TIDMCCH
RNS Number : 7649S
Coca-Cola HBC AG
18 March 2021
Coca-Cola HBC AG
Publishes 2020 integrated annual report
'Adapt to Win'
Zug, Switzerland - 18 March 2021 - Coca-Cola HBC AG today
published its 2020 Integrated Annual Report, Adapt to Win . The
report highlights progress made on all aspects of business,
governance and sustainability during 2020.
You can find our 2020 Integrated Annual Report, ("2020 Annual
Report") here:
https://www.coca-colahellenic.com/en/investor-relations/results-reports-presentations
A copy of the 2020 Annual Report has also been submitted to the
National Storage Mechanism in accordance with Listing Rule 9.6.1
and will shortly be available for inspection at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism .
Printed copies of the 2020 Annual Report will be available on or
around 8 April 2020 and can be requested by shareholders, free of
charge, at
https://www.coca-colahellenic.com/en/investor-relations/order-a-report
The information in the Group's preliminary results announcement
released on 11 February 2020, together with the information set out
in the Appendix to this announcement, which is extracted from the
2020 Annual Report, constitutes the material required by the
Disclosure Guidance and Transparency Rules (DTR 6.3.5R) to be
communicated to the media in unedited full text through a
Regulatory Information Service. Page numbers and notes to the
accounts mentioned in the extracts from the 2020 Annual Report,
refer to page numbers and notes to the accounts in the 2020 Annual
Report. Terms used, but not otherwise defined in this announcement,
have the meanings given to them in the 2020 Annual Report. This
material is not a substitute for reading the full 2020 Annual
Report.
Enquiries
Coca--Cola HBC Group
Investors and Analysts:
Joanna Kennedy Tel: +44 7802 427505
Investor Relations Director joanna.kennedy@cchellenic.com
Carla Fabiano Tel: +44 7808 215245
Investor Relations Manager carla.fabiano@cchellenic.com
Vasso Aliferi Tel: +41 79 610 7881
Investor Relations Manager vasso.aliferi@cchellenic.com
Media:
David Hart Tel: +41 41 726 0143
Group Communication Director david.hart@cchellenic.com
Greek media contact:
V+O Communications Tel: +30 6936750476
Chara Yioti cy@vando.gr
APPIX
1. Principal risks and uncertainties
The principal risks and uncertainties relating to the Company
are as set out in the "Effective management of risk" section of the
2020 Annual Report, pages 54 to 61.
The following is extracted in full and unedited text from the
2020 Annual Report and is repeated here solely for the purpose of
complying with DTR 6.3.5R.
Principal risks
The cyclic review of our principal risks involves an assessment
of the likelihood of their occurrence and their potential
consequences to confirm the level of exposure and evaluate the
strategies to manage them. Our list of principal risks, presented
on pages 58-61, involves a long-term view which evolves over
time.
In 2020, the COVID-19 pandemic had a significant impact on our
business and particularly on two of our principal risks - channel
mix and health and safety. As indicators of the broad impact that
the COVID-19 pandemic might have on our business and our people
began to emerge in early 2020, our Group COVID-19 Operational Task
Force worked closely with Company business units to identify
additional actions to be taken to reduce the impact on our
business.
Restrictions across our markets saw hotels, restaurants and
cafés close down for extended periods of time. This had a
significant impact on one of our primary channels for providing our
products to consumers.
Despite this, our strong relationships with partners and
customers, together with the resilience and adaptability of our
people and our business, enabled us to adjust to meet changing
demand.
Many of our smaller customers, smaller cafés and restaurants for
example, have been severely impacted by the COVID-19 pandemic.
While it increased short-term credit risks, the Company took a
long-term view of the situation, using this time to support many of
our smaller customers and invest in building relationships which
will pay dividends over time.
As noted in our viability statement, while the longer-term
changes to our markets are still uncertain, we are confident that
with the widespread distribution of vaccines and the focus of
governments in our markets on economic recovery, the impact of the
COVID-19 pandemic is likely to dissipate in the short to medium
term.
The health and safety risks to our people of acquiring and
transmitting COVID-19 were considerable, and our Board moved to
prioritise safety in early 2020. Additional measures were put in
place across offices and production & distribution facilities
to reduce the risk of transmission and advice was provided to our
people to reduce the risk of acquiring the disease. Contingency
plans to manage potential staffing shortfalls were established but
not required.
We continue to carefully monitor COVID-19 cases in each market
and investigate increases or unusual concentrations. We have also
learned from what has worked well in certain markets and shared
best practices to safeguard the wellbeing of our employees,
customers and communities.
The changing nature of the workplace, with a dramatic shift to
working from home during 2020, also provided challenges as far as
providing a safe workplace and ensuring additional support for
family care and mental health concerns. The Company encouraged our
employees to access our Employee Assistance Programme to help
support our people through these trying times.
We saw an increase in political and social instability with
hostilities in Armenia and protest activity in Belarus and
Nigeria.This instability increased personal security risks to our
people and had some shortterm operational impacts on our
business.
There is evidence of increasing social discontent and
dissatisfaction with incumbent governments around the world,
particularly amongst younger people who believe that political
leaders are not listening to them or acting quickly enough on
issues that are high on their agenda, including equality and
climate change.
This dissatisfaction may be exacerbated by widening gaps between
groups disproportionally impacted by COVID-19 and governments
introducing additional measures to restore economies. This may lead
to unrest and protest activity creating personal security risks for
our people as well as disruptions to our business.
COVID-19 has led to higher levels of sovereign debt across our
territories, that may slow economic growth and impact consumer
spending. It may also lead to increased corporate taxes and
additional discriminatory taxes such as sugar taxes and
non-recyclable plastics and water levies as governments look to
reduce debt, broaden the tax base and respond to consumer concerns
around health and climate change.
The global geopolitical and macroeconomic environment remains
volatile and complex, with the potential to adversely impact our
business. It therefore remains a focus for our ERM programme.
Cyber security risks increased during the year and that was
reflected in a number of well-publicised attacks against a variety
of companies and industries. The increase in the number of people
working from home increased opportunities for malicious acts. The
Company continued to enhance its IT security programme to mitigate
those risks by aligning with the NIST Cyber Security Framework and
continuously increasing our ability to respond to increasingly
sophisticated cyber attacks by improving our people capabilities,
processes and technology.
In 2020, we retained our focus on managing our key
sustainability risks with continued management attention and
investment in new technologies. Our aim is to reduce the
longer-term impact of climate change on the business, to improve
efficiencies and to reduce our impact on the environment. This
reflects our commitment to our long-term Mission 2025 strategy
despite the shorter-term pressure on our financial resources
resulting from the COVID-19 pandemic.
Access to water is fundamental for healthy communities and the
environment as well as for our operations. Climate change is
impacting the availability of water in some parts of the
territories in which we operate.This may lead to increasing
scarcity, production halts and generally higher costs associated
with water. Failure to decrease our net use of water and contribute
to resolving water challenges for our communities and the
environment could lead to increasing regulatory attention and a
decline in stakeholder trust.
Last year, we renewed our Water stewardship policy. We also
continued to assess the potential impact of climate change on water
availability in regions in which we operate.
We are using tools from recognized organisations, such as the
World Wildlife Federation (WWF) and the World Resource Institute
(WRI), to assess future water risks for different temperature
scenarios.The outcomes are the basis for our long-term management
plans to assure supply and business continuity as well as making a
contribution to water challenges facing our communities.
A broader discussion on our climate-related risks, their link to
materiality, and our risk management approach is provided as part
of our statement on implementing the recommendations of the Task
Force on Climate-related Financial Disclosures located on page
62-63.
Our robust risk management programme is integrated into monthly
business routines and evaluates risks against our business and
strategic priorities, ensuring we remain vigilant to the
uncertainty in our operating environment and can react with greater
speed.
The programme enables us to proactively identify new risks and
opportunities, which in turn allows us to understand threats to our
business viability. This analysis is the key component of our
qualitative review process in support of our viability
statement.
Principal Description Potential Key mitigations Link to Risk
risks impact material Status
issues
1. Sustainability: Concerns -- Decreased -- World Without -- Packaging Increasing
Plastics related to credibility Waste global and waste
and packaging packaging in public vision management
waste waste and discussions -- Mission 2025 -- Sustainable
plastic pollution. -- Long-term packaging related sourcing
damage to commitments
our reputation -- Partnerships
and licence with local communities,
to operate NGOs, start-ups
-- Increased and academia
cost of doing to manage packaging
business, recovery and
including minimise environmental
discriminatory impacts
taxes
-- Loss of
consumer base
-------------------- ------------------ ------------------------ ---------------- -----------
2. Sustainability: The risks -- Commodity -- New science-based -- Climate Increasing
Climate associated availability target for 2030 change
change with unpredictable -- Disruption -- Energy management -- Sustainable
and more of operations programmes and sourcing
volatile and distribution transition to
effects of -- Long-term renewable and
weather. damage to clean energy
Failure to our reputation -- Engagement
reduce carbon and licence and partnering
emissions to operate with local and
along the -- Increased international
value chain. cost of doing stakeholders
business -- Focus on sustainable
procurement
-- Physical risk
analysis including
quantification
and stress testing
in line with
TCFD recommendations
-- Natural disaster
plans in place
across the operations
-------------------- ------------------ ------------------------ ---------------- -----------
Principal Description Potential Key mitigations Link to Risk
risks impact material Status
issues
3. Sustainability: The risks -- Availability -- Source -- Water Increasing
Water availability in our operations, of water for vulnerability stewardship
and usage sourcing the communities assessments (SVAs) -- Sustainable
areas of that we operate to identify and sourcing
raw materials, within and mitigate water
communities the environment supply risks
and the -- Long-term are performed
environment damage to at all plants
related to our reputation -- Alliance for
water and licence water stewardship
availability, to operate certification,
water stress -- Water shortage to identify and
and water for our operations mitigate shared
quality. may lead to water risks in
production the catchment
interruptions areas are performed
-- Increased at all plants
cost of water -- All key
sourcing and water-related
treatment risks are
consolidated
in the water-risk
register and
shared quarterly
with Supply Chain
Management
-- Water usage
reduction plans
and wastewater
discharge monitoring
is implemented
in all plants
-- Water priority
locations are
identified, and
context-based
action plans
are prepared
-- Water stewardship
initiatives and
other forms of
engagement and
partnering with
local and
international
stakeholders
------------------- ---------------------- --------------------- ---------------- -----------
4. Consumer Failure to -- Failure -- Focus on -- Nutrition Increasing
health and adapt to to achieve product -- Product
wellbeing changing our growth innovation and quality
consumer plans expansion to -- Responsible
health trends, -- Long-term a 24/7 beverage marketing
misconceptions damage to portfolio
about the our reputation -- Expand our
health impact and licence range of low-
of our products. to operate and no-calorie
-- Loss of beverages
consumer base -- Introduce
-- Potential smaller packs
imposition -- Reduce the
of discriminatory calorie content
taxation of products in
the portfolio
-- Clearer
labelling
on packaging
-- Promote active
lifestyles through
consumer
engagement
programmes focused
on health and
wellness
-- Address
misconceptions
about the health
impacts of our
products
--------------------- ---------------------- ------------------- ---------------- -----------
Principal Description Potential Key mitigations Link to Risk
risks impact material Status
issues
5. Cyber A cyber attack -- Financial -- Implement -- Economic Increasing
incidents or data centre loss a NIST-aligned impact
failure resulting -- Operational cyber security
in business disruption and privacy control
disruption, -- Damage framework and
or breach to corporate monitor compliance
of corporate reputation -- Safeguard
or personal -- Non-compliance critical IT and
data confidentiality with data operational assets
protection -- Enhanced ability
legislation to detect, respond
(e.g. GDPR) and recover from
cyber incidents
and attacks
-- Foster a positive
culture of cyber
security
-- Monitor threat
landscape and
remediate associated
vulnerabilities
-- Integration
of Cyber Incident
Response Plan
into IMCR Framework
---------------------- ----------------------- ------------------------- -------------- -----------
6. Health The risk -- Death, -- COVID-19 prevention -- Employee Increasing
and safety of health injury or protocol in place wellbeing
and safety disease of across the organisation & engagement
and occupational employees, -- Monitoring
workplace contractors system for internal
incidents or members COVID-19 cases
involving of the public and enhanced
our employees, -- Employee rapid response
contractors engagement to reduce risk
or third-party and motivation of transmission
logistics -- Attraction -- New Group-wide
providers. of talent/prospective policy and supporting
employees materials for
improved mental
health
-- Behavioural-based
Safety Programme
in place at all
our facilities
-- Standardised
programmes, policies
and legislation
applied locally
-- Group oversight
by the Health
and Safety (H&S)
Team
-- H&S Board
with mandate
to accelerate
the H&S step-change
plan implementation
---------------------- ----------------------- ------------------------- -------------- -----------
Principal Description Potential Key mitigations Link to Risk
risks impact material Status
issues
7. Channel The immediate -- Reduced -- Prioritisation -- Economic Increasing
mix consumption availability of assortment impact
channel remains of our portfolio per channel to
under pressure and overall drive higher margin
and accelerated profitability packs
as consumers -- Enhanced
altered consumption marketing
habits and campaigns to capture
shifted occasions growing occasions
from out-of-home of socialising
to at-home. at home accelerated
A continued by COVID-19
increase restrictions
in the concentration -- Refreshed and
of retailers enhanced key account
and independent capabilities and
wholesalers tools to partner
on whom we and grow profitable
depend to revenue with
distribute customers
our products. -- Work closely
with our out-of-home
channel customers
to drive
transactions
and support them
selling online
to more effectively
manage the impact
of COVID-19 or
in their re-opening
as restrictions
ease
-- Accelerate
Right Execution
Daily (RED) to
support our
commitment
to operational
excellence
-- Develop our
digital and
e-commerce
capabilities to
capture
opportunities
associated with
existing and new
distribution
channels
-- Localised
management
plans in specific
countries dependent
on channel impact
and risk and
including
variance in the
impact of COVID-19
restrictions
--------------------- ---------------------- --------------------- -------------- -----------
8. Foreign Foreign exchange Financial -- Treasury policy -- Economic Stable
exchange and commodity loss requires, where impact
and commodity exposure -- Increased possible, the
costs arises from cost base hedging of 25%
changes in -- Asset impairment to 80% of rolling
exchange -- Limitations 12-month forecasted
rates and on cash repatriation transactional
commodity foreign currency
prices. exposure
Currency -- Hedging beyond
devaluation 12 months may
combined occur in exceptional
with capital cases, subject
controls to approval of
restricts Group CFO
movement -- Treasury policy
of funds requires, where
and increases possible, the
the risk hedging of rolling
of asset three-year commodity
impairment. exposures; different
policy limits
apply for each
hedgeable commodity
-- Derivative
financial
instruments
are used, where
available, to
reduce net exposure
to currency and
commodity price
fluctuations
--------------------- ---------------------- --------------------- -------------- -----------
Principal Description Potential Key mitigations Link to Risk
risks impact material Status
issues
--------------------- ---------------------- --------------------- -------------- -----------
9. Geopolitical Volatile -- Eroded -- Seek to offer -- Economic Increasing
and macroeconomic and challenging consumer confidence the right brand impact
macroeconomic, affecting at the right price -- Corporate
security discretionary in the right package citizenship
and geopolitical spending through the right -- Employee
conditions -- Potential channel wellbeing
together imposition -- Robust security & engagement
with adverse of discriminatory practices and
global events taxation procedures to
including -- Inflationary protect people
health-related pressures and assets
issues can -- Social -- Crisis response
affect consumer unrest and business
demand and -- Safety continuity
create security of people strategies that
risks across and assets enable effective
our diverse responses to adverse
markets. events
--------------------- ---------------------- --------------------- -------------- -----------
10. People Inability -- Failure -- Upgrade our -- Employee Stable
to attract, to achieve Employer Value wellbeing
retain and our growth Proposition and & engagement
engage sufficient plans Employer Brand -- Human
numbers of -- Develop leaders rights,
qualified and people for diversity
and experienced key positions & inclusion
employees internally, improve -- Corporate
in highly leaders' skills citizenship
competitive and commitment
talent markets. for talent
development
-- Continuous
employee listening
to address culture
and engagement
effectively
-- Promote an
inclusive
environment
that allows all
employees to achieve
their full potential
-- Create shared
value with the
communities in
which we work
to ensure we are
seen and considered
as an ethical
business with
an attractive
purpose
-- Expand talent
pool by hiring
more diverse
workforce
--------------------- ---------------------- --------------------- -------------- -----------
11. Quality The occurrence Damage to -- Stringent -- Product Stable
of quality/food brand and quality/food quality
safety issues, corporate safety processes
or the contamination reputation in place to minimise
of our products -- Loss of the likelihood
across our consumer trust of occurrence
diverse -- Reduction -- Early warning
brand portfolio. in volume systems that enable
and net sales fast issue
revenue identification
-- Robust response
processes and
systems that enable
us to quickly
and efficiently
deal with
quality/food
safety issues,
ensuring customers
and consumers
retain confidence
in our products
--------------------- ---------------------- --------------------- -------------- -----------
Principal Description Potential Key mitigations Link to Risk
risks impact material Status
issues
12. Ethics The risk -- Damage -- Annual 'Tone -- Corporate Stable
and compliance of fraud to our corporate from the Top' governance
against the reputation messaging
Company as -- Significant -- Code of Business
well as risk financial Conduct, ABAC
of Anti-Bribery penalties and commercial
and Corruption -- Management compliance training
(ABAC) fines time diverted and awareness
or sanctions to resolving campaigns for
if our employees, legal issues our entire workforce,
or the third -- Economic training on international
parties we loss because sanctions for
engage to of fraud and our employees
deal with reputational exposed to this
governments, damages, fines risk
fail to comply and penalties, -- All third parties
with ABAC in the event that we engage
requirements. of non -- must comply with
The risk compliance our Supplier Guiding
of inadvertent Principles, which
non-compliance include ABAC and
with international international
sanctions sanctions compliance
in certain -- All third parties
countries. that we engage
to deal with governments
on our behalf
are subject to
ABAC due diligence.
Screening of third
parties and transactions
potentially exposed
to international
sanctions risk
-- Cross-functional
Joint Task Forces
in Nigeria and
Russia that proactively
address risks
in our key operations
-- Risk-based
internal control
framework and
assurance programme
with local management
accountability
-- Periodic risk-based
internal audits
of ABAC compliance
programme
-- 'Speak Up Hotline'
-------------------- ---------------------- ----------------------------- ------------- --------
13. Strategic We rely on -- Termination -- Management -- Economic Stable
stakeholder our strategic of agreements focus on effective impact
relationships relationships or unfavourable day-to-day interaction --Corporate
and agreements renewal terms with our strategic governance
with The couldadversely partners
Coca-Cola affect profitability -- Working together
Company (including as effective partners
Costa Coffee), for growth
Monster Energy -- Engagement
and our premium in joint projects
spirits partners. and business planning
with a focus on
strategic issues
-- Participation
in 'Top to Top'
senior management
forums
-------------------- ---------------------- ----------------------------- ------------- --------
2. Directors' responsibility statement
The following statement relates to and is extracted from the
2020 Annual Report, page 131. It is repeated here solely for the
purpose of complying with DTR 6.3.5R. It is not connected to the
extracted information presented in this announcement or in the
Company's results announcement published on 11 February 2021.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report,
including the consolidated Financial Statements, and the Corporate
Governance Report including the Remuneration Report and the
Strategic Report, in accordance with applicable law and
regulations.
The Directors, whose names and functions are set out on pages
80-82, confirm to the best of their knowledge that:
(a) The Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary for
shareholders to assess the Group's position and performance,
business model and strategy.
(b) The consolidated Financial Statements, which have been
prepared in accordance with International Financial Reporting
Standards, as issued by the IASB, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Company and the undertakings included in the consolidation of the
Group taken as a whole.
(c) The Annual Report includes a fair review of the development
and performance of the business and the position of the Company and
the undertakings included in the consolidated Coca-Cola HBC Group
taken as a whole, together with a description of the principal
risks and uncertainties that they face.
The activities of the Group, together with the factors likely to
affect its future development, performance, financial position,
cash flows, liquidity position and borrowing facilities are
described in the Strategic Report (pages 10 to 72). In addition,
Notes 24 'Financial risk management and financial instruments', 25
'Net debt', and 26 'Equity' include: the Company's objectives,
policies and processes for managing its capital; its financial risk
management objectives; details of its financial instruments and
hedging activities; and its exposures to credit risk and liquidity
risk. The Group has considerable financial resources, together with
long-term contracts with a number of customers and suppliers across
different countries. The Directors have also assessed the principal
risks and the other matters discussed in connection with the
Viability Statement on page 57. The Directors considered it
appropriate to adopt the going concern basis of accounting in
preparing the annual Financial Statements and have not identified
any material uncertainties to the Group's ability to continue to do
so over a period of at least 12 months from the date of approval of
these financial statements.
By order of the Board
Anastassis G. David
Chairman of the Board
18 March 2021
About Coca--Cola HBC
Coca-Cola HBC is a growth-focused CPG business and strategic
bottling partner of The Coca-Cola Company. We create value for all
our stakeholders by supporting the socio-economic development of
the communities in which we operate and we believe building a more
positive environmental impact is integral to our future growth.
Together, we and our customers serve more than 600 million
consumers across a broad geographic footprint of 28 countries on 3
continents. Our portfolio is one of the strongest, broadest and
most flexible in the beverage industry, offering consumer-leading
partner brands in the sparkling, juice, water, sport, energy,
plant-based, ready-to-drink tea, coffee, adult sparkling and
premium spirits categories. These brands include Coca-Cola,
Coca-Cola Zero, Schweppes, Kinley, Royal Bliss, Costa Coffee,
Valser, Romerquelle, Fanta, Sprite, Powerade, FuzeTea, Dobry,
Cappy, Monster and Adez. We foster an open and inclusive work
environment amongst our more than 27,000 employees and we are
ranked among the top sustainability performers in ESG benchmarks
such as the Dow Jones Sustainability Indices, CDP, MSCI ESG and
FTSE4Good.
Coca-Cola HBC has a premium listing on the London Stock Exchange
(LSE:CCH) and is listed on the Athens Exchange (ATHEX:EEE). For
more information, please visit http://www.coca-colahellenic.com
.
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