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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Coca-cola Europacific Partners Plc | LSE:CCEP | London | Ordinary Share | GB00BDCPN049 | ORD EUR0.01 (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 1.40 | 2.12% | 67.40 | 67.00 | 67.40 | 67.40 | 66.00 | 66.20 | 17,882 | 16:35:28 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Btld & Can Soft Drinks,water | 18.3B | 1.67B | 3.6374 | 16.03 | 26.76B |
From Apr 2022 to Apr 2024
TIDMCCEP
RNS Number : 8535U
Coca-Cola Europacific Partners plc
04 August 2022
COCA-COLA EUROPACIFIC PARTNERS
Results for the six months ended 1 July 2022
Raising FY guidance, reflecting great first-half
Hot Features
Premium
H1 2022 As Reported Comparable Change vs H1 2021 Change vs
Metric([1]) ([1]) H1 2021
============ ============== =========== ============== ------------------------------------------------------ -------------------------
As Reported Comparable Comparable Pro Pro
([1]) FXN ([1]) forma forma
Comparable Comparable
([3]) FXN([3])
============ ============== =========== ============== ==================== =============== =============== ============ ===========
Total Volume (M 32.0 32.5 13.0
CCEP UC)([2]) 1,618 1,618 % % %
------------ -------------- ----------- -------------- -------------------- --------------- --------------- ------------ -----------
40.0 40.0 38.0 18.5 17.0
Revenue (EURM) 8,280 8,280 % % % % %
-------------------- -------------- ----------- -------------- -------------------- --------------- --------------- ------------ -----------
Cost of sales 37.5 40.0 38.0 20.0 18.5
(EURM) 5,288 5,300 % % % % %
-------------------- -------------- ----------- -------------- -------------------- --------------- --------------- ------------ -----------
Operating expenses 30.0 34.5 32.5
(EURM) 2,025 1,929 % % % 9.5% 8.0%
-------------------- -------------- ----------- -------------- -------------------- --------------- --------------- ------------ -----------
Operating profit 86.0 52.0 50.0 31.0 29.0
(EURM) 967 1,051 % % % % %
-------------------- -------------- ----------- -------------- -------------------- --------------- --------------- ------------ -----------
Profit after taxes
(EURM) 675 743 174.5% 48.5% 46.5%
-------------------- -------------- ----------- -------------- -------------------- --------------- --------------- ============ ===========
Diluted EPS (EUR) 1.46 1.61 175.5% 48.0% 45.5%
-------------------- -------------- ----------- -------------- -------------------- --------------- --------------- ------------ -----------
Revenue per UC
(EUR) 5.05 4.5% 4.5%
-------------------- ============== =========== -------------- ==================== =============== --------------- ============ -----------
Cost of sales
per UC (EUR) 3.23 4.5% 5.5%
==================== ============== =========== ============== ==================== =============== =============== ------------ -----------
H1 Interim dividend
per share([4])
(EUR) 0.56
==================== ============== =========== ======================================================================
14.0 14.5 14.5
Volume (M UC)([2]) 1,276 1,276 % % %
-------------------- -------------- ----------- -------------- -------------------- --------------- --------------- ------------ -----------
20.0 20.0 19.0 20.0 19.0
Revenue (EURM) 6,451 6,451 % % % % %
-------------------- -------------- ----------- -------------- -------------------- --------------- --------------- ------------ -----------
Operating profit 46.5 30.5 30.0 30.5 30.0
(EURM) 741 825 % % % % %
-------------------- -------------- ----------- -------------- -------------------- --------------- --------------- ------------ -----------
Revenue per
UC
Europe (EUR) 5.03 4.5% 4.5%
------------ -------------- ----------- -------------- -------------------- --------------- --------------- ------------ -----------
Volume (M
API UC)([2]) 342 342 222.5% 222.5% 7.5%
============ -------------- =========== ============== -------------------- =============== =============== ============ ===========
10.5
Revenue (EURM) 1,829 1,829 243.0% 243.0% 229.0% 15.0% %
-------------------- -------------- ----------- -------------- -------------------- --------------- --------------- ------------ -----------
Operating profit 26.5
(EURM) 226 226 1,406.5% 276.5% 260.0% 32.0% %
-------------------- -------------- =========== ============== -------------------- --------------- --------------- ------------ -----------
Revenue per UC
(EUR) 5.12 2.0% 3.5%
-------------------- -------------- ----------- -------------- -------------------- --------------- --------------- ------------ -----------
DAMIAN GAMMELL, CHIEF EXECUTIVE OFFICER, SAID:
"We are pleased to have delivered a great first-half. We achieved strong top and bottom-line growth, gained value share and generated solid free cash flow. Key to this was the continued recovery of restaurants, pubs, cafes and bars, a return to travel and tourism for many consumers and a resilient home channel. All underpinned by robust categories and the strength of our customer relationships.
"Our focus on core brands, leading in-market execution and headline price and mix delivered volume and revenue ahead of 2019. We shared in this success with our retail customers, having delivered more revenue growth for them than any of our peers. And we continued to make progress against our sustainability commitments - using more recycled plastic in our bottles and reducing carbon emissions from our supply chain.
"We remain confident in the resilience of our categories, despite a more uncertain outlook, given macroeconomic and geopolitical volatility and higher inflation. We continue to actively manage key levers of pricing and promotional spend across our broad pack offering, alongside our focus on efficiency. However, given our strong first-half, we are raising revenue, operating profit and free cash flow guidance for FY22. This demonstrates the strength of our business and ability to deliver continued shareholder value. "
___________________________
Note: All footnotes included after the 'About CCEP' section
Q2 & H1 HIGHLIGHTS([1],[3])
Revenue
Q2 Reported +26.0%; Q2 Pro forma +16.0%([5])
-- Reported growth, in addition to the drivers below, reflects the acquisition of Coca-Cola Amatil (completed 10 May 2021)
-- Pro forma comparable volume +10.5%([8]) (+5.0% vs 2019) driven by the continued recovery of the Away from Home (AFH) channel, further supported by the return of tourism in Europe, alongside favourable weather
Strong AFH pro forma comparable volume: +20.0% (+1.5% vs 2019) reflecting increased mobility & the recovery of immediate consumption (IC) packs (+30.5% ([9]) vs 2021; +5.0% ([9]) vs 2019)
Resilient Home pro forma comparable volume: +4.5% (+7.5% vs 2019) driven by solid in-market execution, supported by the recovery of IC packs & sustained growth in future consumption (FC) packs (e.g. multipack cans +4.5% ([9]) vs 2021; +26.0%([9]) vs 2019)
-- Pro forma revenue per unit case +5.0%([2],[5]) (+7.0%([10]) vs 2019) driven by favourable underlying price & promotional optimisation, alongside positive pack & channel mix led by the recovery of AFH
H1 Reported +40.0%; H1 Pro forma +17.0%([5])
-- Reported growth, in addition to the drivers below, reflects the acquisition of Coca-Cola Amatil
-- NARTD value share gains across measured channels both in-store([6]) (+30bps) including sparkling (+90bps) & online([6]) (+30bps)
-- Delivered more revenue growth for our retail customers than any of our FMCG peers in Europe([7]) & our NARTD peers in API([7])
-- Pro forma comparable volume +13.0%([8]) (+4.5% vs 2019) driven by the solid recovery of AFH, further supported by the return of tourism in Europe, sustained growth in the Home channel & strong trading during the festive Ramadan period in Indonesia
Comparable volume by channel: AFH +28.5% (flat vs 2019); Home +4.5% (+7.5% vs 2019)
-- Pro forma revenue per unit case +4.5%([2],[5]) (+6.0%([10]) vs 2019) driven by favourable underlying price & promotional optimisation, alongside positive pack & channel mix led by the recovery of AFH
H1 Operating profit
Reported +86.0%; Pro forma comparable +29.0%([5])
-- Reported growth, in addition to the drivers below, reflects the acquisition of Coca-Cola Amatil
-- Pro forma comparable cost of sales per unit case +5.5%([2],[5]) reflecting increased revenue per unit case driving higher concentrate costs, commodity inflation & adverse mix, partially offset by the favourable recovery of fixed manufacturing costs as a result of higher volumes
-- Comparable operating profit of EUR1,051m, +29.0%([3],[5]) reflecting the increased revenue, the benefit of on-going efficiency programmes & continuous efforts on discretionary spend optimisation
-- Comparable diluted EPS of EUR1.61 (reported +175.5%)
Dividend
-- First-half interim dividend per share of EUR0.56 (declared at Q1 & paid in May), calculated as 40% of the FY21 dividend, with the second-half interim dividend to be paid with reference to the current year annualised total dividend payout ratio of approximately 50%
Other
-- Generated strong free cash flow of EUR1,281m (net cashflows from operating activities of EUR1,653m) driven by strong first-half performance & working capital initiatives. Continued focus on returning to our target leverage range (Net debt/Adjusted EBITDA of 2.5x-3x) by FY24
-- Reorientation of the API portfolio to maximise system value creation to enable greater focus on NARTD, RTD alcohol & spirits well advanced:
Sale of NARTD own brands to The Coca-Cola Company for A$275m substantially complete; annualised EBIT impact of A$25m
Previously announced plans to exit production, sale & distribution of Australia beer & apple cider products completed([11]) ; minimal EBIT impact
SUSTAINABILITY
-- Recognised, for the second time, in the Financial Times-Statista list of Europe's Climate Leaders & 2022 Bloomberg Gender Equality Index
-- Third manufacturing site certified carbon neutral (Belgium) -- GB launched new attached caps to PET bottles, thereby improving recyclability
-- France to become first supplier of non-alcoholic beverages to distribute 100% of its beverages to hotels, restaurants & cafes using returnable, refillable glass bottles by end of 2022
-- New lighter weight PET bottle necks in Europe, saving c.7,000 tonnes of plastic annually by 2024
FY22 GUIDANCE & OUTLOOK([1],[3])
The outlook for FY22 reflects current market conditions. Guidance is on a pro forma comparable & Fx-neutral basis.
Revenue: pro forma comparable growth of 11-13% (previously 8-10%)
-- Weighted towards volume growth over price/mix reflecting continued recovery of the AFH channel, further supported by the return of tourism
-- Positive mix led by the continued recovery of the AFH channel -- Additional headline pricing & promotional optimisation
Cost of sales per unit case: pro forma comparable growth of 7.5% (previously 7%)
-- Higher concentrate costs reflecting increased revenue per unit case -- High teen commodity inflation, weighted to the second-half -- FY22 hedge coverage at 90% -- FY23 high single-digit commodity inflation expected
Operating profit: pro forma comparable growth of 9-11% (previously 6-9%)
-- Remain on track to deliver our previously announced efficiency savings & API combination benefits (multi-year programmes amounting to EUR350 to EUR395m in total (vs 2019))
Comparable effective tax rate: c.22-23% (unchanged)
Dividend payout ratio: c.50%([12]) (unchanged)
Free cash flow: at least EUR1.6bn (previously at least EUR1.5bn)
SECOND-QUARTER & FIRST-HALF REVENUE PERFORMANCE BY GEOGRAPHY([1])
All values are unaudited, changes versus equivalent 2021 period
Second-quarter First-half
----------------------------------------------- ----------------------------------------------
Fx-Neutral Fx-Neutral
EUR million % change % change EUR million % change % change
=================== ================= ============= ============= ================ ============= =============
Great Britain 805 16.0 % 14.5 % 1,463 22.5 % 19.5 %
------------------- ----------------- ------------- ------------- ---------------- ------------- -------------
France([14]) 554 14.0 % 14.0 % 1,017 13.5 % 13.5 %
------------------- ----------------- ------------- ------------- ---------------- ------------- -------------
Germany 736 18.0 % 18.0 % 1,296 19.0 % 19.0 %
------------------- ----------------- ------------- ------------- ---------------- ------------- -------------
Iberia([15]) 828 27.5 % 27.5 % 1,371 28.5 % 28.5 %
------------------- ----------------- ------------- ------------- ---------------- ------------- -------------
Northern
Europe([16]) 723 13.0 % 13.5 % 1,304 14.5 % 15.0 %
------------------- ----------------- ------------- ------------- ---------------- ------------- -------------
Total Europe 3,646 18.0 % 17.5 % 6,451 20.0 % 19.0 %
------------------- ----------------- ------------- ------------- ---------------- ------------- -------------
API([13]) (Pro
forma)([3]) 925 17.0 % 10.0 % 1,829 15.0 % 10.5 %
------------------- ----------------- ------------- ------------- ---------------- ------------- -------------
Total CCEP (Pro
forma)([3]) 4,571 17.5 % 16.0 % 8,280 18.5 % 17.0 %
API
-- Q2 volume growth reflects strong trading during the festive Ramadan period in Indonesia & continued momentum in Australia & New Zealand. H1 volume ahead of 2019.
-- Coca-Cola No Sugar outperformed in Australia & biggest ever Ramadan activation in Indonesia drove H1 Sparkling volume ahead of 2019. Monster continued to grow in all markets.
-- Revenue/UC([17]) growth driven by lower promotions & positive pack mix led by growth in smaller packs in Australia & favourable underlying price in all markets.
France
-- Q2 volume growth reflects the recovery of the AFH channel, supported by increased tourism & favourable weather. Resilient demand in the Home channel supported Q2 & H1 volume ahead of 2019.
-- Coca-Cola Original Taste & Zero Sugar, Monster & Fuze Tea all outperformed.
-- Revenue/UC([17]) growth supported by positive brand & pack mix e.g. small glass +93.0% led by the recovery of the AFH channel, as well as favourable underlying price.
Germany
-- Q2 volume growth reflects the on-going recovery of the AFH channel & tourism. Later removal of restrictions slowed the overall recovery of the AFH channel. Continued demand in the Home channel & the border trade business supported Q2 & H1 volume ahead of 2019.
-- Coca-Cola Original Taste, Zero Sugar, Fanta & Monster all outperformed.
-- Revenue/UC([17]) growth driven by favourable underlying price, as well as positive brand (e.g. Monster volume +23.5%), pack & channel mix.
Great Britain
-- Q2 volume growth reflects the strong recovery of the AFH channel & favourable weather. Resilient demand in the Home channel further supported overall volume growth, with both Q2 & H1 volume in double-digit growth versus 2019.
-- Coca-Cola Original Taste & Zero Sugar, Fanta & Monster all outperformed.
-- Revenue/UC([17]) growth driven by favourable underlying price & promotional optimisation, as well as positive pack mix led by increased mobility & the recovery of the AFH channel e.g. small PET +26.5%; small glass +66.5%.
Iberia
-- Q2 volume growth reflects the strong recovery of the AFH channel, particularly in Spain which over-indexes in its exposure to HoReCa([18]) , supported by the return of tourism & favourable weather. Improved trading in the Home channel, after the impact of the increased Spanish VAT rate last year, also supported Q2 volume ahead of 2019.
-- Coca-Cola Zero Sugar & Monster both outperformed.
-- Revenue/UC([17]) growth driven by positive channel & pack mix e.g. small glass +66.0% led by the recovery of the AFH channel & favourable underlying price.
Northern Europe
-- Q2 volume growth reflects the on-going recovery of the AFH channel with good momentum following the removal of restrictions towards the end of Q1. Resilient demand in the Home channel supported Q2 & H1 volume ahead of 2019.
-- Coca-Cola Zero Sugar, Fanta & Monster all outperformed.
-- Revenue/UC([17]) growth driven by favourable underlying price alongside positive pack (e.g. small glass +118.0%), channel & brand mix led by increased mobility & the recovery of the AFH channel.
___________________________
Note: All values are unaudited and all references to volumes are on a comparable basis
SECOND-QUARTER & FIRST-HALF PRO FORMA VOLUME PERFORMANCE BY CATEGORY([1],[3],[8])
Comparable volumes, changes versus equivalent 2021 period.
Second-quarter First-half
------------------------------ ------------------------------
% of % Change % of % Change([5])
Total Total
============================================ =============== ============= =============== =============
Sparkling 84.5 % 10.0 % 84.5 % 12.5 %
Coca-Cola(TM) 58.0 % 9.5 % 58.0 % 11.0 %
Flavours, Mixers & Energy 26.5 % 11.5 % 26.5 % 15.5 %
Stills 15.5 % 12.5 % 15.5 % 16.0 %
Hydration 8.0% 18.5 % 8.0% 19.0 %
RTD Tea, RTD Coffee, Juices & Other([19]) 7.5% 7.0% 7.5% 12.5 %
Total 100.0% 10.5% 100.0% 13.0%
Coca-Cola(TM)
-- Original Taste H1 +12.5%; Lights H1 +9.0% reflecting the continued recovery of the AFH channel & tourism
-- Continued outperformance of Zero Sugar also contributed to the volume growth (H1 +24.0% vs 2019)
-- Zero Sugar gained value share([6]) of Total Cola +60bps
Flavours, Mixers & Energy
-- Fanta Q2 +15.0%; H1 +20.0% Sprite Q2 +9.0%; H1 +16.5% driven by the continued recovery of the AFH channel & strong trading during Ramadan in Indonesia
-- Energy Q2 +16.5%; H1 +17.5% led by Monster. Innovation & distribution supported by solid in-market execution continued to support volume growth (Q2 +61.0% vs 2019; H1 +67.5% vs 2019)
Hydration
-- Water Q2 +16.5%; H1 +17.0% driven by the continued recovery of IC reflecting increased mobility
-- Water in decline vs 2019 (Q2 -22.0%; H1 -24.5%), partially offset by Sports (Q2 +24.0%; H1 +17.5%)
RTD Tea, RTD Coffee, Juices & Other([19])
-- Juice drinks H1 +7.0% reflecting increased mobility & the recovery of the AFH channel. Solid growth in Capri-Sun (Q2 +20.0% vs 2019; H1 +20.0% vs 2019)
-- RTD Tea/Coffee H1 +20.0% with strong growth in Fuze Tea (Q2 +43.5%([9]) vs 2019; H1 +43.0%([9]) vs 2019). Fuze Tea also continuing to grow value share([6],[9])
-- Alcohol continued to deliver strong growth in Australia led by Spirits & RTD (Q2 16.5% vs 2019; H1 +19.0% vs 2019)
___________________________
Note: All references to volumes are on a comparable basis
Conference Call (with presentation) -- 4 August 2022 at 12:00 BST, 13:00 CEST & 7:00 a.m. EDT; via www.cocacolaep.com -- Replay & transcript will be available at www.cocacolaep.com as soon as possible Financial Calendar -- Combined third-quarter 2022 trading update & investor event: 2-3 November 2022 -- Financial calendar available here: https://ir.cocacolaep.com/financial-calendar/ Contacts
Investor Relations
Sarah Willett Claire Michael Claire Copps
+44 7970 145 218 +44 7528 251 033 +44 7980 775 889
Media Relations
Shanna Wendt Nick Carter +44 7976 595 168 +44 7976 595 275 About CCEP
Coca-Cola Europacific Partners is one of the world's leading consumer goods companies. We make, move and sell some of the world's most loved brands - serving 600 million consumers and helping 1.75 million customers across 29 countries grow.
We combine the strength and scale of a large, multi-national business with an expert, local knowledge of the customers we serve and communities we support.
The Company is currently listed on Euronext Amsterdam, the NASDAQ Global Select Market, London Stock Exchange and on the Spanish Stock Exchanges, trading under the symbol CCEP.
For more information about CCEP, please visit www.cocacolaep.com & follow CCEP on Twitter at @CocaColaEP.
___________________________
1. Refer to 'Note Regarding the Presentation of Pro forma financial information and Alternative Performance Measures' for further details and to 'Supplementary Financial Information' for a reconciliation of reported to comparable and reported to pro forma comparable results; Change percentages against prior year equivalent period unless stated otherwise
2. A unit case equals approximately 5.678 litres or 24 8-ounce servings
3. Comparative pro forma figures as if the acquisition of Coca-Cola Amatil Limited occurred at 1 January 2021 presented for illustrative purposes only, it is not intended to estimate or predict future financial performance or what actual results would have been. Acquisition completed on 10 May 2021. Prepared on a basis consistent with CCEP accounting policies for the period 1 January to 10 May 2021. Refer to 'Note Regarding the Presentation of Pro forma financial information and Alternative Performance Measures' for further details
4. 27 April 2022 declared EUR0.56 interim dividend per share, paid 26 May 2022 5. Comparable & Fx-neutral
6. In-store: NielsenIQ Global Track YTD Data; Countries: NZ data to w/e 17.07.22; ES, DE, FR, BE, NL, SE, PT & NO data to w/e 03.07.22; GB data to w/e 02.07.22; IND data to w/e 12.06.22: IRI YTD Data; AUS data to w/e 03.07.22
Online: NielsenIQ Global Track YTD Data; Countries: ES, NL, SE & PT data to w/e 03.07.22; NielsenIQ & Retailer data; GB data to w/e 02.07.22: Retailer data; AUS data to w/e 03.07.22
7. Europe: NielsenIQ Strategic Planner YTD data: Countries: GB, BE, DE, ES, FR, NL, NO, PT & SE data to 16.06.22
API: NielsenIQ Global Track YTD Data; Countries: NZ & IND data to 31.03.22; IRI YTD data: Country; AUS data to P3 2022
8. Adjusted for 1 less selling day in Q1; No selling day shift in Q2; CCEP H1 pro forma volume +12.0%
9. Europe only 10. Management's best estimate
11. As previously announced (Q1 2022 Trading update on 27 April 2022), CCEP will retain ownership of Feral craft brewery
12. Dividends subject to Board approval 13. Includes Australia, New Zealand & the Pacific Islands, Indonesia & Papua New Guinea 14. Includes France & Monaco 15. Includes Spain, Portugal & Andorra 16. Includes Belgium, Luxembourg, the Netherlands, Norway, Sweden & Iceland 17. Revenue per unit case 18. HoReCa = Hotels, Restaurants & Cafes 19. RTD refers to Ready to Drink; Other includes Alcohol & Coffee Forward-Looking Statements
This document contains statements, estimates or projections that constitute "forward-looking statements" concerning the financial condition, performance, results, strategy and objectives of Coca-Cola Europacific Partners plc and its subsidiaries (together CCEP or the Group). Generally, the words "ambition", "target", "aim", "believe", "expect", "intend", "estimate", "anticipate", "project", "plan", "seek", "may", "could", "would", "should", "might", "will", "forecast", "outlook", "guidance", "possible", "potential", "predict", "objective" and similar expressions identify forward-looking statements, which generally are not historical in nature.
Forward-looking statements are subject to certain risks that could cause actual results to differ materially from CCEP's historical experience and present expectations or projections, including with respect to the acquisition of Coca-Cola Amatil Limited and its subsidiaries (together "CCL" or "API") completed on 10 May 2021 (the "Acquisition"). As a result, undue reliance should not be placed on forward-looking statements, which speak only as of the date on which they are made. These risks include but are not limited to:
1. those set forth in the "Risk Factors" section of CCEP's 2021 Annual Report on Form 20-F filed with the SEC on 15 March 2022 and as updated and supplemented with the additional information set forth in the "Principal Risks and Risk Factors" section of this document;
2. risks and uncertainties relating to the Acquisition, including the risk that the businesses will not be integrated successfully or such integration may be more difficult, time consuming or costly than expected, which could result in additional demands on CCEP's resources, systems, procedures and controls, disruption of its ongoing business and diversion of management's attention from other business concerns;
3. the extent to which COVID-19 will continue to affect CCEP and the results of its operations, financial condition and cash flows will depend on future developments that are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic;
4. risks and uncertainties relating to the global supply chain, including impact from war in Ukraine, such as the risk that the business will not be able to guarantee sufficient supply of raw materials, supplies, finished goods, natural gas and oil and increased state-sponsored cyber risks;
5. risks and uncertainties relating to the global economy and/or a potential recession in one or more countries, including risks from elevated inflation, price increases, price elasticity, disposable income of consumers and employees, pressure on and from suppliers, increased fraud, and the perception or manifestation of a global economic downturn; and
6. risks and uncertainties relating to potential global energy crisis, with potential interruptions and shortages in the global energy supply, specifically the natural gas supply in our territories. Energy shortages at our sites, our suppliers and customers could cause interruptions to our supply chain and capability to meet our production and distribution targets. The impacts, including potential increases in energy prices, are expected to be exacerbated during the approaching colder months of the year.
Due to these risks, CCEP's actual future results, dividend payments, capital and leverage ratios, growth, including growth in revenue, cost of sales per unit case and operating profit, free cash flow, market share, tax rate, efficiency savings, achievement of sustainability goals, including net zero emissions, and the results of the integration of the businesses following the Acquisition, including expected efficiency and combination savings, may differ materially from the plans, goals, expectations and guidance set out in forward-looking statements (including those issued by CCL prior to the Acquisition). These risks may also adversely affect CCEP's share price. Additional risks that may impact CCEP's future financial condition and performance are identified in filings with the SEC which are available on the SEC's website at www.sec.gov. CCEP does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required under applicable rules, laws and regulations. Furthermore, CCEP assumes no responsibility for the accuracy and completeness of any forward-looking statements. Any or all of the forward-looking statements contained in this filing and in any other of CCEP's or CCL's public statements (whether prior or subsequent to the Acquisition) may prove to be incorrect.
Note Regarding the Presentation of Pro forma financial information and Alternative Performance Measures
Pro forma financial information
Pro forma financial information has been provided in order to illustrate the effects of the acquisition of Coca-Cola Amatil Limited (referred to as CCL pre acquisition, API post acquisition) on the results of operations of CCEP in 2021 and allow for greater comparability of the results of the combined group between periods. The pro forma financial information for 2021 has been prepared for illustrative purposes only and because of its nature, addresses a hypothetical situation. It is based on information and assumptions that CCEP believes are reasonable, including assumptions as at 1 January 2021 relating to acquisition accounting provisional fair values of API assets and liabilities which are assumed to be equivalent to those that have been provisionally determined as of the acquisition date and included in the financial statements for the year ended 31 December 2021, on a constant currency basis. The pro forma information for 2021 also assumes the interest impact of additional debt financing reflecting the actual weighted average interest rate for acquisition financing of c.0.40% for 2021.
The pro forma financial information does not intend to represent what CCEP's results of operations actually would have been if the acquisition had been completed on the dates indicated, nor does it intend to represent, predict or estimate the results of operations for any future period or financial position at any future date. In addition, it does not reflect ongoing cost savings that CCEP expects to achieve as a result of the acquisition or the costs necessary to achieve these cost savings or synergies. As pro forma information is prepared to illustrate retrospectively the effects of future transactions, there are limitations that are inherent to the nature of pro forma information. As such, had the acquisition taken place on the dates assumed, the actual effects would not necessarily have been the same as those presented in the Pro Forma financial information contained herein .
Alternative Performance Measures
We use certain alternative performance measures (non-GAAP performance measures) to make financial, operating and planning decisions and to evaluate and report performance. We believe these measures provide useful information to investors and as such, where clearly identified, we have included certain alternative performance measures in this document to allow investors to better analyse our business performance and allow for greater comparability. To do so, we have excluded items affecting the comparability of period-over-period financial performance as described below. The alternative performance measures included herein should be read in conjunction with and do not replace the directly reconcilable GAAP measures.
For purposes of this document, the following terms are defined:
"As reported" are results extracted from our consolidated financial statements.
"Pro forma " includes the results of CCEP and API as if the Acquisition had occurred at the beginning of 2021, including acquisition accounting adjustments relating to provisional fair values. Pro forma also includes impact of the additional debt financing costs incurred by CCEP in connection with the Acquisition for all periods presented.
"Comparable" is defined as results excluding items impacting comparability, which include restructuring charges, acquisition and integration related costs, inventory fair value step up related to acquisition accounting, the impact of the closure of the GB defined benefit pension scheme, net impact related to European flooding and net tax items relating to rate and law changes. Comparable volume is also adjusted for selling days.
"Pro forma Comparable" is defined as the pro forma results excluding items impacting comparability, as described above.
"Fx-neutral" is defined as period results excluding the impact of foreign exchange rate changes. Foreign exchange impact is calculated by recasting current year results at prior year exchange rates.
"Capex" or "Capital expenditures" is defined as purchases of property, plant and equipment and capitalised software, plus payments of principal on lease obligations, less proceeds from disposals of property, plant and equipment. Capex is used as a measure to ensure that cash spending on capital investment is in line with the Group's overall strategy for the use of cash.
"Free cash flow" is defined as net cash flows from operating activities less capital expenditures (as defined above) and interest paid. Free cash flow is used as a measure of the Group's cash generation from operating activities, taking into account investments in property, plant and equipment and non-discretionary lease and interest payments. Free cash flow is not intended to represent residual cash flow available for discretionary expenditures.
"Adjusted EBITDA" is calculated as Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA), after adding back items impacting the comparability of period over period financial performance. Adjusted EBITDA does not reflect cash expenditures, or future requirements for capital expenditures or contractual commitments. Further, adjusted EBITDA does not reflect changes in, or cash requirements for, working capital needs, and although depreciation and amortisation are non-cash charges, the assets being depreciated and amortised are likely to be replaced in the future and adjusted EBITDA does not reflect cash requirements for such replacements.
"Net Debt" is defined as the net of cash and cash equivalents less borrowings and adjusted for the fair value of hedging instruments related to borrowings and other financial assets/liabilities related to borrowings. We believe that reporting net debt is useful as it reflects a metric used by the Group to assess cash management and leverage. In addition, the ratio of net debt to adjusted EBITDA is used by investors, analysts and credit rating agencies to analyse our operating performance in the context of targeted financial leverage.
"Dividend payout ratio" is defined as dividends as a proportion of comparable profit after tax.
Additionally, within this document, we provide certain forward-looking non-GAAP financial Information, which management uses for planning and measuring performance. We are not able to reconcile forward-looking non-GAAP measures to reported measures without unreasonable efforts because it is not possible to predict with a reasonable degree of certainty the actual impact or exact timing of items that may impact comparability throughout year.
Unless otherwise stated, percent amounts are rounded to the nearest 0.5%.
Supplementary Financial Information - Income Statement - Reported to Comparable
The following provides a summary reconciliation of CCEP's reported and comparable results for the first six months ended 1 July 2022 and 2 July 2021:
First Six Months As Reported Items impacting Comparability Comparable
2022
==================== ====================
Unaudited, in CCEP Restructuring Acquisition European CCEP
millions of Charges and Integration flooding([5])
EUR except per ([1]) related
share data costs
which is ([3])
calculated prior
to rounding
================ ==================== ======================== ===================== ===================== ====================
Revenue 8,280 - - - 8,280
Cost of sales 5,288 - - 12 5,300
================ ==================== ======================== ===================== ===================== ====================
Gross profit 2,992 - - (12) 2,980
Operating
expenses 2,025 (95) (1) - 1,929
================ ==================== ======================== ===================== ===================== ====================
Operating profit 967 95 1 (12) 1,051
Total finance
costs, net 63 - - - 63
Non-operating
items 6 - - - 6
================ ==================== ======================== ===================== ===================== ====================
Profit before
taxes 898 95 1 (12) 982
Taxes 223 19 - (3) 239
================ ==================== ======================== ===================== ===================== ====================
Profit after
taxes 675 76 1 (9) 743
================ ==================== ======================== ===================== ===================== ====================
Attributable to:
Shareholders 667 76 1 (9) 735
Non-controlling
interest 8 - - - 8
================ ==================== ======================== ===================== ===================== ====================
Profit after
taxes 675 76 1 (9) 743
---------------- -------------------- ------------------------ --------------------- --------------------- --------------------
Diluted earnings
per share
(EUR) 1.46 0.17 - (0.02) 1.61
---------------- -------------------- ------------------------ --------------------- --------------------- --------------------
First Six Months As Reported Items impacting Comparability Comparable
2021
================= =================
Unaudited, in CCEP Restructuring Defined Acquisition Inventory Net CCEP
millions Charges benefit and Integration step Tax ([6])
of EUR except ([1]) plan related up costs([4])
per closure([2]) costs
share data which ([3])
is
calculated prior
to
rounding
================ ================= =================== ================== ================== ================= ================ =================
Revenue 5,918 - - - - - 5,918
Cost of sales 3,840 (4) 3 - (48) - 3,791
================= ================= =================== ================== ================== ================= ================ =================
Gross profit 2,078 4 (3) - 48 - 2,127
Operating
expenses 1,558 (88) 6 (40) - - 1,436
================= ================= =================== ================== ================== ================= ================ =================
Operating profit 520 92 (9) 40 48 - 691
Total finance
costs,
net 64 - - (3) - - 61
Non-operating
items 1 - - - - - 1
================= ================= =================== ================== ================== ================= ================ =================
Profit before
taxes 455 92 (9) 43 48 - 629
Taxes 209 28 4 1 5 (118) 129
================= ================= =================== ================== ================== ================= ================ =================
Profit after
taxes 246 64 (13) 42 43 118 500
================= ================= =================== ================== ================== ================= ================ =================
Attributable to:
Shareholders 244 64 (13) 42 42 118 497
Non-controlling
interest 2 - - - 1 - 3
================= ================= =================== ================== ================== ================= ================ =================
Profit after
taxes 246 64 (13) 42 43 118 500
----------------- ----------------- ------------------- ------------------ ------------------ ----------------- ---------------- -----------------
Diluted earnings
per share (EUR) 0.53 0.14 (0.03) 0.10 0.09 0.26 1.09
----------------- ----------------- ------------------- ------------------ ------------------ ----------------- ---------------- -----------------
_ _________________________
([1]) Amounts represent restructuring charges related to business transformation activities.
([2]) Amounts represent the impact of the closure of the GB defined benefit pension scheme to future benefits accrual on 31 March 2021.
([3]) Amounts represent cost associated with the acquisition and integration of CCL.
([4]) Amounts represent the non-recurring impact of provisional fair value step-up of API finished goods.
([5]) Amounts represent the incremental expense incurred offset by the insurance recoveries collected as a result of the July 2021 flooding events, which impacted the operations of our manufacturing facilities in Chaudfontaine and Bad Neuenahr.
([6]) Amounts include the deferred tax impact related to income tax rate and law changes.
Supplementary Financial Information - Income Statement - Reported to Pro forma Comparable
The following provides a summary reconciliation of CCEP's reported and pro forma comparable results for the first six months ended 2 July 2021:
Transaction Pro forma Items
Pro forma accounting Combined impacting
First Six Months adjustments adjustments Comparability Pro forma
2021 As Reported API ([A]) ([B]) ([C]) Comparable
==================== ===================== ===================== ==================== ===================== ====================
Unaudited, in CCEP CCEP CCEP
millions
of EUR except
share
data which is
calculated
prior to
rounding
================ ==================== ===================== ===================== ==================== ===================== ====================
Revenue 5,918 1,056 - 6,974 - 6,974
Cost of sales 3,840 616 2 4,458 (49) 4,409
================ ==================== ===================== ===================== ==================== ===================== ====================
Gross profit 2,078 440 (2) 2,516 49 2,565
Operating
expenses 1,558 323 68 1,949 (186) 1,763
================ ==================== ===================== ===================== ==================== ===================== ====================
Operating profit 520 117 (70) 567 235 802
Total finance
costs,
net 64 12 13 89 (3) 86
Non-operating
items 1 (1) - - - -
================ ==================== ===================== ===================== ==================== ===================== ====================
Profit before
taxes 455 106 (83) 478 238 716
Taxes 209 28 (23) 214 (61) 153
================ ==================== ===================== ===================== ==================== ===================== ====================
Profit after
taxes 246 78 (60) 264 299 563
================ ==================== ===================== ===================== ==================== ===================== ====================
Attributable to:
Shareholders 244 75 (61) 258 298 556
Non-controlling
interest 2 3 1 6 1 7
================ ==================== ===================== ===================== ==================== ===================== ====================
Profit after
taxes 246 78 (60) 264 299 563
================ ==================== ===================== ===================== ==================== ===================== ====================
Diluted earnings
per
share (EUR) 0.53 0.16 (0.13) 0.56 0.66 1.22
================ -------------------- --------------------- --------------------- -------------------- --------------------- --------------------
__________________________
([A]) Amounts represent adjustments to include API financial results prepared on a basis consistent with CCEP accounting policies, as if the Acquisition had occurred on 1 January 2021 and excludes API acquisition and integration related costs.
([B]) Amounts represent transaction accounting adjustments for the period 1 January to 10 May as if the Acquisition had occurred on 1 January 2021. These include the depreciation and amortisation impact relating to provisional fair values for intangibles and property plant and equipment, the interest impact of additional debt financing reflecting the actual weighted average interest rate for Acquisition financing of c.0.40% and the inclusion of acquisition and integration related costs incurred by API prior to the Acquisition.
([C]) Items impacting comparability represents amounts included within Pro forma Combined CCEP affecting the comparability of CCEP's year-over-year financial performance and are set out in the corresponding table below:
First Six Months Items impacting Comparability
2021
=====================
Unaudited, in Restructuring Defined Acquisition Inventory Net Tax Other Total
millions Charges benefit and Integration step up ([5]) ([6]) items
of EUR except ([1]) plan closure([2]) related costs impacting
share costs ([4]) Comparability
data which is ([3])
calculated
prior to
rounding
================ =================== =================== =================== ================== ================= =================== =====================
Revenue - - - - - - -
Cost of sales (4) 3 - (48) - - (49)
================ =================== =================== =================== ================== ================= =================== =====================
Gross profit 4 (3) - 48 - - 49
Operating
expenses (88) 6 (100) - - (4) (186)
================ =================== =================== =================== ================== ================= =================== =====================
Operating profit 92 (9) 100 48 - 4 235
Total finance
costs,
net - - (3) - - - (3)
Non-operating
items - - - - - - -
================ =================== =================== =================== ================== ================= =================== =====================
Profit before
taxes 92 (9) 103 48 - 4 238
Taxes 28 4 19 5 (118) 1 (61)
================ =================== =================== =================== ================== ================= =================== =====================
Profit after
taxes 64 (13) 84 43 118 3 299
================ =================== =================== =================== ================== ================= =================== =====================
Attributable to:
Shareholders 64 (13) 84 42 118 3 298
Non-controlling
interest - - - 1 - - 1
================ =================== =================== =================== ================== ================= =================== =====================
Profit after
taxes 64 (13) 84 43 118 3 299
================ =================== =================== =================== ================== ================= =================== ===================== Diluted earnings per share (EUR) 0.14 (0.03) 0.19 0.09 0.26 0.01 0.66 ================ ------------------- ------------------- ------------------- ------------------ ----------------- ------------------- ---------------------
__________________________
([1]) Amounts represent restructuring charges related to business transformation activities.
([2]) Amounts represent the impact of the closure of the GB defined benefit pension scheme to future benefits accrual on 31 March 2021.
([3]) Amounts represent cost associated with the acquisition and integration of CCL.
([4]) Amounts represent the non-recurring impact of the provisional fair value step-up of API finished goods.
([5]) Amounts include the deferred tax impact related to income tax rate and law changes.
([6]) Amounts represent charges incurred prior to Acquisition classified as non-trading items by API which are not expected to recur.
Supplemental Financial Information - Operating Profit - Reported to Comparable
Revenue
Second-Quarter Ended Six Months Ended
=========== --------------------------------------------------------------- --------------------------------------------------------------
Revenue 1 July 2 July % Change 1 July 2 July % Change
CCEP 2022 2021 2022 2021
In millions
of
EUR, except
per
case data
which
is
calculated
prior to
rounding.
FX impact
calculated
by
recasting
current
year
results at
prior year
rates.
=========== ======================== ====================== ============= ======================= ====================== =============
As reported 4,571 3,625 26.0 % 8,280 5,918 40.0 %
Adjust:
Impact
of fx
changes (65) n/a n/a (114) n/a n/a
Fx-neutral 4,506 3,625 24.5 % 8,166 5,918 38.0 %
Revenue per
unit
case 5.13 4.91 4.5% 5.05 4.82 4.5%
Second-Quarter Ended Six Months Ended
=========== ---------------------------------------------------------------
Revenue 1 July 2 July % Change 1 July 2 July % Change
Europe 2022 2021 2022 2021
In millions
of
EUR, except
per
case data
which
is
calculated
prior to
rounding.
FX impact
calculated
by
recasting
current
year
results at
prior year
rates.
=========== ======================== ====================== ============= ======================== ====================== =============
As reported 3,646 3,092 18.0 % 6,451 5,385 20.0 %
Adjust:
Impact
of fx
changes (10) n/a n/a (38) n/a n/a
Fx-neutral 3,636 3,092 17.5 % 6,413 5,385 19.0 %
Revenue per
unit
case 5.10 4.89 4.5% 5.03 4.80 4.5%
Second-Quarter Ended Six Months Ended
=========== -----------------------------------------------------------------
Revenue API 1 July 2 July % Change 1 July 2 July % Change
In millions 2022 2021 2022 2021
of
EUR, except
per
case data
which
is
calculated
prior to
rounding.
FX impact
calculated
by
recasting
current
year
results at
prior year
rates.
=========== ======================== ====================== ============= ======================== ====================== ===============
As reported 925 533 73.5 % 1,829 533 243.0%
Adjust:
Impact
of fx
changes (55) n/a n/a (76) n/a n/a
Fx-neutral 870 533 63.0 % 1,753 533 229.0%
Revenue per
unit
case 5.28 5.02 5.5% 5.12 5.02 2.0%
Six Months Ended 1 July
2022
================================ ---------------------------------------------------------
Revenue by Geography As reported Reported Fx-Neutral
In millions of EUR % change % change
================================ ======================= =============== ===============
Great Britain 1,463 22.5 % 19.5 %
--------------------------------- ----------------------- --------------- ---------------
Germany 1,296 19.0 % 19.0 %
--------------------------------- ----------------------- --------------- ---------------
Iberia([1]) 1,371 28.5 % 28.5 %
--------------------------------- ----------------------- --------------- ---------------
France([2]) 1,017 13.5 % 13.5 %
--------------------------------- ----------------------- --------------- ---------------
Belgium/Luxembourg 511 12.5 % 12.5 %
--------------------------------- ----------------------- --------------- ---------------
Netherlands 329 23.5 % 23.5 %
--------------------------------- ----------------------- --------------- ---------------
Norway 208 4.0% 2.0%
--------------------------------- ----------------------- --------------- ---------------
Sweden 213 19.0 % 23.5 %
--------------------------------- ----------------------- --------------- ---------------
Iceland 43 13.0 % 5.5%
Total Europe 6,451 20.0 % 19.0 %
--------------------------------- ----------------------- --------------- ---------------
Australia 1,102 236.0% 226.0%
--------------------------------- ----------------------- --------------- ---------------
New Zealand and Pacific Islands 302 255.5% 247.0%
--------------------------------- ----------------------- --------------- ---------------
Indonesia and Papua New Guinea 425 254.0% 224.0%
--------------------------------- ----------------------- --------------- ---------------
Total API 1,829 243.0% 229.0%
--------------------------------- ----------------------- --------------- ---------------
Total CCEP 8,280 40.0% 38.0%
--------------------------------- ----------------------- --------------- ---------------
________________________
([1]) Iberia refers to Spain, Portugal & Andorra.
([2]) France refers to continental France & Monaco.
Volume
Second-Quarter Ended Six Months Ended
===========
Comparable 1 July 2 July % Change 1 July 2 July % Change
Volume 2022 2021 2022 2021
- Selling
Day
Shift CCEP
In millions
of
unit cases,
prior
period
volume
recast
using
current
year
selling
days
=========== ====================== ====================== ============= ===================== ========================= =============
Volume 878 738 19.0 % 1,618 1,227 32.0 %
Impact of
selling
day shift n/a - n/a n/a (7) n/a
Comparable
volume
- Selling
Day
Shift
adjusted 878 738 19.0 % 1,618 1,220 32.5 %
Second-Quarter Ended Six Months Ended
=========== ------------------------------------------------------------- ---------------------------------------------------------------
Comparable 1 July 2 July % Change 1 July 2 July % Change
Volume 2022 2021 2022 2021
- Selling
Day
Shift
Europe
In millions
of
unit cases,
prior
period
volume
recast
using
current
year
selling
days
=========== ====================== ====================== ============= ===================== ========================= =============
Volume 714 632 13.0 % 1,276 1,121 14.0 %
Impact of
selling
day shift n/a - n/a n/a (7) n/a
Comparable
volume
- Selling
Day
Shift
adjusted 714 632 13.0 % 1,276 1,114 14.5 %
Second-Quarter Ended Six Months Ended
=========== ------------------------------------------------------------- ---------------------------------------------------------------
Comparable 1 July 2 July % Change 1 July 2 July % Change
Volume 2022 2021 2022 2021
- Selling
Day
Shift API
In millions
of
unit cases,
prior
period
volume
recast
using
current
year
selling
days
=========== ====================== ====================== ============= ====================== ====================== ===============
Volume 164 106 54.5 % 342 106 222.5%
Impact of
selling
day shift n/a - n/a n/a - n/a
Comparable
volume
- Selling
Day
Shift
adjusted 164 106 54.5 % 342 106 222.5%
Cost of Sales
Six Months Ended
============================================ -----------------------------------------------------------------
Cost of Sales 1 July 2 July % Change
In millions of EUR, except per case data 2022 2021
which is calculated prior to rounding.
FX impact calculated by recasting current
year results at prior year rates.
============================================ ======================== ======================== =============
As reported 5,288 3,840 37.5 %
Adjust: Total items impacting comparability 12 (49) n/a
Comparable 5,300 3,791 40.0 %
Adjust: Impact of fx changes (72) n/a n/a
Comparable & fx-neutral 5,228 3,791 38.0 %
Cost of sales per unit case 3.23 3.09 4.5%
For the six months ending 1 July 2022, reported cost of sales were EUR5,288 million, up 37.5% versus 2021, reflecting the acquisition of Coca-Cola Amatil on 10 May 2021.
Comparable cost of sales for the same period were EUR5,300 million, up 40.0% versus 2021. Cost of sales per unit case increased by 4.5% on a comparable and fx-neutral basis, reflecting increased revenue per unit case driving higher concentrate costs, commodity inflation & adverse mix, partially offset by the favourable recovery of fixed manufacturing costs as a result of higher volumes.
Operating expenses
Six Months Ended
============================================ ----------------------------------------------------------------
Operating Expenses 1 July 2 July % Change
In millions of EUR. FX impact calculated 2022 2021
by recasting current year results at prior
year rates.
============================================ ======================== ======================= =============
As reported 2,025 1,558 30.0 %
Adjust: Total items impacting comparability (96) (122) n/a
Comparable 1,929 1,436 34.5 %
Adjust: Impact of fx changes (27) n/a n/a
Comparable & fx-neutral 1,902 1,436 32.5 %
For the six months ending 1 July 2022, reported operating expenses were EUR2,025 million, up 30.0% versus 2021.
Comparable operating expenses were EUR1,929 million for the same period, up 34.5% versus 2021, reflecting the impact of the API operations acquired in 2021, higher volumes and inflation, partially offset by the benefit of ongoing efficiency programmes and our continuous efforts on discretionary spend optimisation.
Restructuring charges of EUR95 million were incurred in the six month period ending 1 July 2022, which are primarily attributable to EUR81 million of expense recognised in connection with the transformation of the full service vending operations and related initiatives in Germany. This compares to restructuring charges of EUR92 million incurred in the six month period ending 2 July 2021, primarily related to productivity initiatives announced in Iberia for which EUR50 million of severance costs have been recorded.
Operating profit
Six Months Ended
============================================ ---------------------------------------------------------------
Operating Profit CCEP 1 July 2 July % Change
In millions of EUR. FX impact calculated 2022 2021
by recasting current year results at prior
year rates.
============================================ ======================== ====================== =============
As reported 967 520 86.0 %
Adjust: Total items impacting comparability 84 171 n/a
Comparable 1,051 691 52.0 %
Adjust: Impact of fx changes (15) n/a n/a
Comparable & fx-neutral 1,036 691 50.0 %
Six Months Ended
============================================ ----------------------------------------------------------------
Operating Profit Europe 1 July 2 July % Change
In millions of EUR. FX impact calculated 2022 2021
by recasting current year results at prior
year rates.
============================================ ========================= ====================== =============
As reported 741 505 46.5 %
Adjust: Total items impacting comparability 84 126 n/a
Comparable 825 631 30.5 %
Adjust: Impact of fx changes (5) n/a n/a
Comparable & fx-neutral 820 631 30.0 %
Six Months Ended
========================================== -----------------------------------------------------------------------
Operating Profit API 1 July 2 July % Change
In millions of EUR. FX impact calculated 2022 2021
by recasting current year results at prior
year rates.
========================================== ======================== ======================= ====================
As reported 226 15 1,406.5%
Adjust: Total items impacting
comparability - 45 n/a
Comparable 226 60 276.5%
Adjust: Impact of fx changes (10) n/a n/a Comparable & fx-neutral 216 60 260.0% Supplemental Financial Information - Operating Profit - Reported to Pro forma Comparable
All pro forma measures presented below relate only to 2021 periods.
Revenue
Second-Quarter Ended Six Months Ended
============ --------------------------------------------------------------- --------------------------------------------------------------
Pro forma 1 July 2 July % Change 1 July 2 July % Change
Revenue 2022 2021 2022 2021
CCEP
In millions
of
EUR, except
per
case data
which
is
calculated
prior to
rounding.
FX impact
calculated
by recasting
current
year results
at
prior year
rates.
============ ======================== ====================== ============= ======================= ====================== =============
As reported
and
comparable 4,571 3,625 26.0 % 8,280 5,918 40.0 %
Add: Pro
forma
adjustments n/a 259 n/a n/a 1,056 n/a
Pro forma
Comparable 4,571 3,884 17.5 % 8,280 6,974 18.5 %
Adjust:
Impact
of fx
changes (65) n/a n/a (114) n/a n/a
Pro forma
Comparable
and
fx-neutral 4,506 3,884 16.0 % 8,166 6,974 17.0 %
Pro forma
Revenue
per unit
case 5.13 4.90 5.0% 5.05 4.84 4.5%
Second-Quarter Ended Six Months Ended
============ --------------------------------------------------------------- -----------------------------------------------------------------
Pro forma 1 July 2 July % Change 1 July 2 July % Change
Revenue 2022 2021 2022 2021
API
In millions
of
EUR, except
per
case data
which
is
calculated
prior to
rounding.
FX impact
calculated
by recasting
current
year results
at
prior year
rates.
============ ======================== ====================== ============= ======================== ====================== ===============
As reported
and
comparable 925 533 73.5 % 1,829 533 243.0%
Add: Pro
forma
adjustments n/a 259 n/a n/a 1,056 n/a
Pro forma
Comparable 925 792 17.0 % 1,829 1,589 15.0 %
Adjust:
Impact
of fx
changes (55) n/a n/a (76) n/a n/a
Pro forma
Comparable
and
fx-neutral 870 792 10.0 % 1,753 1,589 10.5 %
Pro forma
Revenue
per unit
case 5.28 4.90 8.0% 5.12 4.95 3.5%
Second-Quarter Ended 1 Six Months Ended 1 July
July 2022 2022
--------------------------------------------------- ---------------------------------------------------
Pro forma Pro forma Pro forma Pro forma Pro forma Pro forma Pro forma
revenue comparable comparable Fx-Neutral comparable comparable Fx-Neutral
by % change % change % change % change
Geography
In
millions
of
EUR
Europe 3,646 18.0 % 17.5 % 6,451 20.0 % 19.0 %
Australia 550 14.5 % 8.5% 1,102 10.5 % 7.0%
New
Zealand
and
Pacific
Islands 154 24.0 % 20.0 % 302 15.0 % 12.0 %
Indonesia
and Papua
New
Guinea 221 18.0 % 6.0% 425 29.0 % 18.0 %
Total API 925 17.0 % 10.0 % 1,829 15.0 % 10.5 %
Total CCEP 4,571 17.5 % 16.0 % 8,280 18.5 % 17.0 %
Volume
Second-Quarter Ended Six Months Ended
============ -------------------------------------------------------------- ---------------------------------------------------------------
Comparable 1 July 2 July % Change 1 July 2 July % Change
Volume 2022 2021 2022 2021
- Selling
Day
Shift CCEP
In millions
of
unit cases,
prior
period
volume
recast using
current
year selling
days
============ ====================== ======================= ============= ===================== ========================= =============
Volume 878 738 19.0 % 1,618 1,227 32.0 %
Impact of
selling
day shift n/a - n/a n/a (7) n/a
Comparable
volume
- Selling
Day
Shift
adjusted 878 738 19.0 % 1,618 1,220 32.5 %
Pro forma
impact([1]) n/a 55 n/a n/a 212 n/a
Pro forma
comparable
volume 878 793 10.5 % 1,618 1,432 13.0 %
Second-Quarter Ended Six Months Ended
============ -------------------------------------------------------------- ---------------------------------------------------------------
Comparable 1 July 2 July % Change 1 July 2 July % Change
Volume 2022 2021 2022 2021
- Selling
Day
Shift API
In millions
of
unit cases,
prior
period
volume
recast using
current
year selling
days
============ ====================== ======================= ============= ====================== ====================== ===============
Volume 164 106 54.5 % 342 106 222.5%
Impact of
selling
day shift n/a - n/a n/a - n/a
Comparable
volume
- Selling
Day
Shift
adjusted 164 106 54.5 % 342 106 222.5%
Pro forma
impact([1]) n/a 55 n/a n/a 212 n/a
Pro forma
comparable
volume 164 161 2.0% 342 318 7.5%
___________________________
[1] Pro forma API volume for the six months ended 2 July 2021 is 321 million unit cases. Including the impact of the Q1 selling day shift (3 million unit cases), pro forma comparable API volume is 318 million unit cases.
Second-Quarter Ended Six Months Ended
================== ----------------------------------------------- -----------------------------------------------
1 July 2 July % Change 1 July 2 July % Change
2022 2021 2022 2021
============= =============
Pro forma % of Total % of Total % of Total % of Total
Comparable
Volume by Brand
Category CCEP
Adjusted for
selling day shift
================== =============== =============== ============= =============== =============== =============
Sparkling 84.5 % 84.5 % 10.0 % 84.5 % 84.5 % 12.5 %
Coca-Cola(TM) 58.0 % 58.5 % 9.5 % 58.0 % 59.0 % 11.0 % Flavours, Mixers & Energy 26.5 % 26.0 % 11.5 % 26.5 % 25.5 % 15.5 % Stills 15.5 % 15.5 % 12.5 % 15.5 % 15.5 % 16.0 % Hydration 8.0% 7.5% 18.5% 8.0% 7.5% 19.0% RTD Tea, RTD Coffee, Juices & Other([1]) 7.5% 8.0% 7.0% 7.5% 8.0% 12.5% Total 100.0% 100.0% 10.5 % 100.0% 100.0% 13.0%
________________________
[1] RTD refers to Ready to Drink; Other includes Alcohol & Coffee
Cost of Sales
Six Months Ended
============================================ -----------------------------------------------------------------
Pro forma Cost of Sales 1 July 2 July % Change
In millions of EUR, except per case data 2022 2021
which is calculated prior to rounding.
FX impact calculated by recasting current
year results at prior year rates.
============================================ ======================== ======================== =============
As reported 5,288 3,840 37.5 %
Add: Pro forma adjustments n/a 616 n/a
Adjust: Acquisition accounting n/a 2
Adjust: Total items impacting comparability 12 (49)
Pro forma Comparable 5,300 4,409 20.0%
Adjust: Impact of fx changes (72) n/a n/a
Pro forma Comparable & fx-neutral 5,228 4,409 18.5%
Cost of sales per unit case 3.23 3.06 5.5%
Comparable cost of sales for the six months ending 1 July 2022 were EUR5,300 million, up 20.0% versus 2021 on a pro forma comparable basis. Cost of sales per unit case increased by 5.5% on a pro forma comparable and fx-neutral basis, driven by an increase in concentrate in line with our incidence model reflecting the improvement in revenue per unit case. There was also upward pressure on commodities and adverse mix, partially offset by the favourable recovery of fixed manufacturing costs given higher volumes.
Operating Expenses
Six Months Ended
============================================ ----------------------------------------------------------------
Pro forma Operating Expenses 1 July 2 July % Change
In millions of EUR. FX impact calculated 2022 2021
by recasting current year results at prior
year rates.
============================================ ======================== ======================= =============
As reported 2,025 1,558 30.0 %
Add: Pro forma adjustments n/a 323 n/a
Adjust: Acquisition accounting n/a 68
Adjust: Total items impacting comparability (96) (186)
Pro forma Comparable 1,929 1,763 9.5%
Adjust: Impact of fx changes (27) n/a n/a
Pro forma Comparable & fx-neutral 1,902 1,763 8.0%
Comparable operating expenses for the six months ending 1 July 2022 were EUR1,929 million, up 9.5% versus 2021 on a pro forma comparable basis, reflecting higher volumes and inflation, partially offset by the benefit of on-going efficiency programmes and our continuous efforts on discretionary spend optimisation in areas such as trade marketing, travel and meetings.
Operating Profit
Six Months Ended
============================================ -----------------------------------------------------------------
Pro forma Operating Profit CCEP 1 July 2 July % Change
In millions of EUR. FX impact calculated 2022 2021
by recasting current year results at prior
year rates.
============================================ ======================== ======================== =============
As reported 967 520 86.0 %
Add: Pro forma adjustments n/ 117 n/a
Adjust: Acquisition accounting n/ (70)
Adjust: Total items impacting comparability 84 235
Pro forma Comparable 1,051 802 31.0 %
Adjust: Impact of fx changes (15) n/a n/a
Pro forma Comparable & fx-neutral 1,036 802 29.0 %
Six Months Ended
========================================= ------------------------------------------------------------------------
Pro forma Operating Profit API 1 July 2 July % Change
In millions of EUR. FX impact calculated 2022 2021
by recasting current year results at
prior
year rates.
========================================= ======================== ======================== ====================
As reported 226 15 1,406.5%
Add: Pro forma adjustments n/a 117 n/a
Adjust: Acquisition accounting n/a (70)
Adjust: Total items impacting
comparability - 109
Pro forma Comparable 226 171 32.0 %
Adjust: Impact of fx changes (10) n/a n/a
Pro forma Comparable & fx-neutral 216 171 26.5 %
Supplemental Financial Information - Effective Tax Rate
The effective tax rate was 25% and 46% for the six months ended 1 July 2022 and 2 July 2021, respectively, and 29% for the years ended 31 December 2021.
For the six months ending 1 July 2022, the effective tax rate reflects the impact of having operations outside the UK which are taxed at rates other than the statutory UK rate of 19%.
We expect our full year 2022 comparable effective tax rate to be between 22% and 23%.
Supplemental Financial Information - Free Cash Flow
Six Months Ended
================================================= -------------------------------------------------
Free Cash Flow 1 July 2 July
In millions of EUR 2022 2021
================================================= ======================= ========================
Net cash flows from operating activities 1,653 908
Less: Purchases of property, plant and equipment (178) (115)
Less: Purchases of capitalised software (22) (42)
Add: Proceeds from sales of property, plant and
equipment 6 20
Less: Payments of principal on lease obligations (80) (65)
Less: Interest paid, net (98) (58)
Free Cash Flow 1,281 648
Supplemental Financial Information - Borrowings
As at
======================== ----------------------------------------------- ===========
1 July 31 December Credit Moody's Fitch
2022 2021 Ratings Ratings
Net Debt As of 3
In millions of EUR August 2022
======================== =================== ========================== =========== ======== ============
Long-term
Total borrowings 12,642 13,140 rating Baa1 BBB+
Fair value of hedges
related to
borrowings([1]) (164) (110) Outlook Stable Stable
Note: Our credit ratings can
be materially influenced by
a number of factors including,
but not limited to, acquisitions,
investment decisions and working
capital management activities
of TCCC and/or changes in the
credit rating of TCCC. A credit
rating is not a recommendation
to buy, sell or hold securities
Other financial and may be subject to revision
assets/liabilities([1]) 30 42 or withdrawal at any time.
Adjusted total
borrowings 12,508 13,072
Less: cash and cash
equivalents([2]) (1,819) (1,407)
Less: short term
investments([3]) (239) (58)
Net debt 10,450 11,607
______________________
([1]) Net Debt includes adjustments for the fair value of derivative instruments used to hedge both currency and interest rate risk on the Group's borrowings. In addition, Net Debt also includes other financial assets/liabilities relating to cash collateral pledged by/to external parties on hedging instruments related to borrowings.
([2]) Cash and cash equivalents as at 1 July 2022 and 31 December 2021 include EUR75 million and EUR45 million of cash in Papua New Guinea Kina respectively. Presently, there are government-imposed currency controls which impact the extent to which the cash held in Papua New Guinea can be converted into foreign currency and remitted for use elsewhere in the Group.
([3]) Short term investments are term cash deposits held in API with maturity dates when acquired of greater than three months and less than one year. These short term investments are held with counterparties that are continually assessed with a focus on preservation of capital and liquidity. Short term term investments as at 1 July 2022 and 31 December 2021 include EUR40 million and EUR44 million of assets in Papua New Guinea Kina respectively, subject to the same currency controls outlined above.
Supplemental Financial Information - Adjusted EBITDA
Six Months Ended
=============================================== -----------------------------------------------------------
Adjusted EBITDA 1 July 2022 2 July 2021
In millions of EUR
=============================================== ============================ =============================
Reported profit after tax 675 246
Taxes 223 209
Finance costs, net 63 64
Non-operating items 6 1
Reported operating profit 967 520
Depreciation and amortisation([1]) 386 342
Reported EBITDA 1,353 862
Items impacting comparability
Restructuring charges([2]) 94 71
Defined benefit plan closure([3]) - (9)
Acquisition and Integration related costs([4]) 1 40
European flooding([5]) (12) -
Inventory step up costs([6]) - 48
Adjusted EBITDA 1,436 1,012
______________________
([1]) Includes the depreciation and amortisation impact relating to provisional fair values for intangibles and property plant and equipment as at 2 July 2021.
([2]) Amounts represent restructuring charges related to business transformation activities, excluding accelerated depreciation included in the depreciation and amortisation line.
([3]) Amounts represent the impact of the closure of the GB defined benefit pension scheme to future benefits accrual on 31 March 2021.
([4]) Amounts represent cost associated with the acquisition and integration of CCL.
([5]) Amounts represent the incremental expense incurred offset by the insurance recoveries collected as a result of the July 2021 flooding events, which impacted the operations of our manufacturing facilities in Chaudfontaine and Bad Neuenahr.
([6]) Amounts represent the non-recurring impact of the provisional fair value step-up of API finished goods.
Pro forma measures presented below relate only to 2021.
Six Months Ended
===============================================
Pro forma Adjusted EBITDA 1 July 2022 2 July 2021
In millions of EUR
=============================================== ============================ =============================
Reported profit after tax 675 246
Taxes 223 209
Finance costs, net 63 64
Non-operating items 6 1
Reported operating profit 967 520
Pro forma adjustments CCL([1]) - 117
Transaction accounting adjustments([2]) - (70)
Pro forma Combined operating profit 967 567
Depreciation and amortisation([3]) 386 418
Pro forma EBITDA 1,353 985
Items impacting comparability
Restructuring charges([4]) 94 71
Defined benefit plan closure ([5]) - (9)
Acquisition and Integration related costs([6]) 1 100
Inventory step up costs([7]) - 48
European flooding([8]) (12) -
Other([9]) - 4
Pro forma adjusted EBITDA 1,436 1,199
______________________
([1]) Amounts represent adjustments to include CCL financial results prepared on a basis consistent with CCEP accounting policies, as if the Acquisition had occurred on 1 January 2021 and excludes CCL acquisition and integration related costs.
([2]) Amounts represent transaction accounting adjustments for the period 1 January to 10 May 2021 as if the Acquisition had occurred on 1 January 2021.
([3]) Includes the depreciation and amortisation impact relating to provisional fair values for intangibles and property plant and equipment as if the Acquisition had occurred on 1 January 2021.
([4]) Amounts represent restructuring charges related to business transformation activities, excluding accelerated depreciation included in the depreciation and amortisation line.
([5]) Amounts represent the impact of the closure of the GB defined benefit pension scheme to future benefits accrual on 31 March 2021.
([6]) Amounts represent costs associated with the acquisition and integration of CCL.
([7]) Amounts represent the non-recurring impact of the provisional fair value step-up of API finished goods.
([8]) Amounts represent the incremental expense incurred offset by the insurance recoveries collected as a result of the July 2021 flooding events, which impacted the operations of our manufacturing facilities in Chaudfontaine and Bad Neuenahr.
([9]) Amounts represent charges incurred prior to Acquisition classified as non-trading items by API which are not expected to recur.
Principal Risks and Risk Factors
The principal risks and risk factors in our 2021 Integrated Report on Form 20-F for the year ended 31 December 2021 ('2021 Integrated Report') (pages 42 to 47 and 195 to 202 respectively) continue to represent our risks.
We recognize significant volatility as a result of the current geopolitical and economic situation and see an upward trend for the Geodemographic principal risk. Absent other material changes, for example geographic expansion of the war in Ukraine, it is not deemed necessary to change any of the other principal risk ratings included in our 2021 Integrated Report.
Our current assessment takes into account additional mitigation put in place to address increased risk levels due primarily to:
-- the war in Ukraine, which has impacted supply of raw materials, supplies, finished goods, gas/oil/energy and increased cyber risks;
-- economic impacts, including inflation, price increases, price elasticity, disposable income of consumers and employees, pressure on and from suppliers, increased fraud, and the perception or manifestation of a global economic downturn;
-- political developments, including strikes, unrest, interest rates, ESG and other regulation; and
-- the continuing and evolving worldwide COVID-19 pandemic.
Accordingly, changes in the risk levels and the respective mitigations put in place to our principal risks and risk factors are provided below and supplement the Principal Risks and Risk Factors in our 2021 Integrated Report. Any or all of the Principal Risks and Risk Factors contained therein may be exacerbated by unpredictable developments in the factors identified above and in our Forward-Looking Statements set out on page 7 of this Half Year 2022 Interim Report.
The risks described in this report and in our 2021 Integrated Report are not the only risks facing the Group. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition or future results.
Potential risk from global economic downturn
We recognize the increased likelihood of a global economic downturn (e.g. a recession) and have evaluated the impact on our business. While such a fundamental development could impact our entire risk profile, we expect the following principal risks to be primarily impacted (a discussion of our respective mitigations is incorporated in the Principal Risk table below):
-- Geodemographic
A prolonged war in Ukraine and an extension of the war zone to other countries could exacerbate the risk of a global (raw) material, energy and gas crisis and increase the risk of cyber-attacks, including state-sponsored attacks.
With the approaching autumn and winter season, COVID-19 cases could increase across our territories and trigger governmental and societal counter measures, including shutdowns, with additional negative impact on the affected countries and their economic state.
-- Economic and political conditions
Central banks across the world are looking to manage elevated levels of inflation through increasing interest rates, which negatively impacts investment and debt financing activities.
Disagreement with governmental actions to mitigate the effects of a recession might lead to social unrest.
Elevated supply chain cost and continuously increasing prices with high volatilities and deteriorating availability of goods and materials could put the viability of some of our suppliers (and sub-suppliers) at risk.
-- Market
The general economic environment might:
- require us to absorb supply cost increases without being able to implement offsetting customer price increases,
- put the viability and independence of our existing customers at risk, - lead our customers to promote and give preference to private label versus our products,
- lead consumers with decreasing disposable income to divert to private label and value packs and from the away-from-home to the home channel.
-- People and Wellbeing
Our employees are impacted by inflation and increasing cost of living (e.g. energy prices, basic food) which could lead to decreasing motivation, higher absenteeism or strikes.
Potential risk from energy crisis
One of the global consequences of the war in Ukraine is potential interruptions and shortages in the global energy supply, specifically the natural gas supply in our territories. The impacts, including potential increases in energy prices, are expected to be exacerbated during the approaching colder seasons of the year in Europe. While an energy crisis could impact our entire risk profile we expect the principal risks 'Economic and political conditions' and 'Geodemographic' to be most impacted.
We are working to strengthen our resilience to manage this risk across our territories. This work includes but is not limited to:
-- Limiting our dependence on natural gas (from Russia) through conversion to oil at selected sites which provides more supply options for CCEP;
-- Proactively managing supplier risks for gas in Germany, Recycled/Virgin-PET, CO2, sugar, glass, cans and other critical supplies; and
-- Reviewing and building up our contingency to ensure product (SKU) supply, including through assessing different scenarios of gas rationing across the EU.
SUMMARY OF OUR PRINCIPAL RISKS
The following is a summary of the Group's updated Principal Risks in alphabetical order:
Risk change legend: Increased Decreased -> Stayed the same
Principal Definition and Key Mitigation Change
Risk impact vs 2021
Integrated
Report
=================== ================== ================================================================ ===========
Climate Scientific ->
change and consensus * Set science based carbon reduction targets for our
water indicates core business operations and our value chain
that increased
concentrations
of carbon dioxide * Carbon reduction plans for our production facilities,
and distribution and CDE
other GHGs are
causing
climate change and * Supplier carbon footprint reduction programme
exacerbating launched in support of CCEP's 2040 net zero ambition
water scarcity. with focus on suppliers setting SBTi targets and
Such GHG using 100% renewable electricity
emissions occur
across
our entire value * Transition to 100% renewable electricity across our
chain own operation
including our
production
facilities, cold * External policy leadership and advocacy to support a
drink transition to a low-carbon economy
equipment and
transportation.
GHG emissions also * Life cycle analysis to assess carbon footprint of
occur packaging formats
as a result of the
packaging
we use and * Use of recycled materials for our packaging, which
ingredients have a lower carbon footprint
we rely on.
Governmental,
international, and * SVAs to protect future sustainability of local water
private sources and FAWVA and water management plans
sector
organizations are
increasingly * Supplier engagement on carbon reduction and
imposing sustainable water use
pressure to reduce
GHGs
and to disclosure * Assessment on climate-related risks (both physical
more and transition risks) and future climate scenario
information planning
regarding
GHGs, which could
impose * Comprehensive disclosure of GHG emissions across our
financial and value chain in line with GHG Protocol
reputational
costs on our
business. * Water scarcity simulation test and exercise of IMTs
Our ingredients to ensure an appropriate response to water related
and production incidents
facilities also
rely heavily
on the
availability of
water. This
exposes us
to the risk of
negative
impacts related to
our
ability to produce
or
distribute our
products,
or the
availability and
price of
agricultural
ingredients and
raw materials
as a result of
increased
water scarcity.
Failure
to address these
risks
may cause damage
to our
corporate
reputation or
investor
confidence, a
reduction in
consumer
acceptance of our
products
and potential
disruption
to our operations.
------------------- ------------------ ---------------------------------------------------------------- -----------
Competitiveness We are continuing ->
business our * Regular competitiveness reviews ensuring effective
transformation strategy of steering, high visibility and quick decision making
and integration continuous
improvement, which
should * Dedicated programme management office and effective
enable us to project management methodology
remain competitive
in the future.
This includes * Continuation of strong governance routines
technology
transformation,
supporting home * Regular ELT and Board reviews and approvals of
working, progress and issue resolution
improvements in
our supply
chain and in the * Analysis and review of acquisition related activities
way we such as integration and business performance risk
work with our indicators and capital allocation risk reviews
partners
and franchisors,
and our * Building a performant and resilient workforce with
Acquisition of CCL priority focus on health and safety and mental
and wellbeing initiatives especially in the front lines
ongoing roles
integration
activities.
This exposes us to
the
risk of
ineffective
coordination
between BUs and
central
functions, change
fatigue
among our people
and social
unrest. As a
result, we
may not create the
expected
value from these
initiatives
or execute our
business
plans effectively.
We
may also
experience damage
to our reputation,
a decline
in our share
price, industrial
action and
disruption
of operations.
------------------- ------------------ ---------------------------------------------------------------- -----------
Cyber and We rely on a ->
social engineering complex IT * Proactive monitoring of cyber threats and
attacks and landscape, using implementing preventive measures
IT infrastructure both
internal and
external * Business awareness and training on information
systems, including security and data privacy
some
systems that are
outside * Business continuity and disaster recovery programmes
our direct control
where
employees work * A programme to identify and resolve vulnerabilities
from home.
These systems are
potentially * Third party risk assessments
vulnerable to
adversarial
and accidental * Corporate security business intelligence
security
and cyber threats,
and * Appropriate investment in updating systems
user behaviour.
This threat
profile is * Hardware lifecycle process in place
dynamically
changing,
including as * Regular internal and external testing of our security
a result of the controls (red teaming, pentesting)
COVID-19
pandemic and the
war in * Global Security Operations Centre, operated 24/7
Ukraine, as
potential
attackers' skills
and Additional or enforced
tools advance. mitigation since IR 2021:
This exposes
us to the risk of Cyber Risk
unauthorised * Executive Team and Board of Directors are actively
data access, engaged in the cyber strategy process
compromised
data accuracy and
confidentiality, * Introduced additional technical and organizational
the loss of system measures to manage Phishing
operation
or fraud. As a
result, * Actively looking for weaknesses and proactive
we could mitigation of cyber risks
experience
disruption
to operations, * Continuing structural risk reduction in IT and OT
financial
loss, regulatory
intervention,
or damage to our Corporate Security Risk
reputation. * Horizon scanning, exchange with peers and
organizations (e.g. OSAC)
* Employee extraction process reviewed and executed
------------------- ------------------ ---------------------------------------------------------------- -----------
Economic Our industry is ->
and political sensitive * Diversified product portfolio and the geographic
conditions to economic diversity of our operations assist in mitigating our
conditions exposure to any localised economic risk
such as commodity
and
currency price * Our flexible business model allows us to adapt our
volatility, portfolio to suit our customers' changing needs
short-term during economic downturns
interest rate
volatility and
inflation * We regularly review our business results and cash
changes and flows and, where necessary, rebalance capital
expectations, investments - Macro economic and political
political developments continue to be closely monitored to
instability, ensure that business is prepared to manage emerging
low consumer situations
confidence,
lack of liquidity
and * Monitoring of societal developments
funding resources,
widening
of credit risk * We have a very robust and forward-looking hedging
premiums, policy for managing the financial risks like foreign
unemployment and exchange, commodity and interest rate risks
the impact
of war, the
widespread
outbreak of Additional or enforced
infectious mitigation since IR 2021:
disease such as
COVID-19. Corporate Security
This exposes us to * Active monitoring of societal developments,
the
risk of an adverse
impact local security protocols
on CCEP and our in place
consumers,
driving a Supply Chain
reduction of * Increased hedge coverage of key commodities for 2022
spend within our and 2023
category
or a change in
consumption * Working with suppliers to manage non-commodity
channels and contract risk
packs. As
a result, we could
experience * Minimizing disruption to supply by securing
reduced demand for contingency supply for directly impacted goods, i.e.,
our glass, cans, coolers
products, fail to
meet
our growth
priorities
and our reputation
could
be adversely
impacted.
Adverse economic
conditions
could also lead to
increased
volatility,
inflation,
energy and
commodity cost,
customer and
supplier
delinquencies and
bankruptcies,
while restrictions
on
the movement of
goods
in response to
economic,
political or other
conditions,
such as COVID-19
and the
war in Ukraine,
could
affect our supply
chain.
------------------- ------------------ ---------------------------------------------------------------- -----------
Geodemographic Our business is
vulnerable * Continually updating our response to the situation
to a range of and our people's needs
risks that
may materialise
and cause * Customers: working closely with suppliers, partners
disruption. These and TCCC to ensure we best serve our customers and
include respond to their needs
threats and risks
such
as impacts of war, * Communities: working closely with TCCC to support our
physical communities
attacks (e.g.
terrorism),
cyber terrorism * Governance: strong frameworks, business continuity
and attacks plans, incident management teams, strategic business
on third parties, continuity scenario testing, risk reassessments used
and in business planning, increased frequency of reviews
supplier failure with country leadership teams. Board and TCCC
as well incorporating learnings from the Coca-Cola system -
as natural hazards Effective management of liquidity, costs and
such discretionary spend
as fire, flood,
severe
weather including * Operational, technology and strategic resilience
heat towers developed as part of our newly created
waves and severe business continuity and resilience strategy to enable
storms, further resilience and risk mitigation for CCEP
and pandemics.
Working
with teams across * Training and awareness to build BCR capabilities
the throughout CCEP to improve buy in and skills when it
business, we comes to preparing for and responding to incidents
develop business
continuity plans
and resilience * Business impact analysis (BIA) to analyse and
arrangements to identify critical people (roles), property,
ensure technology, equipment and suppliers (value chain)
the delivery of across CCEP and their associated maximum acceptable
our products outages, recovery time objectives and recovery point
and services no objectives
matter
what the cause of
disruption. * Scenario planning exercise with stakeholders across
This is to protect facilities and functions to determine scenarios that
our could lead to the unavailability of critical
people, our dependencies identified in the BIA and the associated
environment, impacts if the scenarios were to occur
our reputation and
our
overall financial * BCP development with colleagues across the business
condition. to mitigate risks identified during the BIA, scenario
In some cases, planning and risk assessment and having them
such as available to use in following waves
the current
COVID-19 pandemic,
health, economic * Risk assessments to identify the likelihood and
and legal impact of identified scenarios occurring, enabling
effects could have BCPs to be developed in a targeted, meaningful way
a direct
or indirect impact
on * Testing and exercising to validate BCPs are effective,
our ability to giving teams capabilities to respond to incidents
operate. that may occur, through table top and live simulated
exercises with stakeholders across CCEP, within sites
and functions
Additional or enforced
mitigation since IR 2021:
COVID-19
MonMonitoring evolution
in each country and adhering
with with governmental recommendations
and regulations
Supply chain
Implemented business contingency
plans for our infrastructure
regarding gas supply disruption,
e.g., in Germany
------------------- ------------------ ---------------------------------------------------------------- -----------
Legal, regulatory Our daily ->
and tax change operations are * Continuous monitoring of new or changing regulations
subject to a broad and appropriate implementation
range
of regulations at
EU and * Dialogue with government representatives and input to
national level. public consultations on new or changing regulations
These
include
regulations * Effective compliance programmes and training for
covering employees
manufacturing, the
use
of certain * Measures set out elsewhere in this table in relation
ingredients, to legal, regulatory and tax changes with respect to
packaging, any of the other principal risks, and in particular
labelling in relation to packaging, perceived health impact of
requirements, our beverages and ingredients, and changing consumer
and the preferences
distribution and
sale of our
products. * Increasing recycled content level in specific
This exposes us to countries to mitigate tax impact
the
risk of legal,
regulatory
or tax changes
that may
adversely impact
our business.
As a result, we
could
face new or higher
taxes,
higher labour and
other
costs, stricter
sales
and marketing
controls,
or punitive or
other actions
from regulators or
legislative
bodies that
negatively
impact our
financial results,
business
performance or
licence to
operate. COVID-19
has resulted in
both short-term
and long-term
changes
to legislation and
regulation.
It may also lead
to future
increases in taxes
to
finance the cost
of government
responses to
COVID-19.
In addition to the
changes
that took
immediate effect
from 11pm GMT on
31 December
2020, we expect
Brexit
could, over time,
lead
to increased
diversity
of regulation and
consequent
costs of
compliance
including
inability to or
difficulties
in standardising
product
and process
between the
UK and CCEP's
other markets.
------------------- ------------------ ---------------------------------------------------------------- -----------
Market Our success in the ->
market * Shopper insights and price elasticity assessments
depends on a
number of
factors. These * Pack and product innovation
include
actions taken by
our competitors, * Promotional strategy
route to market,
our ability
to build strong * Commercial policy
customer
relationships and
create * Collaborative category planning with customers
value together
(which
could be affected * Growth centric customer investment policies
by customer
consolidation,
buying * Business development plans aligned with our customers
groups, and the
changing
customer * Diversification of portfolio and customer base
landscape) and
government
actions, including * Realistic budgeting routines and targets
those introduced
as a
result of COVID-19 * Investment in key account development and category
such planning
as social
distancing,
the forced closure * Continuous evaluation and updating of mitigation
of plans
some of our
customer channels,
restricted tourism * Responded to COVID-19 by developing and investing in
and routes to market, for example, online channel, so our
restrictions on products remain available to consumers
large
gatherings. We are
also
subject to risks Additional or enforced
from mitigation since IR 2021:
the impact of * Monitoring pricing strategy and implementing
price increases additional price increases with customers
on foods and
commodities
on the competitive
environment
in which we
operate. This
exposes us to the
risk
that market forces
may
limit our ability
to execute
our business plans
effectively.
As a result, it
may be
more challenging
to expand
margins, increase
market
share, or
negotiate with
customers
effectively,
and COVID-19 may
also
further adversely
impact
the market in
previously
unforeseen ways.
------------------- ------------------ ---------------------------------------------------------------- -----------
Packaging The packaging of ->
our products * Continued sustainability action plan focused on
is under packaging, including our commitments to:
increasing
scrutiny,
especially ensure that 100% of our
plastics, from primary packaging is recyclable
a regulatory, tax, or refillable
consumer drive higher collection
and customer rates, aiming to ensure
perspective, that 100% of our packaging
and NGO's, is collected for reuse or
non-compliance recycling
with new ensure that by 2023 at
regulations, least half of the material
reputational we use for our PET bottles
impact, sourcing comes from recycled plastic,
and logistical achieving 100% by 2030
challenges. * Work with TCCC to explore alternative sources of rPET
API territories and innovative new packaging materials
have increased
this scrutiny. As
a result, * Work with TCCC to encourage consumers to recycle
we must challenge their packaging using existing collection
our infrastructure
growth model
relying on
SUP growth towards * Cross functional Sustainable Packaging Office (SPO)
a more with a dedicated focus on packaging collection and to
environmentally ensure all sustainable packaging strategies are
sustainable implemented on time
growth model that
makes
it sustainable in * Support for well-designed Deposit Return Scheme (DRS)
time, across our markets as a route to 100% collection and
changing our increased availability of rPET
packaging
strategy in a
short time * Work to expand delivery mechanisms that do not rely
frame, increasing on single use packaging, for example refillable
collection packaging and dispensed delivery
rates at a high
speed
,developing our * Investment in enhanced recycling technology
reusable
and packageless
options * We continue to develop the business models for
and reducing packaging-less solutions (such as Freestyle) to
virgin materials provide an alternative offering for customers who do
and plastics in not want to use packaging
our secondary
packaging.
Protecting * We also continue to develop the business models for
our future license refillable packaging to provide an alternative
to offering for customers who want fully circular
operate depends on alternatives to single use packaging
our
understanding and
acceptance * Increase use of recycled content in films
of both the need
to reduce
our use of virgin * Moving from hard to recycle plastic shrink to
plastic sustainable board for multi packs
and to de-couple
our growth
from a continued
growth
in the use of
single use
plastic.
Additionally,
our packaging
future mix
will determine our
path
towards a neutral
carbon
Company in 2040
and our
30% GHG emissions
reduction
in 2030.
------------------- ------------------ ---------------------------------------------------------------- -----------
People and The advent of the ->
wellbeing COVID-19 * CCEP CoC
pandemic has
resulted
and is likely to * CCEP wide wellbeing network
continue
causing a higher
degree * Regular communication
of mental health
issues
and higher absence * External EAP support and internal wellbeing (mental
rates health) first aiders
for employees.
There is
growing awareness * Flexible working
of stress
related illness
due to * Working from home
more demand and
responsibility
on employees, * Safety measures
especially
where
restructuring * Appropriate incentivisation
takes
place, which
exposes us * Talent reviews
to the risk of
long-term
absence and a loss * Tools for employees to take ownership of careers
of
production.
Our response to * People related training and reskilling, risk
these assessments, action plans and compliance
topics, the change
in
working conditions * Manager and employee wellbeing training
and
the upcoming
importance * Wellbeing material available to managers and
of "future of employees via CCEP platforms to support our employees
work" and
"working flexibly"
will * Human Rights Policy
affect the
perception
of CCEP as an
employer Additional or enforced
and our ability to mitigation since IR 2021:
attract, * Monitoring and managing wage increases and closely
retain and following government strategies in our territories
motivate existing that try to mitigate wage inflation impact
and future
employees.
This exposes us to * Monitoring strike risk
the
risk of not having
the
right talent with
the
required technical
skillset.
As a result, we
could
fail to achieve
our strategic
objectives and
could experience
a decline in
employee
engagement,
industrial
action, suffer
from reputational
damage or
litigation.
------------------- ------------------ ---------------------------------------------------------------- -----------
Perceived We make and ->
health impact distribute * Reducing the sugar content of our soft drinks,
of our beverages products through product and pack innovation and reformulation
and ingredients, containing sugar managing our product mix to increase low and no
and changing and alternative calorie products
consumer sweeteners.
buying trends Healthy lifestyle
campaigns, * Making it easier for consumers to cut down on sugar
increased media by providing straightforward product information and
scrutiny smaller pack sizes
and social media
have
led to an * EU wide soft drink industry calorie reduction
increasingly commitment with the Union of European Soft Drinks
negative Associations (UNESDA)
perception of
these ingredients
among * Adopting calorie and sugar reduction commitments at
consumers. This country level
exposes
us to the risk
that we * Dialogue with government representatives, NGOs, local
will be unable to communities and customers
evolve
our product and
packaging * Employee communication and education
choices quickly
enough
to satisfy changes * Responsible sales and marketing codes
in
consumer
preferences. * Proactive introduction of colour coded front of pack
We will also face guideline daily amount labelling as a fact based and
new non-discriminatory way of informing consumers in an
pressure from the understandable way
EU Commission
with the Farm to
Fork * Encourage the European Commission to evaluate and
Strategy, at the develop EU harmonised guidance for nutritional
heart labelling, to address potential unfair targeting of
of the European the sparkling soft drinks industry
Green
Deal, aiming to
make food * Work with International Sweeteners Association to
systems fair, promote and protect the reputation of alternative
healthy sweeteners and, through UNESDA, working with the
and European food safety authority on their opinions that
environmentally will inform EU and national government action
friendly.
As a result, we
could
experience
sustained decline
in sales volume,
which
could impact our
financial
results and
business
performance.
------------------- ------------------ ---------------------------------------------------------------- -----------
Product We produce a wide ->
quality range * TCCC standards and audits
of products, all
of which
must adhere to * Hygiene regimes at production facilities
strict
food safety
requirements. * Total quality management programme
This exposes us to
the
risk of failing to * Robust management systems
meet,
or being perceived
as * ISO certification
failing to meet,
the necessary
standards, which * Internal governance audits
could
lead to
compromised * Quality monitoring programme
product
quality. As a
result, * Customer and consumer monitoring and feedback
our brand
reputation could
be damaged and our * Incident management and crisis resolution
products
could become less
popular * Every CCEP production facility has:
with consumers.
a hazard analysis critical
control points assessment
and mitigation plan in place
a quality monitoring plan
based on risk and requirements
a food fraud vulnerability
assessment and mitigation
plan based on risk and requirements
* a food defense threat assessment and mitigation plan
based on risk and requirements
------------------- ------------------ ---------------------------------------------------------------- -----------
Relationships We conduct our ->
with TCCC business * Clear agreements govern the relationships
and other primarily under
franchisors agreements
with TCCC and * Incidence pricing agreement with TCCC
other franchisors.
This exposes us to
the * Aligned long range planning and annual business
risk of misaligned planning processes
incentives
or strategy,
particularly * Ongoing pan-European and local routines between CCEP
during periods of and franchise partners
low
category growth or
crisis, * Increased frequency of meetings and maintenance of
such as COVID-19. positive relationships at all levels
As a
result, TCCC or
other * Regular contact and best practice sharing across the
franchisors could Coca-Cola system
act
adversely to our
interests * Improve visibility and ways of working with TCCC
with respect to
our business
relationship.
------------------- ------------------ ---------------------------------------------------------------- -----------
*Change vs 2021 Integrated Report may be as a result of a change in likelihood or impact.
Related Parties
Related party disclosures are presented in Note 10 of the Notes to the condensed consolidated interim financial statements contained in this interim management report.
Going Concern
As part of the Directors' consideration of the appropriateness of adopting the going concern basis in preparing the condensed consolidated interim financial statements, the Directors have considered the Group's financial performance in the period and have taken into account its current cash position and its access to a EUR1.95 billion undrawn committed credit facility. Further, the Directors have considered the current cash flow forecast, including a downside stress test, which supports the Group's ability to continue to generate cash flows during the next 12 months.
On this basis, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for a period of 12 months from the date of signing these financial statements. Accordingly, the condensed consolidated interim financial statements have been prepared on a going concern basis and the Directors do not believe there are any material uncertainties to disclose in relation to the Group's ability to continue as a going concern.
Responsibility Statement
The Directors of the Company confirm that to the best of their knowledge:
-- The condensed consolidated interim financial statements for the six months ended 1 July 2022 have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as issued by the International Accounting Standards Board, UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority (DTR).
-- The interim management report includes a fair review of the information required by the DTR 4.2.7 R and DTR 4.2.8 R as follows:
-- DTR 4.2.7 R: (1) an indication of important events that have occurred during the first six months of the financial year, and their impact on the condensed set of financial statements, and (2) a description of the principal risks and uncertainties for the remaining six months of the financial year; and
-- DTR 4.2.8 R: (1) related parties transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or the performance of the Group during that period, and (2) any changes in the related parties transactions described in the last annual report that could have a material effect on the financial position or performance of the Group in the first six months of the current financial year.
The Directors of the Company are shown on pages 67-71 in the 2021 Integrated Report and Form 20-F for the year ended 31 December 2021.
A list of current directors is maintained on CCEP's website: www.cocacolaep.com/about-us/governance/board-of-directors/.
On behalf of the Board
Damian Gammell Manik Jhangiani Chief Executive Officer Chief Financial Officer
4 August 2022
Independent Review Report to Coca-Cola Europacific Partners plc
Conclusion
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 1 July 2022 which comprises the condensed Consolidated Interim Income Statement, Condensed Consolidated Interim Statement of Comprehensive Income, Condensed Consolidated Interim Statement of Financial Position, Condensed Consolidated Interim Statement of Cash Flows, Condensed Consolidated Interim Statement of Changes in Equity and the related explanatory notes 1 - 13. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 1 July 2022 is not prepared, in all material respects, in accordance with International Accounting Standard 34, "Interim Financial Reporting", as issued by the International Accounting Standards Board, U.K. adopted International Accounting Standard 34, "Interim Financial Reporting" and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review Engagements 2410 (UK) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with U.K. adopted International Accounting Standards, International Financial Reporting Standards ("IFRS") as adopted by the European Union and International Financial Reporting Standards as issued by the International Accounting Standards Board ("IASB"). The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as issued by the International Accounting Standards Board and U.K. adopted International Accounting Standard 34, "Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis of Conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with this ISRE, however future events or conditions may cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible for assessing the company'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 company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.
Use of our report
This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.
Ernst & Young LLP
London
4 August 2022
Coca-Cola Europacific Partners plc
Condensed Consolidated Interim Income Statement (Unaudited)
Six Months Ended
--------------------------------------------
1 July 2 July
2022 2021
Note EUR million EUR million
------------------------------------------------- ---- --------------------- ---------------------
Revenue 3 8,280 5,918
Cost of sales (5,288) (3,840)
--------------------- ---------------------
Gross profit 2,992 2,078
Selling and distribution expenses (1,410) (1,033)
Administrative expenses (615) (525)
--------------------- ---------------------
Operating profit 967 520
Finance income 30 14
Finance costs (93) (78)
--------------------- ---------------------
Total finance costs, net (63) (64)
Non-operating items (6) (1)
--------------------- ---------------------
Profit before taxes 898 455
Taxes 11 (223) (209)
--------------------- ---------------------
Profit after taxes 675 246
===================== =====================
Profit attributable to shareholders 667 244
Profit attributable to non-controlling interests 8 2
--------------------- ---------------------
Profit after taxes 675 246
===================== =====================
Basic earnings per share (EUR) 4 1.46 0.54
Diluted earnings per share (EUR) 4 1.46 0.53
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Coca-Cola Europacific Partners plc
Condensed Consolidated Interim Statement of Comprehensive Income (Unaudited)
Six Months Ended
--------------------------------------------
1 July 2 July
2022 2021
EUR million EUR million
----------------------------------------------------- --------------------- ---------------------
Profit after taxes 675 246
--------------------- ---------------------
Components of other comprehensive income/(loss):
Items that may be subsequently reclassified to the
income statement:
Foreign currency translations:
Pretax activity, net 98 58
Tax effect - -
--------------------- ---------------------
Foreign currency translation, net of tax 98 58
Cash flow hedges:
Pretax activity, net 8 223
Tax effect (3) (48)
--------------------- ---------------------
Cash flow hedges, net of tax 5 175
Other reserves:
Pretax activity, net (2) 6
Tax effect - (1)
--------------------- ---------------------
Other reserves, net of tax (2) 5
--------------------- ---------------------
101 238
--------------------- ---------------------
Items that will not be subsequently reclassified
to the income statement:
Pension plan remeasurements:
Pretax activity, net 53 149
Tax effect (16) (24)
--------------------- ---------------------
Pension plan adjustments, net of tax 37 125
--------------------- ---------------------
37 125
--------------------- ---------------------
Other comprehensive income/(loss) for the period,
net of tax 138 363
--------------------- ---------------------
Comprehensive income for the period 813 609
===================== =====================
Comprehensive income attributable to shareholders 798 604
Comprehensive income attributable to non-controlling
interests 15 5
--------------------- ---------------------
Comprehensive income for the period 813 609
===================== =====================
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Coca-Cola Europacific Partners plc
Condensed Consolidated Interim Statement of Financial Position (Unaudited)
1 July 31 December
2022 2021
Note EUR million EUR million
------------------------------------------------ ---- ----------------------- -----------------------
ASSETS
Non-current:
Intangible assets 5 12,677 12,639
Goodwill 5 4,668 4,623
Property, plant and equipment 6 5,164 5,248
Non-current derivative assets 265 226
Deferred tax assets 26 60
Other non-current assets 576 534
----------------------- -----------------------
Total non-current assets 23,376 23,330
----------------------- -----------------------
Current:
Current derivative assets 308 150
Current tax assets 31 46
Inventories 1,410 1,157
Amounts receivable from related parties 10 77 143
Trade accounts receivable 2,753 2,305
Other current assets 275 271
Assets held for sale 66 223
Short term investments 239 58
Cash and cash equivalents 1,819 1,407
----------------------- -----------------------
Total current assets 6,978 5,760
----------------------- -----------------------
Total assets 30,354 29,090
======================= =======================
LIABILITIES
Non-current:
Borrowings, less current portion 8 11,065 11,790
Employee benefit liabilities 122 138
Non-current provisions 12 86 48
Non-current derivative liabilities 134 47
Deferred tax liabilities 3,604 3,617
Non-current tax liabilities 106 110
Other non-current liabilities 38 37
----------------------- -----------------------
Total non-current liabilities 15,155 15,787
----------------------- -----------------------
Current:
Current portion of borrowings 8 1,577 1,350
Current portion of employee benefit liabilities 9 10
Current provisions 12 106 86
Current derivative liabilities 68 19
Current tax liabilities 242 181
Amounts payable to related parties 10 339 210
Trade and other payables 5,075 4,237
----------------------- -----------------------
Total current liabilities 7,416 6,093
----------------------- -----------------------
Total liabilities 22,571 21,880
======================= =======================
EQUITY
Share capital 5 5
Share premium 225 220
Merger reserves 287 287
Other reserves (62) (156)
Retained earnings 7,136 6,677
Equity attributable to shareholders 7,591 7,033
Non-controlling interest 9 192 177
----------------------- -----------------------
Total equity 7,783 7,210
----------------------- -----------------------
Total equity and liabilities 30,354 29,090
======================= =======================
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Coca-Cola Europacific Partners plc
Condensed Consolidated Interim Statement of Cash Flows (Unaudited)
Six Months Ended
1 July 2 July
2022 2021*
Note EUR million EUR million
--------------------------------------------------------- ---- --------------------- --------------------
Cash flows from operating activities:
Profit before taxes 898 455
Adjustments to reconcile profit before tax to
net cash flows from operating activities:
Depreciation 6 336 300
Amortisation of intangible assets 5 50 42
Share-based payment expense 12 4
Finance costs, net 63 64
Income taxes paid (162) (58)
Changes in assets and liabilities, net of acquisition
amounts:
(Increase) in trade and other receivables (429) (384)
(Increase) in inventories (245) (144)
Increase in trade and other payables 936 503
Increase in net payable receivable from related
parties 180 121
Increase/(decrease) in provisions 59 (23)
Change in other operating assets and liabilities (45) 28
--------------------- --------------------
Net cash flows from operating activities 1,653 908
--------------------- --------------------
Cash flows from investing activities:
Acquisition of bottling operations, net of cash
acquired* - (5,401)
Purchases of property, plant and equipment (178) (115)
Purchases of capitalised software (22) (42)
Proceeds from sales of property, plant and equipment 6 20
Proceeds from sales of intangible assets 143 -
Investments in equity instruments (2) -
Proceeds from the sale of equity instruments 13 -
Net proceeds/(payments) of short term investments* (181) 118
Other investing activity, net (1) 16
--------------------- --------------------
Net cash flows used in investing activities* (222) (5,404)
--------------------- --------------------
Cash flows from financing activities:
Proceeds from borrowings, net 8 - 4,877
Changes in short-term borrowings 8 237 305
Repayments on third party borrowings 8 (834) (468)
Payments of principal on lease obligations (80) (65)
Interest paid, net (98) (58)
Dividends paid 9 (256) -
Exercise of employee share options 5 18
Other financing activities, net (8) 4
--------------------- --------------------
Net cash flows (used in)/from financing activities (1,034) 4,613
--------------------- --------------------
Net change in cash and cash equivalents* 397 117
--------------------- --------------------
Net effect of currency exchange rate changes on
cash and cash equivalents 15 46
Cash and cash equivalents at beginning of period 1,407 1,523
--------------------- --------------------
Cash and cash equivalents at end of period* 1,819 1,686
===================== ====================
*Comparative information has been reclassified in connection with the acquisition of CCL. Refer to Note 1.
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Coca-Cola Europacific Partners plc
Condensed Consolidated Interim Statement of Changes in Equity (Unaudited)
Share Share Merger Other Retained Non-controlling Total
capital premium reserves reserves earnings Total interest equity
----------- ----------- ---------- ----------- ----------- ----------- --------------- -----------
EUR EUR EUR EUR EUR EUR EUR EUR
Note million million million million million million million million
---------------- ---- ----------- ----------- ---------- ----------- ----------- ----------- --------------- -----------
Balance as at 31
December 2020 5 192 287 (537) 6,078 6,025 - 6,025
Profit after
taxes - - - - 244 244 2 246
Other
comprehensive
income - - - 235 125 360 3 363
----------- ----------- ---------- ----------- ----------- ----------- --------------- -----------
Total
comprehensive
income - - - 235 369 604 5 609
Non-controlling
interests
recognised
relating
to business
combination - - - - - - 220 220
Cash flow hedge
gains
transferred to
goodwill
relating to
business
combination - - - (84) - (84) - (84)
Issue of shares
during
the period - 18 - - - 18 - 18
Equity-settled
share-based
payment expense - - - - 4 4 - 4
Share-based
payment
tax effects - - - - 3 3 - 3
Balance as at 2
July 2021 5 210 287 (386) 6,454 6,570 225 6,795
=========== =========== ========== =========== =========== =========== =============== ===========
Balance as at 31
December 2021 5 220 287 (156) 6,677 7,033 177 7,210
Profit after
taxes - - - - 667 667 8 675
Other
comprehensive
income - - - 94 37 131 7 138
----------- ----------- ---------- ----------- ----------- ----------- --------------- -----------
Total
comprehensive
income - - - 94 704 798 15 813
Issue of shares
during
the period - 5 - - - 5 - 5
Equity-settled
share-based
payment expense - - - - 12 12 - 12
Dividends 9 - - - - (257) (257) - (257)
Balance as at 1
July 2022 5 225 287 (62) 7,136 7,591 192 7,783
=========== =========== ========== =========== =========== =========== =============== ===========
The accompanying notes are an integral part of these condensed consolidated interim financial statements.
Notes to the Condensed Consolidated Interim Financial Statements
Note 1
GENERAL INFORMATION AND BASIS OF PREPARATION
Coca-Cola Europacific Partners plc (the Company) and its subsidiaries (together CCEP, or the Group) are a leading consumer goods group in Western Europe and the Asia Pacific region, making, selling and distributing an extensive range of primarily non-alcoholic ready to drink beverages.
The Company has ordinary shares with a nominal value of EUR0.01 per share (Shares). CCEP is a public company limited by shares, incorporated under the laws of England and Wales with the registered number in England of 09717350. The Group's Shares are listed and traded on Euronext Amsterdam, the NASDAQ Global Select Market, London Stock Exchange and on the Spanish Stock Exchanges. The address of the Company's registered office is Pemberton House, Bakers Road, Uxbridge, UB8 1EZ, United Kingdom.
These condensed consolidated interim financial statements do not constitute statutory accounts as defined by Section 434 of the Companies Act 2006. They have been reviewed but not audited by the Group's auditor. The statutory accounts for the Company for the year ended 31 December 2021, which were prepared in accordance with U.K. adopted International Accounting Standards, International Financial Reporting Standards (IFRS) as adopted by the European Union and International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB), have been delivered to the Registrar of Companies. The auditor's opinion on those accounts was unqualified and did not contain a statement made under section 498 (2) or (3) of the Companies Act 2006.
Basis of Preparation and Accounting Policies
The condensed consolidated interim financial statements of the Group have been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as issued by the International Accounting Standards Board, the U.K. adopted International Accounting Standard 34, "Interim Financial Reporting" and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority and should be read in conjunction with our 2021 consolidated financial statements. The annual financial statements of the Group for the year-ended 31 December 2022 will be prepared in accordance with U.K. adopted International Accounting Standards, International Financial Reporting Standards (IFRS) as adopted by the European Union and International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB).
The accounting policies applied in these interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's consolidated financial statements as at and for the year ended 31 December 2021. The policy for recognising income taxes in the interim period is consistent with that applied in previous interim periods and is described in Note 11.
Several amendments and interpretations apply for the first time in 2022, but do not have a material impact on the condensed consolidated interim financial statements of the Group.
As disclosed in the notes to the Group's consolidated financial statements as at and for the year ended 31 December 2021 (refer to Note 4 "Business combinations"), short term time deposits and treasury bills with maturities of greater than three months and less than one year acquired as part of the CCL acquisition have been reclassified and presented as short term investments. The impact on the comparative condensed consolidated interim statement of cash flows for the six months ended 2 July 2021 was a net reduction in cash flows from investing activities of EUR138 million (including net proceeds from short term investments of EUR118 million) and a reduction in cash and cash equivalents of EUR138 million. There was a corresponding increase in short term investments of EUR138 million as at 2 July 2021.
Reporting periods
Results are presented for the interim period from 1 January 2022 to 1 July 2022.
The Group's financial year ends on 31 December. For half-yearly reporting convenience, the first six month period closes on the Friday closest to the end of the interim calendar period. There was one less selling day in the six months ended 1 July 2022 versus the six months ended 2 July 2021, and there will be equal selling days in the second six months of 2022 versus the second six months of 2021 (based upon a standard five-day selling week).
The following table summarises the number of selling days, for the years ended 31 December 2022 and 31 December 2021 (based on a standard five-day selling week):
Half Full
year year
------- ----- -----
2022 130 260
2021 131 261
----- -----
Change -1 -1
===== =====
Comparability
The COVID-19 pandemic and related response measures have had and may continue to have an adverse effect on global economic conditions, as well as our business, results of operations, cash flows and financial condition. At this time, we cannot predict the degree to which, or the time period over which, our business will continue to be affected by COVID-19 and the related response measures. These impacts limit the comparability of these condensed consolidated interim financial statements with prior periods.
In addition, operating results for the first half of 2022 may not be indicative of the results expected for the year ended 31 December 2022 as sales of the Group's products are seasonal. In Europe, the second and third quarters typically account for higher unit sales of the Group's products than the first and fourth quarters. In the Group's Asia Pacific territories, the fourth quarter would typically reflect higher sales volumes in the year. The seasonality of the Group's sales volume, combined with the accounting for fixed costs such as depreciation, amortisation, rent and interest expense, impacts the Group's results for the first half of the year. Additionally, year-over-year shifts in holidays, selling days and weather patterns can impact the Group's results on an annual or half-yearly basis.
Exchange rates
The Group's reporting currency is the Euro. CCEP translates the income statements of non-Euro functional currency subsidiary operations to the Euro at average exchange rates and the balance sheets at the closing exchange rate as at the end of the period.
The principal exchange rates used for translation purposes in respect of one Euro were:
Average for the six
month period ended Closing as at
-------------------------------------------------------- ----------------------------------------------------------
31 December
1 July 2022 2 July 2021([1]) 1 July 2022 2021
------------ --------------------------- --------------------------- --------------------------- -----------------------------
UK Sterling 1.19 1.15 1.17 1.19
US Dollar 0.91 0.83 0.96 0.88
Norwegian
Krone 0.10 0.10 0.10 0.10
Swedish Krone 0.10 0.10 0.09 0.10
Icelandic
Krone 0.01 0.01 0.01 0.01
Australian
Dollar 0.66 0.64 0.66 0.64
Indonesian
Rupiah([2]) 0.06 0.06 0.06 0.06
New Zealand
Dollar 0.61 0.59 0.60 0.60
Papua New
Guinean Kina 0.26 0.24 0.27 0.25
([1]) For the previous year period Asia Pacific rates are calculated as average for the period from 10 May 2021 to 2 July 2021.
([2]) Indonesian Rupiah is shown as 1000 IDR versus 1 EUR.
Note 2
BUSINESS COMBINATIONS
On 10 May 2021, the Company acquired 100% of the issued and outstanding shares of API (the Acquisition). API was one of the largest bottlers and distributors of ready to drink non-alcoholic and alcoholic beverages and coffee in the Asia Pacific region and was the authorised bottler and distributor of The Coca-Cola Company's (TCCC) beverage brands in Australia, New Zealand and Pacific Islands, Indonesia and Papua New Guinea. Details surrounding this business combination transaction, including the provisional fair values of assets and liabilities acquired, were disclosed in Note 4 of the Group's annual consolidated financial statements for the year ended 31 December 2021. The valuation exercise was completed during the first half of 2022. Subsequent changes to the provisional amounts previously disclosed are immaterial.
Note 3
OPERATING SEGMENTS
Description of segments and principal activities
The Group derives its revenues through a single business activity, which is making, selling and distributing an extensive range of primarily non-alcoholic ready to drink beverages. The Group's Board continues to be its Chief Operating Decision Maker (CODM), which allocates resources and evaluates performance of its operating segments based on volume, revenue and comparable operating profit. Comparable operating profit excludes items impacting the comparability of period over period financial performance.
Six Months Ended 1 July Six Months Ended 2 July
2022 2021
Europe API Total Europe API Total
EUR million EUR million EUR million EUR million EUR million EUR million
------------------- ------------------ ------------------ --------------------- ------------------ ------------------- ---------------------
Revenue 6,451 1,829 8,280 5,385 533 5,918
Comparable
operating
profit([1]) 825 226 1,051 631 60 691
Items impacting
comparability([2]) (84) (171)
--------------------- ---------------------
Reported operating
profit 967 520
Total finance
costs,
net (63) (64)
Non-operating items (6) (1)
--------------------- ---------------------
Reported profit
before
tax 898 455
===================== =====================
([1]) Comparable operating profit includes comparable depreciation and amortisation of EUR273 million and EUR114 million for Europe and API respectively, for the six months ended 1 July 2022. Comparable depreciation and amortisation charges for the six months ended 2 July 2021 totalled EUR285 million and EUR36 million, for Europe and API respectively.
([2]) Items impacting the comparability of period-over-period financial performance for 2022 primarily include restructuring charges of EUR95 million, partially offset by net insurance recoveries received of EUR12 million arising from the July 2021 flooding events. Items impacting the comparability for 2021 included restructuring charges of EUR92 million, acquisition and integration related costs of EUR40 million, inventory fair value step up related to acquisition accounting of EUR48 million and a positive impact of the closure of the GB defined benefit pension scheme of EUR9 million.
No single customer accounted for more than 10% of the Group's revenue during the six months ended 1 July 2022 and 2 July 2021.
Revenue by geography
The following table summarises revenue from external customers by geography, which is based on the origin of the sale:
Six Months Ended
1 July 2 July
2022 2021
Revenue EUR million EUR million
-------------------------------- ------------------- -------------------
Great Britain 1,463 1,192
Germany 1,296 1,091
Iberia([1]) 1,371 1,069
France([2]) 1,017 896
Belgium/Luxembourg 511 454
Netherlands 329 266
Norway 208 200
Sweden 213 179
Iceland 43 38
------------------- -------------------
Total Europe 6,451 5,385
Australia 1,102 328
New Zealand and Pacific Islands 302 85
Indonesia and Papua New Guinea 425 120
------------------- -------------------
Total API 1,829 533
------------------- -------------------
Total CCEP 8,280 5,918
=================== ===================
([1]) Iberia refers to Spain, Portugal & Andorra.
([2]) France refers to continental France & Monaco.
Note 4
EARNINGS PER SHARE
Basic earnings per share is calculated by dividing profit after taxes by the weighted average number of Shares in issue and outstanding during the period. Diluted earnings per share is calculated in a similar manner, but includes the effect of dilutive securities, principally share options, restricted stock units and performance share units. Share-based payment awards that are contingently issuable upon the achievement of specified market and/or performance conditions are included in the diluted earnings per share calculation based on the number of Shares that would be issuable if the end of the period was the end of the contingency period.
The following table summarises basic and diluted earnings per share calculations for the periods presented:
Six Months Ended
1 July 2 July
2022 2021
-------------------------------------------------------- -------------------- --------------------
Profit after taxes attributable to equity shareholders
(EUR million) 667 244
Basic weighted average number of Shares in issue([1])
(million) 457 455
Effect of dilutive potential Shares([2]) (million) 1 2
Diluted weighted average number of Shares in issue([1])
(million) 458 457
Basic earnings per share (EUR) 1.46 0.54
Diluted earnings per share (EUR) 1.46 0.53
([1]) As at 1 July 2022 and 2 July 2021, the Group had 456,789,240 and 455,853,051 Shares, respectively, in issue and outstanding.
([2]) For the six months ended 1 July 2022 and 2 July 2021, there were no outstanding options to purchase Shares excluded from the diluted earnings per share calculation. The dilutive impact of the remaining options outstanding, unvested restricted stock units and unvested performance share units was included in the effect of dilutive securities.
Note 5
INTANGIBLE ASSETS AND GOODWILL
The following table summarises the movement in net book value for intangible assets and goodwill during the six months ended 1 July 2022:
Intangible
assets Goodwill
EUR million EUR million
-------------------------------------- --------------------- ---------------------
Net book value as at 31 December 2021 12,639 4,623
Additions 22 -
Amortisation expense (50) -
Disposals (1) -
Transfers and reclassifications 14 (1)
Currency translation adjustments 53 46
--------------------- ---------------------
Net book value as at 1 July 2022 12,677 4,668
===================== =====================
Note 6
PROPERTY, PLANT AND EQUIPMENT
The following table summarises the movement in net book value for property, plant and equipment during the six months ended 1 July 2022:
Total
--------------------------------------
EUR million
-------------------------------------- ---------------------
Net book value as at 31 December 2021 5,248
Additions 251
Disposals (9)
Depreciation expense (336)
Transfers and reclassifications (19)
Currency translation adjustments 29
---------------------
Net book value as at 1 July 2022([1]) 5,164
=====================
([1]) The net book value of property, plant and equipment includes right of use assets of EUR663 million.
Note 7
FAIR VALUES AND FINANCIAL RISK MANAGEMENT
Fair Value Measurements
All assets and liabilities for which fair value is measured or disclosed in the condensed consolidated interim financial statements are categorised in the fair value hierarchy as described in our 2021 consolidated financial statements.
The fair values of the Group's cash and cash equivalents, short term investments, trade accounts receivable, amounts receivable from related parties, trade and other payables, and amounts payable to related parties approximate their carrying amounts due to their short-term nature.
The fair values of the Group's borrowings are estimated based on borrowings with similar maturities and credit quality and current market interest rates. These are categorised in Level 2 of the fair value hierarchy as the Group uses certain pricing models and quoted prices for similar liabilities in active markets in assessing their fair values. The total fair value of borrowings as at 1 July 2022 and 31 December 2021, was EUR11.6 billion and EUR13.3 billion, respectively. This compared to the carrying value of total borrowings as at 1 July 2022 and 31 December 2021 of EUR12.6 billion and EUR13.1 billion, respectively. Refer to Note 8 for further details regarding the Group's borrowings.
The Group's derivative assets and liabilities are carried at fair value, which is determined using a variety of valuation techniques, depending on the specific characteristics of the hedging instrument taking into account credit risk. The fair value of our derivative contracts (including forwards, options, cross-currency swaps and interest rate swaps) are determined using standard valuation models. The significant inputs used in these models are readily available in public markets or can be derived from observable market transactions and, therefore, the derivative contracts have been classified as Level 2. Inputs used in these standard valuation models include the applicable spot, forward, and discount rates. The standard valuation model for the option contracts also includes implied volatility, which is specific to individual options and is based on rates quoted from a widely used third-party resource. As at 1 July 2022 and 31 December 2021, the total value of derivative assets was EUR573 million and EUR376 million, respectively. As at 1 July 2022 and 31 December 2021, the total value of derivative liabilities was EUR202 million and EUR66 million, respectively. During the period, EUR8 million of gains have been recorded within Other Comprehensive Income, primarily related to increases in fair value on commodity related hedging instruments.
For assets and liabilities that are recognised in the condensed consolidated interim financial statements on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation at the end of each reporting period. There have been no transfers between levels during the periods presented.
Financial Instruments Risk Management Objectives and Policies
The Group's activities expose it to several financial risks including market risk, credit risk, and liquidity risk. Financial risk activities are governed by appropriate policies and procedures to minimise the uncertainties these risks create over the Group's future cash flows. Such policies are developed and approved by the Group's Treasury and Commodities Risk Committee through the authority provided to it by the Group's Board of Directors. There have been no changes in the risk management policies since the year end.
Note 8
BORROWINGS AND LEASES
Borrowings Outstanding
The following table summarises the carrying value of the Group's borrowings as at the dates presented:
1 July 31 December
2022 2021
EUR million EUR million
------------------------------------------------ ------------------------- -------------------------------
Non-current:
Euro denominated bonds 8,572 8,646
Foreign currency bonds (swapped into Euro)([1]) 1,103 1,757
Australian dollar denominated bonds 442 432
Foreign currency bonds (swapped into Australian
Dollar or New Zealand Dollar)([1]) 428 446
Lease obligations 520 509
------------------------- -------------------------------
Total non-current borrowings 11,065 11,790
========================= ===============================
Current:
Euro denominated bonds([2]) - 700
Foreign currency bonds (swapped into Euro)([1]) 817 -
Australian dollar denominated bonds([3]) 103 230
Euro commercial paper 522 285
Bank overdrafts - 1
Lease obligations 135 134
------------------------- -------------------------------
Total current borrowings 1,577 1,350
========================= ===============================
([1]) Cross currency swaps are used by the Group to swap foreign currency bonds into the required local currency.
([2]) In January 2022 the Group repaid prior to maturity EUR700 million of outstanding Euro denominated bonds (EUR700 million 0.75% Notes 2022) due in February 2022.
([3]) In March 2022, the Group repaid on maturity EUR134 million of outstanding Australian dollar denominated bonds (A$200 million 3.3750% Notes 2022). These were acquired as part of the API acquisition.
During the 6 month period ending 1 July 2022, the Group entered into interest rate swaps with notional value of EUR1 billion, which were designated in a fair value hedge relationship with Euro denominated bonds. As at 1 July 2022, fair value adjustments of EUR77 million are included within non current borrowings in relation to these hedges.
Note 9
EQUITY
Share Capital
As at 1 July 2022, the Company had issued and fully paid 456,789,240 Shares. Shares in issue have one voting right each and no restrictions related to dividends or return of capital. The share capital increased during the six months ended 1 July 2022 from the issue of 554,208 Shares, following the exercise of share-based payment awards.
Dividends
During the first six months of 2022, the Board declared a first half dividend of EUR0.56 per share, which was paid on 26 May 2022. No dividends were declared or paid in the first six months of 2021.
Non-controlling interests
Equity attributable to non-controlling interest was EUR192 million and EUR177 million as at 1 July 2022 and 31 December 2021, respectively, representing 29.4% of PT Coca-Cola Bottling Indonesia held by TCCC and 6.1% of Samoa Breweries Limited held by numerous investors.
Note 10
RELATED PARTY TRANSACTIONS
For the purpose of these condensed consolidated interim financial statements, transactions with related parties mainly comprise transactions between subsidiaries of the Group and the related parties of the Group.
Transactions with The Coca-Cola Company (TCCC)
The principal transactions with TCCC are for the purchase of concentrate, syrup and finished goods. The following table summarises the transactions with TCCC that directly impacted the condensed consolidated interim income statement for the periods presented:
Six Months Ended
1 July 2022 2 July 2021
EUR million EUR million
-------------------------------------------- ------------------------------- -------------------------------
Amounts affecting revenue([1]) 51 22
Amounts affecting cost of sales([2]) (1,910) (1,438)
Amounts affecting operating expenses([3]) 1 4
------------------------------- -------------------------------
Total net amount affecting the consolidated
income statement (1,858) (1,412)
=============================== ===============================
([1]) Amounts principally relate to fountain syrup and packaged product sales.
([2]) Amounts principally relate to the purchase of concentrate, syrup, mineral water and juice as well as funding for marketing programmes.
([3]) Amounts principally relate to costs associated with new product development initiatives and support funding.
The following table summarises the transactions with TCCC that impacted the consolidated statement of financial position as at the dates presented:
31 December
1 July 2022 2021
EUR million EUR million
----------------------- ------------------------------ -----------------------------
Amount due from TCCC 68 135
Amount payable to TCCC 305 189
In February 2022, the Group entered into asset sale arrangements with TCCC pursuant to which, the Group agreed to sell certain non-alcoholic ready to drink beverage brands, predominantly available in Australia and New Zealand, which were acquired as part of the business combination transaction consummated on 10 May 2021, for a total consideration approximating EUR182 million. The sale price approximated the fair value of the brands assessed at the acquisition date. These brands were classified as assets held for sale in our consolidated statement of financial position as at 31 December 2021 . During the first half of 2022, the Group partially completed the asset sale transaction and expects to finalize the remaining portion during the second half of the year. The Group has also entered into commercial agreements with TCCC to facilitate ongoing manufacturing, distributing and/or selling activities pertaining to these brands. The brands which are yet to be sold to TCCC, amount to EUR40 million and are classified as assets held for sale in our condensed consolidated interim statement of financial position as at 1 July 2022.
Transactions with Cobega companies
The principal transactions with Cobega are for the purchase of juice concentrate and packaging materials. The following table summarises the transactions with Cobega that directly impacted the condensed consolidated interim income statement for the periods presented:
Six Months Ended
1 July 2022 2 July 2021
EUR million EUR million
-------------------------------------------- -------------------------------- --------------------------------
Amounts affecting revenues([1]) 2 -
Amounts affecting cost of sales([2]) (32) (21)
Amounts affecting operating expenses([3]) (8) (5)
-------------------------------- --------------------------------
Total net amount affecting the consolidated
income statement (38) (26)
================================ ================================
([1]) Amounts principally relate to packaged product sales.
([2]) Amounts principally relate to the purchase of packaging materials.
([3]) Amounts principally relate to certain costs associated with maintenance, repair services and rent
The following table summarises the transactions with Cobega that impacted the consolidated statement of financial position as at the dates presented:
31 December
1 July 2022 2021
EUR million EUR million
------------------------- ------------------------------- -------------------------------
Amount due from Cobega 5 2
Amount payable to Cobega 27 19
Transactions with Other Related Parties
For the six months ended 1 July 2022 and 2 July 2021 the Group recognised charges in cost of sales of EUR83 million and EUR28 million, respectively, in connection with transactions that have been entered into with joint ventures, associates and other related parties predominantly for the purchase of finished products as well as container deposit scheme charges in Australia.
Transactions with joint ventures, associates and other related parties that impacted the condensed consolidated interim statement of financial position as at 1 July 2022 include EUR4 million in amounts receivable from related parties and EUR7 million in amounts payable to related parties respectively. As at 31 December 2021 amounts receivable from related parties and amounts payable to related parties included EUR6 million and EUR2 million respectively related to transactions with joint ventures, associates and other related parties.
Note 11
TAXES
Taxes on income in interim periods are accrued using the tax rate that would be applicable to the expected total annual profit or loss.
The effective tax rate (ETR) was 25% and 46% for the six months ended 1 July 2022 and 2 July 2021, respectively, and 29% for the year ended 31 December 2021. The ETR has been calculated by applying the weighted average annual ETR, excluding discrete items, of 25% and 22% to the profit before tax for the six months ended 1 July 2022 and 2 July 2021, respectively.
The ETR of 25% which is higher than statutory UK rate reflects the impact of having operations outside the UK which are taxed at rates other than the statutory UK rate of 19%.
The following table summarises the major components of income tax expense for the periods presented:
1 July 2 July
2022 2021
EUR million EUR million
------------------------------------------------------------ --------------------- --------------------
Current income tax:
Current income tax charge 228 125
Adjustment in respect of current income tax from
prior periods 8 (13)
--------------------- --------------------
Total current tax 236 112
Deferred tax:
Relating to the origination and reversal of temporary
differences (4) (25)
Adjustment in respect of deferred income tax from
prior periods (9) 4
Relating to changes in tax rates or the imposition
of new taxes - 118
--------------------- --------------------
Total deferred tax (13) 97
--------------------- --------------------
Income tax charge per the consolidated income statement 223 209
===================== ====================
Tax Provisions
The Group is routinely under audit by taxing authorities in the ordinary course of business. Due to their nature, such proceedings and tax matters involve inherent uncertainties including, but not limited to, court rulings, settlements between affected parties and/or governmental actions. The probability of outcome is assessed and accrued as a liability and/or disclosed, as appropriate. The Group maintains provisions for uncertainty related to these tax matters that it believes appropriately reflect its risk. As at 1 July 2022, EUR154 million of these provisions is included in current tax liabilities and the remainder is included in non-current tax liabilities. There has been no material change in tax provisions since 31 December 2021.
The Group reviews the adequacy of these provisions at the end of each reporting period and adjusts them based on changing facts and circumstances. Due to the uncertainty associated with tax matters, it is possible that at some future date, liabilities resulting from audits or litigation could vary significantly from the Group's provisions. When an uncertain tax liability is regarded as probable, it is measured on the basis of the Group's best estimate.
The Group has received tax assessments in certain jurisdictions for potential tax related to the Group's purchases of concentrate. The value of the Group's concentrate purchases is significant, and therefore, the tax assessments are substantial. The Group strongly believes the application of tax has no technical merit based on applicable tax law, and its tax position would be sustained. Accordingly, the Group has not recorded a tax liability for these assessments and is vigorously defending its position against these assessments.
Note 12
PROVISIONS, COMMITMENTS AND CONTINGENCIES
The following table summarises the movement of provisions for the periods presented:
Restructuring Other
Provision Provisions([1]) Total
EUR million EUR million EUR million
-------------------------------------- --------------------- --------------------- ---------------------
Balance as at 31 December 2021 103 31 134
Charged/(credited) to profit or loss:
Additional provisions recognised 97 3 100
Unused amounts reversed (4) (2) (6)
Utilised during the period (36) - (36)
Balance as at 1 July 2022 160 32 192
===================== ===================== =====================
______________________
([1]) Other provisions primarily relate to decommissioning provisions, property tax assessment provisions and legal reserves.
As part of the Accelerate Competitiveness programme, the Group announced further proposals during the first half of 2022, including the transformation of the full service vending operations and related initiatives in Germany. Restructuring charges of approximately EUR81 million associated with these initiatives have been recorded during the six months ended 1 July 2022 primarily related to expected severance costs.
Commitments
There have been no significant changes in the commitments of the Group since 31 December 2021. Refer to Note 23 of the 2021 consolidated financial statements for further details about the Group's commitments.
Contingencies
There have been no significant changes in contingencies since 31 December 2021. Refer to Note 23 of the 2021 consolidated financial statements for further details about the Group's contingencies.
On 24 July 2020, a CCEP subsidiary 'Associated Products & Distribution Proprietary Limited' (APD), was joined to proceedings in the Supreme Court of Queensland between a Glencore joint venture and the State of Queensland, whereby APD's entitlement to royalties, from its sub-surface strata and associated mineral rights, has been challenged by the State of Queensland. Since 2014 and through to 24 July 2020, CCEP has received and recognised approximately EUR50 million in royalties. Effective the commencement of the proceedings, royalties have been paid directly to court and/or state government, which amounted to approximately EUR33 million as at 1 July 2022 and have not been recognised by the Group. If the Group is able to successfully defend the claim, it will be entitled to the past and future royalty payments arising from the ownership of the mineral rights. The proceedings remain ongoing and the Group intends to defend the matter robustly.
Note 13
EVENTS AFTER THE REPORTING PERIOD
In connection with the ongoing dispute in Spain regarding the refund of historical VAT amounts, EUR218 million of VAT receivable and related interest is classified within Other non-current assets as at 1 July 2022. On 29 July 2022, the Arbitration Board provided a ruling which, based on our current interpretation, indicates the regional tax authorities of Bizkaia (Basque Region) as responsible for refunding CCEP. As at the time of issuance of these condensed consolidated interim financial statements, there is uncertainty on the timing of the refund and we consider that the non-current classification remains appropriate. We believe it remains a certainty that the amount due will be refunded to CCEP.
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