REG - Coca-Cola HBC AG - ROBUST PERFORMANCE IN DIFFICULT MARKET CONDITIONS <Origin Href="QuoteRef">CCH.L</Origin> - Part 3
29/10/2014 10:55
- Part 3: For the preceding part double click ID:nRSG4748Ob
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, plantand equipmentE million Intangible assetsE 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 June2014E 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.
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 E1.8 million, 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.
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