level of activity, performance or achievements will meet these
expectations. Moreover, neither Coca-Cola HBC, nor its Directors,
employees, advisers nor any other person assumes responsibility forthe accuracy and completeness of any forward-looking statements.
After the date of this Integrated Annual Report, unless Coca-Cola
HBC is required by law or the rules of the UK Financial Conduct
Authority to update these forward-looking statements, Coca-Cola
HBC makes no commitment to update any of these forward- looking
statements to conform them either to actual results or to changes
in Coca-Cola HBC’s expectations.

About our report
The 2021 Integrated Annual Report (the ‘Annual Report’)consolidates Coca-Cola HBC AG’s (also referred to as ‘Coca-Cola
HBC’ or the ‘Company’ or the ‘Group’) UK and Swiss disclosure
requirements, while meeting the disclosure requirements for its
secondary listing on the Athens Exchange. In addition, the Annual
Report aims to deliver against the expectations of the Company’s
stakeholders and sustainability reporting standards, providing
a transparent overview of the Group’s performance and progressin sustainable development for 2021.
Our strategy is designed to deliver responsible, sustainable andprofitable growth. This strategy is grounded in our purpose to provide
growth for our customers and delight our consumers by nurturingpassionate and empowered people as we enrich our communities
and care for the environment. Our purpose is directly linked toour strategy and the five growth pillars that guide us as we pursue
our objectives and targets. Those growth pillars are: 1. Leverage
our unique 24/7 portfolio; 2. Win in the marketplace; 3. Fuel growththrough competitiveness and investments; 4. Cultivate thepotential of our people; 5 Earn our license to operate. The initiatives
we implemented within each of these pillars forms the basis of
the narrative of the Integrated Annual Report, which is structured
around these five pillars.

The Annual Report is for the year ended 31 December 2021,
and its focus is on the primary core business of non-alcoholic readyto-drink beverages across the 29 countries in which we operate.
Our website and any other website referred to in the Annual Report
are not incorporated by reference and do not form part of theAnnual Report.
The consolidated financial statements of the Group, included on
pages 154-210, have been prepared in accordance with International
Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB). Coca-Cola HBC AG’s statutoryfinancial statements, included on pages 211-236, have been preparedin accordance with the Swiss Code of Obligations. Unless otherwise
indicated or required by context, all financial information containedin this document has been prepared in accordance with IFRS.
For Swiss law purposes, the annual management report consistsof the sections entitled ‘Strategic Report’, ‘Corporate Governance’(without the sub-section ‘Director’s Remuneration Report’),‘Supplementary Information’ and ‘Glossary’.
The Group uses certain Alternative performance measures (APMs)
which provide additional insights and understanding to the Group’s
underlying operating and financial performance, financial conditionand cash flows. A full list of these APMs, their definition andreconciliation to the respective IFRS measures can be foundon pages 237-240.
This report has been prepared in accordance with the GRI Standards:
Core option. In addition, the sustainability aspects of this Annual
Report comply with the AA1000AS Assurance Standard, and theadvanced level requirements for communication on progressagainst the 10 Principles of the United Nations Global Compact.
In addition, the report is aligned with the principles and elementsof the International Integrated Reporting Council’s (IIRC) framework.
Carbon emissions are calculated using the GHG Protocol Corporate
Accounting and Reporting Standard methodology. Furthermore,
Coca-Cola HBC supports the Task Force on Climate-related
Financial Disclosures (TCFD) and reports to the Sustainability
Accounting Standards Board (SASB) framework. The sustainability
aspects of the Integrated Annual Report have been verified by anindependent professional assurance provider as dictated by theCompany’s Executive Leadership Team (ELT), and you can find therelevant assurance statement on pages 242-244. As with the restof the information provided, the sustainability aspects of this Annual
Report are for the full year ended 31 December 2021 and the related
information presented is based on an annual reporting cycle.
Scope of the report: environmental and social data includes
North Macedonia and Multon joint venture. Snacks manufacturing
operations are not included in the environmental and social reporting,unless stated otherwise (due to their very small impact, less than theinternal materiality threshold). Relevant impact areas from coffee
and premium spirits categories are included in the environmental
and social data.
We remain committed to strong corporate governance andleadership as well as transparency in our disclosures. We will continue
to review our reporting approach and routines, to ensure they meet
best practice reporting standards and the expectations of our
stakeholders, and provide visibility on how we create sustainablevalue for the communities we serve.

Visit us
www.coca-colahellenic.com

Write to us

The Group site features all the latest news
and stories from around our business andcommunities, as well as an interactive
online version of this report.

We have dedicated email addresses which
you can use to communicate with us:
investor.relations@cchellenic.com
sustainability@cchellenic.com

Coca‑Cola HBC AG
Turmstrasse 26, CH-6312 Steinhausen, Switzerlandwww.coca-colahellenic.com
investor.relations@cchellenic.com
sustainability@cchellenic.com

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