REG - Coca-Cola HBC AG - 2014 Half Yearly Financial Report <Origin Href="QuoteRef">CCH.L</Origin> - Part 2
29/10/2014 11:40
- Part 2: For the preceding part double click ID:nRSK7106Oa
- (124.7) - - - - 1.2 (123.5) (4.5) (128.0)
1,992.5 5,280.0 (6,472.1) (70.7) (168.1) 380.5 1,892.9 2,835.0 5.1 2,840.1
Profit for the period net of tax - - - - - - 65.6 65.6 (0.1) 65.5
Other comprehensive income for the period, net of tax - - - - (68.9) 11.5 16.3 (41.1) - (41.1)
Total comprehensive income for the period, net of tax(1) - - - - (68.9) 11.5 81.9 24.5 (0.1) 24.4
Balance as at 28 June 2013 1,992.5 5,280.0 (6,472.1) (70.7) (237.0) 392.0 1,974.8 2,859.5 5.0 2,864.5
Shares issued to employees exercising stock options 4.9 7.1 - - - - - 12.0 - 12.0
Share-based compensation:
Options - - - - - 4.2 - 4.2 - 4.2
Movement in treasury shares - - - - - (0.1) - (0.1) - (0.1)
Hyperinflation impact - - - - - - (0.3) (0.3) - (0.3)
Appropriation of reserves - - - - - (1.5) 1.5 - - -
Dividends - - - - - - (0.2) (0.2) - (0.2)
1,997.4 5,287.1 (6,472.1) (70.7) (237.0) 394.6 1,975.8 2,875.1 5.0 2,880.1
Profit for the period net of tax - - - - - - 155.6 155.6 0.1 155.7
Other comprehensive income for the period, net of tax - - - - (56.3) (5.9) (6.3) (68.5) - (68.5)
Total comprehensive income for the period, net of tax - - - - (56.3) (5.9) 149.3 87.1 0.1 87.2
Balance as at 31 December 2013 1,997.4 5,287.1 (6,472.1) (70.7) (293.3) 388.7 2,125.1 2,962.2 5.1 2,967.3
(1)The amount included in the exchange equalisation reserve of E68.9
million loss for the first half of 2013 represents the exchange loss
attributed to the owners of the parent of E68.7 million plus the share of
equity method investments of E0.2 million loss.
The amount included in other reserves of E11.5 million gain for the first half
of 2013 consists of gains on valuation of available-for-sale financial assets
of E0.3 million, cash flow hedges gain of E13.2 million (of which E6.6 million
represents revaluation gains for the period and E6.6 million represents
revaluation losses reclassified to profit and loss for the period) and the
deferred income tax charge of E2.0 million.
The amount of E81.9 million gain comprises a gain for the period of E65.6
million, plus the actuarial gains of E19.7 million less deferred income tax
charge of E3.4 million.
The amount of E0.1 million loss included in non-controlling interests for the
first half of 2013 represents the share of non-controlling interests in the
retained earnings.
(2) As these condensed consolidated interim financial statements are a
continuation of the consolidated financial statements of Coca-Cola Hellenic
Bottling Company S.A., for the period 1 January 2012 to 25 April 2013 these
components of equity reflect the capital structure of Coca-Cola Hellenic
Bottling Company S.A. and following the reorganisation reflect the capital
structure of Coca-Cola HBC AG.
Condensed consolidated interim statement of changes in equity (unaudited)
SharecapitalE million SharepremiumE million GroupReorganizationreserveE million Treasuryshares E million ExchangeEqualizationreserveE million OtherreservesE million RetainedearningsE million TotalE million Non-Controllinginterests E million Totalequity E million
Balance as at 1 January 2014 1,997.4 5,287.1 (6,472.1) (70.7) (293.3) 388.7 2,125.1 2,962.2 5.1 2,967.3
Shares issued to employees exercising stock options 0.3 0.3 - - - - - 0.6 - 0.6
Share-based compensation:
Options - - - - - 6.7 - 6.7 - 6.7
Movement in treasury shares - - - - - (1.9) - (1.9) - (1.9)
Hyperinflation impact - - - - - - 2.1 2.1 - 2.1
Appropriation /transfer of reserves - - - - - (134.3) 134.3 - - -
Dividends (note 13) - (130.2) - - - - 1.2 (129.0) - (129.0)
1,997.7 5,157.2 (6,472.1) (70.7) (293.3) 259.2 2,262.7 2,840.7 5.1 2,845.8
Profit for the period net of tax - - - - - - 95.1 95.1 - 95.1
Other comprehensive income for the period, net of tax(3) - - - - (46.2) (3.8) (17.7) (67.7) - (67.7)
Total comprehensive income for the period net of tax - - - - (46.2) (3.8) 77.4 27.4 - 27.4
Balance as at 27 June 2014 1,997.7 5,157.2 (6,472.1) (70.7) (339.5) 255.4 2,340.1 2,868.1 5.1 2,873.2
(3)The amount included in the exchange equalisation reserve of E46.2 million
loss for the first half of 2014 represents the exchange loss attributed to the
owners of the parent of E46.3 million plus the share of equity method
investments of E0.1 million gain.
The amount included in other reserves of E3.8 million loss for the first half
of 2014 consists of gains on valuation of available-for-sale financial assets
of E0.1 million, cash flow hedges losses of E5.1 million (of which E6.7
million represents revaluation loss for the period, E3.8 million represents
revaluation loss reclassified to profit and loss for the period and E2.2
million represents revaluation gains reclassified to inventory for the period)
and the deferred income tax credit of E1.2 million.
The amount of E77.4 million gain comprises a gain for the period of E95.1
million plus actuarial loss of E22.0 million less deferred income tax credit
of
E4.3 million.
Condensed consolidated interim cash flow statement (unaudited)
Note Six months to Six months to
27 June 2014E million 28 June 2013E million
Operating activities
Profit after tax for the period 95.1 65.5
Total finance costs, net 8 38.9 49.4
Share of results of equity method investments (4.0) (4.4)
Tax charged to the income statement 34.1 23.5
Depreciation of property, plant and equipment 4 176.7 191.2
Employee share options 6.7 2.1
Amortisation of intangible assets 4 0.2 0.6
347.7 327.9
Gains on disposal of non-current assets (2.6) (2.7)
Increase in inventories (135.8) (138.6)
Increase in trade and other receivables (194.6) (139.8)
Increase in trade and other payables 241.8 222.5
Tax paid (21.6) (19.5)
Net cash from operating activities 234.9 249.8
Investing activities
Payments for purchases of property, plant and equipment (137.3) (146.9)
Payments for purchase of intangible assets 17 (14.1) -
Proceeds from sales of property, plant and equipment 3.8 2.7
Net receipts from / (payments for) investments 1.2 (6.1)
Interest received 4.5 2.7
Net cash used in investing activities (141.9) (147.6)
Financing activities
Payments for buy-out minorities of Coca-Cola Hellenic Bottling Company SA - (1.0)
Proceeds from shares issued to employees exercising stock options 0.6 4.4
Purchase of shares held by non-controlling interests 12 - (15.3)
Dividends paid - (4.5)
Proceeds from external borrowings 647.0 1,226.8
Repayments of external borrowings (858.8) (609.3)
Principal repayments of finance lease obligations (6.6) (8.0)
Interest paid (54.8) (73.0)
Net cash (used in)/ from financing activities (272.6) 520.1
(Decrease) / increase in cash and cash equivalents (179.6) 622.3
Movement in cash and cash equivalents
Cash and cash equivalents at 1 January 737.5 439.1
(Decrease) / increase in cash and cash equivalents (179.6) 622.3
Effect of changes in exchange rates (1.3) -
Effect of consolidation of Coca-Cola HBC AG - 1.8
Hyperinflation impact on cash 0.5 0.3
Cash and cash equivalents at the end of the period 557.1 1,063.5
Selected explanatory notes to the condensed consolidated interim financial
statements (unaudited)
1. Accounting policies
The accounting policies used in the preparation of the condensed consolidated
interim financial statements of Coca-Cola HBC AG ('Coca-Cola HBC', the
'Company' or the 'Group') are consistent with those used in the annual
financial statements for the year ended 31 December 2013, except for the
adoption, as of 1 January 2014, the amendment to IAS 32 Financial Statement
Presentation, on asset and liability offsetting; amendment to IAS 36
Impairment of assets, on recoverable amount disclosures; amendment to IAS 39
Financial Instruments: Recognition and Measurement, on novation of
derivatives, and IFRIC 21 Levies. The adoption of the new interpretation and
amended standards did not have a significant impact on the current or prior
periods.
Basis of preparation
Operating results for the second quarter of 2014 are not indicative of the
results that may be expected for the year ending 31 December 2014 because of
business seasonality. Business seasonality results from higher unit sales of
the Group's products in the warmer months of the year. The Group's methods of
accounting for fixed costs such as depreciation and interest expense are not
significantly affected by business seasonality.
Costs that are incurred unevenly during the financial year are anticipated or
deferred in the interim report only if it would also be appropriate to
anticipate or defer such costs at the end of the financial year.
Taxes on income in the interim periods are accrued using the tax rate that
would be applicable to expected total annual profit or loss.
These condensed consolidated interim financial statements are prepared in
accordance with International Financial Reporting Standards ("IFRS") as issued
by the International Accounting Standards Board ("IASB") applicable to Interim
Financial Reporting ("IAS 34"). These condensed consolidated interim financial
statements should be read in conjunction with the 2013 annual financial
statements, which include a full description of the Group's accounting
policies.
Exchange rates
The Group's reporting currency is the euro (E). Coca-Cola HBC translates the
income statements of subsidiary operations to the euro at average exchange
rates and the balance sheet at the closing exchange rate for the period,
except for subsidiaries operating in a hyperinflationary environment as
explained in Note 8.
The principal exchange rates used for transaction and translation purposes in
respect of one euro were:
Average for the six months period ended Closing as at
27 June 2014 28 June 2013 27 June 2014 31 December 2013
US dollar 1.37 1.31 1.36 1.38
UK sterling 0.82 0.85 0.80 0.84
Polish zloty 4.17 4.19 4.15 4.15
Nigerian naira 213.57 203.87 211.90 214.41
Hungarian forint 307.53 295.90 306.09 296.36
Swiss franc 1.22 1.23 1.22 1.23
Russian Rouble 47.74 40.68 46.19 44.98
Romanian leu 4.47 4.38 4.39 4.46
Serbian dinar 115.69 111.94 115.54 114.62
Czech koruna 27.45 25.75 27.43 27.48
Ukrainian hryvnia 14.25 10.46 16.18 10.94
3. Segmental analysis
The Group has one business, being the production, sale and distribution of
ready -to- drink primarily non-alcoholic, beverages. The Group operates in 28
countries and its financial results are reported in the following three
reportable segments:
Established markets: Austria, Cyprus, Greece, Italy, Northern Ireland, Republic of Ireland and Switzerland.
Developing markets: Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia.
Emerging markets: Armenia, Belarus, Bosnia and Herzegovina, Bulgaria, FYROM, Moldova, Montenegro, Nigeria, Romania, the Russian Federation, Serbia (including the Republic of Kosovo) and Ukraine.
Emerging markets:
Armenia, Belarus, Bosnia and Herzegovina, Bulgaria, FYROM, Moldova,
Montenegro, Nigeria, Romania, the Russian Federation, Serbia (including the
Republic of Kosovo) and Ukraine.
Information on the Group's segments is as follows:
Three months ended Six months ended
27 June 2014 28 June 2013 27 June 2014 28 June 2013
Volume in unit cases(1) (million)
Established countries 174.6 177.5 305.9 319.4
Developing countries 100.3 105.5 170.3 182.3
Emerging countries 285.7 294.7 494.0 502.7
Total volume 560.6 577.7 970.2 1,004.4
Net sales revenue (E million)
Established countries 700.1 697.2 1,228.0 1,267.7
Developing countries 299.5 308.5 504.7 525.7
Emerging countries 852.4 943.5 1,450.4 1,587.7
Total net sales revenue 1,852.0 1,949.2 3,183.1 3,381.1
Operating profit (E million)
Established countries 70.0 30.5 58.9 33.9
Developing countries 32.8 15.4 22.8 0.5
Emerging countries 90.5 99.4 82.4 99.6
Total operating profit 193.3 145.3 164.1 134.0
Reconciling items (E million)
Finance costs, net (18.4) (29.7) (38.9) (49.4)
Tax (44.3) (30.1) (34.1) (23.5)
Share of results of equity method investments 3.8 4.4 4.0 4.4
Non-controlling interests (0.1) 0.1 - 0.1
Profit after tax attributable to owners of the parent 134.3 90.0 95.1 65.6
(1) One unit case corresponds to approximately 5.678 litres or 24 servings, being a typically used measure of volume. Volume data is derived from unaudited operational data.
4. Tangible and intangible assets
Property, plant and equipment E million Intangible assets E million
Opening net book value as at 1 January 2014 2,901.9 1,921.3
Additions 137.3 14.1
Disposals (1.6) -
Depreciation and amortisation (176.7) (0.2)
Foreign exchange differences (46.3) (1.3)
Effect of hyperinflation 0.3 -
Closing net book value as at 27 June 2014 2,814.9 1,933.9
5. Net debt
As at
27 June 2014E million 31 December 2013E million
Long-term borrowings 1,855.0 1,853.6
Short-term borrowings 228.0 446.2
Cash and cash equivalents (557.1) (737.5)
Net debt 1,525.9 1,562.3
During January 2014, the remaining amount of the E500 million bond issued on
2008 (E317.0 million) was repaid using part of the cash balance.
6. Fair value
The Group's activities expose it to a variety of financial risks: market risk
(including currency risk, interest rate risk, and commodity price risk),
credit risk, liquidity risk and capital risk. There have been no changes in
the risk management policies since the year end.
The Group's financial instruments recorded at fair value are included in Level
2 within the fair value hierarchy and comprise derivatives. There have been no
changes in valuation techniques and inputs used to determine their fair value
since 31 December 2013 (as described in the 2013 Annual Report available on
the Coca-Cola HBC's web site: www.coca-colahellenic.com). As at 27 June 2014,
the total financial assets included in Level 2 was E20.9 million and the total
financial liabilities E86.1 million.
There were no transfers between level 1, 2 and 3 during the first half of
2014. The fair value of bonds and notes payable as at 27 June 2014, including
the current portion, is E1,790.0 million, compared to their book value of
E1,695.6 million, including the current portion.
7. Restructuring costs
Restructuring costs amounted to E5.1 million before tax in the second quarter
of 2014. The Group recorded E1.1 million, E0.3 million and E3.7 million of
restructuring charges in its established, developing and emerging countries
respectively. For the second quarter of 2013, restructuring costs amounted to
E16.2 million, of which E14.9 million, E0.3 million and E1.0 million related
to the Group's established, developing and emerging countries, respectively.
The restructuring costs mainly concern redundancy costs.
Restructuring costs amounted to E11.9 million before tax in the first half of
2014. The Group recorded E5.8 million, E1.1 million and E5.0 million of
restructuring charges in its established, developing and emerging countries
respectively. For the first half of 2013, restructuring costs amounted to
E22.4 million, of which E21.0 million, E0.3 million and E1.1 million related
to the Group's established, developing and emerging countries, respectively.
The restructuring costs mainly concern redundancy costs.
8. Total finance costs, net
Three months ended
27 June 2014E million 28 June 2013E million
Interest income (2.4) (2.6)
Finance costs 17.4 31.8
Net foreign exchange losses 1.9 0.5
Loss on net monetary position 1.5 -
Total finance costs, net 18.4 29.7
Six months ended
27 June 2014E million 28 June 2013E million
Interest income (4.7) (4.1)
Finance costs 34.4 52.8
Net foreign exchange losses/(gains) 6.7 (0.3)
Loss on net monetary position 2.5 1.0
Total finance costs, net 38.9 49.4
Total net finance costs for the second quarter and first half of 2014 were
lower by E11.3 million and E10.5 million respectively, compared to the same
prior year periods, mainly due to the one-off impact of the tender of the E500
million Bond (fully repaid in January) incurred in June 2013.
Hyperinflation
Belarus has been considered to be a hyperinflationary economy since the fourth
quarter of 2011. The three year cumulative inflation exceeded 100% and
therefore Belarus was consolidated in terms of the measuring unit at the
balance sheet date and translated at the closing exchange rate. The
restatement was based on conversion factors derived from the Belarus Consumer
Price Index (CPI) as compiled by the National Statistical Committee of the
Republic of Belarus. The conversion factor used for June 2014 was 1.101 which
resulted in a net monetary loss for the first half of 2014 of E2.5 million.
Selected explanatory notes to the condensed consolidated interim financial
statements (unaudited)
9. Tax
The Group's effective tax rate for 2014 may differ from the parent company
statutory tax rate as a consequence of a number of factors, the most
significant of which are: the statutory tax rates of the countries in which
the Group operates, the non-deductibility of certain expenses, non-taxable
income and one off tax items.
10. Earnings per share
Basic earnings per share is calculated by dividing the net profit attributable
to the owners of the parent by the weighted average number of shares
outstanding during the period (second quarter of 2014: 364,284,408, first half
of 2014: 364,287,740, second quarter of 2013: 363,203,865, first half of 2013:
363,164,293). Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume conversion of
all dilutive ordinary shares arising from exercising employee stock options.
11. Share capital
On 25 April 2013, Coca-Cola HBC acquired 96.85% (355,009,014 shares) of the
issued Coca-Cola Hellenic Bottling Company SA ("CCHBC SA") shares, including
shares represented by American depositary shares, following the successful
completion of its voluntary share exchange offer and became the new parent
company of the Group.
On 17 June 2013, Coca-Cola HBC completed its statutory buy-out of the
remaining shares of CCHBC SA that it did not acquire upon completion of its
voluntary share exchange offer. Consequently, CCHBC SA is now a 100% owned
subsidiary of Coca-Cola HBC. Out of the remaining 3.15% interest acquired in
CCHBC SA, representing 11,544,493 shares, 11,467,206 shares were exchanged for
equal number of Coca-Cola HBC shares and 77,287 shares were acquired for a
cash consideration of E1.0 million.
In 2013, the share capital of Coca-Cola HBC increased by the issue of
1,199,080 new ordinary shares following the exercise of stock options pursuant
to the Coca-Cola HBC AG's employees' stock option plan. Total proceeds from
the issuance of the shares under the stock option plan amounted to E16.4
million.
In the first quarter of 2014, the share capital of Coca-Cola HBC increased by
the issue of 38,245 new ordinary shares following the exercise of stock
options pursuant to the Coca-Cola HBC AG's employees' stock option plan. Total
proceeds from the issuance of the shares under the stock option plan amounted
to E0.4 million.
In the second quarter of 2014, the share capital of Coca-Cola HBC increased by
the issue of 18,663 new ordinary shares following the exercise of stock
options pursuant to the Coca-Cola HBC AG's employees' stock option plan. Total
proceeds from the issuance of the shares under the stock option plan amounted
to E0.2 million.
Following the above changes, and including 3,445,060 ordinary shares held as
treasury shares, out of which 14,925 shares represent the initial ordinary
shares of Coca-Cola HBC, on 27 June 2014 the share capital of the Group
amounted to E1,997.7 million and comprised 367,747,133 shares with a nominal
value of CHF 6.70 each.
12. Non-controlling interests
On 8 June 2011, the Board of Directors of the Coca-Cola HBC's subsidiary
Nigerian Bottling Company plc ("NBC") resolved to propose a scheme of
arrangement between NBC and its minority shareholders, involving the
cancellation of part of the share capital of NBC. The transaction was approved
by the Board of Directors and General Assembly of NBC on 8 June 2011 and 22
July 2011 respectively and resulted in the acquisition of the remaining 33.6%
of the voting shares of NBC bringing the Group's interest in the subsidiary to
100%. The transaction was completed in September 2011 and NBC was de-listed
from the Nigerian Stock Exchange. The consideration for the acquisition of non
controlling interests was E100.2million, including transaction costs of
E1.8million, out of which E75.2 million was paid as of 27 June 2014 (as of 31
December 2013: E75.2 million). The difference between the consideration and
the carrying value of the interest acquired (E60.1million) has been recognised
in retained earnings while the accumulated components recognised in other
comprehensive income have been reallocated within the equity of the Group.
On 14 January 2013, the Group acquired 14% of Coca-Cola Hellenic Bottling
Company Bulgaria AD, bringing the Group's interest in the subsidiary to
99.39%. The consideration paid for the acquisition of non controlling
interests acquired was E13.3 million and the carrying value of the additional
interest acquired was E8.2 million. The difference between the consideration
and the carrying value of the interest acquired has been recognised in
retained earnings.
13. Dividends
The shareholders of Coca-Cola HBC AG approved the dividend distribution of
0.354 euro cents per share at the Annual General Meeting held on 25 June 2014.
The total dividend amounted to E130.2 million and was paid on 29 July 2014.
On 19 June 2013, the extraordinary general meeting of Coca-Cola HBC AG
approved the distribution of a E0.34 dividend per share. The total dividend
amounted to E124.7 million and was paid on 23 July 2013.
14. Contingencies
There have been no significant changes in contingencies since 31 December 2013
(as described in the 2013 UK Annual Financial Report available on the
Coca-Cola Hellenic's web site: www.coca-colahellenic.com).
15. Commitments
As of 27 June 2014 the Group has capital commitments of E118.2 million (31
December 2013: E80.0 million), which mainly relate to plant and machinery
equipment.
16. Number of employees
The average number of full-time equivalent employees in the first half of 2014
was 36,857 (38,167 for the first half of 2013).
17. Related party transactions
a) The Coca-Cola Company
As at 27 June 2014, The Coca-Cola Company and its subsidiaries (collectively,
'TCCC") indirectly owned 23.1% (2013: 23.2%) of the issued share capital of
Coca-Cola HBC.
Total purchases of concentrate, finished products and other materials from
TCCC and its subsidiaries during the first half and the second quarter of 2014
amounted to E746.7 million and E421.4 million (E715.8 million and E394.2
million in the respective prior year period). Total net contributions received
from TCCC for marketing and promotional incentives during the same period
amounted to E30.6 million and E21.2 million (E42.1 million and E26.4 million
in the respective prior year period).
During the first half and the second quarter of 2014, the Group sold E11.9
million and E7.0 million of finished goods and raw materials respectively to
TCCC (E13.8 million and E7.7 million in the respective prior year period)
while other income from TCCC was E8.6 million and E5.1 million respectively
(E9.2 million and E7.5 million in the prior year period). Other expenses from
TCCC amounted to E0.1 million and nil for the first half and second quarter of
2014 (E2.6 million and E1.3 million in the respective prior year periods).
As at 27 June 2014, the Group had a total amount of E88.2 million (E73.6
million as at 31 December 2013) due from TCCC, and had a total amount of
E272.4 million (E215.4 million as at 31 December 2013) due to TCCC.
An amount of E14.1 million was paid to TCCC in the second quarter of 2014 in
relation to the acquisition of certain intangible assets.
b) Kar-Tess Holding
Frigoglass S.A. ('Frigoglass')
Frigoglass, a company listed on the Athens Exchange, is a manufacturer of
coolers, cooler parts, glass bottles, crowns and plastics. Truad Verwaltungs
AG, in its capacity as trustee of a private discretionary trust established
for the primary benefit of present and future members of the family of the
late Anastasios George Leventis, currently indirectly owns 44.5% of Frigoglass
through Torval Investment Corp., Lavonos Limited, Thrush Investments Holdings,
Tinola Holdings S.A., Boval Limited, Boval S.A., Rondo Holding S.A. and Eagle
Enterprises A.E. Truad Verwaltungs AG, in its capacity as trustee of a private
discretionary trust established for the primary benefit of present and future
members of the family of the late Anastasios George Leventis, holds 100% of
the share capital of Torval Investment Corp., whose 100% owned subsidiary
Lavonos Limited holds 100% of the share capital of Boval Limited as nominee
for Torval Investment Corp, where Boval Limited controls its 100% owned
subsidiary Boval S.A., which controls Kar Tess Holding, which holds
approximately 23.2% (2013: 23.2%) of Coca Cola HBC's total issued capital.
Frigoglass has a controlling interest in Frigoglass Industries Limited, a
company in which Coca-Cola HBC has a 23.9% effective interest, through its
investment in NBC.
During the first half and the second quarter of 2014, the Group made purchases
of E41.9 million and E32.2 million respectively (E63.9 million and E40.4
million in the prior-year periods) of coolers, raw materials and containers
from Frigoglass and its subsidiaries and incurred maintenance and other
expenses of E6.5 million and E4.9 million respectively (E5.1 million and E2.5
million in the prior-year periods). The Group did not record any other income
from Frigoglass both during the first half and the second quarter of 2014
(E0.1 million for both prior-year periods under review). As at 27 June 2014,
Coca-Cola HBC owed E20.1 million (E11.7 million as at 31 December 2013) to,
and was owed E0.5 million (E0.5 million as at 31 December 2013) by
Frigoglass.
c) Other related parties
During the first half and the second quarter of 2014, the Group purchased
E60.9 million and E39.5 million of raw materials and finished goods
respectively (E66.8 million and E42.3 million in the prior year period). In
addition, the Group did not receive reimbursement for direct marketing
expenses for both of the first half and the second quarter of 2014 (E0.4
million for both prior year periods under review). Furthermore the Group added
E1.0 million tangible fixed assets during the first half and the second
quarter of 2014, (nil for both prior year periods under review). During the
first half and the second quarter of 2014 the Group incurred other expenses of
E17.8 million and E9.2 million (E18.6 million and E9.9 million in the prior
year period) and recorded income of E0.3 million and E0.2 million respectively
(E3.4 million and E0.3 million in the prior year period). As at 27 June 2014,
the Group owed E24.1 million (E6.8 million as at 31 December 2013) to, and was
owed E5.4 million (E5.7 million as at 31 December 2013) by other related
parties.
d) Joint Ventures
During the first half and the second quarter of 2014, the Group purchased
E10.8 million and E7.0 million of finished goods (E13.1 million and E7.8
million in the prior-year periods) from joint ventures. In addition, during
the first half and the second quarter of 2014, the Group incurred expenses of
E0.4 million and E0.2 million (E0.2 million and E0.1 respectively in the
prior-year periods) and recorded other income for the first half and the
second quarter of E0.8 million and E0.4 from joint ventures (E0.2 million and
nil in the prior-year periods). As at 27 June 2014, the Group owed E66.4
million (E63.6 million as at 31 December 2013) to, and was owed E10.4 million
(E9.1 million as at 31 December 2013) by joint ventures.
There were no transactions between Coca-Cola HBC and the directors and senior
management except for remuneration for the period ended 27 June 2014, as well
as the prior year period.
There were no other significant transactions with related parties for the
period ended 27 June 2014.
18. Recent developments in Ukraine and the Russian Federation
We disclosed in our financial statements and annual report for the year ended
31 December 2013 information on the recent events involving Ukraine and the
Russian Federation, including those related to the Crimean peninsula, which
have among other things resulted in the depreciation of the Russian Ruble and
the Ukrainian Hryvnia. The ongoing situation in Ukraine and the Russian
Federation, and any further economic sanctions that may be imposed on the
Russian Federation by the US and the European Union, could adversely affect
the Group's operational and financial performance. We are continuously
monitoring developments in that region.
19. Subsequent events
Following the 27 June 2014 the Group incurred E16.7m of restructuring costs
before tax in its established markets.
Explanatory Notes
Adjusted EBITDA
The Group defines Adjusted EBITDA as operating profit before deductions for
depreciation and impairment of property, plant and equipment, amortisation of
intangible assets, impairment of intangible assets, stock option compensation
and other non-cash items. Adjusted EBITDA serves as an additional indicator of
the Group's operating performance and not as a replacement for measures such
as cash flows from operating activities and operating profit as defined and
required under IFRS. The Group believes that Adjusted EBITDA is useful to
investors as a measure of its operating performance because it reflects the
underlying operating cash costs by eliminating the non-cash items listed
above. In addition, the Group believes that although EBITDA is a measure
commonly used by analysts and investors in its industry, current shareholders
of CCH and potential investors in CCH use multiples of the Group's Adjusted
EBITDA in making investment decisions about CCH. Accordingly, the Group has
disclosed this information to permit a more complete analysis of its operating
performance. Adjusted EBITDA, as calculated by the Group, may not be
comparable to similarly titled measures reported by other companies.
Capital expenditure
The Group defines capital expenditure as payments for purchases of property,
plant and equipment, net of proceeds from sale of property, plant and
equipment, including principal repayments of finance lease obligations.
Free cash flow
The Group defines free cash flow as the net cash from operating activities
less capital expenditures.
The financial measures adjusted EBITDA, capital expenditure and free cash flow
consist of the following reported amounts in the condensed consolidated
interim financial statements:
Three months ended
27 June 2014 28 June 2013
Profit after tax (Em)...................................................................... 134.4 89.9
Tax charged to the income statement (Em)..................................... 44.3 30.1
Total finance costs, net (Em).......................................................... 18.4 29.7
Share of results of equity method investments (Em)........................ (3.8) (4.4)
Operating profit (Em)................................................................... 193.3 145.3
Depreciation of property, plant and equipment (Em)......................... 86.3 97.5
Amortisation of intangible assets (Em)............................................ 0.1 0.3
Employee share options (Em).......................................................... 3.2 1.5
Adjusted EBITDA (Em)................................................................... 282.9 244.6
(Gains) / losses on disposal of non-current assets (Em).................... (1.5) (1.4)
(Increase) / decrease in working capital (Em).................................. (1.8) 1.3
Tax paid (Em)................................................................................. (10.6) (7.1)
Net cash from operating activities (Em)............................................ 269.0 237.4
Payments for purchases of property, plant and equipment (Em)........ (91.7) (97.4)
Principal repayments of finance lease obligations (Em) .................... (3.4) (4.1)
Proceeds from sale of property, plant and equipment (Em) ............... 1.7 1.3
Capital expenditure (Em) ............................................................. (93.4) (100.2)
Net cash from operating activities (Em) .......................................... 269.0 237.4
Capital expenditure (Em) ............................................................... (93.4) (100.2)
Free cash flow (Em) ..................................................................... 175.6 137.2
(93.4)
(100.2)
Free cash flow (Em)
.....................................................................
175.6
137.2
Six months ended
27 June 2014 28 June 2013
Profit after tax (Em)...................................................................... 95.1 65.5
Tax charged to the income statement (Em)..................................... 34.1 23.5
Total finance costs, net (Em).......................................................... 38.9 49.4
Share of results of equity method investments (Em)........................ (4.0) (4.4)
Operating profit (E)...................................................................... 164.1 134.0
Depreciation of property, plant and equipment (Em)......................... 176.7 191.2
Amortisation of intangible assets (Em)............................................ 0.2 0.6
Employee share options (Em).......................................................... 6.7 2.1
Adjusted EBITDA (Em)................................................................... 347.7 327.9
Gains on disposal of non-current assets (Em)................................... (2.6) (2.7)
Increase in working capital (Em)..................................................... (88.6) (55.9)
Tax paid (Em)................................................................................. (21.6) (19.5)
Net cash from operating activities (Em)............................................ 234.9 249.8
Payments for purchases of property, plant and equipment (Em)........ (137.3) (146.9)
Principal repayments of finance lease obligations (Em) .................... (6.6) (8.0)
Proceeds from sale of property, plant and equipment (Em) ............... 3.8 2.7
Capital expenditure (Em) ............................................................. (140.1) (152.2)
Net cash from operating activities (Em) .......................................... 234.9 249.8
Capital expenditure (Em)
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